Linux: Inside the heart of a network (Why Microsoft Fears)

A computer, in a very broad sense is made up of two main parts. The hardware – hard disk, RAM, monitor, CPU and etc. And the operating system, software that interfaces between the computer hardware, you (the user) and the software you install for email, word processing and etc.
One of the most expensive parts of a computer is the CPU and there’s really nothing you can do about that. But one of the next most expensive parts of the computer is the operating system.
Linux is an open source operating system managed by Linus Torvalds and continuously updated by a loose network of volunteers.
Open source meaning its code is freely available for use and modification unlike Microsoft Windows which is owned and controlled by Microsoft.
Linux volunteers work at many large tech companies such as HP, IBM and Intel and contribute to the overall development of Linux.

Companies such as Red Hat take the free Linux and bundle manuals and support and resell it. Other ways companies benefit are by the reduced cost of not having to charge for an operating system. HP, Dell and IBM sell millions of dollars worth of powerful servers. Some customers pay for a Windows or Unix operating system. Many other companies, including and eBay save a lot of money by using Linux.
Business Week writes The software is making its way into everything from Motorola (MOT ) cell phones and Mitsubishi robots to eBay (EBAY ) servers and the NASA supercomputers that run space-shuttle simulations. Its growing might is shaking up the technology industry, challenging Microsoft Corp.’s (MSFT ) dominance and offering up a new model for creating software. Indeed, Torvalds’ onetime hobby has become Linux Inc. “People thought this wouldn’t work. There are just too many people and companies to hang together. But now it’s clear it does work,” says Mark Blowers, an analyst at market researcher Butler Group.
Why is Linux such a pain to Microsoft. Well 1) its backed by large companies 2) its relatively free 3) more businesses are using it and its cutting into Microsoft’s server dominance
Business Week writes But Ballmer may have a tough time persuading customers that Windows is cheaper than Linux. It often isn’t. With Windows, end users pay an up-front fee that ranges from several hundred dollars for a PC to several thousand for a server, while there’s no such charge for Linux. The total cost over three years for a small server used by 30 people, including licensing fees, support, and upgrade rights, would be about $3,500 for Windows, compared with $2,400 for a Red Hat subscription, say analysts. The situation where Microsoft can have an edge is when a company already is using Windows. Then, in some cases, it can be cheaper to upgrade to a newer version of Microsoft’s software, rather than replacing it with Linux — once you take into account the retraining expenses. Analyst George Weiss of market researcher Gartner Inc. says that Microsoft may trumpet those individual cases, but “there’s no study that says Windows will be a better total cost of ownership in general.”