Case | HBS Case Collection | October 2006 (Revised February 2010)

Linux vs. Windows

by Ramon Casadesus-Masanell and Jordan Mitchell

Abstract

As of 2006, Microsoft is finding that its dominant position in client and server operating systems is under attack from Linux. While Linux has only 3% of the worldwide installed base of PC operating systems, it had captured 20% of the server market by the end of 2005 and was quickly becoming a formidable alternative for productivity programs with OpenOffice. Linux's "business model" to compete against Microsoft is significantly different than those of traditional for-profit software companies. Linux is open source (all code is made available for redistribution by anyone) and harnesses the collective power of thousands of programmers—both independent and employees of major software firms such as IBM, HP, Intel, Sun, and Dell—which allows it to work out bugs quickly and release new operating systems several times per year. Students are faced with the analysis of competitive interaction between the Windows and Linux business models and value loops and are asked to reason whether a clear winner will emerge.

Keywords: Business Model; For-Profit Firms; Open Source Distribution; Competitive Strategy; Software; Value; Technology Industry;

Citation:

Casadesus-Masanell, Ramon, and Jordan Mitchell. "Linux vs. Windows." Harvard Business School Case 707-465, October 2006. (Revised February 2010.)