Emergic: Rajesh Jain's Blog

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Microsoft and Linux

August 31st, 2004 · No Comments

Forbes has a story about Microsoft’s new tune on Linux:

Microsoft has finally met its match against software that is largely downloadable for free. Investors discount it into the stock price. In a private meeting with executives in May, Chief Executive Steve Ballmer griped that Microsoft’s profits have more than doubled in the past six years, but the stock, at $29, is right where it was back then.

“Linux creates a cloud of uncertainty over Microsoft. Every time Red Hat reports earnings, Microsoft seems to take a hit,” says Goldman Sachs software analyst Richard Sherlund.

The reality is a bit less dire. Microsoft’s revenue climbed 14% this year to $36.84 billion. What Linux is doing is taking away greater opportunities. Few companies running Windows are switching to Linux; most of the converts come from Unix systems supplied by Sun, Hewlett-Packard and IBM.

But Linux is doing well in server software and threatens serious inroads into Microsoft’s desktop monopoly. In the next two years Linux server revenue will grow $2.2 billion, while Microsoft’s will grow $2.5 billion, according to research firm Gartner. Linux at some point could be good enough to run home PCs. It has just a 3% market share for desktop software, mostly in schools and overseas (that’s more than Apple’s). Linux vendor Novell is now rolling out Linux for its own employees’ PCs and has 18 customers signed up for trial runs.

Tags: Microsoft

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