Nearly every IT manager I know has experimented with the idea of replacing Windows with Linux for standard business desktops. Some began considering it as early as 1999. Some have even done extensive tests and pilot programs. But how many of them have done significant desktop Linux deployments on their live networks? Zero. The reason? Applications.

Businesses don’t care about operating systems. Businesses care about tools that help them solve problems. Businesses care about technologies that help them deliver goods and services to their customers as cost effectively as possible. Businesses also want to partner with technology vendors they can trust to uphold their end of the deal, and Microsoft has fashioned itself into a reliable business partner.

Sure, there are a lot of businesses and IT departments that don’t like being so beholden to Microsoft. They’d love to save big money in licensing fees by switching to Linux on the desktop. Some of them even feel like they could give workers a more user-friendly platform with Mac OS X to save support costs and increase productivity. However, with the exception of some developers and graphic artists, the corporate world continues to reject both Linux and OS X. According to W3Counter, which measures global Web users, Linux is installed on just 1.7% of desktops and Mac OS X is on 4.5%, while Windows XP is on 80.9% and Windows Vista is on 4.5%.

This is the reality I was talking about last week in my column Sanity check: The truth about Windows Vista adoption in 2007 when I said that businesses don’t have a whole lot of realistic alternatives to Windows. TechRepublic members jeckhart23, crispbacon, and stuq didn’t like that I dismissed desktop Linux so quickly. But the fact is that most businesses are too heavily invested in their Windows applications to make a switch, even if they really wanted to.

When I say “applications,” I’m not just talking about Microsoft Office. In terms of office suites, Open Office and iWork have come far enough to provide viable alternatives. It’s the line-of-business applications and the custom software that is built to run on Windows that really locks businesses in. Then, you add in enterprise resource planning (ERP), customer relations management (CRM), and business intelligence (BI) applications and you’re talking about a huge investment, all of it centered around the Windows platform on the client side. In many cases, on Linux or Mac OS X there would be no client software to access the applications that run the day-to-day operations of many businesses, and no viable alternatives.

Nevertheless, the tectonic plates of the technology industry are always in motion. They rattle markets, wipe away fortunes, and prop up new champions. There are two seismic movements that could soon change the application issue and loosen Microsoft’s grip on the business desktop, which has held strong for more than two decades with DOS and Windows. The earth-rattling developments are Software as a Service (SaaS) and smartphones. Let’s look at why they will change the game.

1. SaaS delivers applications that are OS agnostic

You have every right to smirk or snort. It’s been at least a decade since we started hearing that all software would soon be delivered over the Internet and shrink-wrapped boxes would become relics of an analog era. This concept has been the next big thing for so long that its first set of buzzwords is already dead — remember “Web services” and “Application Service Providers (ASPs)?”

Today, we talk about Software as a Service (SaaS) and Service-oriented Architecture (SOA). Although the acronyms have changed, we’re still primarily talking about software that is more network-centric, client-agnostic, and delivered as a service, usually over the Internet. So far, this model hasn’t succeeded on a large scale because there are still lots of little details — especially in relation to security, compliance, customization, and extensibility — that are being fully identified and addressed as part of this major shift in software.

However, a number of key breakthroughs over the past 12 to 24 months have signaled that SaaS has arrived in the real world:

  • growth — The world’s most successful SaaS example is arguably, which has created sales force automation (SFA) and CRM software that it hosts and delivers over the Internet. grew by 58% in 2006 and 60% in 2007. It has been so successful that it changed its name to in September 2007 and is now focused on “platform as a service.” In other words, it wants to sell lots of different kinds of SaaS apps.
  • NetSuite delivers — Another SaaS company that has recently made a big splash is NetSuite, which delivers CRM and ERP software, especially to small and medium companies. Just take a look at the list of awards and praise that NetSuite has received in 2007 to gauge its impact. NetSuite has also created a platform called SuiteBuilder to help businesses reuse parts of its code to more easily create modular business apps. Plus, NetSuite touts the fact that all of its applications run on the iPhone.
  • Zoho online productivity suite — In terms of SaaS productivity applications, Google is trying to make its play with Google Apps, but the best of breed in this space comes from Zoho. The Zoho suite is broad and growing with more than 10 applications that take full advantage of being an online experience while also expanding some offline capabilities.
  • Microsoft gets into services — Microsoft has interpreted the tea leaves and is aligning its assets for a major move into the SaaS arena. While the first iterations of Windows Live and Office Live were relatively lame and had very little to do with their offline counterparts, Microsoft Office Live Workspace looks like a much more significant online play. Microsoft is also making a higher-level play aimed at BI, SOA, and enterprise SaaS. But most important of all, on June 15, 2006, Microsoft named Ray Ozzie as its chief software architect, succeeding Bill Gates. Microsoft has always called itself a software company, and by naming its most fervent internal SaaS advocate to its top strategic software post, Microsoft made an obvious indication of where it’s betting its future.

The implications are clear. SaaS applications can be accessed via a Web browser from virtually any client operating system, and beyond that, from a lot more devices than just PCs. While SaaS won’t ultimately take over all software, it will have a major impact on business applications and help trigger an era of OS and device agnosticism.

2. Smartphones are getting smart enough to replace PCs

The smartphone is the new PC. For the next generation of knowledge workers, the smartphone threatens to become their primary computing device. That doesn’t mean that everyone will work on small screens — far from it. Screens are getting larger, large screens are getting cheaper, and the line between TV and computer screens is blurring.

It’s very conceivable that smartphones will soon plug into docks and then provide full PC-like capability with a standard keyboard, mouse, and large screen LCD. In fact, if you want to see this type of experience in action today, take a look at i-Mate and its line of uber smartphones. The i-Mate Ultimate 8502 is especially compelling. I saw the i-Mate products in action at Gartner ITxpo in October when they were first launched in the U.S. market. It was hard not to be impressed, and to see the i-Mate as a glimpse of the future.

Smartphones are already a major computing access device for a critical mass of users in Asia and Europe, and they’re rapidly growing in North America. The race is on to make smartphones smarter and to make smaller laptops more phone-like, and all of the biggest players in the tech industry want a piece of this future.

Last week, Google announced its Android platform for smartphones, which is based on Linux and is set to take on Windows Mobile, Symbian, Palm, and iPhone in the battle royal of smartphone platforms. Intel joined the alliance of partners that has formed around Android, in a move indicating that the world’s dominant PC chipmaker sees a big future in small computing devices.

Don’t write Microsoft’s obituary just yet. The Redmond software giant keenly understands the trends that are driving the future. At the CTIA Wireless Conference this fall, Microsoft CEO Steve Ballmer said, “We need to bring together four powerful computing [elements] that exist today: the desktop PC, enterprise computing, mobile services running in the cloud, and phone devices… We are investing very heavily in devices and services around [the next generation] as a platform… The key thing is to provide a very consistent platform across all phones — to leverage our learning and knowledge in writing apps for PCs and bring that rich experience to phones.”

Microsoft will continue to be a major player in the business client market, but with the competition and established players in the mobile space and the reality of SaaS driving a multiple-platform future on the client-side, it’s very unlikely that Microsoft will be able to maintain the dominant position it currently holds over business users with the Windows PC.

As Ballmer acknowledged, much of the future is in software services and smartphones, and that will not only open the door for more vendors to participate from the smartphone side, but it will also have the effect of gradually removing the application roadblock on the desktop PC.

That’s when you will you see the Linux desktop and Mac OS X get an opportunity to expand their marketshare. Of course, by that time the PC could be migrating toward becoming a niche device that is needed only for higher-end, graphics-intensive computing, while something between the smartphone and today’s ultramobile PC (UMPC) becomes the everyman platform.

Do you think SaaS and smartphones will loosen Microsoft’s grip on businesses? How will the developments in SaaS and smartphones fundamentally change the way businesses purchase and implement technology? Join the discussion.