Europeans turn to open-source software

Microsoft faces a serious threat to its monopoly in Europe's public sector as Tony Blair's newly-elected UK government prepares to announce plans to encourage more take-up of free open-source software.

A survey commissioned by the FT found that more than 60 per cent of UK local authorities intended to increase their use of open source.

The UK pubic sector spent £12.4bn ($23.5bn) on IT in 2003-04, and more than three-quarters of public bodies plan to expand use of open source over the next three years. Two out of five who don't yet use it plan to do so.

Microsoft faces pressure across Europe over its software pricing, which leaves public bodies facing huge bills for upgrading the Windows program.

Other countries are considering their options and could use open-source to bargain down Microsoft. For a company whose most familiar competitive tactic has been to undercut rivals on price, Microsoft has faced a new and unusual threat from "free" software such as the Linux operating system.

This has brought a re-evaluation of the company's unsuccessful efforts to marginalise the open-source approach to software development. It has also forced Microsoft to dig in for what will be its most important long-term competitive battle, according to Steve Ballmer, chief executive officer.

Minutes from a recent meeting in Brussels between Microsoft representatives and local authority representative bodies from the UK, Belgium and Holland said Microsoft's pricing structure had damaged trust.

Local authorities told the meeting they "felt they were being forced down a route dictated by Microsoft and as a result they are now looking for a far more open approach where users have choice".

Angela Waite, president of the Society of IT Managers, which represents local authorities and which carried out the survey for the FT, said the survey showed concerns about open-source were easing.

"The open-source market is beginning to come to some maturity which gives confidence to IT managers that they can start to rely on this technology," she said.

Additional reporting by Richard Waters in San Francisco