Microsoft was struck a huge blow when the state of Massachusetts declared it would stop using the software giant’s Office software.

The decision was based on the state’s move to adopt the new office document standard, Open Document, for all public documents. Massachusetts wants the documents to be available to its citizens without the need to purchase proprietary software, and Microsoft Office does not support Open Document.

Massachussetts has long been a thorn in Microsoft’s side - it was the only state to hold out for compensation after other states settled over a long-running anti-trust case.

It’s no small matter for Microsoft, which is coming out with all guns blazing.

Open source software, which is written collectively by volunteer programmers, has been a thorn in the software company’s side for several years. The popularity of Linux, the open source operating system, has increasingly threatened Microsoft’s Windows, which is its biggest earning product. The Office suite is a close second, earning $8.6bn last year, and the company is complaining bitterly about the Massachusetts decision.

Massachusetts is still accepting comments on the proposal and Microsoft has accused the proposal of being based on a “very political situation” and argued that it will be more expected than anticipated. If the proposal is accepted, State agencies will have until January 2007 to replace their Microsoft Office software with standardised alternatives, such as OpenOffice.

Although some governments and regional authorities in countries such as Brazil, Peru, India and China, and several European countries have adopted open source software, Massachussetts is the first US state to do so.

Microsoft told CNet it would not adopt the Open Document standard in its Office products.

Intel and AMD

Chipmaker Intel hit back at allegations of anti-competitive behaviour by its smaller AMD.

AMD in June filed a complaint with a Delaware court claiming that Intel used its muscle to prevent PC makers from using AMD chips, citing companies such as IBM, Hewlett-Packard and Dell.

In its first legal filing responding to the claim, Intel said AMD was “dogged by its reputation for unreliability as a supplier” and suffered from “anaemic” investment in its manufacturing.

In the never-ending war between the two chipmakers hardware enthusiasts tend to come out on the side of AMD, and this latest battle is no exception.

Intel’s 63-page response was “as expected”, according to respected review website Tom’s Hardware, which also claims to have been told by several Fortune 500 companies that “predatory” pricing by Intel made it difficult to source AMD products.

Indian IT groups get seal of approval

The inclusion of three Indian companies in ABN-Amro’s record €1.8bn ($2.2bn) outsourcing deal was “the worst kept secret” in the sub-continent’s IT sector.

While Indian outsourcing providers Tata Consultancy and Infosys will receive €200m and €100m, with the lion’s share going to IBM, the inclusion of Indian companies in an international outsourcing deal of this size is a first. ABN’s decision to use them alongside big US outsourcers like IBM - who traditionally win IT contracts of this scale - “sends a message of trust”, according to Infosys chief executive Nandan Nilekani.

Sony’s PSP comes to Europe

After being on sale for nine months in Japan and five months in the US, Sony’s new handheld, the PlayStation Portable (PSP), went on sale for the first time in Europe and Australia. Hundreds queued up to buy the new consoles at special midnight store openings in London’s Oxford Street.

Sony Computer Entertainment’s UK chief, Ray Maguire, told that he expected 100,000 PSPs to be sold in the first day of UK sales.

Sony can expect to see increasing competition for the handheld games market from mobile phone makers, who are ramping up their games offerings.

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