And ... Microsoft loses to Linux in Munich

[Gary Wilson]

UPDATE 2-Microsoft loses city of Munich deal to Linux
Reuters, 05.28.03, 12:36 PM ET

By Hans Nagl

MUNICH, May 28 (Reuters) - The city of Munich said on
Wednesday it would switch 14,000 computers from
Microsoft's (nasdaq: MSFT - news - people) Windows
operating system to rival Linux in a deal estimated to
be worth tens of millions of euros.

The decision is a blow to U.S. giant Microsoft, whose
chief executive Steve Ballmer had personally
campaigned for Microsoft's counter-offer to the city,
based on Windows XP.

Microsoft has created two funds to discount its
products against the emerging Linux software, which is
eating into its most profitable business.

"This strategic decision makes Munich less dependent
on one IT supplier and sets a trend towards more
competition," Munich mayor Christian Ude said in a
statement.

Analysts said Munich's decision to choose open source
software, which means Linux, was a breakthrough.

"It is one of the largest desktop migrations to Linux
ever seen," said Gartner Dataquest analyst Nikos
Drakos in London.

Linux suppliers welcomed the move by of one of
Germany's largest cities, where many of the country's
biggest corporations have their headquarters.

"You can compare this to the fall of the Berlin Wall,"
said Richard Seibt, Chief Executive of Linux software
provider Suse. Suse is bidding for the Linux contract
together with International Business Machines Corp
(nyse: IBM - news - people).

Linux is considered by many to be the only big rival
to Microsoft's Windows and can already be found on 15
percent of all computers sold in Western Europe.

A Microsoft spokesman in Munich said his company was
still at hand if the city found that certain units
could not switch over to Linux. "Some applications do
not run on Linux," he said.



LINUX GROWING IN GERMANY

The Munich decision comes as the German government is
installing Linux throughout certain ministries and
public institutions.

In the northern state of Lower Saxony, 11,000 police
computers will be switched from Microsoft Windows to
Linux from next year, according to the interior
ministry.

Companies and governments are increasingly opting for
Linux, written by Linus Torvalds and further developed
on the Web with the help of thousands of volunteer
programmers, because it is a stable software and not
controlled by just one company.

Hundreds of companies distribute the software,
charging little or nothing for the core software, but
taking fees on modifications, services and
maintenance.

IBM and Suse declined to give the value of the bids
for their Linux offerings.

Media have reported that Microsoft's offer of about
27.3 million euros ($32.3 million) had been almost
three million euros below that of the Linux
competitor, but the city had still chosen Linux for
strategic reasons.

Microsoft confirmed it had offered discounts for the
total project, but declined to give details.

(Additional reporting by Lucas van Grinsven in
Amsterdam)

Copyright 2003, Reuters News Service



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