Microsoft Hit by Open Source and Lawmakers

Part of Microsoft's nervousness is Apple's growing share in the U.S. market, but Linux is also taking a bite. Their Form 10-K submission to the U.S. Securities and Exchange Commission quotes their concern: "The Linux operating system [...] is available without payment under a General Public License, [and] has gained some acceptance, especially in emerging markets, as competitive pressures lead OEMs to reduce costs and new, lower-price PC form-factors gain adoption." They call out Red Hat and Canonical as competition in a number of categories and mention that even smaller open source enterprises and community projects have endangered their "money for software licenses" model. Add to that other threatening activity: "Partners such as Hewlett-Packard and Intel have been actively working with alternative Linux-based operating systems."

The Redmond giant also sees itself in a defensive stance with mobile devices in that consumers are migrating to them from conventional PCs. The market share of Internet Explorer is being continuously eroded by browsers from Apple, Mozilla and Opera, but especially Google: "OEMs have been working to make the Google Android mobile operating system more compatible with small form-factor PCs or netbooks."

Microsoft's declaration of principles on intellectual property issues vis a vis open source also came into play. One statement didn't leave much to the imagination in light of recent patent issues. Quote: "Certain 'open source' software business models challenge our license-based software model. [...] These firms do not bear the full costs of research and development for the software. Some of these firms may build upon Microsoft ideas that we provide to them free or at low royalties in connection with our interoperability initiatives."

Microsoft also attributes the first ever breach in their sales history to software piracy, the European Commission, U.S. anti-trust laws and lawmakers in general.

One statement should give software patent activists such as the Free Software Foundation pause: "Similarly, the absence of harmonized patent laws makes it more difficult to ensure consistent respect for patent rights." The FSFE has been warning at regular intervals that software patents could start making their way into Europe in the guise of "harmonization."