I guess it's a little bit of both. First mistake they made was that they tasked local contractors (think O(1) people) with forking their very own linux distro f

I guess it's a little bit of both. First mistake they made was that they tasked local contractors (think O(1) people) with forking their very own linux distro from Ubuntu. Then they put a lot of ressources into the KDE3-fork which was made to look like Windows NT (because they were migrating from that in 200x and you know the secretaries for life...). In the end they wondered why all their application software was old and buggy and I suppose from the whole project there was no significant contract work upstreamed (think LO performance patches...). Also being 1% of the market apparently does not entice any competition in the public software (think access-frontends in VB6@1000€s per place) market. Given this, some years ago, the mayor changed, Accenture did a 'cost' study and MS moved its german HQ to the city.