It sounds like people are getting serious about Linux on the desktop, but this announcement shows just how big it is starting to get:
[Sun CEO Scott] McNealy announced today that the Chinese government has pledged to deploy a million computers in the next year using Sun’s Linux desktop software. The cost: $50 per license for Sun’s desktop software
The more this kind of thing spreads, the more price pressure that will put on Microsoft. Microsoft has huge margins (I believe last quarter they made $2.2 billion in profit on $2.8 billion in Windows revenue!) and plenty of room to wiggle. The problem is that investors are used to Microsoft’s 30%+ net profit margin.
This is really just the beginning, though. Things will really heat up in the years leading up to Longhorn’s release.