Microsoft Opens Up

Is Microsoft (NASDAQ:MSFT) opening up? The tech giant said today that it plans to reveal the source code for its Office 2003 product (a suite that includes such well-known applications as Outlook, Excel, and Word) to government clients. As dramatic as the headlines sound, this move may not be quite as surprising as it seems.

Microsoft has historically held its code very close to the vest (with the exception of a snag a few months ago when a portion of its source code leaked into the Internet wilds). Microsoft's insistence on secrecy clashed with the ideals of the open-source movement where code is open for all to see and fiddle with, and which, according to proponents, increases security while providing a more affordable alternative to Microsoft products.

Microsoft had already agreed to give government clients access to some of its code when the company launched its Government Security Program in early 2003, taking a bit of the impact out of today's news. However, the move still highlights the company's need to convince important government clients that its products are secure.

Although there are indications that the open-source movement has become a thorn in mighty Microsoft's side, other variables are at work that could pose some trouble. For one, frustrations with frequent security problems have made switching to an alternative, such as Linux or Apple (NASDAQ:AAPL), more compelling for some. Plus, it's not hard to imagine that Apple's popular iPod might increase the appeal of Macintosh computers for the young -- or young at heart.

There are also increasing signs that Microsoft indeed recognizes that it might want to change the way it does business. The company recently announced that it would provide a stripped-down version of Windows XP for sale in Thailand. In some emerging markets, particularly in Asia, Linux has been become a compelling choice for both financial and security reasons.

Today's news still drums up some questions. Will the move snub out defections to open-source alternatives to Microsoft Office? Will the government programmers who view Microsoft's code help bulk up security? Will charges of theft run rampant now that more eyes will be on more code?

One thing's for sure: Microsoft knows that it faces some degree of threat to the ubiquity of its software, and it's making changes to maintain its dominance.

Discuss these and other issues facing Mr. Softy on our Microsoft discussion board. Or talk to our Linux users.

Alyce Lomax does not own shares of any of the companies mentioned.