According to Tech Flash it is the first time that Microsoft has ever named Linux distros as viable competition for its Windows desktop operating system. Normally it fails to mention the word unless it is to say that it is not suing Linux for infringing unspecified patents.
Microsoft is only making the admission this time because of the use of Linux on netbooks, which are rising to glory. Quite why Microsoft is so worried when Linux hasn't been overwhelmingly favoured by OEMs is anyone's guess.
Rob Helm, director of research for Directions on Microsoft said that netbooks open the possibility that some other OS could get its grip on the desktop.
Microsoft named Red Hat and Canonical as competitors to its client business, which includes the desktop version of its Windows OS. Until recently Microsoft thought that Red Hat was competition only for its server business.
Apple OSX also got a mention as an also ran. Even then Microsoft described it as yet another variant of Unix, a bit like Linux.
It seems a strange thing to worry about, seeing as how Linux hasn't yet really taken off on the desktop.
Microsoft told the SEC that Linux has "some acceptance" as an alternative client OS to Windows, particularly in "emerging markets" where "competitive pressures lead OEMs to reduce costs and new, lower-price PC form-factors gain adoption."