Microsoft has finally admitted that it faces a real threat from Linux.

"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... Microsoft also pointed out that hardware partners, including Hewlett-Packard and Intel, were working with 'alternative' Linux-based platforms.," writes The Register's Kelly Fiveash.

"What threatens Microsoft is not an open source company, or a collection of open source companies, but the open source model," writes ZDNet's Dana Blankenhorn. "Microsoft can maintain its share only by offering subsidized software as an alternative to free. But it can't maintain its margins. It's going to have a tough time maintaining profitability."

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