Intel (NASDAQ:INTC) and Microsoft (NASDAQ:MSFT) remain the closest of partners. But a sibling rivalry is brewing. In fact, Intel's growing investments in the open source community reveal five key trends that should worry Microsoft investors over the long haul.
In its latest move, Intel Capital has invested an undisclosed sum in Centric CRM, a small open source application developer.
So, how does Intel's growing open source focus impact Microsoft? Glad you asked.
1. More Windows Server competition: Already, we've seen the Intel-Red Hat alliance make Red Hat Linux a wildly popular operating system for Intel server grids. Red Hat's momentum, I believe, prompted Microsoft to align with Novell.
2. More server application competition: Backed by Intel, Centric CRM will increasingly compete with Microsoft Dynamics CRM, Oracle/Siebel, SalesForce.com, and other CRM software providers.
3. More desktop competition: Intel is one of the loudest promoters of Ubuntu Linux -- the fast-growing open source desktop operating system. In fact, Intel and Dell are among the top sponsors of the upcoming UbuntuLIVE conference in July.
4. More mobile device competition: Intel also is working with Ubuntu on a mobile/embedded version of Linux for Internet devices and smart phones. Preliminary code should ship this fall, with Intel-based mobile devices running Ubuntu arriving in early 2008.
5. Less intimidation by Microsoft: In the 1990s, Microsoft's overwhelming power intimidated PC suppliers and hardware companies. These days, decisions by Dell (NASDAQ:DELL) and Intel to aggressively support open source give smaller hardware companies the confidence they need to break away from Microsoft whenever appropriate.
Of course, I'm only providing one side of the story. Ironically, open source could also help Microsoft. Imagine if Centric CRM, SugarCRM, MySQL and other open source applications ran best on Windows Server rather than Linux. Microsoft's Windows Server team is working overtime to ensure that scenario is plausible.
The bottom line: Microsoft remains the world's largest software company. But Intel's investments prove competition is thriving in the software market.