Microsoft admits Open Source software could impact their business.

Microsoft is warning that the success of the open-source movement could hurt its sales, potentially forcing the software giant to cut prices and sacrifice both revenue and profits.

“To the extent the open-source model gains increasing market acceptance, sales of the company’s products may decline, the company may have to reduce the prices it charges for its products, and revenues and operating margins may consequently decline,” Microsoft said in a filing last week with the Securities and Exchange Commission.

Well, duh. That’s not necessarily a bad thing in my mind either. Force some competition? Force lower prices? Works for me. Say, wasn’t the “give it away for free to gain market share” approach something Microsoft did themselves with Internet Explorer?

The truth is MS could stand to lower some of their prices and might find that it instills even greater sales. Honestly the best thing they could do to solidify their stranglehold on the PC OS market would be to give Windows XP away for free, at least the home edition, and then charge for support. If they’re smart MS will adopt some of the ideas that Open Source uses to maintain their market share and lower prices wouldn’t necessarily be a bad thing.

Saw this over at CNET.com—Microsoft: Open source could harm us.

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