Microsoft for the first time has named Linux distributors Red Hat and Canonical as competitors to its Windows client business in its annual filing to the U.S. Securities and Exchange Commission.

In its annual Form 10-K report for the fiscal year ended June 30, Microsoft cited Red Hat and Canonical -- the latter of which maintains the Ubuntu Linux distribution -- as competitors to its client business, which includes the desktop version of its Windows OS.

Previously, Microsoft had only noted competition from Red Hat to its Server and Tools business, which includes the Windows Server version of the OS for server hardware, in its 10-K reports.

"Client faces strong competition from well-established companies with differing approaches to the PC market," Microsoft said in the filing. "Competing commercial software products, including variants of Unix, are supplied by competitors such as Apple, Canonical, and Red Hat."

"Microsoft would like the netbook to go away and be replaced by lightweight laptops -- ones with long battery life that cost enough to justify running full Windows on them," he said.

Helm added that Microsoft is trying to discourage the production of inexpensive computers where Windows becomes the most expensive component because it can't make as much money on Windows on these devices, and they could drive down the price of Windows. ()

Read full story.