Microsofts Tolerating Piracy strategy and open source

Reading the story in Fortune was an eyeopener for me and it started a debate in my mind regarding what open source evagelists have been saying and Microsoft's strategy. (NASDAQ: MSFT)

The open source story has been that there are three kinds of consumers
- People who will never spend on Software (students , startups , etc)
- People who will always spend for Sofware ( As they want indemnification , Software contracts etc). generally Publicly traded companies.
- People inbetween.

Companied like Sun (NASDAQ: SUNW) have taken this to the core and have a go to market strategy that is inline with this concept.

The Fortune article and specifically the comment from Bill Gates

tolerating piracy turned out to be Microsoft's best long-term strategy. That's why Windows is used on an estimated 90% of China's 120 million PCs. "It's easier for our software to compete with Linux when there's piracy than when there's not," Gates says. "Are you kidding? You can get the real thing, and you get the same price." Indeed, in China's back alleys, Linux often costs more than Windows because it requires more disks. And Microsoft's own prices have dropped so low it now sells a $3 package of Windows and Office to students.

was an eyeopener because to me Microsofts strategy is more evolutionary in nature and also protects its interest recognizing the fact that customers will evolve and hence pay later on. Students will move into organizations and startup's will turn into public companies at some point of time. I do not mean to imply that SUN does not recognize the evolutionary nature of customer , but they are giving an option to the customer - not to pay if they think they can maintain SUNW software themselves. While Microsoft will use its Legal muscle later on in the evolution of the customer and force them to pay.