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Browser boosts, open source on Microsoft's list

The software giant is looking increasingly to open source and the Web browser to help it compete. It needs to compete again through product and partner innovation.

Microsoft hasn't had appreciable competition for its two cash cows, its Office productivity suite and its Windows operating system, in more than a decade. Recently, however, Apple's Mac OS X and Linux for Netbooks have given Windows a run for its money on the desktop, and Google, Zoho, and other software-as-a-service providers have mounted a challenge to Office.

But the real competition is in the browser, which increasingly displaces the traditional desktop operating system, and through which businesses and consumers reach their preferred applications. This is perhaps why Microsoft CEO Steve Ballmer highlighted Microsoft's need to improve Internet Explorer to Wall Street analysts on Tuesday, as Mary Jo Foley reports.

Or perhaps it's related to the European Commission veering toward a decision that would force Microsoft to bundle competing browsers like Mozilla's open-source Firefox with Windows.

As Google and others enter the Commission fray to ensure a level playing field for competing browsers, Microsoft will quickly have to figure out winning innovation strategies, and not merely distribution strategies.

All else being equal, if users have real choice in their browser, they're unlikely to choose IE, at this point, unless IE 8 can catch up with Firefox's extensibility and Safari's or Google Chrome's speed. Microsoft clearly needs to compete again through product innovation and partner innovation.

Intriguingly, an emerging strategic priority for Microsoft may do both: open source. Microsoft is now inviting open-source developers to participate with the company in building out Visual Studio 2010, as The Register details, just as Microsoft is seeking open-source add-ons for its customer resource management offering.

No, Microsoft is not magically morphing into an open-source company, but it's increasingly an open source-savvy company. Microsoft increasingly seems to grasp the "open core" strategy that JasperSoft CEO Brian Gentile recently explicated on his blog. It's a way for companies like Microsoft (and IBM, Oracle, and others) to participate in open source without abandoning their investments in their existing license-based business models.

As Microsoft moves into browser-based delivery of more and more applications, I think we'll see even more browser innovation and open-source innovation from the Redmond giant.

Follow me on Twitter at mjasay.