Microsoft confronts Linux threat down under

The New South Wales Department of Public Works and Services (DPWS) in Australia has become a key battleground on which Microsoft is campaigning to defend its domination of the desktop from Sun Microsystem's StarOffice.

Sun has confirmed that it is in discussions with the DPWS in a bid to snare NSW government desktops with its alternative Linux-based PC operating system and office software suite.

According to Sun's estimates, the NSW government could save just under 100m Australian dollars (about £36m) if it migrates just one-third of the estimated 300,000 desktop PCs throughout its departments.

"If they were to migrate 100,000 [users] to StarOffice rather than upgrading to Windows XP it would save the NSW government around up to 99m Australian dollars in licensing over three years," said a spokesperson for Sun.

However, according to well-placed industry sources, Microsoft is campaigning heavily for the NSW governent to accept a new cross-agency desktop software contract to supercede its its existing arrangement. The sources said that the DPWS had forwarded a letter to heads of department throughout its agencies outlining an offer from Microsoft containing generous terms if they extend their existing Office software contracts with the giant.

According to the sources, the letter contains a time-limited offer for between 60,000 and 120,000 three-year, Office XP licenses at a cost of approximately 770 Australian dollars per seat under its controversial software assurance scheme.

A spokesperson for Microsoft Australia said the company has a three-year panel contract with the DPWS that's been in place since 2000 but it is staying tight-lipped about allegations it has sought to alter it.

"During that [time] there has been various deals and negotiations but we can't comment on any specific deal," said the spokesperson. "We don't discuss publicly any conversation between our customers and ourselves."

Microsoft has also declined to provide ZDNet Australia with details that would reveal when its existing panel contract is due to expire.

Sun said it has offered the NSW government StarOffice licenses at one-off cost of 45 Australian dollars per user and an on going annual support charge of 18 Australian dollars per user for software upgrades.

The DPWS did not to respond to ZDNet Australia's requests for comment in time to contribute to the report.

Governments in France, Germany the UK and elsewhere have begun to show more interest in open-source software, and in some cases have already begun promoting its adoption as a way of promoting software diversity and locally-based software development. Microsoft has said that it sees Linux and other open-source software is a serious threat to its Office and Windows businesses.

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