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Microsoft's March of the Penguin

Do me a favor: Check your backyard. Are cats and dogs playing a mild-mannered game of tiddlywinks? I only ask because this morning's news has me convinced that the apocalypse is upon us.

Yesterday, at the annual LinuxWorld conference in Boston, Microsoft (Nasdaq: MSFT  ) said it plans to support the Linux open-source operating system (and presumably, its cuddly penguin mascot). Yes, you read that right. And, no, I can't believe it, either. Mr. Softy is, after all, the maker of all things Windows.

For its part, Microsoft says that it will support Linux distributions from Red Hat (Nasdaq: RHAT  ) and Novell (Nasdaq: NOVL  ) in its Virtual Server product, which enables IT managers to configure a group of servers into one big jumble of computing power. Virtual Server had been reserved for managing Windows-driven computers.

It's hard to say what has driven Mr. Softy's change of heart, but recent data from researcher IDC may help. According to a March report, last year Windows surpassed Unix as the top server operating system, accounting for $17.7 billion in 2005 server sales versus $17.5 billion for Unix boxes. Linux came in third at $5.3 billion. Notably, it's the first time that Windows has occupied the top spot since IDC began tracking server market share in 1996.

The much-needed boost may have given Mr. Softy the wherewithal to embrace a rival, particularly given increasing pressure to open the books on its source code. Or this all may be an attempt to keep Linux close enough to strangle when no one's looking. Is that really so crazy?

Here's the problem: Mergers and acquisitions are on the rise. As much as culture clashes can cause issues, merging tech infrastructures is often the biggest pain. Offering compatibility across platforms is the only way to reassure nervous IT managers afraid of betting on the wrong horse. This new Virtual Server may offer a measure of assurance to those who like the tight integration between Windows servers and PCs, but who also have Linux clients to worry about. (Or vice versa.)

Either way, what matters here is that Mr. Softy has found a way to make nice with Linux. That's a burden lifted from IT managers, and it gives them another reason to buy Microsoft's infrastructure software. For investors tired of shake-ups and product delays, the news couldn't have come at a better time.

Further frosty Foolishness:

  • Our Foolish forecaster, Rich Smith, donned the Red Hat recently. Find out what he learned.
  • Maybe Mr. Softy has lost his mojo?
  • Microsoft is good! No, it's bad! You decide.

Microsoft is a Motley Fool Inside Value pick. Interested in the other selections that are helping chief analyst Philip Durell beat the market by more than 4%? Ask us for anall-access pass. You'll get to see the entire portfolio and will receive instructive lessons on valuation and company analysis. Give Inside Value a try; it'sfree for 30 days.

Fool contributorTim Beyershasn't yet experimented with Linux, but he digs penguins. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Foolprofile. The Motley Fool has an ironcladdisclosure policy.

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