Microsoft revises terms for UK gov't software licenses

Faced with prospect of losing national and local U.K. governments as customers, Microsoft Corp. has offered new software licensing terms as part of its negotiations with government representatives, the company confirmed Tuesday.

"We have received a new offer, though it's confidential and I'm not at liberty to reveal the details. We do hope to reach the next stage by the end of the month," said Bob Griffith, national secretary for the Society of Information Technology Management (SOCITM), the group representing local government IT workers.

Microsoft in the U.K. confirmed that the SOCITM as well as the Office of Government Commerce (OGC), which is representing the government on a national level, had been sent revised offers, though she too declined to outline any details. "We are currently in negotiations with the OGC regarding their licensing agreements. The details of these discussions are customer confidential," said Liz Gent, a spokeswoman for Microsoft.

Last November, OGC revealed that it was in talks with Microsoft over a single contract to supply its Office and Windows software to the country's 497,600 public servants. The OGC said that under its new licensing program, Microsoft was looking to raise fees on government contracts by between 50 percent to 200 percent and that the government had not ruled out the idea of ending its contract with Microsoft to find cheaper software elsewhere if a deal could not be reached.

At the time, Martin Day, a spokesman for the OGC, said that the U.K. government currently spends approximately £120 million (US$169 million) per year on the direct purchase of Microsoft products, and believed that the increased licensing fees would add up to £60 million a year to the bill.

Microsoft has met with strong resistance from both corporate and government users of its operating system since the software giant unveiled its new software licensing schemes for both corporate and home use of Windows and Office last May. The announcement was made on the same day Microsoft launched Office XP.

For example, Microsoft said that as part of the program it would eliminate certain upgrades from previous versions, and that users would have a deadline for upgrading their licensing rights after which they would have to buy new licenses for Office XP -- at a cost of up to US$300 more per user -- if they wanted to have upgrade protection.

By late Tuesday, Day could not confirm that the OGC had received Microsoft's latest offer but did say the negotiations between the two sides were continuing. "The government would be very interested in any new terms that Microsoft would have to offer," Day said.

The SOCITM has posted Microsoft's revised offer on its internal Web site, requesting that its members review the details of the proposal. "As is standard practice, we will accept or reject the proposal based on the feedback we get from members," Griffith said.

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