Smith said Microsoft respects and appreciates the role open source plays in the industry, especially for customers with heterogeneous networks. Smith attempted to highlight Microsoft's experience with patents, which he said has proved to be a double-edge sword and a sticking point with the open source community. He also acknowledged the patent issue was among the hardest issues confronting them.

Smith also tried to downplay some of the accusations from the packed crowd that charged Microsoft executives with comparing open source as a cancer or Communism.

"How can Microsoft collaborate with Communism and cancer?" the San Francisco Chronicle quoted him as saying. "We don't claim to know everything or be the smartest folks in Redmond." He noted that sort of anti-open source rhetoric emanating from the company has ceased, while taking pains to concede Microsoft had been less than friendly to the open source community in the past.

The open source community is likely to take its usual wait-and-see approach to Smith's speech. Resentment still lingers in many pockets, and open source advocates often see Microsoft's talk as little more than empty rhetoric. The important thing to do, Smith said, is focus on ways Microsoft and the open source can move forward. He acknowledged, however, that more work continues to be done to reconcile the considerable differences in proprietary and open source business models, and cautioned at this stage in the dialogue it is too early for anyone to have the last word on the issue.