Beyond Binary

In case you were wondering, Microsoft thinks the battle of open source vs. proprietary software is basically over.

"Today, but increasingly in the future, we are all going to be 'mixed source'," Microsoft's top intellectual property lawyer said in a lunchtime interview on Thursday. To bolster his claim, Horacio Gutierrez notes Microsoft is releasing plenty of stuff as open source, while open-source companies like Red Hat often license commercial software alongside their open-source products. "I actually think the war between proprietary and open source is a thing of the past," he said.

Gutierrez: If every effort to license proves not to be fruitful, ultimately we have a responsibility to customers that have licenses and to our shareholders to ensure our intellectual property is respected.

(Credit: Microsoft)

That doesn't mean Microsoft is ready to sing Kumbaya with Red Hat, or other companies that haven't made an IP deal with Redmond. While Microsoft is patient, Gutierrez indicated that Microsoft's patience is not unlimited.

"If every effort to license proves not to be fruitful, ultimately we have a responsibility to customers that have licenses and to our shareholders to ensure our intellectual property is respected," he said.

Microsoft has, on a number of occasions, asserted that Linux violates a ton of Microsoft patents, but Microsoft has never sued a company over those claims.

Gutierrez said he would like to keep that record intact, noting that the Novell deal, in particular, is an example of how working with a rival can ultimately benefit both companies.

It's generally thought that if you want to kill a good technical discussion, just bring in the lawyers.

But Gutierrez notes that it's often the complete opposite. In fact, he credits Microsoft's stepped-up licensing efforts that began five years ago for having helped the company find a way to talk to rivals that it had shunned in the past.

"It is truly a business mechanism to start discussions that weren't possible before," he said.

He notes that before software patents were in widespread use, companies were reluctant to share any technical details, jealously guarding all their know-how as trade secrets--another form of intellectual property protection that largely requires information to be kept confidential.

Patents remain a double-edged sword for Microsoft, however. Gutierrez said the company is defending about 50 patent cases at the moment--half of all the company's litigation docket.

While some are high-profile cases such as the disputes with Alcatel-Lucent, most are with companies that don't actually make goods related to the patents they hold.

In an effort to help head off patent disputes, Microsoft is an investor in Nathan Myrhvold's patent-buying Intellectual Ventures effort and has also made deals with several other such patent companies. "We've done deals with a number of others," Gutierrez said.

On the positive side, though, are deals like the Novell one, Gutierrez said. In the end, Novell has grown its business, Microsoft got added revenue and customers end up with products that work better together. Gutierrez wouldn't name names, but he said to expect more deals along the lines of the ones Microsoft struck with Novell and Sun Microsystems.

"We have tasted the opportunity to put IP to work in a very constructive way that leads to better products and more satisfied customers," he said.

Microsoft on Tuesday announced a change in its licensing policy to make it easier for businesses that want the ability to shift server software that is running in a virtual machine from one physical machine to another.

The licensing shift, which had been expected, lifts a cap that had limited the ability to switch software from one physical machine to another within a server farm. Under the prior rules, such shifts could me made only once every 90 days. That's a problem because software from VMware and others aims to allow such transfers to be made dynamically in response to changing demand.

"Businesses are taking steps to make their IT operations more dynamic and are delving into virtualization as a cornerstone strategy," Microsoft Senior Director Zane Adam said in a statement. "Microsoft recognizes this and is innovating its licensing policies, product support, and a wide range of IT solutions to help customers get virtual now."

The change applies to 41 server titles, Microsoft said, including the enterprise version of SQL Server 2008, the standard and enterprise versions of Exchange Server 2007, as well as the Microsoft Office SharePoint Server 2007 and Microsoft System Center products.

Microsoft also plans to offer better support for businesses that are running its software inside other companies' virtualization engines. Under the changes, Microsoft will support its software running inside virtual machines from VMware, Cisco Systems, Citrix, Novell, Sun Microsystems, and Virtual Iron as if it were being run in nonvirtual environments.

In the past, many customers with problems running Microsoft software in VMware, for example, had to reproduce the problem outside of VMware in order to get technical support from Microsoft.

For some time now, Microsoft has been trying to shift its pricing policies to reflect a new world in which server software often runs inside virtual machines.

Microsoft is going to have more to say on the virtualization front at a September 8 event in the Seattle area.

In its continuing effort to adjust to the realities of virtualization, Microsoft plans on Tuesday to announce new licensing and support policies to address how software can be used across multiple virtual and physical machines.

The software maker confirmed the planned move to CNET News, but declined to go into details ahead of the Tuesday announcement. However, Network World speculated that the company may ease up on a licensing requirement that ties software in a virtual machine to running on a particular server.

That poses a challenge in a world in which virtualization software, such as that from VMware, allows companies to seamlessly move virtual machines from one physical server to another, based on demand needs.

Although it has had challenges of its own keeping pace with changes in the way server software is run, Microsoft has led the way in some new frontiers of licensing, such as how to deal with multicore processors.

I asked Forrester Research lead analyst Duncan Jones for his thoughts on the just-announced Select Plus licensing program offered up by Microsoft.

Jones said that the program is largely an improvement on Microsoft's Select program, but also pointed out a few potential pitfalls to watch out for.

On the plus side, Jones said that Select Plus should help large organizations that have multiple, autonomous business units.

"Often there is no central person or process to coordinate a group-wide forecast, agree (on) joint strategies and negotiate a single Select agreement because each unit wants to make its own decision when it is ready to do so," Jones said in an e-mail interview. "These companies end up paying more by buying licenses retail or (from a computer maker). Under Select Plus the enterprise can get economies of scale without losing any flexibility for the business units to decide what and when to buy."

Select Plus also offers customers the ability to see all their licenses in one place, he said. The new program will be better in almost all cases than Select he said, with the exception being a company that is "significantly expanding its purchases over previous years yet is unable to make one big purchase immediately."

He also notes the fact that companies wanting to add Microsoft's Software Assurance program have to buy a full three years' worth under the new program. Under Select, customers would buy one, two, or three years depending on which year of the three-year agreement they were in. "This means companies have to make an assessment on whether SA makes sense for each (order) they raise, based on what they think of the program and when they think the next version of that product will be released," Jones said.

Any Select customers want to share their take?

Microsoft said Monday that it is adding a new licensing option, this one dubbed Select Plus and targeted largely at midsize firms.

The program's two main attractions are the fact that it is not tied to a specific term and it makes it easier for different subsidiaries of a company to take advantage of their combined purchasing power.

The additional option runs counter to the trend at Microsoft, which has been working to scale back the number of different licensing plans. The company had managed to shrink its number of options--from 107 programs in 2006 to 23 as of last year. With Select Plus, the number of Microsoft licensing programs has crept back up to 26.

Although it adds yet another option, Joe Matz, corporate vice president at Microsoft, said that Select Plus fills a need.

"Many customers end up with multiple agreements because Select is not as flexible as customers would like," he said. Microsoft isn't getting rid of Select, but expects that over time, customers will choose the new option.

The software maker has come under criticism from some customers and analysts for both the cost and the complexity of its licensing programs.

In a recent report, Forrester advised its clients to plan months ahead to figure out which Microsoft licensing option made the most financial sense. The analysis firm also said that Microsoft's Software Assurance support program is more expensive compared with rivals.

"Microsoft's software maintenance agreement is among the industry's most expensive--25 percent for server products and 29 percent for desktop products," Forrester said in the report. "In terms of upgrade rights--the major element--this is only cost-justified by a three- to four-year upgrade cycle, but Microsoft has undermined Software Assurance's value proposition by missing delivery dates for new versions."

With Microsoft's announcement of yet another patent cross-licensing deal this week, it would seem nearly everyone has a deal with Redmond.

The company has inked a lot of deals since it began its patent deal push a few years back, signing folks from Sun Microsystems to Novell to Samsung. So it's getting a lot less interesting to write up each one of these things. As the latest one crossed my desk earlier this week, I had an idea. Rather than write up a story on how another name got added to the list (Pentax), I'd focus on something far more interesting--who's not on the list.

The most vocal about not being on that list, hands down, is Red Hat. The Linux seller has been adamant in resisting Microsoft's idea of a "patent bridge" in which commercial open-source companies pay Redmond money and, in return, Microsoft offers to indemnify them--and their users--from intellectual property claims.

"The reality is that the community development approach of free and open-source code represents a healthy development paradigm, which, when viewed from the perspective of pending lawsuits related to intellectual property, is at least as safe as proprietary software," the company said in a 2007 statement. "We are also aware of no patent lawsuit against Linux. Ever. Anywhere."

Red Hat is not alone among Linux companies in saying no to Microsoft, despite its claim that open-source software infringes hundreds of Microsoft patents. Mandriva, among others, also spoke out against the need for such a pact.

But it's not just Linux companies that have not signed an accord with Redmond. Two other names worth noting from General Counsel Brad Smith's not-yet-friends list are search king Google and database giant Oracle.

In both cases, Microsoft competes pretty head-on with those companies' products, so it's not surprising that they would be among the companies with whom Microsoft either hasn't sought, or hasn't struck, a deal.

Microsoft declined to comment on why any particular companies might not be on the list. Representatives from Oracle and Google also declined to comment.

Anyone have any names that I missed? And who will be next to sign? Sound off with your guesses below.

And here I thought Microsoft had a cross-license pact with nearly every tech company other than Red Hat.

Apparently there are still a few more names to cross of the to-do list Microsoft set-up a few years back. On Thursday, Microsoft announced a deal with Tokyo-based Onkyo, which will pay Microsoft an undisclosed amount of compensation to Redmond.

Onkyo also signed a deal to use Microsoft's Windows Rally technology which aims to offer a better connection between PCs and other consumer electronics, such as Onkyo's home theater and audio/video gear.

The Business Software Alliance is best known for tracking piracy rates and announcing high-profile settlements over improperly licensed programs. But a new study finds that most of its money is not coming from big corporations, but from small businesses.

Associated Press writer Brian Bergstein said his analysis showed that 90 percent of settlement revenue comes from small businesses. Last year the agency, which monitors compliance for companies such as Microsoft and Adobe Systems, took in $13 million in settlement proceeds, according to the AP.

A counterfeit copy of Office 2003, billed incorrectly as an OEM version of the software suite.

(Credit: Microsoft)

Among the other interesting tidbits is a chart showing where the organization's income originates (81 percent stems from settlements, with 13 percent coming from membership dues) and where the money is spent (nearly half went for legal fees, while 16 percent goes to public relations). Also the company has scaled back efforts to offer companies amnesty when they want to come into compliance, while upping the amount offered as rewards to employees who blow the whistle on their employers.

The article questions whether such rewards might encourage a worker in an IT department to report their employer, rather than fix their compliance issue. It also questions the BSA's assertion that it focuses on companies that are flagrantly flouting the software license terms, pointing to a case in Utah where a company had two unlicensed copies of Microsoft software.

One of the interesting issues, I think, is the increase in the technological means built into software, particularly from Microsoft, aimed at thwarting piracy before it occurs.