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Savage discounts from MS flush OSS desktop from London council

Open Source wins everything except the contract

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Newham Council has agreed in principle to stick with Microsoft, and is in the final stages of negotiating a deal with the company that slashes licence costs and includes substantial free support. The Register also understands that the deal includes, as we suggested yesterday, a mechanism whereby Newham's outdated Microsoft Exchange 5.5 system (the one it can't currently afford to upgrade) gets upgraded.

Microsoft UK has seen off the prospect of a high-profile Linux desktop breakthrough at a substantial public sector customer, while Newham head of IT Richard Steel has scored a pricing win that is likely of a magnitude that has so far eluded the Office of Government Commerce, the outfit whose job it is to secure good value for the UK's public sector.

But Newham may not be so lucky next time, and any other UK public sector organisations thinking that a precedent has been set may be barking up the wrong tree. Newham was able to wring major concessions from Microsoft because it had set up, tested and approved a credible alternative in the shape of an open source desktop system. That, combined with what can only be described as an obsession at the highest executive level within Microsoft about open source - particularly open source desktops - in the UK public sector meant that Microsoft UK could pay virtually any price to keep Newham inside the tent.

Plus, Bill's due in London on Monday at the invitation of Chancellor Gordon Brown to tell us all how to get rich, and a major loss wouldn't look good, could even be career-threatening, for Microsoft UK's high command.

Eddie Bleasdale of netproject, which designed the open source desktop alternative for Newham, is as you may imagine not best-pleased, and warns that Newham's apparent victory over Microsoft comes at a price. "Richard Steel has done very well," he says. "He's got his short-term costs down to a very sustainable level, and if the same sustainable prices were achieved in the UK's other local authorities the savings would run into hundreds of millions." If they were applied throughout the UK public sector, he adds, the savings would amount to billions.

"But ask yourself, how did a poverty-stricken council in East London with a limited amount of Unix and Linux expertise get itself a position where it could negotiate so strongly with Microsoft?" It is difficult to argue with Bleasdale's conclusion that Newham could only do this because it had an alternative that worked, and that it was fully prepared to roll out. This clearly is not the case for large numbers of public sector organisations which have locked themselves into Microsoft Windows and Microsoft licensing, and it quite probably will not be the case for Newham when the contracts it is about to sign come up for renewal.

According to Bleasdale a meeting of department heads approved a strategy based on netproject's Secure Open Desktop Architecture in November, and agreed, subject to continuing negotiations with Microsoft, that this recommendation would go forward to the Council's Main Board in early 2004. Thus began the curious interlude in which Richard Steel expressed a preference for sticking with Microsoft, price permitting, Newham pulled the plugs on the IBM run OGC open source trial (which actually never started), and Microsoft presumably came to the conclusion that Newham wasn't bluffing.

Bleasdale observes that netproject's activities frequently seem to have a miraculous effect on the price of Microsoft software, and the customers' consequent enthusiasm for Windows. But he doesn't regard this as a satisfactory situation. Microsoft is trading large discounts to some organisations in exchange for maintaining long-term revenue from customers whose exit routes are continually decreasing, and along the way the impression is created that open source can't make it in the public sector, can't make it on the desktop. "The reputation of open source got hammered [in Newham]," he says. "We got a hammering as well and I'm not prepared to just let it go.

"I see no effort at all on the part of the OGC to seriously embrace the concepts of open source. Instead, we get this %@*! invited over to tell us how you get to be a billionaire." (The Register believes this to be a reference to the presence of a well-known software tycoon at Gordon's Brown's entrepreneurs' summit.) In order to achieve real change and win back real independence, says Bleasdale, the government has to provide leadership. The OGC needs to fund genuine open source pilots that show public sector organisations how it's done, and how to do it. Using open source as as lever to squeeze better prices out of the single franchise-holder, the monopoly, has limited shelf-life, and we need to get beyond that. ®

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