This is the same strategy that Ballmer has used against commercial Linux providers...And it has worked; as they settle with Microsoft! MS is making money via the screwed-up US Patent system.
(1) Microsoft cannot compete with free. Their fundamental business model is selling software licenses. It is their primary cash-cow! They are willing to use ANY means to gain leverage over competitors; preferably one that makes THEM money.
(2) Linux is free (liberty and most often, beer); but the license its under does not protect it from a flawed patent system.
There is no protection for you, if you happen to accidentally trample on someone's patent. The best you can do is NOT settle; but to ask for what specific patent you have infringed, so you can code around it. (That is legal, as you have a right to know. And you don't have to pay a dime in settlement)...If you had money and time to go through the legal system; the accusing party must prove the patent is legit. If they can't...It'll be invalidated.
(3) Knowing this weakness, Microsoft will "extort" anyone who uses Linux in a commercial setting.
The patents don't have to be legitimately court tested; just the fear of patent infringement is enough! (Some real ones can be used if the other side has a known competent legal team.)
That is, go after folks who sell a Linux-based commercial product like a smartphone (as in the case of Android) OR as a software package (such as Novell, etc)...Interestingly, Red Hat and Canonical told MS to "get lost"; as they recognize this is nothing more than an empty patent threat.
The point of extorting commercial solutions based on Linux with patent threats is to devalue the key characteristic of Linux: Being that its free. This is the focus of Ballmer's strategy.
Such threats also show Microsoft is nothing more than you modern day software mafia...
=> "Say...That's a nice solution. Android, is it? You should be careful with that. Why? Well, these days, Software Patents can be a problem if you use Android. On the other hand, if you sign up with us...You'll be protected from litigation. Why not play it safe, eh? We have Windows Phone 7 coming up, why not sign up to our product?"
As for Ballmer's HTC comment...HTC had no choice because they use both MS and Linux-based products. They were caught in a two-way tag team. Microsoft and Apple were going to sue them. So they settle with MS, such that they can focus on Apple. See the following...
=>
http://arstechnica.com/apple/news/2010/03/apple-vs-htc-a-proxy-fight-over-android-could-last-years.ars
=>
http://arstechnica.com/microsoft/news/2010/04/htc-avoids-two-front-patent-war-with-microsoft-pact.ars
The only way to crap on Ballmer's parade is to intentionally create solutions that de-value Microsoft's key/core cash-cows via open source.
But instead of selling software licenses like they do, you sell support contracts and keep your solution completely open source and under GPLv3. (They won't touch you, because they don't like version 3 of the GPL.)
I guess in today's software industry, it goes like this:
=> Those who can; do.
=> Those who can't; sue.
...Thanks to the screwed-up US Patent system.