Microsoft acknowledges Linux threat to Windows client

The company lists Red Hat and Canonical as competitors to Windows on PCs in an SEC filing

Microsoft for the first time has named Linux distributors Red Hat and Canonical as competitors to its Windows client business in its annual filing to the U.S. Securities and Exchange Commission.

The move is an acknowledgment of the first viable competition from Linux to Microsoft's Windows client business, due mainly to the use of Linux on netbooks, which are rising in prominence as alternatives to full-sized notebooks.

"Netbooks opened Microsoft to the possibility that some other OS could get its grip on the desktop, however briefly," said Rob Helm, director of research for Directions on Microsoft. "Now it's alert to that possibility going forward."

In its annual Form 10-K report for the fiscal year ended June 30, Microsoft cited Red Hat and Canonical -- the latter of which maintains the Ubuntu Linux distribution -- as competitors to its client business, which includes the desktop version of its Windows OS.

Previously, Microsoft had only noted competition from Red Hat to its Server and Tools business, which includes the Windows Server version of the OS for server hardware, in its 10-K reports.

"Client faces strong competition from well-established companies with differing approaches to the PC market," Microsoft said in the filing. "Competing commercial software products, including variants of Unix, are supplied by competitors such as Apple, Canonical, and Red Hat."

The filing goes on to note, in a thinly veiled reference to netbooks, that Linux has gained what Microsoft characterizes as "some acceptance" as an alternative client OS to Windows, in particular in "emerging markets" where "competitive pressures lead OEMs to reduce costs and new, lower-price PC form-factors gain adoption."

It also mentions the work of Microsoft's own OEM (original equipment manufacturer) partners Hewlett-Packard and Intel to support Linux on PCs.

Seattle-based blogger Todd Bishop called attention to Microsoft's acknowledged change to the competitive landscape in a blog post on the TechFlash Microsoft Blog. He also posted a link to Microsoft's 10-K filing.

While Linux on servers is a well-established market among business customers, Linux as a viable alternative to Windows on PCs has never taken off. However, the emergence of the netbook as a low-cost, smaller form factor to the traditional notebook PC has certainly changed that, so much so that Microsoft lately has been pushing a lightweight notebook as an alternative to netbooks, Helm said.

"Microsoft would like the netbook to go away and be replaced by lightweight laptops -- ones with long battery life that cost enough to justify running full Windows on them," he said.

Helm added that Microsoft is trying to discourage the production of inexpensive computers where Windows becomes the most expensive component because it can't make as much money on Windows on these devices, and they could drive down the price of Windows.

Microsoft's current Windows client OS, Windows Vista, had too large a hardware footprint and was too expensive for netbooks, giving Linux an opening in that market when it emerged late last year. However, Microsoft's eight-year-old Windows XP OS is still the dominant system for netbooks, and the release of Windows 7 in October will feature a Starter Edition that is especially geared toward that market as well.

Tags LinuxMicrosoftcanonicalRed Hat

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Elizabeth Montalbano

IDG News Service

24 Comments

Anonymous

1

Microsft Has Only Itself To Blame

"Helm added that Microsoft is trying to discourage the production of inexpensive computers where Windows becomes the most expensive component"

Gee, wasn't it just yesterday that Microsoft ran all those commercials touting how CHEAP a PC is compared to a Mac? Guess what, Microsoft - you won! So stop complaining about how your margins are being eroded.

Anonymous

2

Microsoft isn't the only one to blame...

There isn't just the negative aspect to this... Linux (and other Unix variants such as FreeBSD, Solaris and even MacOS X) have merits on their own that justify this shift.

Anonymous

3

Fair competition

So, Microsoft is able to "discourage the production of inexpensive computers" ?

Given they have ~97% of the OS market, but don't make the computers, how that can be done in a legal way, without resorting to uncompetitive practices ?

Anonymous

4

Enough is never enough for Microsoft

You mean to tell me that to Microsoft, 95% market share just isn't enough? Over the last 20 years, I watched, powerless, as Microsoft wiped out alternatives through whatever means they could find. Remember the Amiga? BeOS? Mac is hanging on.

My favorite story is the BeOS story. They tried so hard to work with Microsoft to dual boot, but Microsoft lied to them and wouldn't cooperate. The fight over the first sector of the hard disk has been won by Linux, where BeOS could not prevail.

Microsoft can't buy Linux. They can't make it go away. And they can't prevent it from booting. Free at last, thank God almighty, free at last!

Anonymous

5

Wat?

95%? 97%? Stop pulling numbers out of your asses.

Anonymous

6

Sigh

> 95%? 97%? Stop pulling numbers out of your asses.

Sorry, but why not just assume they mean "the vast overwhelming majority of market share". It doesn't invalidate the points they are trying to make.

Or would you only be able to respond to their comments if there was an exact real-time figure of market share, to the 10th decimal place perhaps?

Anonymous

7

Marketshare

Not out of my ass: 93.04%
(http://marketshare.hitslink.com/os-market-share.aspx?qprid=9)

Anonymous

8

Microsoft Declares the Years of Desktop Linux.

It they say its so it must be true!

Anonymous

9

Microsoft needs to cut costs and focus

What MS needs to do is stop trying to compete in every market and focus on just making a good product that is stable and user friendly. Too many times they try something half@ssed and it just look foolish when it all falls apart.

If they want to generate a more revenue, cut the R&D on all OSX products. Macs now can run the Windows OS and many users dual boot because they need to use other windows apps for business. Why waste money developing for a smaller user base which have hardware capable of running Windows and most likely already do. This will also save on patching, since now it will be only the windows versions available and focused on.

If others want to insult your products to make theirs look better. There is no reason why MS should support those platforms. Instead focus on your own products and make them better so users will come back. Fight back, don't whine and point fingers.

Anonymous

10

Anti-competition, anti-innovation - fix needed now!

Microsoft continues merrily on its way, fixing markets, blocking possible competition from even being able to enter the PC market. All the OEMs feed out of MS's hands, so they are too afraid to go against the orders from Redmond - they cannot afford the ire of Microsoft.

I really hope some OEMs who are outside of Microsoft's reach (i.e. not already selling heaps of Windows PCs) can put out some cheap ARM-based laptops running Linux. We need a market segment that Microsoft cannot enter until the market gets properly established. Look at gaming consoles: Microsoft has never been able to take over that market.

I find it weird that Microsoft regards the mere existence of competitors - even if they only hold 1% of the market - as dangerous. For most industries the existence of significant competitors is standard. Imagine if we had only one brand of car...

Anonymous

11

Unlike the bishop's wife,

I certainly hope both that it is true and that it becomes widely known. However, my inherent cynicism leads me to suspect that this passage in the filing with the US SEC (anybody looking for a toothless lapdog ?) was motivated more by a desire to defend <strong>Microsoft</strong> from future litigation due to its position as a quasi-monopoly than to any inroads made by <strong>Linux</strong> distros in end-consumer markets hitherto. Still, <em>dans le meilleur des mondes possibles</em>, things could change, and ordinary people could wake up to the fact that there are viable alternatives to Redmond's products....

Henri

Anonymous

12

True OS

I used MS products from '92. Last year I migrated to Ubuntu, now using Archlinux because I need more possibilites. Microsoft grew up, it and its products become dinosaurs just like IBM in old times was. What does not envolve - dies. I love linux.

Anonymous

13

For All those Sad people

M$ sucks whatever you can think of...?

The end is neigh.

Already KDE4 is the benchmark for future DE's

Anonymous

14

A non ymous

1998 will be the year of Linux desktop!
1999 will be the year of Linux desktop!
2000 will be the year of Linux desktop!
2001 will be the year of Linux desktop!
2002 will be the year of Linux desktop!
2003 will be the year of Linux desktop!
2004 will be the year of Linux desktop!
2005 will be the year of Linux desktop!
2006 will be the year of Linux desktop!
2007 will be the year of Linux desktop!
2008 will be the year of Linux desktop!
2009 will be the year of Linux desktop!
2010 will be the year of Linux desktop!
.....

Anonymous

15

Microsoft OS windows 7

Windows 7 best price offers £70-£90 for the trouble of being first to install it and its an inprovement on Vista!???, They would have done much better if they had continued with Windows XP pro and provided real add on programs to it, which could have competed with the best available comercial products. Linux is going to win the market place in Notebooks and small laptops if the only use of them is to enjoy the W W Web from any place on the planet. Serious users of XP Pro for commercial work are able to afford to pay for there needs. Goverments should look to the use of Linux or UNIX based systems to save money! If Microsoft wish to stay the course for the next 10 years they had better stop conditioning the makers of hardware who only produce hardware for windows based OS. Linux needs manufacturers to start providing hardware that works with Linux for future successful progress!
Peter A Johnson.Retired user of Windows and New user of Linux unix.

Anonymous

16

That market share isn't what you people think it is. Most people don't pay for Linux, they just download it. What you are looking at are the Linux vendors that charge for official support, and their service is intended for companies using Linux to host web servers. The competition between Windows and Linux is definitely not in this area.

And, almost all computers come with Windows pre-installed because of legal agreements between MS and OEMs, and you pay extra for it whether you want it or not, so that definitely throws off statistics.

Anonymous

17

Does Linux users have to pay to use their OS?

You're wrong man Canonical and Redhat offer their linux distributions for no charge at all. Canonical has an option to even ship its Ubuntu distribution freely to your home, and you don't have to pay a penny. Only high end users, such as large scale companies and institutions have to buy technical support for these distributions.
Opensource software is mostly available free, but one may aid the developers, by providing donations..

Anonymous

18

Windows 7

thanks for article...

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Anonymous

19

nEYxHTpXxjrOKFwm

I gleaned through various unreliable sources on the world-wide-web turns out to be urban myth. ,

Anonymous

20

tkVtibovrE

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Anonymous

21

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Anonymous

22

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Rikerouri

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Rikerouri

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