Novell is playing Microsoft at its own game with the offer of substantial discounts to public sector organisations in Germany.

Until October, public sector agencies and administrations with up to 500 computer users in Germany will be entitled to a 60 percent discount on all products from the software company.

Germany's public sector has been hit hard by falling tax revenue as the government struggles with a sluggish economy and record-high unemployment. "Budgets in the public sector here are really tight," said a Novell spokeswoman. "There's enormous price pressure."

One of the primary focuses of the program, the spokeswoman explained, is to encourage migration to Linux. The German government is at the forefront of promoting Linux in the public sector, and Novell has been taking steps since acquiring Germany's SuSE Linux in 2003 to give a helping hand.

Last year, the German subsidiaries of Novell and HP teamed to offer Linux-based products to the country's huge public sector and collaborate in developing new Linux-based applications. Novell has a similar partnership with IBM to supply Linux-based IT.

Munich City Council became a Linux posterboy when in May 2003 it decided to move all its 14,000 PCs over to Linux despite a last-minute personal intervention by Microsoft CEO Steve Ballmer. Since then numerous other German councils and even its Federal Finance Office have gone the open-source route.