Microsoft president and CEO Steve Ballmer dropped some serious bombshells this week while keynoting Gartner Group's Symposium/Itxpo, simultaneously disparaging high-end competitor Sun Microsystems while easing into the news that his company will support the Palm OS and may eventually support Linux as well. What Sun, Palm, and Linux all have in common, of course, is that their products compete head-to-head with Microsoft's Windows: Sun Solaris is generally considered the bullet-proof alternative to NT/2000 Server; Palm makes the best-selling handheld OS, which is currently blowing away Microsoft's Windows CE; and Linux presents low-cost competition to Windows on both the desktop and server. And while fact that Microsoft is looking into Linux development might be a surprise to others, readers of WinInfo were first alerted in August that Microsoft had contracted an Israeli company to port its Office applications to Linux. Thanks to Ballmer's comments in a post-keynote Q & A session, the company's public protestations on the subject now seem a bit weak.

First up is Sun Microsystems, however, and Ballmer had a lot to say about the company's CEO, Scott McNealy, who had keynoted the event the day before. McNealy, whose company makes most of its money from high-end hardware sales, had said that "software is a feature \[of hardware\], not an industry," apparently forgetting the wide gulf between hardware maker Sun's financial results and software-maker Microsoft's. "And that, my friend, is why you want to steer clear of Sun. It's software that lets you build scaleable Web sites," Ballmer said of the McNealy comment. "When people benefit from PowerPoint or e-mail, it's software that enables it. EMC, a hardware company, boasted that 75 percent of its engineering is in software. Sun just doesn't get it. That's just a crazy thing to say. Software is the future, not big, honking Sun servers." Actually, McNealy had described his company the day before as the maker of "big freaking webtone servers." Webtone is Sun's marketing term for always-on Internet.

After three unsuccessful generations of Windows CE, Microsoft hasn't publicly abandoned the OS, but Ballmer says that the company will begin supporting Palm OS and other handheld operating systems with software such as Word and Excel, as well as the upcoming .NET services. "No offense to the Pocket PC, but we might need to bring .NET services to Palm and other PDA devices," Ballmer said, admitting that Palm has "more marketing position" than Windows CE. "We're not abandoning Pocket PC, absolutely not," he added. "We're 100 percent committed to it." The Palm OS owns over 70 of the handheld market, while Microsoft's Windows CE-based offerings combine for less than 15 percent.

But the biggest news came with some off-hand remarks about Linux, the open source software solution that is already a credible challenger on the server and is increasingly interesting as a desktop OS. Ballmer called Linux a "phenomenon," and said that the OS was one of his company's strongest competitors. Ballmer admitted that his company was continuously evaluating Linux and would probably port its .NET services to Linux, but that "there are hurdles to putting Microsoft software on Linux." These hurdles include a "messy and confused" intellectual property environment. There's little doubt that Microsoft finds a world of open and free software both messy and confusing: For twenty-five years, the company has made its fortune selling closed, proprietary software. So adapting to this new model is arguably a bigger issue for Microsoft than the move to software-based services. The open hardware model of the PC allowed it to emerge victorious over closed systems like the Macintosh; Linux analysts say that this same condition will eventually allow that OS to triumph over the closed Windows environment. The crucial battlefield of open source software could very well decide Microsoft's role in the future of the industry: Opening up to the Internet, it now seems, might have been only the first step