Does Microsoft's settlement fever signal IP offensive?

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Longer Term Objectives

David,

I can understand why you might think that Microsoft has an IP agenda - a game plan for turning their IP situation around - it certainly fits.

If I may, I think that there are other factors that you should consider giving a little more weight.

First of all, given the size of the numbers involved, we can surely be under no illusions as to the effect recent legal challenges must have had on Microsoft's management. All that money drained from company coffers... Having to explain this loss to investors... The management time taken up with the sheer weight of legal administration, and answering the charges, must have created serious implications for future developments.

There must have been times when the Microsoft Board looked at their litigants with green eyes...

That said, it seems unlikely that Microsoft has a large store of IP that will deliver revenues in the short term. If they did, wouldn't we have seen more by now?

Microsoft have always been at their best when they play the long game. Where they currently hold dominant market positions the - usually - got there by plugging away, designing solutions that worked together from day one (learning from IBM's SAA debacle), and, either starting long-term development projects, or buying up some company with a great idea - and was willing to sell (who, today, remembers the first Powerpoint?).

They have really only got into a serious problem where they tried to move too quickly - Browser technology being the obvious example.

I would suggest that Microsoft's legal programme, therefore, signals a return to that earlier, successful, strategy - while adding two things that Microsoft have not had before:
- an IP portfolio; and
- industry co-operation.

As the world's biggest software provider Microsoft always poo-poohed the idea that they couldn't do it all themsleves. They forgot to read their Andy Grove books, and the Net has proved them wrong. The Net is a major, industry-wide, inflection that is changing not just how software is sold (as you rightly highlighted), but the way that software is designed, written, and supported.

Because communication is now at the heart of all IT, and networking standards are essential to make all communication work (Take a weekend flight to Mongolia. When you get back, tell me how you got on without any knowledge of the standard, local, language...) collaboration must now play a more important role in the whole software lifecycle.

But there is a inherent conflict at the heart of Microsoft's new industry model. While standards are essential, every commercial company is looking for an edge. Therefore, those companies must study every new idea and decide:
- which part of this is the base, the must have to make this work; and
- how do I split off the rest to create a leading product (actually, service, in the Net world) which is based on those standards but adds significant extra value - so that I can charge for that?

It is this dichotomy, between the public IP-standards-open area, of the Net, and the proprietary IP-supplier specific side, that I see in Microsoft's recent actions.

For other examples think:
- Adobe;
- Real Networks; or
- Digital Island (real-time media distribution services over the Net).

Finally, I believe that Microsoft are demonstrating a new understanding of their market. While they have long understood that they must work with others (witness their excellent developer support, HEC and the OEM support program, and Microsoft Partners programme - all long-term and best-in-class examples) they did not appreciate, until the DoJ openned the flood gates, the need to balance a leading competitive position with a wider responsibility to work with others and ensure that the benefits of Microsoft are spread through the industry.

The fact that taking a broader view of IT also underpins Microsoft's ambitions starting from the position of a large, successful, company is something, I am sure, that is also not lost on today's Microsoft.

We could speculate endlessly, and not produce any value, as to how this happened. However, it seems clear that co-operation also helps to manage the risks of future IP arguments. Either the IP will be more clearly owned by Microsoft, or, there will be a development and IP partner to help shoulder the legal and PR costs.

As I say, a long-term strategy - and one that appears to suggest that Microsoft has learned.

Posted by: Stephen Wheeler   Posted on: 11/09/04 You are currently: a Guest | Members login | Terms of Use

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