Despite embracing Linux and Open Source in its agreement with Novell, Microsoft is still firm on the fact that Open Source is a competitor to Windows. 

This emerged during a briefing that Microsoft CEO Steve Ballmer held with analysts last week, who categorised Open Source as a style of competition.
"We have done very well versus Linux on the desktop and on the server, and I am actually hopeful that we will build share, particularly in Web Servers and high performance clusters, from Linux in the next year," he says.
"But you cannot be confused: Having a competitor out there who at least nominally looks to be close to free is always a challenge; and there always is a set of pressure on us, particularly on pricing – there's a set of pricing pressures that nobody should ignore.
"We are competing with a value equation. We are higher priced, but we bring greater value. But I don't want to eliminate in your minds the notions of risk of pricing that comes from competition from Open Source."
To this end, Ballmer says the deal with Novell announced towards the end of last year is of strategic importance.
"It demonstrated clearly the value of intellectual property even in the Open Source world," he says.
"I would not anticipate that we make a huge additional revenue stream from our Novell deal, but I do think it clearly establishes that Open Source is not free and Open Source will have to respect intellectual property rights of others just as any other competitor will."