Firstly, I don't doubt that MS UK and The Gubmint will "work something out".

Don't be expecting Linux or friends on half a million government computers any time soon.

That said, it's a good sign that Very Large Organisations are starting to look at their MS licencing and going, "oh fuck no WAY!", even if they only use it as a stick to beat MS down to a more reasonable price. Two years ago, any organisation like this would have just handed over the cash.

I predict that the first large-scale actual dumping of MS on the desktop will be France or Germany - the latter in particular has stringent rules about using home-grown stuff for government consumption, from paper-clips to cars, and so computers would be a very logical target, especially with SuSE's existence.

And don't forget that MS has prodded that which you should not prod - the sleeping giant that is the EU Commission. You don't wake those buggers up unless you fancy a LONG time in court.