Fruit exporter Enza is saying no to Microsoft's new Software Assurance licensing scheme and is likely to dump Microsoft Office for the bulk of its 500 users.

Enza still has over a year left on an enterprise Select licensing agreement with Microsoft, struck when it was a Government operation.

IT manager Adam Hunt said he would use the time to investigate the free Open Office suite, which has a version for Windows.

He said it was likely he would keep Microsoft Office for only 30 or 40 power users, for which he would pay retail.

"When I want to upgrade I'll just buy it again."

The Software Assurance licensing scheme, which has been delayed twice, is now due to begin on July 31. It comes after changes to Microsoft SQL Server licensing 18 months ago that also annoyed Hunt.

The scheme is causing consternation among corporate IT bosses because it takes away the ability to pay a partial fee for an upgrade.

Instead, upgrades are automatically provided if a fee equivalent to an additional 29 per cent of the original licence fee is paid every year.

Hunt said Microsoft had shot itself in the foot because putting in its software used to be a "no-brainer".

"You used to just put it in and worry about paying for it later because it was so cheap compared to everything else."

He said it was now necessary to do an analysis for SQL Server database software, just as one would do for software from Oracle or SAP.

And with Software Assurance "it is making me do the same thing for Office".

Hunt said the new Microsoft licensing model was based on more frequent upgrades than Enza's financial system, SAP. He predicted Microsoft would be hit hard by free "open source" software.

"If you look at me as a typical example, I've got, say, five hundred seats.

"Maybe I put 400 over those onto Open Office and I leave a hundred. So they lose 80 per cent. That's got to hurt."

Another trend, the use of Citrix's thin client technology, favours Microsoft.

Citrix allows Microsoft Windows to run across terminals and lower-cost PCs.

Hunt said he was considering using Citrix at Enza.

He said there was no complete alternative to Windows available for the free operating system Linux.

But he said it was only a matter of time before a free open source equivalent was developed, which he believed would force Citrix to release a Linux version.

"Then it would be extremely easy for me to fill my data centre up with Linux boxes running Metaframe.

"It would cost around $300 a seat and I'd never have to touch a PC on the desktop again. I could run Open Office on those boxes, and SAP on it, because SAP runs on Linux."

In another cost-cutting move, Enza has pulled out its frame relay-based Voice over IP system which allowed it to make local city phone calls from distant offices.

Hunt said the economics had changed.