The admission, contained in the second so-called Halloween memo posted to the Web this week by programmer Eric Raymond, is counter to the company's public statements downplaying the significance of Linux, and its suggestions that Fortune 1,000 companies have little interest in open source software (OSS).
The new memo also contains a single sentence suggesting that the company may investigate the use of patents and copyrights to combat Linux. Microsoft representatives were not immediately available to comment further on the statement.
In a preface to the memo, Raymond states that the document had been leaked to him by a former Microsoft employee. A Microsoft representative today said the document appears to be authentic, and said it is the second in "what could be a series" of similar memos posted to the Web.
Yesterday, a Microsoft representative downplayed the significance of the initial memo.
According to the new memo, written by Microsoft engineer Vinod Valloppillil, Linux "represents a best-of-breed Unix, that is trusted in mission critical applications, and--due to its open source code--has a long term credibility which exceeds many other competitive OS's."
In what the memo's author considers the "worst case" scenario for Microsoft, Linux will "provide a mechanism for server OEMs to provide integrated, task-specific products and completely bypass Microsoft revenues in this space."
Another new revelation contained in the new memo is that Microsoft considers Linux to be a threat on both server and client systems. "Long term, my simple experiments do indicate that Linux has a chance at the desktop market..," the memo states. The initial memo only cited the server market as a competitive battleground between Linux and Windows NT, now renamed Windows 2000.
The first memo, posted to the Web over the weekend, showed that Microsoft executives fear that the growing popularity of Linux and other open source software poses a direct threat to the company's revenue stream, and suggests the company could respond by modifying open Internet protocols to become proprietary technologies that tie consumers and developers to Microsoft products.
In the new memo, some of the reasons for the company's fears are more clearly defined. The memo states:
The author of the memo also writes that he believes consumers "love" Linux.