AUSTIN, TEXAS – Linux, long the laggard to the Windows desktop, is pushing into emerging markets, onto mobile devices and other client form factors, and is poised to give Microsoft something to really compete against, according to attendees at the annual Linux Foundation Summit.

While the Linux desktop has yet to hit its stride, the operating system is showing up and lowering prices in everything from mobile phones, tablets, global positioning systems and even gas pumps.

The major strike is in ultra-low-cost PCs (ULCPC), an emerging market that Microsoft is finally recognizing.

This week, the company extended the life of Windows XP Home for three more years, a concession that Vista is too bloated for the minimal processing power of ULCPCs and other devices.

Click to see: List of Linux vendors

To Linux vendors it’s a door cracked open and a ray of light for a client operating system that looks smart on a new generation of computing devices.

At this week’s summit, manufacturers of low-cost laptops/desktops, service providers and even top-tier OEMs say they are molding their Linux client operating system efforts to the reality of a new computing landscape while still eyeing the Linux desktop’s long-term enterprise potential.

Representatives from Dell, HP, Lenovo, Asus, Xandros, Zonbu, Via Technology and gOS gathered to discuss the opportunities and challenges of selling Linux client operating systems. 

The idea is to focus consumers and end users on client computing devices that let them get to services and applications they know, or need, without selling them on the underlying operating system.

“There is a huge market of people who can start out with Linux [and you don’t have to try] to get them to switch from Windows,” says John Hull, manager of the Linux engineering team at Dell. “And a lot of the opportunity is going to be in developing markets.”

Dell said this week that its sales in the Middle East and China have jumped between 54% and 70% over the last year. The company predicts that by 2011 nearly 50% of computers will be sold to emerging markets.

Microsoft has been offering low-cost “starter” versions of its operating system in emerging markets for four years, but with spotty results.

“Linux on the PC is more for target areas; it is not a true desktop replacement,” says Jim Mann, technology strategist at HP. “If you don’t have a broad base of apps and support for things such as wireless you are going to have a hard time replacing a Windows ecosystem, so new devices and form factors are the key growth areas.”