Microsoft Slashes Prices As Paris Eyes Linux

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In another sign competition is heating up in the software industry, Microsoft has slashed prices by more than half for Paris City Hall as the French capital considers switching to low-cost, open-source programs.

The software giant agreed to cut prices to suppliers who work with the city "to the order of" 60 percent, said a Paris official, who spoke on condition of anonymity Thursday.

Paris plans to spend $195 million on computers and software over the next three years in a push to upgrade obsolete systems.

But more is at stake than the software bill--up to $18 million at list prices. A decision to ditch Microsoft would be a blow to the software giant at a time when a number of companies and governments are opting for the Linux operating system and other open-source alternatives.

The software--called "open source" because the underlying code is not kept secret and is freely shared--has grown increasingly competitive as performance, usability and interoperability with Microsoft's software improve.

Critics say Microsoft has been able to keep prices high because it dominates the desktop computer software industry. It does not share its source code except in limited circumstances.

Now, with the offer of lower prices, there's increasing evidence the company is feeling at least some competitive pressure from Linux and other open-source programs.

China, Japan, South Korea, Germany and Brazil are among countries where efforts are under way to switch federal agencies and municipalities over to Linux-based systems. Some corporations are also taking the plunge. Hewlett-Packard, one of the world's largest PC makers, said this year it planned to sell Linux-equipped computers.

Microsoft France CEO Christophe Aulnette confirmed that the company had signaled readiness to cut prices for Paris City Hall, but declined to be more specific.

"We are ready to make some efforts on prices," Aulnette told The Associated Press by phone.

He was speaking just weeks before French technology consulting company Unilog SA is due to deliver a detailed report to the capital's Socialist-led administration on plans to install open-source software on 15,000 new terminals.

Paris Mayor Bertrand Delanoe commissioned the study last year after the German city of Munich announced it was dropping Microsoft's operating system and Office software suite in favor of free alternatives Linux and the OpenOffice. Unilog also advised Munich on the changeover.

Munich's choice was widely seen as motivated by a political desire to punish Microsoft for its dominance of the global software industry. The changeover went ahead despite a reported offer from the Redmond, Wash.-based company to undercut the price of open-source software.

Francois Dagnaud, Delanoe's deputy in charge of administration, insisted the Paris decision was still "wide open," but conceded that there were political pressures at work.

"We're fully aware of the political dimension of this question, and we make no secret of it," Dagnaud said by phone.

The most critical factors in deciding between rival systems would be their openness to upgrades and their security, Dagnaud said.

Proponents argue that open-source software allows cheaper and easier customization than software based on Microsoft's closely guarded proprietary source code, as well as better security.

In recent months, Microsoft's Windows and its Internet Explorer Web browser have suffered high-profile attacks by viruses and worms that sometimes compromise users' personal and financial information.

"If I have a safe in my room and I give the code to everybody, will it be safer? I don't think so," Aulnette said.

Despite the growing popularity of open source--particularly among left-wing administrations--Aulnette said he was confident Microsoft's offer would prove the most suitable for Paris City Hall.

"We were clearly told that this is going to be a pragmatic decision," he said.

Copyright © 2004 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.

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