MS says Linux Threatens Innovation

Redmond, Washington, Feb. 14 (Bloomberg) -- Microsoft Corp.'s Windows operating-system chief, Jim Allchin, says that freely distributed software code such as rival Linux could stifle innovation and that legislators need to understand the threat.

The result will be the demise of both intellectual property rights and the incentive to spend on research and development, he said yesterday, after the company previewed its latest version of Windows. Microsoft has told U.S. lawmakers of its concern while discussing protection of intellectual property rights.

Linux is developed in a so-called open-source environment in which the software code generally isn't owned by any one company. That, as well as programs such as music-sharing software from Napster Inc., means the world's largest software maker has to do a better job of talking to policymakers, he said.

''Open source is an intellectual-property destroyer,'' Allchin said. ''I can't imagine something that could be worse than this for the software business and the intellectual-property business.''

Microsoft distributes some of its programs without charge to customers, although it generally doesn't release its programming code, and it retains the ownership rights to that code. Linux is the most widely known open-source product, though other programs including the popular Apache system for Web server computers also are developed the same way.

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Corel Inquiry

Allchin made his comments several hours before Microsoft confirmed that its $135 million investment in software maker Corel Corp. last October is being reviewed by the U.S. Justice Department. Corel said last month it willl drop efforts to develop the Linux operating system, though it will continue to make Linux applications. Corel said it hadn't consulted with Microsoft before making that decision.

Brian Behlendorf, founder of open-source company CollabNet Inc., said most companies that use the open-source development model do retain the rights to some of their intellectual property.

''I think Microsoft is trying to paint the open-source community as being fascist; that all software have has to be free, or none of it can be,'' said Behlendorf, whose company helps businesses run their own open-source projects.

Allchin said he's concerned that the open-source business model could stifle initiative in the computer industry.

''I'm an American, I believe in the American Way,'' he said. ''I worry if the government encourages open source, and I don't think we've done enough education of policy makers to understand the threat.''

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Linux Adoption

Some leading computer companies including International Business Machines Corp. and Hewlett-Packard Co. are selling Linux- based products and working on open-source projects, noted Jeremy Allison, a VA Linux Systems Inc. software developer. He's also a leader in a project develop an open-source file and printer server program.

Microsoft only began significant lobbying efforts in the last few years. The Redmond, Washington-based company also talks to lawmakers about issues including the need for more visas for people with computer skills and computer privacy and security.

Linux is the fastest-growing operating system program for running server computers, according to research firm IDC. It accounted for 27 percent of unit shipments of server operating systems in 2000. Microsoft's Windows was the most popular on that basis, with 41 percent.

Despite Linux's success in some markets, Allchin says he isn't concerned about sales competition from the product. Microsoft provides support to change and develop products based on its operating system software that Linux companies don't, he said. Companies that use Linux in their products then must pay someone else for support, he said.

''We can build a better product than Linux,'' he said. ''There is always something enamoring about thinking you can get something for free.''

Matthew Temple (Matthew_Temple@research.dfci.harvard.edu)