Story: Dear Steve: Time for Microsoft Linux? - ZDNet "Here's my suggestion for how Microsoft should deal with Linux: Don't beat 'em, join 'em.
Do a release of MS Linux. Create Office for Linux. Improve Linux support in your development tools. Do such a good job of embracing and extending Linux that the world won't care when you essentially annex it for your own. A more cynical person than myself might add: Then you can kill it. I won't, because I believe Linux deserves to live."
Not a great week for Linux press thus far...
Tangent: check out Microsoft in the Mirror for some first-person accounts of Microsoft's evolution, including one chapter written by someone who worked on Xenix (essentially Microsoft UNIX, which predated NT and OS/2, and was created with the assistance of none other than SCO; see this for one historical perspective on of the MS/SCO relationship). Much of the book is focused on the trials and tribulations of adjusting to retirement at 35 and other personal perspectives, but there are some useful MS historical factoids as well.