Well, what it told the Securities and Exchange Commission in its annual 10-K filing.

“Client faces strong competition from well-established companies with differing approaches to the PC market. Competing commercial software products, including variants of Unix, are supplied by competitors such as Apple, Canonical, and Red Hat.”

Translation: Microsoft for the first time acknowledges Linux as a serious competitor to Windows, especially on netbooks.

Thanks to Good Morning Silicon Valley for spotting it.