When Microsoft Takes Aim, Whole Industries Take Cover
After all these years, pity the companies -- or even whole industry segments -- that find themselves in
(MSFT) field of vision. No sooner does Microsoft paint a bull's-eye on the back of a competitor than an arrow is sticking out of the competitor's back.
The above thought occurred when an obscure Microsoft executive, Bill Veghte, vice president of device and hardware platforms, displayed a menacing slide at the company's recent analyst extravaganza in Redmond, Wash. Veghte was discussing a tech-world niche in which Microsoft has been an aggressive and well-funded also-ran: the market for so-called embedded software that runs devices from cell phones to personal digital assistants. Most devices have their own software, but Microsoft would like its offerings to be as ubiquitous in gadgets as the Windows operating system is in PCs. That's no small opportunity when you consider that "gadgets" include portable PCs, servers, stereo systems and various combinations of all of these.
Which leads to the menacing slide -- or, more accurately, PowerPoint screen. Veghte displayed what is standard fare at a Microsoft analyst meeting but is chilling all the same. "The Competition: Asking the Hard Questions," read Veghte's slide. There were, in order, one technology and two companies that Microsoft sees as standing in its way to embedded-software dominance: Linux, Palm (PALM) and Wind River (WIND).
Linux has been a bugaboo and boon to Microsoft for several years. On the one hand, the open-system movement has threatened Microsoft as techies flocked to the technology, which they hoped would break the monopolist's back. On the other hand, Linux was one way Microsoft could argue that it had legitimate competition. Linux, in other words, simultaneously was a threat and an antitrust suit negotiating point.Some of Veghte's "hard questions" illustrate the uphill battle the Linux movement faces. "Is there a sustainable business model?" he asked. "Free does not equal free," another slide quipped. "Do you want to be in the OS business?" Translation: Microsoft supports its software. Can you say the same for whoever writes your Linux code? The tide has turned against Linux, of course. One former hardware maker that went boom to bust on the Linux hype train is VA Linux Systems (LNUX), which
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV