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.