In many ways, Microsoft has little to worry about, at least not for now. Sure, they are losing market share steadily, but for their lead to be toppled it would take years and years, or would it?

Microsoft’s agreements with major OEMs (original equipment manufacturers) such as Dell and HP are highly confidential (which is a warning sign in itself), but by most accounts, the agreements give Microsoft a lot of power over these OEMs. This is part of what gives Microsoft so much power. As long as OEMs continue to sell Windows exclusively, which Microsoft essentially ensures with their agreements, they have a large part of the market all to themselves. These strangle-hold agreements may also be a weakness, though.

From the information we have, it appears that Microsoft controls OEMs not by making them love Microsoft, but by threatening them with increased licensing costs, something that could quickly kill any OEM. What this means is that most OEMs probably wish Microsoft has less of a monopoly. In fact, both Dell, by selling Ubuntu on some notebooks, and HP, with their rumored custom version of Linux, have indicated this.

It appears that Dell, HP, and others probably have two options: restrict their Linux stuff to remote areas of their businesses, or declare a revolution by offering Linux on all their computers. I suspect that any single OEM that tried this would get killed, but if several major OEMs did it together?

Let’s look at the pros and cons from the perspective of OEMs:

• PRO: Good chance of toppling Microsoft’s power, freeing them of restrictive licensing deals.
• PRO: Reduce costs by cutting out Windows licensing fees all together.
• CON: Potential technical problems and initial negative customer response.
• CON: Some possibility of getting absolutely crushed. In this case, the company in question could probably recover, but not without losses.

While we do not know exactly how bad the license with Microsoft is, it seems unlikey that any major company would take the risks involved. If I were Microsoft, I would, however, be somewhat concerned. If OEMs did “revolt,” Microsoft would be in deep trouble. Arguably, despite the low probability, this is Microsoft’s most immediate threat. Could it ever happen? Would it work?