Will Microsoft Ever Get It Together?

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On April 5, 2004, Microsoft announced that it would begin licensing a toolset for XML installation through the open-source Common Public License (CPL) licensing agreement. The toolset, called WiX, is used for creating Windows installation programs that use XML code. The WiX toolset code and its CPL license are available at SourceForge, a network for open-source developers. The CPL agreement was originally authored by IBM and has been approved by the Open Source Initiative. The license allows developers to modify the code and to use it in commercial products.

Open-Source Unbeliever

Microsoft claims that this is not a reversal of its long-standing objection to the open-source distribution and marketing movement; rather, it's merely a necessary means of distributing basic tools for efficient implementation of XML code installation. Companies that build XML applications can use the source code to build the installation processes for their products.

Microsoft previously made some source code available under various "shared source" licenses that Microsoft wrote. Those licenses vary, according to the particular agreement; some are "reference-only" licenses that let users look at the code, and some allow modification and commercial release of code. This is the first time Microsoft has used the CPL agreement for any of its proprietary products.

Business Model Conflicts Keep Microsoft out of Open Source

But at the heart of the issue remains Microsoft's current business model. How does Microsoft intend to work with IBM's support of open source and open standards? What does this dichotomy of distribution models mean to software developers around the world?

Earlier this month, Microsoft Distinguished Engineer Jim Gray once again publicly questioned the open-source business model at the Software Development Conference and Expo West. At issue was the question of how software companies could survive if their code is released as open source. If the companies that are developing the standards are placing those software components into open-source repositories, available to others to use and implement in their own products, how will originators of the code make money? "I'm puzzled," said Gray, " to what the business model is because [after it's been released to open source] they can't sell it."

Free, but Not Freedom from Proprietary Ownership

From Microsoft's perspective, open source is the same as "free," and giving away intellectual property makes no sense.

Open source in the 21st century is not much different from the common 20th century practice of providing source code to the customer. The primary difference is that for the open-source customer, the code can be redistributed with or without modifications and without providing a fee to the originator of the code. In essence, the open-source movement is like a chain letter, rapidly passing from one customer to another, with additional words appended at the bottom. Once the code enters the open-source marketplace, it moves on a trajectory that no longer bears any connection to the strategies of the company that authored the code.

Microsoft's "Free Software" Conflicts

Through most of Microsoft's history--beginning when IBM "outsourced" DOS to Bill Gates--Microsoft has honored its source code as the corporation's crown jewels. Even during the heady days of "embrace and extend," when Microsoft was giving away or bundling powerful applications like Internet Explorer (IE), Outlook, Outlook Express, and its Internet Information Server (IIS), the company held tight to the source code, discouraging competitors from delving into its Windows platform secrets.

But this combined strategy to win market share and fend off the competition was, in many respects, the cause of its many legal battles. As Windows became the "standard" for the desktop, there was no way to prevent it from being declared a "monopoly" in the PC world. Ultimately, this led to antitrust actions and lawsuits calling for the distribution of the source. And as the power of Microsoft's monopoly has increased, so too has the cost of the software itself: Free applications from the company are now a rarity. The value of "giveaway" code for customers is now absurd, when there's no one against whom Microsoft is competing.

Microsoft's History Echoes IBM's

Oddly, the history of Microsoft's legal troubles with proprietary code echoes IBM's antitrust battles in the '70s. Under that antitrust remedy, IBM could not appear to be leveraging its market share to exclude potential competitors in either its hardware or its software offerings. That's why Microsoft got the DOS contract from IBM in the beginning: IBM's lawyers said the only way to bring out a new PC product was to outsource major components. Microsoft got a contract for DOS, and Intel got a contract for the 8086 chip. The same thing happened when IBM needed to bring out a product for the midrange server arena: AT&T got a UNIX license, and Motorola got a Power PC chip contract. (OS/400 was exempt because it was essentially a rewrite of the System/38 operating system.) IBM was forced to diversify and share the spoils of its natural business market segment. Microsoft should learn a lesson form this IBM strategy: Outsourcing shares the spoils, but it protects the architect from legal claims of monopolizing the market.

IBM's Business Model Today

IBM's business model has evolved significantly since those early post-Department of Justice antitrust agreements. Its new business model is designed to keep governments in its pocket and off its back.

By embracing and extending the open-source movement, IBM has freed itself from claims of monopolization in the software arena. At the same time, it's freed itself of complaints that its software is proprietary. Most importantly, it has positioned itself firmly in contrast to Microsoft's business strategy and Sun Microsystems' Java market strategy.

By embracing open standards for hardware and open source for software, IBM still can drive the hardware standards with its intellectual property patents and control the movement of software development through Linux and WebSphere's middleware implementation of J2EE.

At the same time, it can approach governments with a claim that open standards and open-source code will enable institutions and companies to build vast networks of completely cross-operational collaborative applications. Why? Because anyone can build a cross-platform application with the middleware tools that IBM is selling. No license fees are required to access the secrets of the IBM platform: Everything is out in the open, ready to connect. All that's needed is IBM's WebSphere middleware tools and a freely available Linux operating system. And if a customer needs some help, IBM is there with its services organization to fill the bill. In this business model, anyone is free to compete, but IBM is calling the shots with hardware patents, J2EE standards, comprehensive database and management software tools, and a well-trained legion of specialists.

Microsoft Is Clueless?

Meanwhile, Microsoft is still struggling with the concept of giving away its paltry proprietary source code. The company is so product-centric that it can't see the forest for the trees. It still believes it sells software products, when in actuality it sells business productivity. And that's why it still can't embrace the open-source movement, except with the simplest of tool distributions: It thinks that if it gives away the source code, customers might actually steal it. It's a consumer-oriented mindset, and it's a consumer-oriented message.

In fact, bearing witness to this small-world perspective is Microsoft's latest marketing message, broadcast on TV and in magazines. Microsoft says it's selling "innovation." But, honestly, when was the last time anybody actually bought an innovative Microsoft product? I'll venture never! And what was the last really innovative thing Microsoft actually created?

Well, maybe solitaire!

Thomas M. Stockwell is Editor in Chief of MC Press, LP.

Thomas Stockwell

Thomas M. Stockwell is an independent IT analyst and writer. He is the former Editor in Chief of MC Press Online and Midrange Computing magazine and has over 20 years of experience as a programmer, systems engineer, IT director, industry analyst, author, speaker, consultant, and editor.  


Tom works from his home in the Napa Valley in California. He can be reached at





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