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Microsoft to offer Linux software?

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SEATTLE, Washington (Reuters) -- In a major strategy shift, Microsoft Corp. will introduce software based on the Linux open source operating system in 2004 for Web services and server software, market researcher META Group predicted on Monday.

Microsoft, which denied that it had any plans to develop software for Linux, is facing a growing threat from the open source software standard as it gains share in the corporate server market used to manage networks and data.

META Group predicted that Linux will be used on nearly half of new servers by 2007, up from its current share of 15 to 20 percent, making it difficult for Microsoft to ignore Linux as a platform for its database, Web hosting and e-mail server applications.

"We believe that, beginning in late 2004, Microsoft (and its partners) will begin moving some of its (to-date) proprietary application enablers (e.g., .Net components) to the Linux environment; this will gradually include the major Microsoft back-office products, such as SQL Server, IIS, and Exchange," META Group said.

Group: Microsoft will lower prices

In a further shift, META Group said that Microsoft will also re-price or separate its Windows server operating system "so that it can be favorably compared against 'free' Linux."

"I'm unaware of any efforts at this time to move any products onto Linux," said Peter Houston, senior director at Microsoft's server group, adding that there were no plans to detach or re-price its Windows server operating system.

"We have made a bet on Windows, and we believe that customers are getting value from the bet we made," said Houston, "and we're going to continue doing what we've been doing for customers."

Linux advocates argue that Linux offers better security, flexibility and innovation because its underlying code, or blueprint, for programs remains open to evaluation and scrutiny.

Microsoft, which has grown into the world's largest software maker by selling proprietary software that cannot be copied or modified freely, said it is not opposed to open-source software, and points out that its source code is available to approved partners and educational institutions on a limited basis.

Microsoft faced a similar situation a decade ago when its nascent server software was competing head-to-head with market leader Sun Microsystems Inc. , but Microsoft did not choose at the time to write software for Sun's proprietary version of Unix.

Linux use grows

Now Linux, essentially a free version of Unix, is eating away at Sun's share of the business server market.

Sun, a hardware and software maker, is now selling computers running Linux, a strategy that was also embraced by International Business Machines Corp.

Redmond, Washington-based Microsoft has toned down its criticism of Linux recently, after an internal strategy document said that some of its arguments against open source software has "backfired."

Instead, Microsoft has stressed that its software is more affordable when considering the total cost of using Linux, including ongoing personnel and administration costs.

Microsoft fights back

A recent Microsoft-sponsored study by researcher IDC concluded that servers based on Microsoft's Windows 2000 were cheaper to own and operate when used for networking, storing and sharing files, printing and security, while Linux servers were cheaper to operate when used for Web hosting.

"The IDC study shows that the upfront cost is a small part of the total cost to the customer," said Microsoft's Houston.

META Group's report also came to the same conclusion, saying that Linux's total costs of ownership were likely to be higher for mainstream server applications.

"IT organizations must evaluate platform costs from a total-cost-of-ownership perspective," META Group's report said.

Copyright 2002 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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