Recently Microsoft has made a software deal with New York City that should lower technology cost will give government workers more access to Microsoft products.  It is not a normal kind of software deal, it is first of its kind and it has a value of about $20 million a year. New York administration said that, it is a citywide, 100,000 person deals and will save $50 million over five years.

New York mayor Michael R. Bloomberg and Microsoft’s CEO Mr. Ballmer announced the agreement in the city hall. Mr. Bloomberg told reports that this deal is all about making the city government work better.

As expected some concession is required on Microsoft’s part. Microsoft usually focuses on selling licenses to bundle of business software products. But in the agreement it is clear that Microsoft will charge people on a sliding scale based on which application they used the most.

There is a huge pressure and competition from Rival companies like Google and IBM and Google launched a office software. Google provides online version of the similar Microsoft Office at a simple charge of $50 per person, per year. Los Angeles had an agreement with Google and they are distributing Google’s software to about 30,000 city workers over the last year. But the Microsoft and New York agreement has different vision and it covers a broader set of applications, Google is yet to match those applications.

In the agreement, Microsoft is expected to sell licenses of bundles of products like MS office which includes Word, PowerPoint, Outlook and Excel. But the problem is different and many government workers use only word to create document and outlook for email. There is also a bigger problem for Microsoft is the customer’s tend to Google and they love to use Google card but its customer’s choice and Microsoft said that they can not do anything.

The agreement says New York will put workers in three categories based on how many application they use. Microsoft decided to use pa-per-use model for customers because of its new online version of its software.

Microsoft is using Cloud computing in the New York City and it will benefit them. As City plans to store information for 30,000 workers at Microsoft’s data centers and there is no need to buy as much computing hardware because people can work together online.

The deputy mayor of New York City Mr. Goldsmith said that we need to increase the use of technology tools and there are large numbers of workers that do not even have e-mail address.

Mr. Goldsmith also supports his counterpart and assert about the Pizza deal and said we are excited abut the Microsoft and New York deal and it will extend the technology use in our sector. He said we are looking forward to this deal and it will only help our worker with some new innovations and technology.

However a vice president of Microsoft said that there will be no changes in the Microsoft’s licensing model and we will stick to the same model.