Graham Stack in Berlin -

A Russian government initiative to switch Russian schools from using Microsoft products - licensed and unlicensed - to open-source software has entered its trial phase. Good news for Russia's nascent IT industry; bad news for Microsoft.

Public outrage erupted across Russia in 2007 when Aleksandr Ponosov, head of a village school in Sepych, Perm region, was arrested for running unlicensed Microsoft operating systems on the school's computers. He faced up to five years in jail until President Vladimir Putin spoke the magic words and the case was dropped.

Ponosov was widely seen as a scapegoat of US demands for a clampdown on pirate software, and the case was a public relations disaster for Microsoft in Russia. The political fall out may be even more troublesome for the global software giant.

Estimates that 70% of school software in Russia is unlicensed prompted the government to fund development and implementation of open-source software for public sector use, starting with schools. "It's happening," says Renaissance Capital's IT analyst David Ferguson.

The first trial of Linux-based software for schools is in full swing - and it's poetic justice that the trial regions include beyond Tatarstan and Tomsk, also the Perm region where the unfortunate Aleksandr Ponsov taught. Armada, one of Russia's big-three IT companies won the trial tender in November, with a value of $2.7m for the company, and the free products developed have now marked their 10,000th download over a period of two months.

In November, no less a figure than Dmitry Medvedev, now president elect but then deputy prime minister, called for a move to open-source software across the board in the public sector, citing a host of convincing reasons: to eliminate pirate software while side-stepping the punitive costs of purchasing or leasing Microsoft products; to boost the local IT industry; and to avoid the security risks ensuing from foreign-origin closed-source systems. Medvedev set the goal of developing a Russian open-source operating system with a full suite of applications for all government services and administration by 2010.

That was good news for Armada, says David Ferguson. The company was spun off last year by media concern RBC, and earns 46% of its estimated $100m annual turnover from government contracts. In the case of the trial open-source software for schools, it has acted as an umbrella for an alliance of software producers. If the current trial goes well, Armada will be in pole position to run the national roll-out slated for next year, "which could add $20m to its revenues," according to Ferguson. Ferguson sees another 10-15 companies in Russia's under-consolidated IT industry likely to get a slice of the action.

Aleksandr Ponosov is also happy, for revenge is sweet. After the emotional trauma of the criminal case opened against him, business daily Kommersant broke the news in February that he has left school teaching for new pastures - promoting the use of open source software as a PR manager for the Armada project in Perm region.

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