Author: Yogi Schulz

The runaway success of many Microsoft software products has produced envy and anxiety among competitors. Microsoft dominance is causing the creative juices to flow in the boardrooms, garages and basements of its competitor software suppliers.

Increasingly, aspiring competitors are using open source software to attack Microsoft. A growing perception, that open source products like Linux and OpenOffice are cheaper, is causing some customers to reduce their use of Microsoft operating systems and Microsoft Office.

This trend toward open source software provides customers what they love most. Lower prices, improved quality and more choice.


Linux, a highly-regarded open source operating system, is continuing to build market share at the expense of UNIX, Novell and IBM server operating systems but not at the expense of Microsoft. “Microsoft continues to defy the overall market trends, and has again pulled the market upward from both a unit shipment perspective and from a revenue perspective,” says Al Gillen, research director for IDC’s System Software research.

However, the number of organizations installing Linux is continuing to grow, particularly among governments. During 2003, the governments of U.K., Germany, Russia and Brazil all signed agreements to foster the use of Linux within their ministries. Earlier this year, the local government in Munich, Germany, voted to move 14,000 computers from Microsoft’s Windows to the rival Linux operating system.

While cost savings are driving organizations to move to Linux, some impediments will slow migration away from Microsoft. A major impediment is inertia. Many organizations have a Microsoft-dominated infrastructure that works. Another impediment is support. Microsoft has spent years signing up legions of capable support organizations for its server software. Linux support organizations such as HP, IBM, Red Hat and SuSE are just beginning to build up the support organizations that corporate customers demand.

Microsoft has responded to the Linux attack by releasing Windows Server 2003. “Linux continues to be a threat to our server business. The ramifications of free software to our business model should be obvious to everybody,” John Connors, Microsoft’s chief financial officer said earlier in 2003. Through technological innovations and improvements to scalability, reliability and security, Windows Server 2003 is expected to reduce the cost of ownership. Windows Server 2003, through a massive Microsoft investment in testing, is expected to address some of the complaints about poor software quality that have been leveled at previous versions.

“Windows Server 2003 delivers a huge improvement in robustness that should satisfy those who have tended to underestimate Microsoft server products in the past”, says Jeff Balsdon, a Senior Microsoft Architect at Metafore Corp. in Toronto, Ontario.

Office Productivity Suites

Microsoft Office is an excellent, high-function, integrated office productivity suite. However, some organizations believe that the license cost is excessive while the feature list has climbed well beyond what most end-users need.

Some organizations are turning to open source alternatives such as OpenOffice software, which performs many of the same functions, at a fraction of the license cost. A recent convert of this shift to OpenOffice, as reported in The Calgary Herald on December 31, 2003, is the Israeli government.

While reduced cost is driving organizations to consider the move, some impediments will slow migration away from Microsoft. The biggest impediment is that the current environment is stable and meeting end-user needs. Who wants to mess with something that’s working? Another impediment is interoperability. While OpenOffice and StarOffice, from Sun Microsystems, can read Microsoft documents, they don’t write them perfectly. This difficulty leads to minor but irritating problems when exchanging documents with a Microsoft Office end-user.

Not surprisingly, Microsoft has and will continue respond to attacks on Office. It recently broke its global pricing policy when faced by the threat of a Thai government-subsidized program designed to bring cheap PCs to the public. First-time computer users are flocking to the Thai Information Ministry’s offer of a PC loaded with Linux and OpenOffice for only US$250. A million new PC owners will be using Linux within the next few months. In response to this deal, Microsoft reduced its Office license price from nearly US$600 to US$37. If the drastic Microsoft price reduction will sway many first-time buyers in Thailand remains to be seen.


The growing use of open source software for operating systems such as Linux and for office productivity suites such as OpenOffice have created choice for end-users, new opportunities for software suppliers and headaches for Microsoft.


Infuse – interviewMr. Lee Helton, CEO of Infuse Inc., a Calgary-based IT computing infrastructure outsourcing organization, has observed Windows 2003 Server performance and reliability improvements that will be appealing to large organizations.

Metafore – interviewJeff Balsdon – now an Engagement Manager; a Senior Microsoft Architect until recently.
Toronto C. 647-292-4387
Security – locked down out of the box.
Robustness – solid; huge improvement, additional testing has paid off.
Performance – no direct experience
Manageability – group policy tools help administrators; expecting TCO to be lower.
Truly an enterprise-class operating system – Active Directory, Volume Shadow Copy
2003 should satisfy those who have tended to underestimate Microsoft server products

Linux contract treads on Microsoft turfJune 3, 2002, By Stephen Shankland

The German government has signed a deal with IBM and Linux company SuSE that makes it easier for government offices to use the open-source operating system, a move that addresses concerns about relying too heavily on Microsoft products.

Linux adoption to soar in ’04DECEMBER 18, 2003, Opinion by Stacey Quandt, Open Source Development Labs Inc. (OSDL)

Over the next 12 to 18 months, Linux will strengthen its hold in the data center and make significant inroads on Microsoft Corp.’s desktop monopoly. This will be driven by the pending release of the 2.6 Linux kernel, whose Native Posix Thread Library (NPTL) will allow better support for database and application server workloads on x86 and 64-bit platforms.

Desktop adoption will be driven by the maturation of Mozilla, OpenOffice, GNU Object Model Environment (GNOME) and K Desktop Environment, as well as a focus on thin-client computing to reduce IT spending. Vertical market segments such as financial services and high-performance technical computing will find new workloads for Linux in an effort to optimize returns on investment. New Linux adoption will be amplified in the retail, telecommunications, small/midsize business and state and local government sectors.,10801,87603,00.html

Linux adoption: into the mainstreamApril 2003, By Gary Barnett

There is no doubt that Open Source is coming of age. It is no longer just for ‘geeks’ or academic institutions. It now has support from a number of powerful players in the software industry, and is entering the mainstream. Open Source software is already widespread with many open source applications firmly established as ‘standard tools’.

However, the transition of ‘grand open source projects’ like Linux into the mainstream wont be an easy one; the current is faster and the water more turbulent for two reasons. Firstly, many of the mantras of open source, especially those concerning cost and freedom from lock-in are going to be severely tested as this breed of software matures. Secondly, it would be foolish to assume that Microsoft can’t or won’t respond to the growing threat of open source in both its product, and pricing strategy.

Key Messages

  1. Linux will be a ‘non controversial choice’ for enterprises of all sizes within twelve months
  2. Linux will drive profound change in the economics of the software industry, but don’t expect this to lead to a dramatic reduction in the total cost of owning software
  3. The success of Linux will depend as much on the actions of leading proprietary software vendors as on the evangelism of the open source community
  4. Linux represents a much greater mid term threat to the proprietaty Unix vendors than it does to Microsoft

Linux Market Share within Web Server Sector to GrowJanuary 7, 2002, Rawlson King,

According to IDC (, a leading IT research consultancy, Linux market share within the Web server sector stands at approximately a third and will grow to 41 per cent by 2005.

Windows and Linux Defy the Market OddsOctober 8, 2003, By Sharon Gaudin

Microsoft Corp.’s operating system environments will hold their lead position in the market through 2007 despite increased competition from Linux, according to a new study from IDC.

Microsoft’s share of worldwide licenses for its server operating systems grew from 50.5 percent in 2001 to 55.1 percent in 2002, reports Framingham, Mass.-based IDC, one of the major industry analyst firms.

”Microsoft continues to defy the overall market trends, and has again pulled the market upward from both a unit shipment perspective and from a revenue perspective,” says Al Gillen, research director for IDC’s System Software research. ”Linux was the only other bright spot in 2002, with that operating environment posting both revenue and shipment volume gains.”

Readers react to IDC’s Linux market share numbersBy Phil Hochmuth, Network World Linux Newsletter, 10/22/03

IDC’s research showed that Linux trailed Microsoft Windows in server operating system shipments. According to the report, Linux accounted for 22.4% of new server operating system shipments last year, while Microsoft had around 55%. Many readers claimed that this was only a small part of the story.

Linux No Threat to Microsoft Dominance—YetIDC study shows Linux market share has grown at the expense of other operating environments.
10/14/2003, by Stephen Swoyer

During 2002, Microsoft grew its share of the worldwide server operating environment license shipments by nearly five percent, from 50.5 percent in 2001 to 55.1 percent. Linux also grew its server license shipments, accounting for 23.1 percent of the worldwide market.

Vendors shipped 5.7 million new server licenses during 2002, which IDC says were split between Microsoft, Linux, combined Unix—which accounted for only 11.1 percent of the market, less than half that of Linux—and Netware, with 9.9 percent.

Asian first-timers prefer Linux to Windows13/11/2003, By Andrew Orlowski in San Francisco

Microsoft recently broke its global pricing policy for the Thai market, offering steep discounts in the Royal Kingdom for its Windows and Office products. From a report at Linux Insider, we learn why.

First-time computer users are flocking to a government-subsidized program to bring cheap PCs to the public. Although pirate copies of Windows and Office have a street price as low as $4, the information ministry’s scheme of selling PCs loaded with Linux and OpenOffice for $250 is a runaway success. A million new PC owners will be using Linux within the next few months.

“Charging Thai consumers nearly $600 for Windows/Office is the equivalent of charging US consumers $3000,” notes the report. But even at the right-sized price of $37, Thai first-timers are preferring Linux. Which also cites Linux’s superior Right-to-Left support as a reason why the ministry’s computers are popular.

Western European Unix and Linux Server Forecast and Analysis, 2003-2007Apr 2003 Doc #GE03K Study, by European Servers Team, Martin Hingley, Nancy Taylor

Nancy Taylor, senior research analyst, European Enterprise Server Solutions, “Although Linux factory revenue is expected to grow the strongest out of all operating systems in the Western European market by a CAGR of 24.5% by 2007, Unix is still forecast to control the largest share at 41.9%.”

Unix to Linux Market Shift – The Growing GapIn 2002, Unix accounted for a 15% share of the total install base for server operating environments, while Linux accounted for an 11% share. By 2007, Unix share will drop to 7% and Linux share will increase to 25%. Although vendors acknowledge the Unix to Linux migration trend is well underway, no one fully understands the implications this market shift may have on their company.

Microsoft Gives Peek at Financial ForecastJanuary 17, 2003 By Peter Galli

“Linux continues to be a threat to our server business. The ramifications of free software to our business model should be obvious to everybody,” John Connors, Microsoft’s chief financial officer said.,3959,834411,00.asp

Microsoft Windows Server 2003 Released to ManufacturingMarch 28, 2003 – Company Delivers Its Best-Performing, Highest-Quality Windows Server Platform Released to Date

Following up on its commitment to Trustworthy Computing, Microsoft spent nearly $200 million training 13,000 Windows developers on new security-focused development techniques, implementing new engineering processes, and completing a line-by-line security review of Windows Server 2003 — delivering a product that is more secure by design, by default and by deployment.

Windows Server 2003 Prepares for Grand EntranceApril 23, 2003, By Thor Olavsrud

Microsoft revenue continues to climb in Q4 ending June 2003

Microsoft Reports First Quarter EarningsStrong Demand for Consumer and Server Products Drives Revenue
Oct. 23, 2003, Redmond, Wash.

How Linux Could Trump UnixFebruary 26, 2003, By Joe “Zonker” Brockmeier NewsFactor Network

Right now, although Linux is being adopted at a brisk pace — it accounted for US$2 billion in sales for HP alone last year — companies are still investing in Unix as well. “Linix is not going anywhere on the high end,” Yankee Group senior analyst Laura DiDio told NewsFactor, noting that buyers of such systems are conservative and usually seek 99.999 percent uptime, so they are unlikely to switch to a relatively unproven system. However, she said, “at the low end, the Linux stuff does eat away at Sun Solaris or even Windows.”

Israel bars MicrosoftCalgary Herald DECEMBER 31, 2003, Peter Enav in Jerusalem

In an apparent showdown over price, Israel’s government has suspended purchases of Microsoft productivity software and is encouraging the development of an open source alternative.

A spokeswoman for the Finance Ministry, which oversees government purchases, said that government agencies would use existing Microsoft Office products for the time being rather than upgrade to newer versions.

The Israeli government also will encourage the development of lower-priced alternatives to Microsoft software in an effort to help expand computer use by the public.

To that end, the Finance Ministry has cooperated with Sun Microsystems and IBM in designing the Hebrew language version of OpenOffice software, a freely distributed open-source alternative to Microsoft Office.

“The move with Microsoft was a purely economic decision,” said the Finance Ministry spokeswoman, speaking on condition of anonymity. “The Israeli government will not be purchasing new products from Microsoft, but will implement its contract to secure existing systems.”

“On a policy level, the government is committed to expanding computer use. We want open source technology to spread, so more people will be able to afford computers,” she said.

The spokeswoman said the government was unhappy with Microsoft’s refusal to sell individual programs from its standard Office package, which includes an e-mail client, spreadsheet and word-processing applications. Not all departments require the entire suite of programs, she said.

Microsoft representatives in Israel did not immediately return phone calls seeking comment.

The Israeli move comes amid growing public sector interest in open source, or non-proprietary, software led by the Linux operating system.

Some federal agencies in France, China and Germany, as well as the city government of Munich, have opted to use Linux not just on servers but also on individual workstations. Entire national governments, including those in Britain, Brazil, Japan, South Korea, China and Russia, are exploring open source alternatives to Microsoft.

Governments are a huge software market, accounting for about 10 percent of global information technology spending, according to research firm IDC.

Federal, state and local governments in the United States spent $34 billion last year on huge systems to track everything from tax collection to fishing licenses.

The Associated Press,7204,8291264%5e15408%5e%5enbv%5e15306-15322,00.html

2004 – the year Microsoft’s prices bend, buckle or break?31/12/2003, By Andrew Orlowski in San Francisco

Munich breaks with Windows for LinuxMay 28, 2003, By Stephen Shankland, CNET

The local government in Munich, Germany, has voted to move 14,000 computers from Microsoft’s Windows to the rival Linux operating system, despite efforts by the software giant to hang onto the multimillion-dollar contract.

The council of Germany’s third-largest city said Wednesday that it will spend about 30 million euros, or $35 million, on the transition. In addition to switching operating systems, the city plans to move from Microsoft’s Office productivity software to the open-source OpenOffice.

IBM teams with Russian government to promote LinuxOct. 08, 2003

IBM and the Russian Ministry of Communications and Computerization in Moscow have announced they will open Linux Competency Center to promote the adoption of Linux in Russia. The new center will be set up to help customers of every size from industry, academia and government to take full advantage of the reliability, flexibility and total cost of ownership that Linux provides. The Moscow Technical University of Communications (MTUCI) has committed to contributing open source skills and technical solutions to the center.

The Linux Competency Center is designed to provide a hands-on environment to simulate real world scenarios, drive application and solution development, offer support, consulting, education and provide Linux product and solution certification.

U.K. government signs Linux dealApril 4, 2003, By Graham Hayday,

The organization responsible for the U.K. government’s procurement policy has opted for Linux to underpin its new online purchasing system. The Office of Government Commerce (OGC) hopes the system will allow public sector agencies to buy products more quickly, easily and cost-effectively.

The Linux-based system is being operated by only for customers in the department of work and pensions. The technology is used for the purchase of printed forms, stationery and associated items but in the long term is likely to encompass a much wider range of goods and services.

IBM, Brazilian government launch Linux effortLetter of intent signals start of open source project
By Robert McMillan, IDG News Service October 10, 2003

SAN FRANCISCO – Brazil has become the latest country this week to show its support for Linux. Following moves by the U.K. and Russia, the government of Brazil announced Friday that it has signed a letter of intent with IBM pledging to develop initiatives that will promote the use of Linux in the Latin American country.

NHS may ditch Microsoft on costsDecember 7, 2003, Faisal Islam, economics correspondent, The Observer

The National Health Service, Britain’s biggest employer, is considering ditching Microsoft software after a row over mounting licensing costs.

Granger, NHS IT director, has ordered a trial of a Linux-based system from Sun Microsystems as part of a £2.3 billion computer modernisation plan. The plan could see Java Desktop software rolled out across the NHS’s 1 million staff and 800,000 computers to replace Microsoft’s Windows operating system and Office suite of programmes.,6903,1101344,00.html