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Microsoft for the first time has named Linux distributors Red Hat and Canonical as competitors to its Windows client business in its annual filing to the U.S. Securities and Exchange Commission (SEC). The move is an acknowledgement of the first viable competition from Linux to Microsoft's Windows client business, due mainly to the use of Linux on netbooks, which are rising in prominence as alternatives to full-sized notebooks. "Netbooks opened Microsoft to the possibility that some other OS could get its grip on the desktop, however briefly," said Rob Helm, director of research for Directions on Microsoft. "Now it's alert to that possibility going forward."