Linux is a threat to Micro$oft in that they open the door to lower cost computing.
The telling point in the battle will be how well WalMart's $200 PC with the Lindows operating system does in the market.
If they sell like 'hot-cakes', then M$ may have a legitimate rival.
Linux is making some in-roads in the server market.
For the general corporate market, Linux is in a chicken / egg situation.
Corporations woun't buy PCs that do not support the applications they use.
Software companies woun't write software for an operating system that is not in wide usage.
Add to that, that many of the applications that are in use on Linux systems are also open source (non-profit), and the scope of the problem becomes clear.
However, if M$ continues down it's draconian road of higher cost more restrictive licenses, you are apt to see Linux begin to take off.
Chas