Are Microsoft's problems due to open source?

Wall Street punished Microsoft today not for bringing in too little money, but for planning on spending too much. (The image of a diving board is by British artist Lincoln Seligman. The original has been sold.)  

If there is any open source angle to this at all, it's that much of the $2 billion in extra spending is going up against Google, which happens to run on an open source platform. Despite Wall Street's assumptions, Microsoft is still treating itself like a growth stock. And you defy Wall Street at your peril.

There is also some good news for open source. Microsoft is spending this money to wean itself away from its earnings on Windows and Office, the two cash cows most threatened by open source software. In some ways it is succeeding. The XBox is doing very well, the mobile business is doing great, and server software is strong.

What I think is really happening here is that Wall Street is starting to believe the claims of open source advocates, especially in light of Sun's move, and was looking for an excuse to stick it to The Man. And, right now, Bill Gates is The Man.

Whether he remains that depends on how much bang he gets from these latest moves. For the first time, failure to perform on diversification is going to cost, a lot. And if that means a little less FUD from Redmond, and a little more attention to performance, that's good news for everyone.