BILL GATES, the chairman of Microsoft and world’s richest man, arrives in London today on a mission to defend the software leviathan’s £200-million-a-year relationship with Britain’s public sector.

The visit by Mr Gates, who will be given an honorary Knighthood today, is ostensibly to attend a government-sponsored summit on entrepreneurship.

But his visit is viewed by IT industry experts as a way of forging a closer relationship with Whitehall at a time when its software is under assault by so-called open source products such as the Linux operating system.

Mr Gates arrives in Britain as the Office of Government Commerce, which controls Whitehall’s procurement, renegotiates its contract with Microsoft, signed in 2002 with the intention of saving £100 million over three years.

The OGC has initiated tests comparing Microsoft’s software against the effectiveness and cost-benefits of IT systems based on open source products. IBM, which has spent $1 billion (£547 million) developing services based on open source technology, is conducting the tests.

Richard Holway, a director of the research group Ovum Holway, said the Government was using trials of Linux as a bargaining tool to secure more favourable terms with Microsoft. “It gives them more muscle at the bargaining table, but these are not empty threats. Microsoft has to deliver savings to their customers or they will see their marketplace eroded,” he said.

The Government is among Microsoft’s largest UK customers and experts believe that the open source tests represent a significant threat to the company’s UK public sector business.

Paul Smith, an analyst at Kable, a public sector IT research group, said: “Governments all over Europe are looking at Linux as a serious alternative at a local and public policy level. It is the single biggest threat to Microsoft in the public sector.”

Public sector bodies of all sizes have been among the most aggressive in testing open source software, causing a headache at Microsoft despite accounting for only 10 per cent of the company’s annual estimated $35 billion turnover.

In Germany, cities such as Munich and Dortmund have converted systems to Linux, while parts of the US Air Force, the US Department of Agriculture and the US Department of Energy, have also made the switch.

But Britain trails other nations in the adoption of open source software, which only costs the fees charged to maintain systems and networks.

The West Yorkshire Police recently converted to Linux, and the National Programme for IT in the NHS, a £3.2 billion programme to modernise hospitals and general practices, has ordered a trial of a Linux-based system from Sun Microsystems.

But Microsoft is fighting back. The company, which last week reported a 19 per cent increase in revenues to a record $10.15 billion during its second quarter, recently won a battle against open source software in the London Borough of Newham.

Matt Lambert, Microsoft’s director of government affairs in Europe, said that suggestions Mr Gates was visiting the UK to rescue Microsoft’s relationship with the Government were “ridiculous”.

“The Government is taking a balanced view on Microsoft and open source software, as it always has done and as it should do. Good luck to them; we don’t expect any special favours,” he said.

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