Friday, May 25, 2007

Fiduciary Duty

Where, oh, where is the time needed to write about Microsoft's multiple asinine positions regarding their patent portfolio? We are witness to an ugly issue within Microsoft because of their lack of a sound strategic direction. I'm sure I'll have fun pointing out many of the issues they have in leadership, strategy, good business stewardship and their complete lack of common sense. But the most pressing to me is fiduciary duty.

Microsoft's Sam Ramji seems to be claiming fiduciary duty to their shareholders as one of the reasons they claim the patent infringements by open-source while at the same time refusing to identify those very same patents. Fiduciary duty is an interesting claim to be making. I claim that Microsoft's actions are in direct contradiction to their fiduciary duty rather than in support.

First, let's understand that Microsoft's sole duty is the satisfaction of their shareholders. Generally speaking, any business that wants to satisfy their shareholders must adhere to applicable laws, build a satisfied customer base, build successful strategies for the future and behave with some semblance of good manners. However, none of these are necessary to satisfy shareholders. While I think all of these are necessary for a long-term business, I could imagine a situation where customer satisfaction and repeat business was not in the best interest of the shareholder.

But let's imagine for a moment that Microsoft's shareholders wish to build a long-term, sustainable business model and, in order to achieve that goal, it is necessary to have an expanding base of satisfied customers.

I would argue that Microsoft's actions regarding their patent claims are in direct contradiction to those goals.

Imagine if, at Microsoft's next shareholder meeting, they said, "Rather than providing new innovation in the market for our consumers and potential consumers, we're going to stifle innovation at every opportunity. We're not going to innovate our business model either. Instead, we're going to use our size to force as many companies out of the software market as possible. We're going to use our patent portfolio to intimidate anyone who dares to enter our market. Additionally, we intend to spend as much money as possible to preserve our existing business franchises rather than explore new ones."

The alternative statement could be, "Rather than rely solely on the successful franchise we've already built we will be spending our resources to invent new products, new capabilities and new business models. We intend to out-innovate any potential competitors and run faster than anyone else can run. No one will be able to keep up with us because we have the resources to invest like no one else."

Perhaps the reality is that Microsoft realizes they are structurally incapable of innovating and must rely on the first option, what I refer to as the buggy-whip strategy - preserve the existing business at all cost.

As an investor I would never invest in a preservationist company and will always seek the innovators for my investment dollars. Without the context of Microsoft's business strategy, preservationist or innovator, it's impossible to judge Sam's claim about their fiduciary duty.

It is truly difficult for me to take Microsoft seriously. I meet with executives every day who truly believe that with a very small investment they can change the world. I see from Microsoft that with their billions of dollars they have to resort to seemingly empty threats to keep those very same changes at bay. That's just pathetic.

Thursday, May 17, 2007

Intellectual Property

If you can think it you can own it, I guess. I've always had a fascination with the phrase. Intellectual property seems to me an attempt to make tangible that which is intangible. To me, though, the problem with intellectual property is that it's very concept and value to society is being destroyed by those who seem to "own" the most of it.

I have the deepest respect for inventors. My father has a patent in his name and I've always thought of him as mechanically imaginative; with the type of imagination that should be rewarded.

The United States and many other countries, in an effort to promote inventiveness and innovation, have established patent systems designed to encourage and reward creative imagination. The key aspect of these patent systems, at least to a lay person such as myself, has been to identify and reward original and non-obvious inventions. Inventions that would not have come into existence without the hard work and dedication of the inventor should be rewarded.

I firmly believe this is a great idea. I'd love to have the innovative imagination to create something uniquely beneficial to society. People speak of having a million dollar idea by inventing a great new product. As a society, we created entire companies and industries around inventiveness, imagination and innovation.

And then, it started to come crashing down around us. It started with software patents but it won't end there. The most difficult thing with software patents is that most software developers recognize that many software patents reward obvious, trivial and incremental improvements to the existing state-of-the-art. Many of us in the software world find it incomprehensible that one-click shopping gets a patent or the way a menu animation unfolds gets "intellectual property" protection.

Combine these issues in the software world with the insanity of digital rights management (DRM), RIAA lawsuits, the obstruction of HDTV innovation through forced DRM in the interconnects and we get that which no legal system can survive - disrespect.

Laws in a civilized society only work when society respects the laws. The abuse the alleged owners of intellectual property foist upon us as consumers of their products will result in the inevitable, ultimate "dissing" of the owners and their supposed property.

Microsoft's latest salvo in this battle is likely the first shot in the latest battle over intellectual property. Microsoft claims 235 violated patents but is unwilling, unable or simply afraid to articulate the specific claims. Microsoft's strategy appears to be another incarnation of the "vig" that needs to be paid to the house. They would rather threaten with massive numbers of patents than to actually enforce any particular patent.

Will industry, or society or we as individuals allow this shake-down to occur? I can't imagine any of us on the consumer side willing to pay any vig because we might be using their intellectual property. I want to know if I'm misappropriating someone else's property and, if I am, then I'm willing to pay or to stop using it once I have enough information to make a decision.

My biggest fear, though, isn't that we will be stuck paying Microsoft's vig, as unpleasant as that would be. My biggest fear is that the disrespect that the Microsofts of the world engender will ultimately eliminate a perfectly valid method of rewarding innovation.

Wednesday, May 16, 2007

Licensing Confusion

Anonymous commented on my Chief Of Licensing post pointing out that there's an entire organization devoted to open-source licensing and (s)he itemizes nine of the licenses managed by the FSF.

I had thought about the number of open-source licenses out there and I've written about it before, there are more than the nine highlighted by the anonymous post. You can read about Microsoft's attempts to bring standardization to their own licensing model here.

The point, however, is that there are far fewer open-source licenses than there are Microsoft standard licenses. More importantly, all the closed-source vendors will negotiate individual terms of their licenses with their customers. It is not unusual for an individual customer to have multiple instantiations of a single license with a particular vendor. The number of closed-source licenses any particular closed-source vendor will have is indeterminate as each one is individually captured in a unique sales contract.

There have been many people complaining about the number of open-source licenses that exist. I favor license simplification and don't want to see a wild proliferation of open-source licenses either.

Don't overlook one of the major benefits of open-source software - license standardization. This is accomplished precisely because an open-source license is non-negotiable. The infinitely negotiable closed-source licenses are the main reason the closed-source companies need licensing chiefs.

Monday, May 14, 2007

Chief Of Licensing

There's someone at Microsoft with that title: Chief Of Licensing. Chief Of Licensing!!!

Chief of what? Chief of Licensing. What? Licensing! Huh? LICENSING!

O.K., how about finishing this one, how many chiefs does it take to write a bad license?

Let's imagine the conversation:

Customer: I want to use my super-powerful computer to help me be more efficient.

Microsoft: Great, first you need to speak with our chief of licensing.

Customer: Who?

Microsoft: He'll help make sure you understand the terms of our licenses so you don't run afoul.

Customer: What's afoul?

Microsoft: Open-source.

Customer: I can't run it?

Microsoft: Nope.

Customer: Why?

Microsoft: It violates at least 235 of our patents.

Customer: What patents.

Microsoft: That's a secret.

Customer: But I can't run it.

Microsoft: Well you can, if you pay us.

Customer: Oh, it's Microsoft software?

Microsoft: Not exactly, but our chief of licensing can help you understand it.

Customer: Understand the secrets?

Microsoft: Not the secrets, never the secrets, just how much you have to pay to run our software or the open-source software.

Customer: But what am I paying for?

Microsoft: Oh, well, that, it's a secret.

Any company that needs a chief of licensing has overly complicated licensing terms. Ask your open-source vendors about their chief of licensing, they'll most likely reply, "Chief of what?"


I talk a lot about transparency in business. I believe in it to my very core. I've always told people what I intended to do, what I hoped to do and what I promised to do. When I was running the Linux Program Office at Oracle I was very open with the strategy and eager to tell people how it would evolve over time.

I remember having many conversations with others about the "sanity" of being so open. There were many people who felt that being secret was the way to go. I always felt this was nonsense. There was nothing more powerful than saying what you were going to do and doing it. After a while others understood that what you said was valuable because it was representative of what you were going to do.

This is why I keep pushing transparency and am so strongly opposed to obliqueness and opaqueness. I harbor an almost instinctual distrust of those who maintain secrets about their business plans. If the secretive were so confident in their business plans then they would gladly share them knowing that no one could stop them from being successful or beating them to the punch.

Yet, here we are with one of the most powerful companies on the planet apparently afraid to take on the open-source world in a direct way. Instead of identifying the patents that have allegedly been violated Microsoft seeks to hide in the shadows. I would argue that Microsoft does not have a sound strategy. If their strategy is so strong then what do they fear?

I believe they fear that their patents are unenforceable and probably a bit farcicle. Microsoft could stand up and say, "Here's a patent you've infringed. We worked hard to invent this clever, neat elegant solution to a difficult problem and you are stealing from us. This is the only way to solve this problem and we are confident that every court in the land will agree with us. Therefore, either stop infringing or pay us."

However, we see no such confidence from Microsoft. What does Microsoft fear more than open-source? I believe they fear what all little bullies fear - of being found out. There is no set of ingenious, clever, elegant solutions that they've invented for all the world to admire. There's nothing but noise, bluster and shadowy skullduggery.

Microsoft fears transparency. They fear the light. We all owe it to ourselves to shine our lights as strongly and as directly as possible.

The truth never fears transparency, why then does Microsoft?

Confederacy Of Dunces

One of my favorite books is A Confederacy Of Dunces by John Kennedy Toole. Sadly, it has also become one of my favorite phrases lately as I go through life. First with customer support and now with the sheer pomposity and idiocy contained in comments regarding open-source.

Jonathan Swift wrote the quote that serves as the epigraph for A Confederacy, "When a true genius appears in the world, you may know him by this sign, that the dunces are all in confederacy against him."

Be forewarned, this one is nothing but rant, rant, rant with a little ranting thrown in.

First, lets start with Microsoft's general counsel and their licensing chief sitting down with Fortune magazine and claiming that open-source software violates at least 235 Microsoft patents. O.K., Microsoft, you've obviously counted them, they're already patents and, therefore, have the details published, how about listing them and where they're violated so they can be fixed? Or, is this more about FUD and confusing the market than it is about clarity and intellectual property? Perhaps no patents are violated. Perhaps the patents themselves are invalid and, therefore, can't be violated. By the way, Microsoft, if you need a licensing chief then you've probably gone way too far down the wrong road.

Transparency, transparency, and more transparency. If you're so certain about the violations, publish them and let's deal with them. Of course, obfuscation has certainly been part of your strategy in the past, perhaps this time as well. Remember, security through obfuscation is not secure and strategy through obfuscation is no strategy. I'll touch on the intellectual property disaster we have in a future post, but let's touch on the next dunce in the confederacy.

Bill Hilf now claims that free software is dead. I'm immediately reminded of that beautiful intellectual debate in "Plan 9 From Outer Space:"

Colonel Tom Edwards: ...Why, a particle of sunlight can't even be seen or measured.
Eros: Can you see or measure an atom? Yet you can *explode* one. A ray of sunlight is made up of *many* atoms!
Jeff Trent: So what if we *do* develop this Solanite bomb? We'd be even a stronger nation than now.
Eros: [with disgust] Stronger. You see? You see? You're stupid minds! Stupid! Stupid!

Stupid, stupid, stupid - it's not about free, it's about freedom. It doesn't matter that Red Hat, SuSE, Ingres, MySQL and many others make money off of open-source software. What matters is that I and anyone else can take that software and build off of it, use it, deploy it or do whatever we want without needing anyone's permission.

The software is free, it's open and yet people still figure out how to make money off of it. These companies are transparent. Let's contrast these companies with the closed-source companies who are secretive, battle innovation from the smaller players and are as opaque as can be. With whom would you rather do business?

Lastly, this quote from Bill really gets to me, "We have thousands of pages, thanks to the Department of Justice. There's no lack of clarity on what cheating could be. When I joined Microsoft, I spent a week in antitrust training to know exactly what the boundary conditions were."

Good grief, do you want to do business with a company that needs thousands of pages from the U.S. Department of Justice so they can understand what cheating would be and know their boundary conditions? Only a predatory company with a predatory culture would look at having an anti-cheat playbook as a positive.

Years ago as a teenager I worked for a grocery store. In the store they had a sign, "We don't train our people to be friendly, we hire friendly people."

Microsoft should consider hiring people who play fair rather than trying to train their people to "know exactly what the boundary conditions were."

Business is business. Microsoft can attempt to serve their shareholders in whatever way they believe is best. That's their business and they have to live and die by it as a company. Just give us a break and stop trying to bullshit us and obfuscate the truth, we're not buying it and you shouldn't be selling it.

Monday, May 7, 2007

Phone Tree Magic...

I hate phone trees when I know that I need to speak with a service rep. I've seen some publications on the magic keys to press when you want to speak to a live person but I thought my own experience with MCI was classic. I had already heard the list of options available and none of them fit my situation so I began the automated voice prompting:

Me: Agent
MCI computer: Sorry that is not a valid choice
Me: Operator
MCI computer: Sorry that is not a valid choice
Me: I want to speak with a F*&#()G person
MCI computer: Please wait while we connect you with the next available agent

So, did I just reach their limit of wrong answers or did I stumble upon the "oooh, he's ticked let's connect him with a person" magic code?

Once again, we see that companies have completely lost touch with service to their customers, probably in the name of some supposed profit justification. It only took four calls, multiple visits to their web-site and untold frustrations to simply pay my bill. Good thing I was trying to give them money, I'd hate to see what it would take to get a refund from them.

Wednesday, May 2, 2007

Mysterious Boxes & Processes vs. Open-Source

My last post hit on issues with voting systems and my belief that the software for these systems must be open-source. I'll continue the same topic in this post and argue that there appears, to me anyway, an insidious movement towards secrecy in processes that can carry grave consequences for the innocent. I liken what we're seeing as no different than the witchcraft trials in Salem centuries ago where the only evidence presented is a mystery to the lay-person and we are told to trust the source.

First we'll start with this motion in one of the RIAA lawsuits claiming illegal downloads of copyrighted material. The attorneys for the defendant are seeking to remove the "expert" witness for the plaintiff because the methods are mysterious, not founded on sound, peer-reviewed science and maintain a certain proprietary nature. They argue that methods used to accuse a person must be challengeable and testable. This is at the heart of the U.S. justice system, the accused always has a right to face their accuser.

However, in this particular case, the defense is pointing out that the methods used to identify their client as a scofflaw maintain a certain ethereal quality about them - they can't quite be grasped, examined and proven. There's a certain air of proprietary-ness associated with the methods used to identify these dastardly music downloaders.

Imagine for a moment that you stand accused of a crime. You find yourself in court and the evidence against you is the display screen from a computer program. The prosecution/plaintiff claim that the methods used to identify you are sound and can be trusted but the software used is considered a trade-secret and you'll just have to trust them when they say you are the culprit. You have no right to examine the software, you have no right to know how it determined your guilt - in essence you have no idea the true evidence against you. Have you ever read Kafka's "The Trial?" You should, this is where some would have us go.

With evidence, as with voting machines, the process has to be transparent to be trusted. If I'm ever accused of a crime I want my experts to be able to examine all the evidence, including source code of programs used to implicate me.

Unlike Kafka, I don't fear a conspiracy, I fear incompetence. I think the RIAA lawsuits are full of incompetence. Combine incompetence with bullying and intimidation and you get a lot of innocent people swallowed up in their own Kafkaesque nightmare.

Openness, which means open-source for software, helps to bring us out of this darkness and back into the light. Open-source is all about transparency and I don't fear that.