Over at the Monday Note blog, former Apple/Be maven Jean-Louis Gassée poses a rhetorical question to Microsoft: How do you compete with free? But it's not just "free" that Microsoft's competing with here, and it's not "open," either. It's "agile."

Agility's a buzzword, to be sure, but it's one that's coming up again and again to smack Microsoft in the face. The Windows legacy -- or maybe I should say, legacy Windows -- is both its biggest accomplishment and its greatest hindrance.

It's not just because of the technical limitations of Windows itself, but because Windows is the biggest embodiment of Microsoft's typical way of doing things. It builds a platform, charges entry fees for it, and makes ominous noises about what happens when you don't come around to its way of thinking. (Not as much as it used to, thankfully, but old habits die hard.)

Now along comes the competition in the form of open source -- not just free and open, but far more flexible by dint of not being compulsively hidebound. Once upon a time, Microsoft was in the position to demand that anything that runs Windows be of a certain hardware spec or better, but today there's no reason the same functionalities can't be available for less -- e.g., XP on netbooks because Vista's too top-heavy for that environment and Windows Mobile isn't nearly enough.

So what happens now? Barring going open source itself -- a logistical and fiscal impossibility right now -- Microsoft can pick one of a couple of ways to avoid being completely nibbled to death:

1. Offer free-to-use, cut-down versions of key products (SQL Server, for instance) to offset the incursion of free-and-open software.

2. Lower its prices and continue to offer more competitive packaging methodologies, such as the student version of Office.

3. Remake Windows from the inside out into something that's agile enough to compete. There were hints of something like #3 happening in the early days of Windows 7, but it looks like that's been shoved off to the side.

No matter what approach it tries, though, it's going to be operating at a serious handicap -- by dint of being Microsoft. That's the single biggest disadvantage its open source competition isn't saddled with: they're free of the legacy of being one of the single stodgiest proprietary software outfits out there. This has more benefits than you might think.

And if those who harness open source can avoid recapitulating the shortcomings of Microsoft in another form, it will be even better.

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