Robert Scoble writes a letter to Bill Gates suggesting what needs to be done to counter the Linux threat. Some of his suggestions:
Don’t “take away their oxygen” like you did with Netscape.
Learn the motivation for folks developing Lindows and Linux and other open source technologies.
Don’t disparage their technology or their tactics.
Don’t brag about the next version of Windows until it’s out.
Give Linux away for free with every copy of Longhorn.
Start a new company, with Microsoft money and ownership, that will develop open source software.
Put a link on Windows start screen that says “try alternates to Microsoft software.
What Microsoft needs to be is to make its software more affordable. More than the freedom to make modifications, what is driving Linux and other open-source software are the price-points. Most of the world’s new customer simply cannot afford Microsoft 80-85% gross margins.