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Microsoft cuts prices to stem defections

Daniel Thomas
Microsoft is offering discounts to companies tempted to switch to open source alternatives such as Linux, to counter widespread user dissatisfaction with its recent licensing changes, according to analysts in the US.

If Microsoft sales representatives think there is a real threat of large numbers of defections to open source operating systems such as Lindows, they are at liberty to offer discounts of as much as 50%, said Laura DiDio, senior analyst at research firm the Yankee Group.

The software giant this week confirmed that some UK companies could benefit from discounts under the terms of its Multi-Year Open Licence initiative, which was quietly launched in late September.

Although Microsoft has yet to offer discounts in the UK, the comments from the US could be used as a negotiation tool, said blue-chip IT user body The Infrastructure Forum (Tif).

"It sounds as though [potential discounts] could well become a self-fulfilling prophecy," said David Roberts, Tif chief executive. "It takes quite a lot to move Microsoft, so it requires continual pressure from various places. The increased pressure on IT budgets mean organisations will be trying harder than ever in negotiations."

The discounts form part of Microsoft's Open Value licensing initiative - the US version of the Multi-Year Open Licence - which is designed to make participation in the software giant's controversial Licensing 6 programme easier.

The initiative allows small businesses to spread payments over three years rather than paying a one-off fee.

The initiatives were launched to answer heavy criticism from users over the Licensing 6 programme, which raised software costs by as much as 107% for some companies, according to analyst firm Gartner.

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