Microsoft deal is put in jeopardy

Microsoft risks losing the biggest software deal in its history because of its much-criticised licensing reforms.

Teams representing UK local and central government have joined forces to negotiate a single licence covering the public sector's 1.7 million desktops.

Talks resumed this week but local authority user group Socitm and the Office of Government Commerce (OGC) say discussions are going badly and confirm that they rejected a second proposal two weeks ago.

"There is every chance negotiations could break down," said Socitm chief negotiator and national secretary Bob Griffith.

With government sales representing 10 per cent of Microsoft's UK business, any licence agreement would be the biggest ever concluded.

Failure would be a devastating blow and would not put existing agreements with the NHS and the Ministry of Defence at risk.

"There is a real question about whether the deal will go ahead - how that might impact on existing Microsoft contracts is stage two," said an OGC spokesman.

David Roberts, chief executive of blue-chip user group The Infrastructure Forum, says several major companies are moving away from Microsoft.

"I know of instances where companies are doing the minimum deal and pursuing a parallel strategy to exit Microsoft completely.

"The only way to make Microsoft change its mind is - don't do a deal. It becomes a business decision, not an IT one. Most boards won't permit their business to be put at greater risk because of one IT vendor," he said.

A Microsoft spokeswoman said: "Negotiations are still ongoing."

But UK Managing Director Neil Holloway told Computing last month that its licensing regime was here to stay and that he believed it was a good deal.