Microsoft's controversial software licensing scheme has delivered little value and many users will not renew their agreements when they expire this year, according to Gartner.

The analyst estimates that 30 per cent of contracts with Microsoft's biggest customers for the Software Assurance (SA) maintenance programme will be up for renewal in the next six months.

It says the software giant is "at serious risk of further alienating many of its customers with respect to its licensing terms and conditions", and could lose up to 10 per cent of its desktop market share by 2008 as a result.

"This is a big renewal phase for Microsoft," said Gartner research director Jon Mein.

"A lot of our clients still perceive a lack of value because the upgrade cycle hasn't met their needs."

Birmingham City Council shunned SA when it was introduced in 2002 because it failed to see any real benefits. "The value wasn't there," said IT contracts manager Tahir Chaudry.

But Microsoft says most customers will renew.

"We are encouraging customers to come and talk to us and discuss their licensing programmes," said Mark Buckley, licensing marketing manager at Microsoft UK.