Now the software giant faces a different challenge: fending off open-source alternatives that are good enough for most jobs.
At Microsoft's TechEd customer conference last week, executives spelled out the company's lineup to combat these cut-rate incursions onto its turf.
In particular, the company is focused on improving its alternatives to the so-called LAMP stack, the combination of the Linux operating system, Apache Web server, MySQL database, and scripting languages PHP, Perl or Python.
Microsoft's anti-LAMP strategy is to heap features into its low-end products and to build a comprehensive set of tools--spanning development to management--in the hopes of making Windows Server more attractive.
Because open-source products can, in general, be downloaded for free, Microsoft has to compete against them by drawing attention to the "total cost of ownership." It must make the case that, all things considered, Windows applications are cheaper over the long term.
Open source "is the first competitor we've ever had where our cost of acquisition is higher than their cost of acquisition," said Microsoft CEO Steve Ballmer. "Usually, we're able to come in and say, 'We're cheaper and better'...Here we have to say, 'lower total cost of ownership--and better.'"
The LAMP combination--or ones like it--have been around for many years. But as LAMP becomes more popular, it poses a more comprehensive threat to Microsoft than Linux alone, because the LAMP package includes a development environment and database.
Microsoft executives have long been aware of how developers are using the LAMP stack, but in the past few months the company has shown a more organized response.
In his keynote speech at TechEd, Ballmer cited LAMP as a competitor to Windows and its .Net development software and touted Microsoft's ability to fend off LAMP for "lightweight Web app development."
Stacking up against LAMP
In November, Microsoft will release Visual Studio 2005, which will include a new edition called Visual Web Developer Express designed specifically for relatively small-scale Web development, where LAMP is often used.
At the same time, Microsoft will release two low-end versions of its SQL Server 2005 database, including a free Express edition. The Workgroup Edition of SQL Server, meanwhile, will include business-intelligence software for generating business reports--typically a costly add-on.
To attack Linux and the Apache Web server in its stronghold among Web hosters, Microsoft next year will release an edition of its Internet Information Server (IIS), Web server software that mimics many of
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