Microsoft declares victory over Linux, names Apple and Google main rivals

Microsoft declares victory over Linux, names Apple and Google main rivals

Summary: Normally, reading a company's annual report is an exercise in sheer boredom. But this year Microsoft's lawyers allowed some actual competitive insight to sneak into the 10-K reports it files with the SEC. Linux has been neutralized, and Apple is first on the list of archrivals.


Most of the time, the boilerplate text in annual reports of public companies is the next best thing to Ambien.

But every once in a while, an insight sneaks in. And on even rarer occasions the lawyers allow top management to tell the unvarnished truth. In public. Under penalty of perjury.

That happened recently when Microsoft released its 2011 annual report, filed with the Securities Exchange Commission as form 10-K.

By itself, the document doesn’t immediately raise any eyebrows. But compare the block of text beneath the Competition heading (under Windows and Windows Live) with the same section from last year’s 10-K and it’s downright revealing. Here is the marked-up version, courtesy of the SEC filings page at, with a technological assist from Microsoft Word 2010 (naturally). The strikeout marks indicate text that was in last year's statement but was removed for 2011; the underlined text is new this year:

The big takeaways:

Linux is no longer a desktop threat. A few years back, it looked like Linux might carve out a niche on low-end, low-priced netbooks. But the iPad took care of that hardware category, and this year Microsoft confidently eliminated Linux from the list of competitors to the Windows operating system. That shouldn’t be a surprise. Even a self-professed “Linux guy” like my ZDNet colleague Steven J. Vaughan-Nichols, acknowledges that cold, hard reality. (On the server side, of course, Microsoft continues to acknowledge that Unix and Linux are strong competitors.)

It’s a three-horse race. Last year, Microsoft used Apple and Google as examples of “well-established companies” that make up its main competition. This year, it threw in the word mainly. “The Windows operating system faces competition,” according to Microsoft, “mainly from Apple and Google.” Full stop.

Mobile matters. Desktop doesn't. I've been making that case for a while. Microsoft has now publicly acknowledged that they get it, too. Last year the threat was from "new devices that may reduce consumer demand for PCs." This year those devices are no longer new, and it isn't just consumer demand that's threatened.

The online battle is now inside the browser. As a professional wordsmith, I’m fascinated by the rhetorical shift from last year to this year. In 2010, Microsoft specifically called out the competition to Internet Explorer. This year, it struck all references to the browser itself and focused instead on the services delivered within it. In the list of competitors to Windows Live software and services, Apple (and, implicitly, its upcoming iCloud service) now gets a shout-out, right alongside Google and Yahoo.

Security is in, “innovation” is out. For as long as I can remember, Microsoft has bragged in its public filings of its record of innovation—a word that’s almost as overused in Redmond as revolutionary is in Cupertino. So it’s especially gratifying to finally see Microsoft’s top management literally strike through the tired “delivering innovative software” line. It’s even more interesting to see them confidently add the word security to the list of Windows strengths.

Is Microsoft getting more serious about the hardware business? My eyebrows almost hit the ceiling when I saw the new sentence added to the end of this year’s Competition section:

Our PC hardware products face competition from computer and other hardware manufacturers, many of which are also current or potential partners.

Now, Microsoft is no slouch in the hardware business. Some very nice keyboards and mice come out of Redmond. But it’s never been more than a footnote on the P&Ls, so the increased emphasis on this category seems a bit, well, odd. In the coming fiscal year, is Microsoft planning to expand its presence in the PC hardware market? I wouldn’t mind seeing a Microsoft-branded Windows 8 tablet, and there’s been some not-so-crazy speculation that Windows 8 could ship as early as April 2012—well before next year’s 10-K is due.

One thing I’ve heard through the years from Microsoft employees is that the company does its very best work when its back is against the wall. Linux may be neutralized as a competitive threat, but Apple and Google are formidable, even existential competitors. The next 12 months promise to be very interesting indeed.

So, what do you think? Is Microsoft's assessment accurate? Or have they missed a key part of the competitive picture?

(Hat tip to Wes Miller for pointing out the revised 10-K text, via Twitter.)

Topics: Hardware, Apple, Google, Linux, Microsoft, Open Source, Operating Systems, Software, Windows

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  • I wonder what OS google is using

    Embedded tick
    Phone tick
    HPC tick

    Declining desktop market cross

    To bad Linux;-)
    Richard Flude
    • RE: Microsoft declares victory over Linux, names Apple and Google main rivals

      @Richard Flude While true, it isn't the same old Linux that we heard about for 13 years.
      • It is...

        @Peter Perry : ...and that's the reason Android has been so successful...

        For example, take an hypothetical Atrix 2...

        ...want to add printing...just use CUPS...
        ...want to add access to Windows drives... use SAMBA...
        ...want to add a built in Web Server... Apache...
        ...want to add a proxy... Squid...
        ...want to add a faster dock with a hard drive... just add a combined eSATA/USB port... connect that to the dock as Ethernet rather than USB... add a 1gen Atom ($25 bucks tops) to it and forget HDMI, opt instead for X-Windows and let the dock handle all the display hardware...
        ...last but not least...
        ...want to add Windows 7 support (ouch)... just add x86 VMWare at the dock level, make a SSH connection between both systems and have the phone boot Windows from the hard drive...

        All this sounds convoluted... it isn't, if you have minimal Linux knowledge... if Motorola doesn't do it... any entrepreneur could ensamble the building blocks and create it in no time... with no license fee need... except Android...

        Linux strength is its legacy support... just as iPhone has apps, Linux has drivers... the fact that the driver model hasn't changed since kernel 2.0 makes it have more drivers than Windows Embedded, Vista and 7 combined... it's only topped by XP... but guess that operating system is no longer supported by Microsoft...
      • yes, consumer Linux distro domination just around corner for last 10yrs..

        @Peter Perry.. give me a freak'n break... now, even though the whole desktop paradigm itself seems to be on it's last legs.. these guys are still pointing to how good the Linux version of the old, tired paradigm that's being abandoned even at MS and Apple and is on it way out... can you say dinosaurs? lol..
      • Actually Peter it is ( )

        And Ed I thought the SEC filing was about threats to MS revenue. The desktop monopoly has always been critical to MS profitability. it looks like the end is being driven not by desktop competition but new platforms. And these platform aren't windows!
        Richard Flude
    • To bad what?

      @Richard Flude
    • None of those are desktop products

      @Richard Flude

      This is about the desktop.
      Ed Bott
      • MS can reinvent ...

        @Ed Bott

        ... the desktop around touch in Windows 8, to do new and exciting things we've never seen before. If touch along with services can cause revolutions in mobile computing, it certainly can cause the same in desktop computing. All MS has to do is bring much of the User Experience innovations and technologies found in MS Surface and the Courier to Windows 8. I guess we have to see what is revealed at the MS BUILD conference next month. I however don't see the end of the desktop coming soon. Rather I see its possible rebirth coming in Windows 8.
        P. Douglas
      • RE: Microsoft declares victory over Linux, names Apple and Google main rivals

        @Ed Bott <br><br>Psst. Ed, your heading specified Linux. NOT desktop Linux. Hence Richard Flude's post.<br><br>Ed, you need to understand what "Linux" is before writing about it for the world to see.<br><br>Richard's post is correct and on point. You said <strong>Linux</strong> in your heading.<br>I would advise you to read up on what Linux is before posting on the topic. Or you could ask <a href=";1_101167_1975333" target="_self">"Your Linux Advocate"</a>. It will help your readers a lot in their understanding of what Linux really is. You write about Linux as if you are a Windows expert, and it shows. <br><br>PS. You muddy the water just a little bit too much for my taste. I'm sorry, obfuscation just doesn't work here.
      • RE: Microsoft declares victory over Linux, names Apple and Google main rivals

        @Ed Bott

        And what is the desktop ?

        IBM called the PC dead.
        Alan Smithie
      • RE: Microsoft declares victory over Linux, names Apple and Google main rivals

        @Alan Smithie<br><br><i><strong>"And what is the desktop ?</strong></i><br><br>Ed's definition: <strong>A computer running Microsoft Windows</strong> in a rectangular shape device with a mouse and a keyboard, printer optional.<br><br>PS. It's patented too.
      • Touch...

        @P. Douglas I'm not really trying to feed a tangent, but really... Touchscreens may be useful for playing Angry Birds or flying the Enterprise, but zero of the functions I perform on a desktop PC can be enhanced by touch interaction. Typing without tactile key response is stupid, because you have to stare at your "keyboard." Photoshop work requires pixel-precision that isn't offered by a blunt fingertip. Playing real games is dang-near impossible on a touch-screen; even a top-down strategy title would be tricky without mouse scrolling. No, the notion of trying to magically bridge mobile and desktop interfaces is a nightmarish idea in my opinion.
      • &quot;This is about the desktop.&quot;

        @Ed Bott: Actually, no, Ed; it's about the overall digital market from desktops all the way down to smart phones and MP3 players. You only need to read the statement to see that Microsoft is fighting on a very broad front.

        Microsoft's phones fell to stability and reliability issues to the point where WP7 is having difficulty living down that reputation despite its visible differences.
        Microsoft's tablet drive went ten years without making an impression on the market where Apple's iPad sold more overall units in a mere nine months.
        Worse, sales of Windows PCs have slowed almost to stagnation--very little growth and even a backwards slide with some brands while Apple's Mac growth has consistently been higher and when adding the iPad to the mix has driven Apple to the top of the computer market. Windows is slipping and quite honestly Microsoft hasn't yet been able to stop that slide.

        No, Microsoft needs to seriously reinvent itself and it needs to do so soon. This passage in the SEC filing merely emphasizes that they now recognize the problem and intend to do something about it. We'll just have to see how successful they are.
      • Touch offers a lot of advantages over the GUI desktop


        First, look at <a href=>this video</a> to get an idea of what is possible with large touch screen computers. Large touch screens lead to much more immersive, and intuitive experiences than what is possible with GUIs. This leads to not only the creation of applications that were prohibitively difficult (to create and use) before, but also leads to the significant enhancement of current day apps.

        Regarding the physical keyboard: it is anything but ideal. Software keyboards can be created that have advantages that exceed those of physical keyboards, that they wind up being more accepted more than their older counterparts. You are seeing something similar today in the area of smartphones, where the overall touch experience and soft keyboards of most smart phones, are overshadowing the physical keyboard advantage of Blackberry devices.

        So many things can be done with soft keyboards that are not possible with physical keyboards. Users could e.g. triple tap on the screen with their index fingers, and halves of soft keyboards could appear under their fingers, and they could straight away begin to type - instead of looking down at physical keyboards, to ensure that their fingers are properly positioned. Users could rely on muscle memory and optionally audio feedback, in lieu of tactile feedback. Also, people rely on visual feedback (i.e. they look at the screen) with physical keyboards, to ensure that they are typing correctly. The same will be true with soft keyboards. Soft keyboards additionally can provide a ton of other advantages over physical keyboards, to make the latter seem quaint. This is precisely what word processor software did to physical typewriters. In fact, a number of people will swear to you that several old electronic typewriters were much better and simpler to use than PCs with word processor software. But others may ask these people: can these typewriters erase errors; easily allow for the selection of fonts; do bold, italic, etc. texts dynamically, etc. When those making the queries hear that they can't, they will become non-interested very quickly. Therefore soft keyboards merely have to initially edge out physical keyboards in the advantages and user experience departments, then widen the gap over time in order to succeed.

        So how can soft keyboards edge out physical keyboards? They can be dynamically customizable - including providing easy access to the full set of ANSI, as well of custom fonts. They can come with excellent word and phrase prediction capabilities, making it possible to create notes faster. Soft keyboards could come with basic word processing features (including spell check) allowing users to leverage these features in every text box they go to. Soft keyboards can complemented with virtual trackpads and virtual representations of other physical devices, bringing unprecedented levels of control use cases to users of software - far more than what is possible with the mouse today.

        What the above means for current software, is that e.g. Photoshop could be far more natural, intuitive and engaging to work with, because users could e.g. use a metaphor of dragging with their hands, layers onto and around their work areas. Users could still manipulate arrows with a virtual trackpad, or use a stylus, which would be more natural and intuitive to control. All of the above would ultimately lead to greater productivity on the part of users, and open up possibilities not present in GUI software.

        I therefore believe touch computing brings a significant advantage to the desktop, that goes way beyond the current paradigm, or what is even possible in touch based mobile computing.
        P. Douglas
      • The decline of the desktop

        Sorry, fanboys. 15 years ago, the desktop was the only way to access the internet. Now with smart phones and tablets, people are using their desktops less and less. It's not unusual for people to use tablets and phones for [b]most[/b] of their computing needs.

        Notice I sad "most", not "all". Only Luddite fanbuis in denial believe otherwise.
      • RE: Microsoft declares victory over Linux, names Apple and Google main rivals

        @Ed Bott <br><br>No this article is not about the desktop. Didn't you read your article?<br><br>You mention the word Desktop exactly twice. <br><br>Take away number one: "Linux is no longer a desktop threat." Where you talk about how the netbook (not desktop) threat was neutralized by Ipads (also not Desktop).<br><br>Take away number two: "Mobile matters. Desktop doesnt." Where you attribute the growing irrelevance of Desktops to new devices that may reduce consumer demand for PCs.<br><br>Take away two is about MS, Apple and Google being a three horse race. You can't be talking about the desktop market as Google is not competing with apple and MS in the desktop market.<br><br>Take away four is about browsers and services and has nothing to do with desktops.<br><br>Take away five has to do with Microsoft shifting from their (unwarranted) bragging about innovation to its (unwarranted) bragging about security. Again, nothing to do with desktops.<br><br>take away six has to do with hardware that, again, has nothing to do with desktops. <br><br>So just how is this about the desktop Ed?<br><br>Microsoft's annual report did not mention Linux as a competitor so you wrote an article with a false and misleading title just to stir up a little controversy. Linux is not a company like Google, or Apple or Microsoft but perhaps you should read the very first sentence in the wikipedia article on Chrome OS.<br><br><a href="" target="_blank" rel="nofollow"><a href="" target="_blank" rel="nofollow"></a></a><br><br>This is really one of the worst articles I've read from you in a while, Ed.
      • RE: Microsoft declares victory over Linux, names Apple and Google main rivals

        @Ed Bott Do we think webOS could be a threat on the desktop? Where are we putting tablets? Desktops? (Because I'm sure you're thinking about Windows on a laptop being a "desktop")

        I don't think this battle is over, and Linux (or more properly a "Linux powered" OS) is done quite yet. HP releasing webOS on bigger systems could yet propel Linux onto the "desktop".

        We haven't seen Canonical give up. We've yet to really see what ChromeOS has to offer (at present the devices are foolishly expensive).

        I think the celebration is a little early yet.
      • Important statements that need some real hard research.

        @Ed Bott <br>Hey Ed, we keep hearing from certain corners that the desktop "doesn't matter" anymore. Well, perhaps from a "number of units sold" perspective as compared to mobile devices, but thats not exactly what many of these statements purporting that the desktop doesn't matter seem to be implying. When statements like that are made, it comes across strongly that the reason "desktops don't matter" is because they are not selling due to mobile computing taking over.<br><br>I would submit that if that is what people are implying it can easily be that they are a long way from right.<br><br>I also see the frequent statement that people are doing more of their computing from mobile devices. <br><br>Again, I would suggest that this may be true, but unless one characterizes the comment properly, it may be misleading. And I would go further to say that all this is linked and a more important truth may exist that puts the whole situation into a little better perspective then much of what has been implied, if I am correct.<br><br>Firstly, of course people are doing a lot more computing by way of mobile device, but is that actually taking much away from desktop/laptop computing, of is the majority of it simply "NEW" computing, or additional computing that just wasn't readily available to be done until the mobile smartphone became cheap enough that people could afford them en mass. <br><br>I know from personal experience and from everyone I know with a smartphone that in fact the vast majority of their smartphone computing is new computing and the majority of time it replaces little to no computing they otherwise do by way of desktop or laptop. <br><br>And are slowing PC sales largely the product of mobile computing taking over notable segments of the computing marketplace? I'm saying that I don't see that as likely at all. One of the telltale signs that such a thing would be happening would be if I ever heard a person or two state that they were going to get a mobile device instead of a computer. While I am betting in a world of so many billions, its been said a number of times, I've never meet one, and I know hoards of people with all kinds and types of desktop and laptop computers and mobile devices of every description. There is zero 'common man' talk about peoples mobile devices replacing their home or work computers. Reality tells us that just ain't happinin'.<br><br>What I do hear people saying more and more often is they don't feel the need to purchase a new computer as often, not nearly as often as they used to. Its a long way from the old days where you get yourself a brand new PIII 800 and a little over a year later your neighbor is showing you his new PIV 1.7 he paid 15% less then you did for your 800.<br><br>For large numbers of people, and in particular at the workplace, even the lower to midrange computers can steam along doing exactly whats required for longer then ever before. Massive amounts of cheap RAM has been available for ages, gigantic HD storage for next to nothing...who is going to purchase a new computer just to jump from a 500GB drive to a 1.5TB drive if otherwise the thing is in good operating order.<br><br>And there was a day when people made the decision to get a new desktop or laptop to get the newest OS. And that last big push of that kind was when people were jumping ship from Win98 to XP. As we have seen, to this day there are large numbers of people who don't want to spend the bucks on a new OS if XP is plodding along just fine.<br><br>Sure, I use my iPhone to do all sorts of online computing, computing I simply never did at all before for the most part. But by the same token, mobile devices are useless for large parts of computing I want to do and when I am around a desktop or laptop, the mobile device is almost always second choice for any meaningful computing I want to do.<br><br>So the question is, how much of the slow down in desktop sales really is due to the opening up of the mobile computing market, and how much is just due to people not wanting to spend the bucks on a new machine they don't feel needs replacing?<br><br>I know a number of older people who only purchased their first computer in the last 2-3 years, or they purchased their first "replacement" computer 2-3 years ago and they have no need to replace their current one...until lets say it breaks so bad it cant be fixed. They may go years yet before such a thing happens.<br><br>Whats your knowledge of this issue?
      • RE: Microsoft declares victory over Linux, names Apple and Google main rivals

        @Ed Bott

        Good explanation Cayble. But let us not forget the disposable factor to this argument as well. You have a desktop PC, what's the most dangerous situation you could put it in, a cup of hot tea sitting on the desk might accidentally spill, almost a million to one odds of an accident befalling your PC if it's just sitting there. Your mobile device though, the accidents list is LONG. Dropping it while walking, Dropping it in the pool; the lake; the bathtub; the river; the toilet, it gets run over by a car, you leave it on the subway/bus or at a restaurant or the office. So it's a 10 to 1 that something might happen to that $500 smart phone.
        I'm not forgetting laptops now, they could be fall the dangers of that smart phone. But it's so large pretty much your going to pick it up or keep a grip on it and you won't be using it while walking or driving.

        As far as Linux Powered Operating Systems go, if the community could pull together and produce ONE unified, simplified, Linux Distro they yeah you might see some competition. Of course the list of other things like mobile device compatibility (Mostly iOS) and then drawing more application developers to the platform, possibly through ease of use application delivery like the App Store but with out the profit percentage. I know people may be tired of hearing about stuff like that, but I have to remind you linux is not meeting it's full potential.
      • Soft keyboards are a fad

        @P. Douglas

        I don't think you understand the major drawback of "soft" keyboards and touch screens - they are good for data consumption, but are absolutely atrocious for data creation. I can easily outtype anyone with an 1980's style AT keyboard, even if my competitor were to use a swipe-style enhanced software keyboard. And I only type ~35-40 words a minute!! Imagine holding your hands up to a screen for 10-20-30 minutes on end. Talk about cramps and carpal tunnel. I can easily rest my hands on a keyboard and the desk it's sitting on.

        Then there's those other tangible differences - hey anyone want to pay $150 for a keyboard? Anyone want to wipe down their touch-keyboard a few times a day? Anyone want to peek underneath their fingers to see what letters are displaying on the keyboard just now?

        The predictive features you are talking about are readily available to traditional keyboards. There's all kinds of software in use for disabled people, for example. There's no reason to believe that this technology couldn't be adopted to non-disabled users. So my question to you would be: Why isn't it found all over the market, why don't we have this on everyone's desktop right now? I believe it's because we prefer our own direct control over machine prediction, we prefer to keep $120 in our pockets, and no, we never wipe the cookie crumbs from our keyboards.