Summary: As Microsoft's profits fall by about a third (again) we look at the role GNU/Linux plays

MAKING the same old tired arguments about the impact of GNU/Linux would be unnecessary, but in a nutshell, GNU/Linux turns operating systems into a commodity in devices, servers, desktops, supercomputers, and so on. This is a direct hit on Microsoft's bread and butter, which get devalued. Yesterday we wrote about the figures reported by Microsoft as they came in and David Gerard did so with a wonderful satire where there are elements of truth, such as:

The world’s largest software maker said it had been affected by weakness in the global personal computer and server markets, particularly by having to sell Windows XP for $5 to keep netbooks from going entirely Linux.

According to real reports, none of Microsoft's divisions saw a rise. Red Hat apparently takes the blame in this report from The Street (subscription required) and the following suggests that the impact of GNU/Linux should come first.

Microsoft profit is down 17%, and cited is long term threats that are materializing on it’s doorstep, Ubuntu Linux and Apple and the newly announced Google OS

Ubuntu Linux has been making serious inroads in the netbook market as a desktop of choice for many lower powered machines called netbooks, The Google OS is vaporware for now… but the threat exists.

More along the same lines:

Crashing PC sales send Microsoft profits tumbling

[...]

But there are other challenges abroad which the firm has dealt with rather less effectively – the effects of competition and the changing nature of the IT business to name but two. Its Windows operating system may still reign supreme numerically, but for how much longer? It faces two serious challenges, firstly from the various homemade flavours of Linux-based OS’s out there, and secondly from arch-rival Google, which is developing its own PC operating system to go head-to-head with Windows.

Linux is free to use already, and the Google system is likely to be so, too. So the $64m question is, how much longer will MS be able to go on selling very expensive OS’s and equally expensive applications when its key rivals will offer 80% of the functionality, and cost next to nothing?

Richard Waters, whose coverage tends to be strongly in favour of Microsoft, confessed that:

It is six years since Steve Ballmer issued a wake-up call to Microsoft's developers, warning of the threat posed by the Linux operating system and other open source projects.

Now it comes to haunt them where it hurts the most: the bottom line. Market share and profitability are totally separate things, albeit not independent. It is all about margins.

According to one of our readers, Microsoft is what killed Sun. "No one survives a partnership with Microsoft," he wrote. "We'll see if Oracle can clean house now. ⬆

Also see: Microsoft Q1 2009: The Things Microsoft Does Not Tell About Its Continued Decline