Microsoft Corporation (MSFT) Loses Big Client; Moscow City Ditching Outlook, Office

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The city of Moscow has decided to stop using Microsoft Corporation ’s software after Russian President Vladimir Putin directed authorities to cut dependence on foreign technology, Bloomberg News reported. The city will remove Microsoft’s programs in phases. Initially, the city is planning to replace the company’s Exchange Server and Outlook on 6,000 computers with a local software. Is this perhaps one of many steps to gain independence from the international market? There are rumours that Russia is set to build its own cryptocurrency to keep up with the bitcoin evolution.

City May Remove Microsoft From 600,000 Computers

On Tuesday, Artem Yermolaev, head of information technology for Moscow, told reporters about Moscow city’s plans to get rid of Microsoft.Microsoft Corporation (MSFT)

He said that the city is going to replace Microsoft’s Exchange Server and Outlook on 6,000 computers with an e-mail system installed by state-run carrier Rostelecom PJSC.

The city, according to Yermolaev, may deploy the new software, developed by Russia’s New Cloud Technologies, to as many as 600,000 computers and servers in the coming days. He did not provide when the city will complete the deployment.

Yermolaev added that Moscow city may also consider Ditching Windows and Office.

Microsoft and Others Face Challenge in Russia’s $3bn Software Market

Russia is becoming a difficult market for international companies including Microsoft Corporation and Oracle Corp. and SAP SE. The local companies and businesses are increasingly moving to homegrown software.

President Putin is urging state entities and local companies to use domestic programs amid concerns over security. Also, Russia is concerned about reliability after U.S. firms shut down services in Crimea following Russia’s 2014 annexation, according to Bloomberg.

Russia may create more problems for U.S. companies in the $3 billion software market. Putin’s internet czar German Klimenko wants to raise taxes on U.S. technology companies to help Russian competitors such as Yandex NV and Mail.ru Group Ltd.

The Communications Ministry has made a list of nearly 2,000 Russian software products, which could be used by state-controlled entities, replacing global vendors. The ministry plans to offer support to domestic developers worth about 3 billion rubles this year.

“We want the money of taxpayers and state-run firms to be primarily spent on local software,” Communications Minister Nikolay Nikiforov told the press.

He noted that, from next year, the Federal Anti-Monopoly Service, General Prosecutor’s Office and Audit Chamber will be “tightening their grip” on state institutions that aren’t using domestic alternatives.

According to Nikiforov, government entities in Russia spend about 20 billion rubles or $295 million every year on foreign software. President Putin’s government has laid out a plan to cut foreign program reliance to less than 50% by 2025.

In addition to Microsoft, the city of Moscow is also replacing Cisco Systems’ technology for city surveillance cameras to local software. Moreover, state media company Rossiya Segodnya and Moscow’s regional government moved from Oracle database systems to open-code PostgreSQL software supported by local programmers, according to Digital Russia.

In other news, Microsoft is reputedly working on an entirely new smartphone model dubbed the Surface Phone, as well as is preparing to release the Surface Pro 5 featuring a 4K display and Intel’s new Kaby Lake processors.

Shares of Microsoft Corporation are up nearly 3% for the year. The stock has gained 31.88% during the last 12 months.

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