Linux- Gaining Ground

THREATENED BY THE PENGUIN contd...

In May 2001, Microsoft's Chief Software Strategist, Craig Mundie (Mundie) (in a speech at New York University) attacked Linux, stating that it defied the system of intellectual property rights (IPR). He also said that using Linux license might change a company's IPRs into public property, as it wanted all the changes made to the source code to be made freely available to the public.

In 2002, Microsoft appointed Peter Houston, senior director, server strategy, to conduct a study on Linux and devise a strategy to counter Linux. Houston said that though Linux was free, its maintenance costs were very high as compared to Windows. In December 2002, Microsoft appointed market researcher IDC to evaluate the total cost of ownership (TCO) for Windows 2000 and Linux. The study was conducted on both Windows and Linux in five different computing tasks like sending files to printers and running security applications. IDC reported that Windows was 11-22% cheaper over a period of 5 years to operate than Linux. However, the study also mentioned that Windows was very expensive for hosting web pages.

However, this move of Microsoft was not well received in the industry, and many questioned the credibility of the report as the company itself had commissioned it. This view was vindicated when one of the IDC researchers - Dan Kusnetzky (Kusnetzky) stated that Microsoft had selected scenarios where the use of Linux would be more costly. He also added that Windows was cheaper only because Microsoft had been developing software to manage its o/s for a very long time. Kusnetzky, said, “Microsoft has had a lot more time to work on this. I wonder why the win wasn't bigger.”^[19] However, Microsoft refuted Kusnetzky's views and stated that it had not manipulated the study.

After its unsuccessful attempts to counter Linux, Microsoft announced a major shift in its strategy in late 2002, and adopted an ‘embrace and extend'strategy towards Linux. In late 2002, Microsoft announced that it would open the source code of Windows 2000 to its largest customers on condition that they would not change the code. However, analysts termed this a one-way sharing as customers would see the source code and help Microsoft to debug and improve the o/s but would still be required to pay for the next version.

Reflecting its changed stand on Linux, Microsoft even participated in the LinuxWorld conference in New York in January 2003. It opened a small booth where its employees were seen wearing black t-shirts with the words ‘Let's Talk'printed on them. Microsoft was confident that with the opening up of the Windows source code to some of its customers, it would be able to maintain its advantage over Linux.

However, Linux remained a strong threat to Microsoft in the server market. The server market emerged as the most important segment in the industry as growth in PCs was declining. By 2003, it was reported that around 39% of corporations had shifted to Linux in the server market. According to IDC reports, it was estimated that by 2006 Linux would increase its market share to 25.2% in the server market, threatening Microsoft's leadership.

^[18] Pecked By Penguins, Business Week, March 3, 2003.

^[19] Pecked By Penguins, Business Week, March 3, 2003.

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