Massachusetts Administration and Finance Secretary Eric Kriss issued a memo to the state's chief technology officer instructing him to adopt a policy of open source and open standards for all future spending on information technology.

However, Microsoft will not be completely eliminated from Massachusetts' technology expenditures. The state has said it will continue to opt for Microsoft software if cost effective open source options are not available for some applications.

The trend toward governmental purchases of Linux is significant, Yankee Group analyst Laura DiDio told NewsFactor. "Should Microsoft be concerned? Yes, because today's trickle could be a flood in 2005 or 2006."

Limiting Choice?

The Massachusetts mandate is a bad idea, said Mike Wendy, PR and policy counsel for the Computing Technology Industry Association (COMPTIA), a software trade group of which Microsoft is a leading member.

"Without the mandate, the state of Massachusetts has a bountiful selection of software options that they can easily chose from without having to preordain or bias a choice," he told NewsFactor.

This limiting of choice is "bad for taxpayers and it's bad for the Massachuetts IT industry, which is still largely proprietary in nature," he said.

Massachusetts state officials were not immediately available for comment.

Big Market

The competition for government contracts is a closely watched battle in the software industry. The global government software market accounts for about 10 percent of world IT budgets, according to research firm IDC. In the U.S., federal, state and local governments spend $34 billion annually on software systems.

Governments around the world have adopted are or considering Linux software. Government agencies in China, France, and Germany are now using it, and governments in Russia, Asia and South America are looking at the issue.

According to the Initiative for Software Choice, a software industry trade group, there are open source mandates in 24 countries. And, IBM claims it has sold 175 Linux systems to publicly-funded buyers.

Additionally, industry observers say that corporate buyers may be influenced by public sector buying decisions. If government agencies demonstrate lower cost of ownership with Linux that may significantly increase adoption in the corporate sector.

Ongoing Debate

Many of these government agencies, including the Pentagon, believe that open source software is cheaper and more secure than proprietary software, though this notion is hotly debated in the software industry.

Some governments believe that because open source code is freely available, flaws are easier to fix and programs are more easily modified for specific uses. Lately, Microsoft has worked to counter this by showing code to select government buyers.

Equally important, many foreign governments do not want to be dependent on a single American company.

Industry Battle

Microsoft, along with other proprietary technology companies, has worked to counter government mandates favoring open source software.

Complaints from these companies helped defeat directives similar to Massachusetts' in Texas and Oregon. In fact, in July Microsoft launched an initiative that offers major discounts for governmental buyers.

Stronghold Remains

It should be noted that whatever threat Microsoft faces in decisions like that of Massachusetts', it continues to be a leader in government software contracts.

One of the issues governments face as they consider replacing proprietary software with open source is compatibility with existing Microsoft software. Additionally, open source software does not currently offer the depth of desktop applications that exists in the Windows library.

Linux's momentum, while considerable, must be put in perspective, DiDio said. "When you're coming from a small base, if you get one plus one, that's doubled."

Microsoft representatives were not immediately available for comment.