Is Linus Torvalds secretly working for Microsoft? That sounds crazy until you consider that lately, the free operating system he created, Linux, has been helping Microsoft close deals.

Consider the deal that Microsoft snagged with the London borough of Newham, announced in early August. Looking to overhaul their computer systems, the Brits originally planned to dump Microsoft's Windows and switch to open-source programs, including Linux. But when they commissioned a study to evaluate costs, they found it would be cheaper to stick with Windows. So they signed on for a 10-year deal.

How could "free" Linux cost more than Windows? First of all, Red Hat, the leading Linux distributor, now charges $799 to $2,499 for each server running Linux. That's not for the software, mind you, but for "maintenance." Semantics aside, you're paying for Linux.

Add in the cost of retraining users and IT staff, rewriting applications to run on Linux, and the cost of paying separately for programs like application servers, Web servers and directories (which come bundled with Windows). You also may need to pay consultants to stitch the pieces together, and you might need to buy insurance to protect you against lawsuits over intellectual property rights. (One outfit hawks such policies for $150,000 year.) View: Full Story