Fortune.com - Technology - How the Open-Source World Plans to Smack Down Microsoft, and Oracle, and ... "Microsoft thrives, of course, when faced with competition—remember how it rallied to crush Netscape during the Internet boom. (Nor is it without allies: Tiny SCO of Lindon, Utah, has worried Linux users by claiming copyright ownership of some of the underlying code—a claim that's wending its way through federal court in Salt Lake City.) Today at Microsoft hundreds of employees are working on Linux and other threats, and the word "open" crops up a lot. Martin Taylor, a rising star who recently served as CEO Ballmer's chief of staff, is assigned full-time to the open-source challenge. Says Marshall Phelps, an ex-IBMer whom Microsoft hired in June to develop an intellectual-property licensing program: "Microsoft has been pretty closed as a company. Basically now we're open for business." Jason Matusow, who runs a program that allows selected customers special rights to view Microsoft source code, says, "Customers in large numbers are telling us we need greater transparency."
Then there is Bill Gates. Microsoft's chairman and chief software architect is spending most of his time these days on a top-to-bottom reworking of Windows, the company's $11-billion-a-year mainstay. Code-named Longhorn and not due for release before next year, the software aims to make computers more versatile and less expensive to maintain. It also aims to discourage defection to Linux: It will integrate key functions of Office and database software so that users won't be as easily tempted by free programs like OpenOffice and MySQL.
As the popularity of open source surges and prices and profit margins in software crumble, will the industry be ruined? Microsoft's Mundie warns darkly that the erosion of profits will slow innovation. But Torvalds (sounding positively Gatesian) argues that the demand for innovative software is limitless: Programmers will never lack for moneymaking opportunities as infotech weaves itself into all aspects of our lives. That may be closer to the truth. Software companies have always had to innovate to survive—and fear focuses the mind."
Another long open source article in Fortune. Annoyingly requires registration.