1.	View Linux as you viewed the Mac in 1983. It's a puzzle and a curveball. You don't own it. Find out what developers want to do with Linux, then provide tools that make that easy. Create bridges from Microsoft desktop apps to servers running on Linux. Invest in WINE so Windows developers have a clear path to Linux without creating new source code bases.
2.	I can hear Bill Gates now saying "Never!" But until he embraces the Internet, in its latest incarnation (Linux), without trying to own it, he'll keep losing. And yes, they are losing. Ownership of the browser is worth bupkis. There will be a dozen browsers in two years. The Internet game is about flow and money, Microsoft has attracted very little of either. MSIE is free, and their portals have been disasters.
3.	They can't focus on the Internet as long as they're protecting Office and competing with other companies. This is another dual-disaster. Office has run its course. They keep looking for a company to compete with. But the Internet is not a company.