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Microsoft under threat from Linux - it's official

Redmond nerves jangle in prized client market

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Microsoft has warned investors about new threats to its precious client-side tech ecosystem, by listing Linux vendors Canonical and Red Hat as rivals in its annual Form 10-K filing.

The software giant also acknowledged Apple’s impressive market share grab in the US, where it now commands fourth place for total shipments.

“[The] Client [division] faces strong competition from well-established companies with differing approaches to the PC market. Competing commercial software products, including variants of Unix, are supplied by competitors such as Apple, Canonical, and Red Hat,” wrote Microsoft in the US Securities Exchange Commission filing.

“Apple takes an integrated approach to the PC experience and has made inroads in share, particularly in the US and in the consumer segment.

“The Linux operating system, which is also derived from Unix and is available without payment under a General Public License, has gained some acceptance, especially in emerging markets, as competitive pressures lead OEMs to reduce costs and new, lower-price PC form-factors gain adoption.”

Microsoft also pointed out that hardware partners, including Hewlett-Packard and Intel, were working with “alternative” Linux-based platforms.

It went on to highlight the shifting operating system landscape, where different platforms and new devices could see some consumers flee Microsoft’s comfort zone - the traditional PC market.

“Competitors such as Apple, Google, Mozilla, and Opera Software Company offer software that competes with the Internet Explorer Web browsing capabilities of Windows products,” Redmond told investors, who have doubtless raised similar concerns over the past 12 months.

“User and usage volumes on mobile devices are increasing around the world relative to the PC. OEMs have been working to make the Google Android mobile operating system more compatible with small form-factor PCs or netbooks.”

Indeed, Microsoft has felt the pinch. For the past two quarters the once bullet-proof company has coughed to less-than-pretty revenue drops that have led to job cuts for the first time in the vendor’s history.

Google’s Chrome OS remained notably absent from the list. The big question is will the upcoming Mountain View platform be included a year from now? ®

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