Microsoft denies 'stripping down' Windows for NHS

Microsoft is in talks with the UK's National Health Service (NHS) for a "tailored" version of its Windows operating system and Office desktop suite in a deal that could have huge implications for the way it sells to its largest customers - but the company denies it will sell a 'stripped down' cheaper version.

Richard Granger, the NHS IT director general, is due to meet with Microsoft CEO Steve Ballmer today to discuss a deal worth several hundred million pounds, according to a report in The Times.

Granger has previously and very publicly stated his demand for much bigger discounts on Microsoft software based on the NHS' bulk purchasing power of over half a million licences. He even launched trials of Linux software at the end of last year in what many saw as an attempt to force the Redmond giant's hand, and a meeting with Bill Gates last month now appears to have been successful.

Granger told the paper: "They [Microsoft] are talking about making specific products for the health sector...taking Office and converting it into a look and feel that would be appropriate for clinicians. It will be the first of its kind...a generic platform specified for use by medical professionals."

Richard Holway, industry analyst at Ovum Holway, said the implications of the agreement are "huge".

"It could open the floodgates for other organisations – public and private sector alike – to also want their own "tailored" versions. Perhaps, at long last, the stranglehold of Microsoft licensing pricing might be broken," he said.

Holway described Granger as "the toughest of procurement officers" and said he may have already saved taxpayers over £1bn through forcing suppliers to the £5bn NHS IT programme to drop their prices.

A Microsoft spokesman told silicon.com that the tailored version it is in discussions with the NHS over includes all core components of the operating system and desktop suite.

A statement issued by the company said: "We cannot comment on specific negotiations with government customers, but we are keen to ensure that all of our licensing agreements represent value for money for government, including the NHS. Microsoft is committed to ensuring that we respond to the differing requirements of our customers and partners, and we always look at how best we can help them gain value from their investment."

A spokesman from the National Programme for IT would not comment on the specifics of the discussions and said the NHS is keeping its options open.

"The National Programme is meeting with Steve Ballmer of Microsoft as a supplier of IT services and products to the NHS; but these discussions are not exclusive to Microsoft," he said. "The National Programme is in negotiations with other suppliers designed to identify the best value IT products and services for the future of the NHS, that take into account the unique size and scale of the NHS as an IT marketplace."