Microsoft Corp. is set to lose a large Windows desktop contract it has with the German government to Linux and open-source software.
The city of Munich, the third largest in Germany, has chosen Linux and the free OpenOffice.org productivity suite for its more than 15,000 desktop systems, replacing Microsoft Windows NT, say sources close to the negotiations.
A spokesman for SuSE declined to comment, while a Microsoft spokesman could not be immediately reached for comment.
The deal—expected to be announced tomorrow by SuSE, the city of Munich and IBM—will be another big blow for Microsoft, which has actively been lobbying governments around the world not to embrace open source and Linux.
To that end, Microsoft in January announced a new global initiative to provide governments around the world with access to Windows source code under its Government Security Program, designed to “address the unique security requirements of governments and international organizations throughout the world.
“We view governments that utilize our software as trusted partners. The GSP will provide governments with the opportunity to assess the security and integrity of the Microsoft products they deploy…
“We are also providing technical documentation, methods for troubleshooting, access to cryptographic tools subject to export controls, and access to Microsoft expert support technicians who can collaborate with governments on how they use this source code access,” Microsofts chief technology officer Craig Mundie said at that time.
China, the U.K., Russia and NATO are among the first participants in the program, while Microsoft is talking to more than 30 other countries about their interest in the program.
Microsofts GSP move followed its concerns about the interest a number of foreign governments and agencies have shown in Linux. Last June, the German government said it was moving to standardize on Linux and an open-source IT model at the federal, state and communal levels.
As part of this move, Germany signed a contract of support with IBM that would facilitate moving its agencies to Linux and the development of innovative IT solutions based on open standards.
Otto Schily, the German minister of the Interior, said at that time that the contract with IBM enabled the administration to buy IBM hardware and software running Linux under competitive pricing conditions.
“Linux offers the best potential as an alternative to Windows for server operating systems to reach more heterogeneity in the area of software. The fact that we have an alternative to Windows with Linux gives us more independence as a large software customer and is a major contribution to the economic use of IT in the administration,” he said.
The German governments move to IBM and Linux followed similar moves by more than 75 other government customers. The U.S. Department of Agriculture, the Federal Aviation Administration, the U.S. Department of Energy, the U.S. Air Force and Pinellas County, Fla., are all using Linux, as are agencies in the governments of China, Singapore, South Africa and Australia.
Microsoft also recently said that it could be forced to lower its software prices in the future as a result of the growth of open source. In its February 10-Q quarterly filing with the Securities and Exchange Commission, Microsoft said that the popularization of the open-source movement continued to pose a significant challenge to its business model.
This threat included “recent efforts by proponents of the open source model to convince governments worldwide to mandate the use of open source software in their purchase and deployment of software products.
“To the extent the open source model gains increasing market acceptance, sales of the companys products may decline, the company may have to reduce the prices it charges for its products, and revenues and operating margins may consequently decline,” it said.
Also, in an assessment of the challenges facing Microsoft, John Connors, Microsofts chief financial officer, said in a teleconference with the media and analysts last month to present the Redmond, Wash., companys third-quarter financial results, that Linux and non-commercial software remained a significant threat to the company.
That warning followed the comments by Microsoft Corp. chairman and chief software architect Bill Gates in February, when he told more than 600 of Microsofts Most Valuable Professionals (MVPs) that he took the Linux threat seriously.
Microsoft also last week took center stage in the crusade by the SCO Group to protect its Unix intellectual property, when the Redmond software firm said it was licensing the Unix source code and patent from SCO.
Responding to allegations that Microsoft was simply using the IP license as a ruse to fund SCOs campaign against IBM, which SCO is suing for $1 billion, and Linux, which it claims is an unauthorized derivative of Unix, Alex Mercer, a Microsoft spokeswoman, told eWEEK that this was “absolutely not” Microsofts intent. “There is absolutely no correlation between the IBM suit and our IP license with SCO,” she said.