Microsoft

Microsoft, which already had a business selling its software licensing technology to other companies, now plans to spin that out into a separate company, known as InishTech.

(Credit: Microsoft)

Microsoft said on Tuesday that it is spinning out as a separate business a two year-old effort that licenses its software protection technologies to other companies.

In the past two years, Microsoft has signed up 120 companies to use the software activation and licensing technologies, including its own eHome unit. But it decided creating an independent company was the way to go.

The new venture, dubbed InishTech, will be based in Ireland. Microsoft will retain a stake in the company as well as an observer seat on its board of directors. Microsoft also plans to be a customer of the company.

The effort is the latest example of Microsoft spinning out its technology to a start-up. A number of past efforts, such as Inrix and Zumobi (formerly ZenZui), have come from technologies developed within Microsoft's research labs, while others have come from various product teams.

It's part of a broader effort at the company to , a push that dates back to late 2003.

Not all of the start-ups have continued with their original business plans, however. Microsoft spun out a social-networking technology, known as Wallop, in 2006. A start-up by that name hoped to launch its own social network based on the technology, but ultimately decided to join, rather than try to beat the likes of Facebook and Bebo. The company now develops applications for social networks.

In a move to tie their collaboration tighter, Microsoft and Lexmark on Tuesday announced that they have entered into a broad patent cross-licensing agreement.

Under the arrangement, Lexmark will license its patents for its printers and multifunction devices, as well as its other products, to Microsoft. And the Redmond, Wash., based company, in return, will offer access to a wide range of its software.

Terms of the agreement were not disclosed.

"We believe this agreement will improve the productivity of both our companies and result in enhanced product offerings and increased satisfaction for all our customers," Marty Canning, Lexmark's printing solutions and services division president, said in a statement.

Microsoft has cut the price of leasing software by as much as 25 percent.

Companies can sign up for discounts on SQL Server, SharePoint, and other Microsoft software, or two bundles of client-access licenses, according to notices posted on the Microsoft Incentives Web site.

One special promotion is "Simplify and Save," which offers savings of 15 percent for those who consolidate at least two existing license agreements into an Open Value agreement. Microsoft said the discount will run for the entire length of a three-year license deal.

Another offer is for between 15 percent and 25 percent off the price of the license and the Software Assurance costs of running Exchange Server, Office Communications Server, SQL Server, Office SharePoint Server, Visual Studio, Office Project, and other Microsoft software.

It is a condition of some Microsoft license agreements that companies take out schemes such as Microsoft Software Assurance in order to keep their software properly licensed, and therefore eligible for upgrades and promotions. Industry estimates suggest this situation can add as much as 100 British pounds a year per PC to the cost of running applications.

The cuts are similar to those that Microsoft has made on the cost of licensing specific products. The Microsoft Office Project Assurance Pack's price has been cut by 25 percent, and Microsoft Project Server 2007 has seen a similar price fall.

According to one analyst, when it comes to special offers, Microsoft does not tell enough people about them. "This is good news for users but Microsoft should be shouting about offers like this," said Tony Lock, analyst with Freeform Dynamics. "Software Assurance is not widely recognized and deals like this, which seems pretty much across the board of Microsoft software, should be better known."

Lock said that, while Microsoft has good market share, it is "not nearly as good as it could or should be, given offers like this."

Colin Barker of ZDNet UK reported from London.

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.