Microsoft vs. Linux

We underdogs tend to stick together. We don't use Windows if we can help it. We avoid Internet Explorer like the plague (an apt metaphor). We are a minority in a world dominated by Windows (93% of the installed base worldwide, according to HitsLink Market Share statistics for August 2009) and IE (67%).

Mac users belong to the largest OS minority at 4.9% (5.3% if we include iPhone and iPod touch users, as both run a version of OS X), followed by Linux at 0.94%. Firefox is the most popular non-Microsoft browser at 23%, followed by Safari at 4.1%. Google's up-and-coming Chrome browser has achieved 2.8% market share, and perennial underdog Opera is just over 2.0%.*

So who does Microsoft target in its latest attack? Little Linux, the free operating system beloved by geeks and shipping on a small percentage of netbooks and low-end PCs (see Microsoft Tells US Retailers Linux Is Rubbish).

Microsoft must perceive Linux as its greatest threat. Why else target Linux when Windows has 99 times as many users?

The Linux Strategy

Linus Torvalds started Linux by creating his own Unix-like kernel in 1991. Torvalds eventually released Linux under a GNU license, which allowed for both free and commercial distribution of the open source operating system. Linux has become very popular on servers, but it has only a small presence in personal computing.

The Linux strategy is to make the operating system free, open, and customizable. Programmers are free to modify their installations to best meet their needs.

The problem with the Linux strategy is that it's free, open, and customizable. There are numerous Linux distributions, many of them offering two or three user interface options - GNOME, KDE, or Xfce. All distributions share the Linux name, and as a free, open source operating system, there's little incentive to market Linux.

The Mozilla Strategy

Microsoft killed of the Netscape browser and Netscape itself by first giving away Internet Explorer for free and later incorporating it into the Windows operating system. IE was even available for Macs, although Microsoft stopped development after Apple released Safari. IE has never been available for Linux.

Netscape was reborn as Mozilla - free, open, and customizable browser. It's available on numerous platforms, and it's 24 times as popular as Linux. Why? Because Firefox was able to capitalize on the security flaws of the Windows/Internet Explorer platform - and because Mozilla.org was able to monetize the search box. You can give some things away and make some money at the same time.

The Apple Strategy

From the first Macintosh in 1984 until the release of System 7.1 in August 1992, the Mac OS was free. Your Mac came with whatever version was current at the time, and you could go to your local Apple dealer, buy a box of blank floppies, and copy the System 6 or System 7 disks for your own use. The operating system was a tool for selling the hardware, so Apple didn't need to charge for the OS, and Apple has never locked the Mac OS to a specific piece of hardware or with an authorization code.

Apple has always used free software as an incentive to buy Macs. At first, it was MacWrite and MacPaint that came bundled with the Mac. Later, HyperCard. Still later, Cyberdog, Apple's first Internet suite (browser, email client, news reader, address book, and FTP). For quite a while, Apple bundled ClarisWorks with consumer Macs, an integrated software suite that put Microsoft Works to shame and was included in education Macs everywhere. ClarisWorks was even moderately successful on Windows.

And then there was iTunes, which began life as an app to rip your CDs, manage your music library, synchronize that with your iPod, and burn your own mix CDs. iTunes was originally Mac only and helped sell iPods. As the iPod market mushroomed, iTunes became very popular on Windows as well, and today iTunes works with audio books, videos, iPhones, and Apple TV. And it provides access to an online store where you can buy music, audio books, and videos. It may no longer sell Macs, but it does sell iPods and media.

iMovie shipped with late Classic Mac OS machines, and with Mac OS X, other apps became free: Preview, TextEdit, iCal, iChat, Mail, Address Book, Spotlight, Dashboard, iPhoto, iDVD, and Safari among them. (At this point, Apple has only ported two OS X apps to Windows - iTunes and Safari.) These programs exist to sell Macs.

Gene Steinberg recently noted on Tech Night Owl that a big part of Apple's strategy is keeping the overall cost of ownership down by keeping apps affordable. In addition to the programs that come bundled with new Macs and the Mac OS, Apple sells iLife and iWork at very reasonable prices.

Apple and Microsoft

Apple and Microsoft have always had an interesting relationship. On one hand, they are competitors in the operating system market, where Windows overshadows the Mac OS (according to HitsLink, Windows users outnumber Mac users about 19:1). And in the media player market, where the iPod completely blows away what remains of the Zune line (one model).

Although Microsoft doesn't support the Zune on non-Windows operating systems and long ago discontinued Internet Explorer for the Mac, there is one place where Microsoft specifically targets the Mac audience: Microsoft Office: Mac. The Mac Business Unit essentially has two products, the free Microsoft Messenger instant messaging client and Office for Mac, which is a profit center for Microsoft. The business edition of Office: Mac sells for $380 at Amazon.com, while the home and student edition is a far more affordable $108.

The Microsoft Way

What's interesting is that the software for the two editions is exactly the same. The difference is the end user license: Business users can buy upgrades when a new version of Office ships; those with the home and student edition are not eligible for upgrades. Also, while they're allowed to install Office on up to three Macs, they are not allowed to transfer the program to another user under any circumstance.

Although it sells keyboard, mice, and media players, Microsoft is essentially a software company. It completely dominates the operating system market. It's browser is the world's most popular. It's office suite is probably the most popular in the world as well. Last year, we published an article showing how Microsoft Word and Excel had risen to dominance on both Mac and Windows platforms - in fact, by 1997 Excel had a higher share of the Mac market than the PC market!

Whether Microsoft is selling an OEM license for Windows XP to a netbook maker, the "Ultimate Edition" of Vista to a businessman, or a companywide license for Office, it makes its money selling software. It doesn't care whether you run Office on Windows or Mac, as long as you pay for it.

The Big Difference

And there's the biggest difference between Apple and Microsoft. Microsoft does everything in its power to prevent software piracy, even to the point that its servers sometimes misidentify authorized installations as pirated ones. Microsoft wants to squeeze every penny it can from the market - and that's why that 1% market share for Linux, from which Microsoft makes no profit, galls Microsoft.

Apple going Intel and offering Boot Camp for free is just one more way Microsoft can profit from the Mac market.

Apple sells computers with an operating system and some free apps installed. The bulk of its profits come from hardware sales, not software or digital media. And without some clever hacking, Mac OS X only installs on Apple branded computers, so it doesn't have to worry about authentication schemes. You have a Mac, you have a software license, and there is no obstacle to using them together (hardware requirements permitting).

Microsoft and Linux

Microsoft is scared of Linux because it sees the free operating system as a threat rather than an opportunity. The company reasons that if people are using a free OS and have access to free office suites and other apps, they won't buy commercial software.

Nonsense. Linux is one percent of the market that Microsoft could target with Office: Linux. Just because people choose an alternate OS, as Mac users do, doesn't mean they won't choose the world's most popular office suite, as Mac users also do.

Apple and Linux

While Windows is 99 times as popular as Linux, Mac OS X is only about five times as popular. Put another way, while supporting Linux users might add 1% to Microsoft's bottom line, it could increase Apple's software market by 20%. iTunes for Linux could be a profit center, selling iPods and media, albeit a small profit center.

Just because people choose a free OS doesn't mean they won't pay for apps or media.

Until Apple realizes that, it will ignore Linux. And until Microsoft realizes that, it will see Linux as a threat rather than an opportunity.

* Here at Low End Mac, our August 2009 logs show Safari and Firefox in a dead heat at 37.8% of visitors, and Linux at 2.9%. IE is at 18.3%, and less than 40% of LEM visitors are running Windows.