Governments and big multinational companies should take note of Microsoft's willingness to bend on prices in an effort to keep key accounts for its Windows operating system from wandering into the open-source Linux camp.
The German Interior Ministry has signed a licensing agreement with Microsoft to receive favourable conditions for both buying and leasing the US company's software products.
The agreement would save federal, state and local governments "much money," Interior Minister, Otto Schily, said.
The deal comes just weeks after Microsoft Chief Executive Officer (CEO), Steve Ballmer, paid a visit to government officials in Germany.
Microsoft has been scrambling to find ways to retain huge public sector software contracts in Germany ever since the German government, in an effort to lower costs and increase security, agreed last year to a partnership with IBM for the delivery of computers with the open-source Linux operating system to federal, state and local governments.
The German government is keen to have Microsoft products co-exist with rival products, according to the Interior Ministry.
"Our strategy is to combine the world of the commercial software companies with the world of open-source providers," Schily said.
Under the agreement, German government agencies can acquire Microsoft software at favourable rates without having to commit themselves to using the company's products exclusively, the ministry.
A ministry spokeswoman declined to comment on the new pricing scheme.
Microsoft has also agreed to publish specifications for interfaces and data formats, in addition to supporting open standards in its products, according to the ministry.
These assurances would give the agencies greater flexibility in building their IT systems, it said.