We're not going to change human nature any time soon. It isn't that we aren't rational -- we are rational -- but reason has limits.
Sometimes, the primary driver in social change is the spread of technology. And the primary driver in the spread of technology is usually falling prices (not falling costs, that's another matter altogether).
And the primary driver in falling prices is usually theft.
If you're a business user, US$50 might get you just what you need in a desktop computing environment: A strong productivity suite, with Outlook/Exchange-like email and scheduling and centralized administration (very important in controlling the IT costs). Sun and Novell currently have enterprise-level offerings in that price range, and that's generally being taken as a sign that Microsoft is in trouble. But Dave Berlind at ZDNet argues that at that level of commodification, the underlying infrastructure doesn't really matter:
When software delivers a specific utility, that utility or "layer of value" is often referred to as "the contract." Like a real contract, a software contract sets the expectations of the external entities that will interface with the software. Those entities can be other systems or software, or they can be humans. ... If software interacts with users, then the rubber meets the road at the user-interface level where users feed something in and get something out in whatever format they want it (think documents and communications like instant messaging).
In the case of desktop Linux, the contract is in the user interface (which includes the applications). After all, a lot of the attraction to desktop Linux is due to the fact that it does things out of the box that Windows does not. For example, there's no need to run out and buy a productivity suite or install an instant messaging client. Most distributions of desktop Linux include fairly robust software for each. This model is remarkably similar to that of PDAs. As with PocketPC or PalmOS-based devices, the targeted users of JDS, NLD, and whatever Red Hat comes up with next will mostly interact with the applications and not with the operating system, which in turn reduces the OS to a mostly embedded and, not coincidentally, rather trivial commodity status. [emph added]
A minor point that Berlind misses: Commodity productivity only works as long as interoperability is rock solid. Ten years of domianance by MS Office have gotten us hooked on being able to freely trade editable documents with anybody, anywhere, anytime, with no format translation necessary. Not that I think Berlind misses this point; it would probably just confuse this issue, but it does end up being important, nonetheless.
But Berlind's main point is that this doesn't look as bad for Microsoft as we might think:
Anybody who thinks that Microsoft is just going to lie down and die as a result of this revolution in what $50 gets you is dreaming. If Novell, Sun, or any other company can turn a profit off of a $50 soup-to-nuts desktop offering, there's no reason Microsoft can't do it, too. It's just that the result may not be Windows and Office as we know them in their entirety. For example, Microsoft already has plans to offer a $36 Windows XP Starter Kit in India and will be offering copies of Office to certain schools at $2.50 per copy.
Berlind's right to say that MS wasn't driven to these tactics by Linux, per se. Linux has played a big role, particularly in the emerging nations and in India, and to a lesser extent in the EU. Especially in South America, new offerings to Governments often have to be Linux or nothing, more or less. And Berlind is right that hardware commodification and per seat pricing pressures in the corporate IT realms are prime proximate drivers for this kind of offering.
The real key driver, though, as I see it, is piracy.
These cheap Windows packagings that Microsoft is hawking aren't really intended to compete with Linux distros. Linux really isn't competition for this market. Much as places like Russia, the Ukraine, India, China, and Brazil are hotbeds of software innovation (and they are), the bulk of users in those places are still "home" and "office" users: They're even more unsophisticated, in other words, than the home users in the US market. It pains me to say this, but Linux is simply not a viable option for them. (Through no fault of the OS, let's be clear. It's a packaging and UI issue. Period.)
The alternatives aren't "buy MS" vs "install Linux for free"; they're "buy MS" or "steal MS". MS has understood this for years, and have taken localized stabs of this sort at it for a long time. What they seem to be realizing now is that their strategy needs to be global. After all, government purchasers in Brazil and Hyderabad can now easily communicate and compare notes on what they're hearing from their MS reps. Again, to be fair, this is probably not something that Berlind missed, so much as something that didn't fit in.
But in de-emphasizing the primary root cause (piracy) and over-focusing on the proximate cause (price wars in conjunction with hardware commodification), Berlind misses a very interesting point about information flow in the new digital world order.