The shot will be heard first in HP's desktop division. The recent launch of the HP Mini 1000 Netbook features a usable keyboard and a choice of operating systems.
You can get an Ubuntu geared to the Intel Atom chip, a simplified Linux geared to Netbooks, or one of two Windows versions -- XP or the beta of Windows 7.
The problem for HP is that if a customer chooses Linux its margins are wafer-thin. If a customer chooses Windows its margins are slightly better.
What Microsoft is telling its OEMs is that they can experiment with Linux if they like, but they are going to take a margin hit for it. And that while the OEMs may feel they don't need Microsoft, Microsoft does not necessarily need them either -- anywhere on the product line.
While software is a great cost-cutter, in other words, it is also a great margin-cutter. All companies which make their living on big margins are under pressure, thanks to open source. Brand names require margins to maintain.