There's more to Microsoft's recent attacks on the open-source movement than mere rhetoric: Linux's popularity could hinder the software giant in its quest to gain control of a server market that's crucial to its long-term goals. Recent public statements by Microsoft executives have cast Linux and the open-source philosophy that underlies it as, at the minimum, bad for competition, and, at worst, a "cancer" to everything it touches. Behind the war of words, analysts say, is evidence that Microsoft is increasingly concerned about Linux and its growing popularity. The Unix-like operating system "has clearly emerged as the spoiler that will prevent Microsoft from achieving a dominant position" in the worldwide server operating-system market, IDC analyst Al Gillen concludes in a forthcoming report. While Microsoft's overall operating-system market leadership is by no means in jeopardy, Linux's continued gains make it harder for Microsoft to further its core plan for the future, Microsoft.Net . The plan is a software-as-a-service initiative similar to plans from competitors including Hewlett-Packard, IBM and Sun Microsystems. One of the cornerstones of .Net is HailStorm, which is built around the company's Passport authentication service. Microsoft.Net and HailStorm make use of XML (Extensible Markup Language) to pass information between computers based on Windows and computers using other operating systems. However, many .Net components -- such as Passport and server-based software including the company's SQL Server database software and BizTalk e-commerce server -- run only on Windows. "The infrastructure to operate XML Web services relies on the Windows operating system and the .Net Enterprise Servers," Microsoft's marketing literature states. Microsoft needs to control the server operating-system market if HailStorm and all the .Net services and subscriptions associated with it are to succeed, analysts say. "HailStorm itself by definition needs Microsoft-provided or -partnered services, which means Microsoft's or its partners' servers," said Gartner analyst David Smith. "In that sense, Linux is a threat to .Net." Microsoft is expected to spend hundreds of millions of dollars marketing and developing .Net. Virtually every product from the company ties in to the plan at some point. While Linux hasn't displaced Windows, it has made serious inroads. Linux accounted for 27 percent of new worldwide operating-system licenses in 2000, and Microsoft captured 41 percent of new licences, according to IDC. Overall, Gartner estimates Linux runs on nearly 9 percent of US servers shipped in the third quarter of 2000, with worldwide projected Linux server sales of nearly $2.5bn (£1.8bn) in 2001 and about $9bn (£6.4bn) in 2005. But Linux continues to gain credibility, particularly because of the massive support provided by IBM, which has pledged to spend $1bn (£700m) on Linux development. In attacking Linux and open source, Microsoft finds itself competing "not against another company, but against a grassroots movement," said Paul Dain, director of application development at Wirestone, a technology services company. "My guess is that they are now under pressure to defend themselves against the criticism from the open-source and free-software communities -- whether it's justified or not -- as well as companies like IBM that are aggressively marketing Linux," Dain said. "In order to combat that, they have to use strong language to get their point across." Increasing Linux use makes it more difficult to spread the .Net message. That, in turn, has led to a string of comments from Microsoft executives publicly denouncing Linux and open source. "Linux is a cancer that attaches itself in an intellectual property sense to everything it touches," Chief Executive Steve Ballmer said in an interview with the Chicago Sun-Times. Despite Microsoft's criticism, the company still uses open-source code in some products. Servers for the company's Hotmail e-mail service use FreeBSD for some DNS (domain name server) functions. "This is a legacy issue that came from Hotmail when we originally got it," said Microsoft spokesman Rick Miller. "We haven't gone out, purchased and put into place FreeBSD. It came when we purchased other companies. We didn't build any of our infrastructure on FreeBSD. We build it on Windows." In the mid 1980s, Microsoft licensed its TCP/IP (transmission control protocol/Internet protocol) networking stack from another company that used open-source code. "You could say it had its genesis in FreeBSD, but it's now absolutely Windows," Miller said. The code first appeared in Windows NT and also was used in Windows 2000. Microsoft has also criticised the General Public License (GPL) that governs the heart of Linux. Under this license, changes to the Linux core, or kernel, must also be governed by the GPL. The license means that if a company changes the kernel, it must publish the changes and can't keep them proprietary if it plans to distribute the code externally. Other open-source projects, such as FreeBSD, allow changes that are kept proprietary. That provision was one reason FreeBSD proved appealing to Wind River Systems, the dominant seller of operating systems for non-PC "embedded" computing devices such as network routers. Microsoft's open-source attacks come at a time when the company has been putting the pricing squeeze on customers. In early May, Microsoft revamped software licensing, raising upgrades between 33 percent and 107 percent, according to Gartner. A large percentage of Microsoft business customers could in fact be compelled to upgrade to Office XP before 1 October or pay a heftier purchase price later on. The action "will encourage -- 'force' may be a more accurate term -- customers to upgrade much sooner than they had otherwise planned," Gillen noted in the IDC report. "Once the honeymoon period runs out in October 2001, the only way to 'upgrade' from a product that is not considered to be current technology is to buy a brand-new full licence.'" This could make open-source Linux's GPL more attractive to some customers feeling trapped by the price hike, Gillen said. "Offering this form of 'upgrade protection' may motivate some users to seriously consider alternatives to Microsoft technology." Ray Bailey, information services manager at The Bergquist Company, said a recent meeting with Microsoft changed the technology direction of his company, which manufactures electronic components and other goods. "Our IS team agreed that, due to Microsoft's changing of the licensing rules and the manner in which they have given us less-than-adequate time to process those changes, we are seriously looking at other platforms," he said. "Linux is a strong contender for our next server because of the low-cost nature of the licensing." Internally, Microsoft seems somewhat torn on how to approach the open-source movement. While the company denounces the move toward free software, it does recognize at least some of the value of open-source development. "Microsoft views open source as a competitor, but it's hard to treat it as a competitor," Gartner's Smith said. "So they have to attack basic tenets, mentality, way of life and thought processes." Since last year, Microsoft has made available to hundreds of its larger customers copies of its closely guarded Windows source code. The company hopes its best customers can help it improve Windows. Microsoft has been touting plans to broaden Windows source-code access to business partners in an initiative it calls its "shared-source philosophy." In particular, Microsoft wants to emulate the spirit of cooperation that has spawned groups of volunteer Linux programmers. "Having a sense of community is a good thing. It's one thing we've watched with interest," Craig Mundie, senior vice president of advanced strategies at Microsoft, said in a recent interview. "The more of that we can foster in our community, the better." Microsoft hopes to imbue its programmer network with some of this community spirit, Mundie said. "The Microsoft Developer Network hasn't been one where there was a lot of dialogue between (developers) and with Microsoft developers." Though Microsoft will be expanding how it engages directly with those who see its source code, the company isn't going to extend the right granted to many members of the open-source community -- the power to change the software. People may submit bug fixes, but "customers aren't trying to buy the rights to produce derivatives," Mundie said. "In general, we're going to control that reintegration. We worry a lot about uniformity and avoiding fragmentation." But how far Microsoft is willing to go with open source appears limited, said Smith, who noted that while attacking Linux, the company promises to support the Unix variant through .Net. It's "a nice PR story for Microsoft to talk about the possibilities about .Net on Linux," he said. "It is true that Linux can participate in those .Net services, but don't expect Microsoft to provide any incentive or anything else that would make that possible." Dain said Microsoft's attacks on Linux and open source may in the long run benefit technology buyers. "Personally, I think the talk on both sides -- Microsoft vs. open source -- will end up benefiting consumers in the workplace and at home. There definitely is competition in the marketplace, and this battle simply proves the point." And while Microsoft may have the advantage in the consumer market with Windows, it's still the underdog in the large-scale business server market. "To many people, including myself, implementing a Microsoft solution is a much more cost-effective way to go than a Sun or other high-end Unix/mainframe solution," Dain said. Find out how the open-source movement is revolutionising the high-tech world at ZDNet UK's Linux Lounge. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the Linux lounge forum Let the editors know what you think in the Mailroom. And read other letters.