Steve Ballmer, quoted in an article in OS News a few days ago, now speaks of Linux as a bigger threat to Microsoft in the PC market than Apple. How does that sound to you? Apple is obviously a big threat to Microsoft (see Apple Market Share: The Sound of Breaking Windows) and if, as Steve Ballmer maintains, Linux is a bigger threat than Apple, then Microsoft is in trouble. Indeed it looks like it is caught in a pincer movement between Linux on the low ground and Apple on the high ground. The fact is that the Linux share of the PC market (if you include laptops and netbooks) is rising fast and, according to Ballmer, it has overtaken Apple in terms of market share by unit.

It just didn’t use to be that way. Microsoft has been playing Whack-A-Mole with Linux for a long time now, with greater success than most commentators, myself included, ever imagined possible. Here’s a list of anti-Linux tactics that, taken together, have been remarkably effective.

1. Pressuring the OEMs. For Linux to gain traction some vendor would need to to offer more than minimal support for it. Microsoft is never going to look favorably on any major vendor that does that and no major PC vendor is likely to deliberately irritate Microsoft. The commercial consequences can be very damaging. It’s a strategy that was eloquently articulated by Chuck Colson when he said’ If you have them by the balls, their hearts and minds will follow.”
2. Marketing Muscle. Microsoft has huge marketing muscle and a well organized PR operation. Linux has almost no marketing muscle beyond the band of enthusiastic activists that prowl the Internet and chat forums. Linux gets a fair amount of coverage, but it just doesn’t match the co-ordinated marketing campaign that Microsoft runs all the time against Linux. Microsoft has ample funds to pay for surveys, special features in magazines, adverts and so on. In 2001/2002 it ran a “just the facts” campaign aimed at discrediting Linux and took it all over the world. Linux simply had no way to respond to that. In marketing, Microsoft completely dominates all channels except the Internet.
3. The Microsoft Ambassador. Every now and then some government in Latin America or the Far East will announce its intention to make heavy use of Linux and then an ambassador from Microsoft, maybe even Bill Gates himself, will turn up and offer some investment or other in local education based on Microsoft technology and the Linux Penguin will get smacked down. A similar thing happened with Nicholas Negroponte’s OLPC initiative. It was too dangerous for Microsoft to allow millions of children across the world to get Linux PCs, and Intel was also unimpressed with the idea, given that the OLPC had no Intel chip, so together they moved in, creating a competitive device and inveigling their way onto the OLPC project. The Linux Penguin was stifled yet again.
4. The Special Anti-Linux Fund. As was made clear by a leaked Microsoft email in 2002, Microsoft engages in steep discounting whenever it goes head to head with Linux on the desktop in a corporate tender. The tactic is to maintain normal pricing policy, but to keep a special fund on one side to fund deals where Microsoft needs to discount heavily. The goal is never to lose to Linux in such tenders. The downside to this is that it inevitably causes some organizations to use competitive tenders that include Linux just to get special discounts. The reality, though, is that not many organizations have done that.
5. FUD (Fear, Uncertainty and Doubt). Microsoft has made no secret of the fact that it hold patents that it believes Linux violates. It doesn’t matter whether any of those patents are legally enforceable, the possibility is enough to spread FUD. The SCO legal cases caused many companies to be a little more reticent in adopting Linux than they might otherwise have been, simply because of the fact that SCO did indeed sue Linux users (although not with success) and there is just the outside possibility that Microsoft might do the same thing at some point. Nobody likes being sued. Even if you win it will probably cost you.
6. Software and Device Compatibility. There is a vast commercial ecosystem that surrounds the Windows PC which pretty much ensures that most devices will work well with Windows, because they have to. Otherwise they don’t sell. The numbers of Linux machines isn’t sufficient for the same vendors to care much whether a device works on a Linux-based PC. Consequently, with some devices, drivers for Linux are either late, come from third parties (open source developers) or are  non-existent. (It’s rare that they are non-existent, but it happens.)
7. The Windows Commercial Ecosystem. PC margins have been getting thinner and thinner. But until recently the cost of the Windows license (to the PC manufacturer) could be deftly hidden in some way. For example 3rd party software vendors will happily pay a small fee to have their demo software ready loaded on the PC you buy. Quite recently, it was estimated that, at the low end of the market, the profit margin of consumer PCs could be attributed entirely to revenue from “preloaded demo software.” There is no market for preloaded demo software on Linux, because the spirit of Linux is entwined with the idea of “free software”. The products aren’t there and if they were the software vendors would not want to compete with free Open Source products. For that reason, at the low end, the price of a cheap desktop Linux PC is pretty much the same as the price of a Windows PC. There’s no clear price advantage.
8. Corporate Drag Along. The monopoly that Microsoft holds in the business world and in government PC usage has helped it immensely in the commercial market, especially in markets where software theft is rampant. The average consumer is not easily persuaded to use unfamiliar products, irrespective of their quality. So the tendency will be to use illegal copies of Microsoft products at home rather than test the Linux-plus-Open-Source alternatives if they can get hold of them.
9. Dominating the Stolen Software Market. Microsoft dominates the stolen software market with great success. More than 20% of Windows usage is unlicensed copies, giving “stolen Windows” a greater share of the PC market than Apple’s OS X and Linux put together. Microsoft needs to maintain that position of leadership. In time some of the illegal users will become legal users and Microsoft will eventually get revenues from them. And while there is a thriving market in stolen software, users will not be inclined to use Open Source alternatives. The trick is for Microsoft to balance the level of software theft with the effort to stop it. No doubt Microsoft could stop it completely – after all it has excellent DRM technology that could be rigorously applied – but that would just encourage Linux and other Open Source products. Far better to have a free version of Microsoft’s products available that can compete with free Open Source products.
10. 24 Hour Linux. Open Source enthusiasts sometimes point out that the sales of Windows are over-counted, because quite a few people who cannot find a PC with Linux loaded will buy one with Windows loaded and then put Linux onto that machine. While this may be true, there’s an opposite effect in countries where software theft is rampant, called “24 Hour Linux.” Where a Linux PC is bought and then a pirate copy of Windows is loaded. In such markets, Microsoft holds its “software theft telescope” to a blind eye.

However, the market is in flux and it looks like Microsoft will no longer be able to hold back the tide. I’ll explain how the game has changed in a blog posting next week.