Before I get start, I would like to say that Microsoft’s involvement in the open source sphere is going to be beneficial for the community and the whole software industry. Monopolies are bad for consumers, suppliers, professionals and technological progress. But why is Microsoft, the company that owns 90% of the OS market has to feel like giving away free code? That goes against the principle of price discrimination, which is a common practice by monopolists.

Well, maybe Ballmer doesn’t feel like he owns 90% of OS market share anymore. And I have to agree with him. The emergence of smart phones as a vertical market somehow independent of Windows OS (ex: iPhone, Blackberry), is rushing the industry towards the lightweight-browser-based operating system. And who’s the biggest player in this field? Google, with tons of Internet-based services and a brand new super anticipated Chrome OS. In this regard, the adoption rate of the Chrome OS might be even more spectacular than that of the Firefox browser. Windows and Office being such cash cows for Microsoft, I would bet everything to reorganize the company if I was management.

One thing most analysts would give to Microsoft is its ability to go through as many transformations as needed by a changing environment. I think we have to have respect for the big giant that is able to go from ‘Open Source is Communism’ to ‘We donate money to Open Source’ in only a few short years. I hope this new initiative will bring competition and exciting new stuff to the software industry.

Lets suppose for a moment that Microsoft has real intentions in becoming a player in the open source scene. Does this company have all it take to be a leader in the community?

Microsoft drives most of its revenue from selling two major products: Windows and Office. If these products become open source, but with a price tag, tons of reliable and compatible (two things missing with current alternative solutions) Windows clones and all kinds of Windows emulators will show up on the market. The natural effect of this competition will be to decrease profit margin. This will eventually lead in downsizing of Microsoft’s staff unless it switch its business model into support services. The idea would be to use the core competence of the company (knowledge of Windows platform) to offer support services as the main source of income. Nevertheless, other players will be able to show up and compete with Microsoft on the same level, except that they will not have access to some valuable resources (key people) available to the giant.

Besides key players, there is one part where Microsoft would trail behind its open source rivals: geek culture. Indeed, geek culture is the main factor behind open source movements. Without those geeks willing to sit down behind a PC and code all day long, this discussion wouldn’t have even occurred in the first place. In contrast, Microsoft is well known for its formal corporate culture and hierarchical complexity.

I believe that this factor will be decisive in the battle for the open source environment. Managers at Microsoft are fully aware of this fact, so this move towards open source is more a way of fighting against the biggest threat to Microsoft’s dominance: Google.