[SkyMarshal]

Free Desktop OS is a loss leader, no way they'll make significant profit out of that. Better to make the best Free Linux desktop OS in the world, get lots of people using it, hopefully among them some engineers, influencers, and decision makers, then provide server/cloud products and services based on that same tech.

For one single data point, that's exactly why I use Ubuntu server for all my cloud deployments - because I use Ubuntu desktop and know the Ubuntu/Debian ecosystem really well.

Nothing wrong with that current business model, any problems are more a matter of execution and competing against - as you point out - heavily entrenched first movers. But focusing on desktop won't save them, especially since desktop is saturated and already peaked. Cloud and mobile is where the growth is now.