Is There More Than Meets the Eye in Microsoft's Moblin Stance?

Is Moblin, the open source mobile operating system initially launched by Intel and now overseen by the Linux Foundation, a potential thorn in Microsoft's side? It seems from Microsoft's own stance toward the early stage netbook- and smartphone-focused OS, that it is not. There are also reports that Microsoft may in fact favor Moblin among Linux-based operating systems aimed at computers that Windows might otherwise run on.

Last week, at the Intel Developer Forum conference, Microsoft's Silverlight team demonstrated the Silverlight 3 web application framework running on both Windows 7 and Moblin Atom chip-based devices.  The announcement from the Silverlight team was very ecumenical, describing the Novell-sponsored open source Moonlight "implementation of Silverlight" as aimed at the broad range of Linux platforms, while Silverlight 3 will be especially adept at running on Moblin. What is Microsoft's real stance toward Moblin?

According to this blog post, Microsoft may see Moblin as the type of limited functionality operating system that can move on very inexpensive netbooks, while Microsoft gains entrenchment for Windows 7 on more expensive netbooks that can bring it higher profit margins. Microsoft has stated in its 10-Q filings that revenue shortfalls and staff reductions at the company are directly related to the netbook phenomenon. In this 10-Q filing, the company says:

"The decline in OEM revenue reflects an 11 percentage point decrease in the OEM premium mix to 64%, primarily driven by growth of licenses related to sales of netbook PCs, as well as changes in the geographic and product mixes."

Microsoft hasn't been able to command the kinds of profit margins for Windows on netbooks that it has traditionally commanded. With its Atom chips, Intel has catered directly to netbooks, which have leaner hardware resources than other types of computers, with an eye toward moving a lot of netbooks and a lot of Atom chips. It has also coralled large hardware partners behind Moblin, and the first Moblin netbook comes from PC giant Dell.

Moblin is an early stage OS, though, focused more on targeted mobile tasks than running a full spate of powerful applications, as Windows 7 can. This post argues that Microsoft may be all for an Intel-backed, Linux-based OS that is in fact stripped down and less functional than Windows 7:

"Microsoft can continue to sell more expensive versions of Windows on more expensive computers with a traditional desktop interface without fearing too much the competition from the cheap Moblin powered netbooks: These don't look like Windows computers and are clearly for a different purpose."

That concept is not too far-fetched. Apple won't play at all in the netbook space due to low profit margins available there. Microsoft doesn't want to continue seeing revenue shortfalls from low profit margins it's been getting on netbooks. And, it's a mistake to assume that Microsoft is always ferociously against the success of alternative operating systems to Windows. The company has produced solid versions of its Office and other applications for the Mac OS for years, for example. That has helped it avoid ongoing antitrust trouble.

Could Microsoft have no problem with Moblin carving out space on extremely inexpensive, limited functionality netbooks? If that helps position Windows 7 as the most robust netbook operating system, available in netbooks that cost a bit more, then Microsoft may not see Moblin as such a threat.