Bullies Have No Friends, Or Customers
This Thursday (11/18/04), Microsoft demonstrated once again the bullying corporate behavior that is fueling distrust among large and small customers and is actually fueling their emerging nemesis, Linux. This time, instead of terrorizing its competitors by dumping cheap, free, or bundled reproductions of their products, they challenged Asian governments attending the Microsoft-sponsored Asian Government Leaders Forum in Singapore to abandon their plans to migrate to Linux or else face lawsuits under World Trade Organization rules.
At the meeting, Microsoft CEO Steve Ballmer was apparently referring to a report by the Open Source Risk Management group that alleged 283 unexplored patent infringements in the Linux kernel. That's a big number. What he didn't say was that the report stated that more than a third of the patents that pose a risk to Linux are held by Linux-friendly companies with financial interest in the operating system's success (IBM, Novell, HP, to name a few). He also neglected to mention Microsoft's own ongoing troubles with patent infringement suits against their own products. Ballmer's implications for these government leaders was clear: Microsoft, who is holding 27 of the patents in the OSRM report, is likely to invade their countries with an army of lawyers should they eschew Windows-based operating systems in favor of Linux.
Ballmer's comments are especially ominous given the recently leaked memo written by Hewlett-Packard executive Gary Campbell in 2002 that described how Microsoft would use patent-infringement litigation to fight open-source competition.
Migration to open-source software, particularly Linux and Linux-compatible products is hot in Asia, driven in part by a desire not to be held hostage by a huge American multi-national corporation and an increasingly wide-spread suspicion that the U.S. has put secret features into some software that would allow it to spy on, or disrupt activities within competing countries. These governments, especially China, believe that seeing the source-code behind the software they use, and being able to make known-secure builds from it are the only ways they can know for sure that they are in control of their computers. In an environment where a presidential administration can argue that torture is legal and ethical, this is not a radical idea.
No wonder that the Redmondians are nervous and it should come as no surprise to anyone that they are once again going on the attack. This is what they do. Ironically, Ballmer's message may have had exactly the opposite effect than what he had hoped for. In suggesting that “someone” might come looking for compensation for intellectual property infringement, it was clear to attendees that the someone would be Microsoft. Governments, being mostly made up of people, don't like to be threatened. Consumers don't like buying things because someone is twisting their arm. The bullying rhetoric these leaders received from the lips of Steve Ballmer is likely to add fuel to their suspicions and heighten motivation to move to Linux.
Even though the HP memo mentions a litigation strategy present at least since 2002, Ballmer's comments signal a shift in their approach. Whereas Microsoft has previously been satisfied with providing behind-the-scenes encouragement and funding for SCO's hapless legal battles with large Linux users, Microsoft seems to be indicating it will have more direct involvement in the frey.
When this is all over, we will know if SCO's strategy marks it as a savvy player or a desperate company with a no-longer-viable product, trying to survive by scavenging scraps from other companies who are actually trying to contribute to the GDP. Now, they are seen as dangerous buffoons and if they happened to release the next great killer application, they wouldn't be able to sell it because of the animosity they have created for themselves in the marketplace. The Santa Cruz Operation that once was a preeminent Unix company is now better known as, Sue Customers Often.
Microsoft now seems willing to join SCO in delivering more enmity than value. It is entirely arguable that Microsoft is delivering the best software portfolio on the planet. As a result of alienating their customers by threatening them for doing nothing more than trying to run their governments, businesses, and homes, Microsoft might find themselves one day in SCO's unenviable place as a joke in the market. There is a significant difference between going after developers and distributors of products that infringe on patents and going after customers who use the products. For every customer sued, ten others will decide that a company that sues its customers isn't worth dealing with.
It isn't enough to have the best products. Microsoft must present the best value proposition. This includes feature sets, availability, costs of ownership, compatibility and reliability, and a little thing known as trust. Even governments, with their faceless and sometimes mindless bureaucracies, will not willingly purchase products from suppliers who threaten them with lawsuits if their products aren't purchased. In a situation where the best product comes from a disagreeable supplier, the natural next step is to look for alternatives that are good enough.
Plenty of companies make open-source software that isn't as good as Microsoft software, but it is good enough for many. The ones that immediately come to mind are Open Office, Star Office, and Corel Office. Each of these are very capable suites and their use is on the rise. Some offer interesting native capabilities not present in Microsoft's Office Suite. For instance, can you see any value in publishing directly to .PDF format from within your word processor or spreadsheet? Open Office does that for free.
Microsoft can only further damage its reputation in the market by threatening customers with intellectual property lawsuits. But, such damage pails in comparison to the ruin it faces should it join its stooge SCO by actually filing litigation against Linux users. As a start towards a sane response to open-source, Bill and Steve should order a few hundred of their legal marines to figure out what an all-out investigation and legal defense of their 27 (currently) potential intellectual property claims against the Linux kernel would cost. They should then take this amount and add to it an estimation of the loss of market share they are certain to suffer when the world press begins excoriating them for aggressive legal tactics (the world hates aggressive legal tactics). As a conservative estimate, let's call it 25%.
Once this very large number is calculated, Bill and Steve should reduce the cost of Microsoft products by that amount across the board. That will be a blow to the open-source crowd who are not yet very good at countering Microsoft's white-papers about the higher costs of open-source software ownership. And it is no skin off of Microsoft's nose since they'd have lost that revenue anyway. This way, customers, rather than lawyers and competitors, get to keep the money. Open-source vendors bolt straight up in the middle of the night when they have this nightmare. Then they smile knowingly to themselves and shake their heads as they realize that this will likely never happen.
It's too bad that Sam Walton is dead. He would have known how to fix Microsoft. If Walmart were in charge of Microsoft's distribution and pricing strategies, they would sell it cheap everywhere and nobody else would be able to sustain a development effort or sustain a profit against them. Microsoft would have nothing to fear from open-source software or any other vendor.
Fortunately for the open-source crowd, the Redmondians appear unlikely to abandon their marketplace bully tactics anytime soon. The steely rhetoric that they rolled out in Asia last week will surely to reach our own shores soon. While it is ultimately good news for Linux and the scrappy open-source movement, we mere mortals who are likely to suffer as the titans battle above will wonder, “Can't we all just get along?”