Why Microsoft needs Linux

Contributed By Ken Creten and Brett Lamb

“If Microsoft wanted to, they could take Linux tomorrow, start
development on it, and do it completely on their own. There’s
nothing to stop anybody from doing that. However, they are required
to make all the changes available to everybody else. This ‘no
ownership’ idea means that the only entity that can really succeed
in developing Linux is the entity that is trusted to do the right
– Linus Torvalds, the original creator of Linux

Linux has grown into a viable operating system through a level
of scientific-like cooperation previously unknown to the software
industry. This cooperation is the main benefit of a movement called
Open Source Software. The development power of the open source
movement parallels the growth in popularity of the Internet while
traditional models for software development are dependent on
financial resources. Even as the largest software vendor, Microsoft
does not have the resources to create software that competes
effectively with many open source products. The biggest potential
threat to Microsoft from an open source project is unquestionably
Linux. Microsoft’s efforts at dominating the enterprise arena with
Windows NT have met with resistance from dissatisfied IT managers
who find solutions with Linux. This increased competition from
Linux requires a dramatic shift in Microsoft’s enterprise strategy
to maintain market share. Since Windows NT cannot currently compete
with Linux on technological grounds, and Microsoft cannot hope to
out-develop this open source project with traditional methods, they
have no choice but to recognize that Linux as a serious threat
unless they find a way to harness the power of the open source
development cycle.

The General Public License (GPL) under which Linux is published
allows for anyone, including Microsoft, to make changes to the
software and redistribute it, as long as they make the source code
freely available. This is precisely what has allowed Linux and
other open source projects to achieve their high quality. So
although some Linux proponents may view Microsoft, especially
Windows NT, as a competitor, there is no reason why Microsoft must
continue a competitive stance towards Linux. Microsoft could
benefit greatly from embracing Linux and it could be their best
hope of continued growth in the enterprise market.

Microsoft has said little officially about their position and
strategies regarding Linux but recently Steve Ballmer, Microsoft’s
president, said at Comdex, “If customers want more source code,
we’re going to think about that and how to address that issue. If
there’s something people would get out of source code availability
in NT, we need to think of how to give them that.” (http://www.computerworld.com/home/news.nsf/all/981117ballmer)
Clearly this indicates an official awareness by Microsoft of the
open source community’s influence on their customers desires, but
does not state a clear intention of any specific strategy, nor does
it recognize any specific threat from Linux.

The so-called Halloween documents (http://www.opensource.org/halloween.html),
though unofficial, may provide greater clues to Microsoft’s
intentions. Many in the software industry, especially in the open
source community, were shocked at the apparent ruthlessness with
which Microsoft seemed willing to act in defense of their market
dominance. Microsoft’s response that the leaked memos do not
represent an official position or strategy, and that “… these
memos represent an engineer’s individual assessment of the market
at one point in time,” does little to relieve the anger generated
in the open source community. (http://www.microsoft.com/ntserver/highlights/editorletter.asp)

There are two main suggested lines of defense against Linux in
the Halloween documents: Legal action against possible patent
infringements and the de-commoditzation of protocols. While some
open-source projects may be vulnerable to patent lawsuits, Linux is
not because it is based on technology on which the patents have
expired (http://www.linuxworld.com/linuxworld/lw-1998-11/lw-11-thesource.html).
Additionally, any legal action would only increase any animosity
the development community already feels towards Microsoft. The goal
of de-commoditization of protocols is ostensibly to shut open
source projects out of the industry, but as they lose market
dominance to Linux, attempts to control open standards will more
likely shut Microsoft out, instead. Analyst Robin Bloor, of Bloor
Research points out: “Any company which ignores standards will not
survive.” (http://www.zdnet.co.uk/news/1998/44/ns-5959.html)

Windows NT is floundering in the enterprise market and Microsoft
has no hope of extending its hegemony to this sphere. There is a
growing doubt among IT professionals that Windows NT is capable of
handling mission critical situations which explains why it is far
behind UNIX in market share and is losing ground.

“According to market researcher Dataquest, Unix growth is
accelerating and outpacing that of NT. Unix server usage grew 12.7
percent in the past two years, from a 36 percent market share in
1996 to 42.7 percent in the second quarter of this year. NT, by
contrast, grew 6.5 percent, half the rate of Unix, from 9.7 percent
in 1996 to 16.2 percent in 1998.” New York Times, 10/29/98

If Microsoft continues its present focus on Windows NT, their
presence in the corporate IT marketplace will be marginalized. This
will negatively affect sales of other Microsoft products, which are
Windows dependent. They may be able to maintain a large market
share of consumer products, but their overall importance in the
software industry will be diminished. Even the consumer market,
which Microsoft now owns, could be threatened by current efforts in
the Open Source community to develop GUI solutions for Linux that
will rival Windows in usability and ease of use. Where NT has
gained a reputation as an easy to use, but relatively inefficient
and unstable platform, Linux is known for stability and
reliability, is growing in market share, and is widely respected in
the industry. As Linux continues to outpace them, Microsoft will be
gradually passed up if they continue to rely on Windows NT. The IT
world has woken to this fact and companies like Intel, IBM,
Netscape, and Oracle are making investments in the future of Linux.
Conspicuously absent from this list of industry leaders is

In Linux, Microsoft has a ready-made opportunity to enter, and
successfully compete, in the enterprise for several reasons. 1) A
move to support open source to this degree would help to heal
Microsoft’s injured public image among developers, network
engineers and especially open source advocates. 2) Microsoft will
have the advantage of brand recognition and current Market
dominance over other implementations of Linux. 3) Linux offers new
markets for ports of other Microsoft products. The open source
community will also benefit from Microsoft’s significant mindshare
and financial resources if brought to bear on the development of

It’s important that Microsoft observe Open Source ideals, rather
than make attempts to subvert the co-operative process, or they
will ultimately lose the connection to the community of developers.
Without this connection, Microsoft will not have the advantage of
mining the development power of open source, and will once again
find themselves competing against, rather than benefiting from, a
superior development model. Anything less than a good-faith effort
at fair participation in the community and delivery of their best
efforts will only further antagonize developers and open source

Embracing Linux will require a reorientation of Microsoft’s
economic model and a deliberate shift to a new paradigm. The
projected revenue loss could keep Microsoft from considering giving
away a free operating system, but they will face lost revenue
anyway because, for enterprise solutions, Linux will out-sell
Windows NT in any case. Open source is quickly out pacing the
quality and speed of traditional companies’ development abilities
and forcing overall software prices down, no matter what Microsoft

There could also be some cultural pains experienced in both
Microsoft and the Open Source community. Individuals in each group
will perceive cooperation between groups to be consorting with the
enemy. Many people in the open source community hate Microsoft, and
Microsoft hates to lose. Differences of this type can only be
supported by the larger communities at the expense of the mutual
benefits. There is no reason Microsoft would have to totally
abandon present plans for Windows NT. Although Linux is directly in
the way of NT for enterprise applications, Windows NT still
dominate the desktop and consumer markets.

Microsoft is left with a difficult choice where the road ahead
is not what it used to be. Windows NT growth in the market has
stalled, while Linux is quickly accelerating. At the moment
Microsoft and the World watch as we enter a critical phase in the
growth of the informationscape. Linux and other Open Source
Software projects are modeled to take maximum advantage of the free
flow of information and processing power that the Internet brings.
While it is not yet understood generally, Closed Source companies
are not prepared to face the challenge created by the open source
model. This is new territory. The fundamental rules by which
complex software is created are changing. Several major Information
Technology companies are beginning to recognize this. Microsoft,
however, has not. All closed source companies will suffer
financially in the coming open source paradigm, but the ones who
jump on board the open source train the quickest will suffer the
least. Microsoft needs a ticket on that train. Microsoft needs

About the authors:
Brett Lamb uses Windows NT, Ken Creten uses everything else. They
both work for PSW Technologies in the Pacific Northwest.
Disclaimer: This paper is not associated with, and does not reflect
the views of PSW Technologies Inc..

Contact: [email protected]