The Case of Linux : Global Challenger to Microsoft ’ s Hegemony ?

Microsoft’s global dominance in its markets is so pervasive that competitors are forced into niche markets. Downstream suppliers and customers, so it is popularly argued, have little choice but to keep building on the Microsoft platform. This is because the benefits of moving to alternative platforms must be weighed against exit costs. In other words, such a move would disrupt existing partner bonds, resource ties and activity links. There is a global ‘challenger’ to Microsoft, one that may yet prove to be a threat to Microsoft’s hegemony. That challenger is Linux. This paper offers a case vignette on Linux that demonstrates its unique application of ‘free’ software. Also, inter-firm relationships can amplify economies of scale and Linux achieves this in a unique way by treating its customers as suppliers. The idea of supply chain is then discussed as well as various kinds of network organisation. The conclusion is reached that Linux and Microsoft have different organisational capabilities and potentialities in the new economy. Also, in this dynamic, global learning environment there are grounds for anticipating unconventional challenges to Microsoft’s hegemony. Introduction Microsoft’s global dominance in its markets is so pervasive that competitors are forced into niche markets. ‘Downstream’ suppliers and customers, it is argued in the IT media, have little choice but to keep building on the Microsoft platform, and what choices that do exist must be weighed against exit costs, in other words, the unamortised cost of their investment is the status quo. This paper will argue that there is a global challenger to Microsoft, one that may yet prove a real threat to Microsoft’s hegemony. That challenger is Linux. The structure of this paper is as follows. First, a case vignette on Linux is provided, demonstrating its unique application of open source software (OSS). Second, it is argued that inter-firm relationships can amplify economies of scale and that Linux achieves this in a unique way by treating its customers as suppliers. Third, the idea of supply chain management is discussed in relation to various kinds of network organisation. Here it is clear that Linux and Microsoft have quite different organisational capabilities. Finally, some conclusions are offered whereby Linux is seen as a knowledge-based network organisation, and a global high tech challenger in the making. The method of inquiry is both exploratory and theoretical. Secondary source information about the activities of Linux was obtained by web-search and through the reading of recent newspapers and trade magazines. Theoretical perspectives that shine light on the global business context and the workings of Linux’s and Microsoft’s strategies and structures were obtained by reference to academic journals.