Linux has been cutting into Microsoft's market share for some time now, but up until recently, it was difficult to get Microsoft to admit as much. But in a recent filing to the U.S. Securities and Exchange Commission, Microsoft for the first time named a pair of Linux distributors -- Red Hat and Canonical -- as COMPETITORS to its Windows CLIENT business.

"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 went on to reference netbooks, noting that Linux has gained "some acceptance," noting that "competitive pressures lead OEMs to reduce costs and new, lower-price PC form-factors gain adoption."

Canonical makes the popular Ubuntu Linux distribution, known for its ease of use and often RECOMMENDED to users new to open source OSes.
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Article from Maximum PCThe newer versions and how much easier they are to use compared to a true Linux OS is a big selling point. It doesn't make much sense to get an alternate OS and then SPEND millions on training your employees how to use it. The more "Windows like" they become the more casual users they will gain and that EVENTUALLY spills over into the business industry.