UK councils are talking to Microsoft's rivals about developing a genuine open-source alternative to MS-Office.

Local government user group Socitm has strongly criticised Microsoft's licensing policies. It is already in talks with Sun Microsystems about whether its StarOffice suite offers a realistic rival for authorities.

The discussions will be closely watched in Redmond. In an exclusive interview with Computing today, Microsoft chief executive Steve Ballmer admits that open source offers a real challenge.

The Sun and Socitm talks are focussing on migration from Microsoft Office and training strategies, and could lead to Sun incorporating council requirements into future releases of the package.

The Office of Government Commerce signed a deal with Sun yesterday (Wednesday) to provide StarOffice for central government departments.

Office software is a problem for local authorities because of the expense, says Socitm national secretary Bob Griffith.

'The main issue will be, can users move from Microsoft Office to StarOffice with a minimum effort? If they can and StarOffice is significantly cheaper then that increases competition and pushes down prices.

'Microsoft had the view last year that they were almost invincible but now there is more interest in competing products,' said Griffith.

Twenty local authorities are currently running trials of StarOffice.

Penwith District Council is already using the software on its 300 desktops. Head of IT Andy Mann says neither interoperability nor training have been big issues, and he thinks a clear lead from Socitm will be a great help to councils considering migration.

Ballmer says Microsoft offers value for money which will help it keep customers.

'Every product we compete with, we're cheaper. We're just not cheaper than Linux or StarOffice. It's free but free is not magic.'

He says Microsoft will stick to a pricing policy it considers fair.

'Some people think some of our products are too cheap. Enterprise customers say: "This product can't possibly be enterprise-ready at this price."'