Connors, Strategist Take on Linux

Competition with Linux was the main theme of separate Feb. 2004 teleconferences by Microsoft Chief Financial Officer John Connors and General Manager for Platform Strategy Martin Taylor. Both men emphasized that Linux competition is not an immediate threat to Microsoft’s current business but it could be a brake on growth in servers and in sales to developing countries. To fight back, Microsoft is expanding its public sector sales force and is creating specialized, low-cost software for markets where Linux has traction.

Threat in Servers, Emerging Markets

Both Connors and Taylor pointed to server software as the top battleground with Linux. Windows Server leads the server OS market and continues to grow, but Linux is slowly closing the gap.

Linux growth, they claim, comes primarily at the expense of Unix OSs running on proprietary hardware, such as Sun Solaris and HP-UX. Customers moving applications from these relatively expensive systems to Intel hardware find Linux attractive because of its similarity to Unix. However, Linux also competes with Windows and Novell Netware in the market for single-purpose infrastructure servers, such as Web servers and e-mail gateways. The threat is that Linux will gradually slow and then stop Windows expansion into these roles.