Why the Microsoft Beast Pays Its Competitors for Success

Why the Microsoft Beast Pays Its Competitors for Success
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One thing that Microsoft has always seemed to steer clear of in its long and successful history is open source software, whether applications or operating systems, so it seems quite odd to discover that money from Redmond has been propping up SUSE Linux Enterprise Server over the past few years, with Microsoft stores even acting as dealers for Linux servers.

At first glance this betrays a hidden side to the company, but deeper investigation finds that it is still motivated by profit and a desire to restrict competitive growth. Indeed, it could be that although they have a range of new and modern products (particularly new ones that seem to be out-performing traditional markets such as Windows) Microsoft remains the money-making, startup-munching beast of old.

Following the recent acquisition of Skype (subject to regulatory approval) Microsoft has proved that it is still a behemoth invoking the mantra of “don’t invent, buy” despite recent successes for Office, the Xbox 360 and Kinnect causing their profits to skyrocket.

But with such success, why does Microsoft have to destroy any opposition that it finds?

The Microsoft-SUSE Arrangement

When you think of tech giants, successful companies that have rode the crest of the wave kick-started by Intel’s invention of the microprocessor, you always think of Microsoft. Founded by Bill Gates in the 1970s and a major player in the business and home computing booms of the 1980s and 1990s, their founder famously stated that he wanted “a PC in every home."

They easily reached that once-lofty ambition and on the way – with the help of current CEO Steve Ballmer – Microsoft chewed up much of the opposition, spitting out the bits that they didn’t want and retaining control over the vital components that they could use, often valuabe patents. Microsoft Excel is a key example of software that has the famous name all over it, but in fact originated with another company.

You might reasonably point out that Apple is a company that Microsoft hasn’t attempted to destroy, but the fact is that in its current guise Apple isn’t really competition, it’s more of a clone of Microsoft with slightly more desirable hardware and marginally more usable software. And Apple’s in-roads on Microsoft in consumer areas haven’t been matched on the enterprise side.

The real competitors for Microsoft are those companies who have a service that could impact on something that the highly innovative developers at Redmond are planning on unveiling or upgrading. The Skype acquisition is a key example of this, a big name brand that is the first stop for many Internet users looking for voice or webcam chat. However, Skype isn’t the only big name that Microsoft has been throwing cash at to get its own way.

In July 2011 they renewed an agreement with Attachmate, the owner of the SUSE Linux Enterprise Server, a competitor to many of Microsoft’s enterprise-scale operating systems. This is the third deal concerning this technology, harking back to the days when Novell owned SUSE, and it basically allows Microsoft to license sell licenses for the technology via its stores.

Shall I restate that last bit?

Microsoft is paying $100,000 to a competitor to sell licenses to open source services through Microsoft’s own stores!

There is, of course, method in this apparent madness, and it is something that is so jaw-droppingly Microsoft that you might wonder how you hadn’t heard of this happening before.

Basically, Microsoft’s main competitor in the enterprise server sector is Red Hat, a popular Linux server distro, to which SUSE Linux is a poor second-placed rival. By propping up SUSE Linux by the sum of around $500,000 since 2006, Microsoft has been playing a long game, preventing Red Hat from achieving dominance by selling SUSE server licenses from their own stores when customers decide to go for an open source alternative!

It’s both genius and wrong at the same time, and leaves Microsoft as the continuing master of the enterprise server operating system market.

The Enemy of My Enemy is My Friend?

Is it wrong to be shocked at Microsoft’s behavior towards Red Hat, or is this just yet another example of how the company can easily buy itself out of any trouble that might be brewing? Would it be irresponsible to describe SUSE Linux as a puppet of Microsoft?

The fascinating Steve Ballmer has been CEO of Microsoft for several years now. Did Ballmer conceive this strategy himself? He is certainly aware of it; indeed, Microsoft’s CEO is aware of a lot of things in the computing industry, particularly the open source arena.

But it is particularly strange that Ballmer (no stranger to controversy and considered by many to be the leading force in many of Microsoft’s aggressive “buy-outs” in the past) should be willing to fork out so much money and give so much support to an open source, Linux-based server operating system, especially considering the fact that in 2001 he called Linux:

“a cancer that attaches itself in an intellectual property sense to everything it touches.”


I don’t know about you, but that looks like a statement from a man who really doesn’t like Linux.

Plenty of commentators have questioned Ballmer’s tech credentials, and while it is true that the man who current drives Microsoft forward was originally a financial mind rather than an innovator, he certainly knows the industry. Let’s face it, despite the failures of Windows Vista and 7, they’re doing well with Xbox, Kinnect, Office (and Windows Phone looks like an exciting slow burner).

The Same Old Microsoft

The continued presence of Ballmer at Microsoft does ultimately mean one thing, however. They continue to be a monolithic international business supplying games consoles, mobile phones, computer peripherals, operating systems for home and business computing and of course office software, but ultimately they have got where they are today more by purchasing than by innovation.

If Steve Ballmer truly is as intimidating as his biographers suggest, and has such a dislike for Linux as his statement in 2001 indicates, then he is also a very shrewd and canny operator. Of course, Microsoft is bigger than one man, but a company of that size needs a strong character at the helm, someone to guide, direct and shape the beast, someone to press forward with the in-house development and to handle the big purchases when the time comes.

Ultimately, it is the shareholders’ desire for strong profits and dividends that drives Microsoft. Playing the two Linux server distros against each other in this way is just another way of feeding the great Beast of Redmond.


Microsoft profit climbs, Windows revenue dips, https://articles.economictimes.indiatimes.com/2011-07-23/news/29806557_1_microsoft-shares-microsoft-profit-xbox

Ballmer Calls Linux “A Cancer”, https://slashdot.org/story/01/06/01/1658258/Ballmer-Calls-Linux-A-Cancer

Prickett Morgan, Timothy. “Microsoft kicks SUSE another $100m”, https://www.theregister.co.uk/2011/07/25/microsoft_suse_deal_renewed/

Image Credit: Wikimedia Commons/Off2riorob