Microsoft casts a watchful eye on LinuxWorld

As the Linux faithful unveiled their enterprise wares at last week's LinuxWorld, Microsoft Corp. openly cast a critical eye on the proceedings.

The software giant has been waging a public relations campaign against open source software recently, calling it a threat to intellectual property. But such mudslinging just reinforces the fact that Microsoft sees Linux as a real threat, analysts say.

The two major threats are server software and embedded systems, they say. But Microsoft is also concerned about how Linux might affect its .Net strategy for delivering software over the Internet as Web services.

"Linux is making inroads with Web servers, e-mail, file and print, things that were traditionally Windows," says Al Gillen, an analyst with International Data Corp. "It is also interesting in the embedded market with its openness and pricing model."

Gillen says the one area where Linux won't challenge Windows is on the desktop, where Microsoft owns slightly more than 96 percent of the market compared with Linux's paltry 1.5 percent, according to figures from a report soon to be released by IDC detailing Year 2000 market share for servers and clients.

The IDC figures on the server side, however, show a different story. Linux servers for the third straight year added market share. For 2000, IDC reported that Linux captured nearly 27 percent of the server market, up from 24 percent in 1999 and 16 percent in 1998. Windows gained 41 percent of the market, up from 38 percent in both 1999 and 1998.

But the big loser may be Unix, which slipped to a 13.9 percent share of the server market, down from 15 percent in 1999 and 19 percent in 1998.

"It appears Linux is succeeding in replacing Unix on the low end, which is more damaging for Sun than us," says Doug Miller, director of competitive strategies for Microsoft.

That observation by Miller, who surveyed LinuxWorld in person last week, is supported by a recent study from Aberdeen Group analyst Bill Claybrook, who concluded Linux would replace Unix in the next 8 years. But the report also said Linux may replace Unix on high-end servers, which sets up a threat to Microsoft and its high-end server aspirations with its Windows 2000 DataCenter.

Claybrook cites Linux efforts by such industry stalwarts as Compaq, Dell, Hewlett-Packard, Hitachi and IBM. "The large system vendors are doing the work to push Linux into the enterprise," he says.

Another area of friction between Microsoft and Linux is in the embedded space, including PDAs, Web phones, set-top boxes and other smart devices.

Linux vendors such as Lineo Inc., with its Embedix Linux distributions for embedded devices, and IBM Corp., with its project to embed Linux on a cryptographic coprocessor, are just some examples of the more than 520 embedded hardware and software Linux projects currently underway.

Microsoft has taken notice and is opening up its Windows CE source code.

"The embedded space is where access to server code is needed. When you build an embedded device, that is crucial," says Microsoft's Miller. But Microsoft is only making its code available for non-commercial purposes.

Another major area of concern for Microsoft is its .Net initiative.

Microsoft plans to fiercely protect its intellectual property rights in the face of open source projects designed to emulate .Net. The most notable is the Mono project led by Ximian that is attempting to port the .Net framework to Linux.

"We welcome the .Net endorsement, but the challenge will be if they can make it happen within a framework where our intellectual property is respected," says Microsoft's Miller.

Experts say Microsoft won't let any .Net Linux projects get past the test stage.

"You won't see an open source project emulating .Net get off the ground because Microsoft will shut it down with patents," says Gary Hein, an analyst with The Burton Group. "They are letting these projects go forward now because they give the idea that there won't be a lock-in to Microsoft later on."

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