I was saying years ago, that MS, if it really wanted to dominate, would create MS/Linux. For a long time, their standing policy was "embrace and extend". If MS were to "embrace" the linux kernel, but write their own X to run on it, which would be the only version that ran their apps, they could dump a significant support and r&d cost (by having Linux do it for them), but still maintain their proprietary nature by keeping everything in their version of X in house.
MS Linux I don't see happening: they have staked their reputation too much on the "GPL is a viral communist cancer" crap (despite having actually scaled it down since the early days). MS BSD, however: now THAT I can see. They can tout "compatibility" with Linux (which would be neither entirely true nor entirely false, especially if they offered, say, Exceed's X server), AND lead ISV's and customers down the garden path by putting COM and .NET and Win32 and whatever else on top of it. Plus they'll be able to say, "Look! Linux isn't any less resource heavy than Windows." Of course it wouldn't be, with all those droppings all over it. Jeff Rollin