Once More unto the Breach

Microsoft to Standardize Office Formats in ECMA

The definitive opening post on this is Andy Updegrove.  Andy is an experienced standards lawyer and does wonderful analysis of the news to date.  You would do well to start here because he focuses on the core of the Microsoft strategy starting with the press release and positions the reporting around it perfectly.  (He also collects the relevant press articles.)

Jean Paoli (Scoble interview) and Brian Jones (blog) are proud technologists, so discount their blogs and save yourself some time if you're only interested in watching the standards strategy unfold. (This is not a snide remark -- how do you think they'd talk about their work?  They're both appropriately strong supporters of this effort.)   

The real fuss will begin once the patent license is presented (which both Jean and Brian have misunderstood in the past as well).  Ecma International requires that participants offer reasonable and non-discriminatory (RAND) terms around intellectual property with respect to their standards. 

It will likely be a royalty free license, because the current patent license around the proprietary specification is royalty free.  That patent license, however, couldn't be sublicensed, so an implementer that wanted to license their implementation under the GPL couldn't.  Indeed previous examples around the IETF SenderID standard would force users of other implementations to engage in a license with Microsoft which is a rather onerous problem for free and open source licensed software.  Microsoft will of course hide behind the "it's our property" rhetoric, and label anyone that doesn't agree as either a "thief" or an "IP socialist".  Standards can be a rhetorical game and Microsoft has a fetish about intellectual property (which may well reflect on their constant focus on competitors since IP is a vendor-to-vendor discussion).

As Stephen O'Grady points out in the ZDNet article, there is prior history here.  The C#/CLI standards were also developed at Ecma International, a royalty-free patent license offered to essential patents, and Microsoft will still make no definitive comment about the mono project thereby keeping it in an ambiguous state with respect to its potential customers.  While Novell continues to sell and ship mono, one can only presume there are lawyers from both sides snarling at each other in the ever present legal struggles between these two companies. 

While standards exist to encourage multiple implementations, Microsoft wants to have the imprimatur without the attendant loss in control of what it perceives to be "its property".

It will be fascinating to see the early technical committee meetings.  No changes will be allowed to the Microsoft formats of course, because they will claim that "changes are out of scope" due the millions of users presently using the format.  (This is certainly how the Open Software Foundation played the GUI Wars around OSF/Motif in the early 1990s.)  Indeed the point is to perfectly align the new format standard with the about to be shipped product.

The stress will be discovering how hard it is to maintain exact conformance.  One bug fix after the standard locks but before the product ships could break the link between product and standard.  Likewise, one necessary editorial correction to the document if the product ships first could render the product nonconforming with its own spec.  There could be fascinating compliance angles to be played here by the other vendors. 

This is not to be ignored.  At least one first tier UNIX vendor in the mid-1990s discovered after they shipped, that their C-language compiler was no longer compliant to U.S. government procurement standards, and had to sit there quietly through a two year ship cycle hoping no one at their competitors or in the U.S. government would notice while they fixed it.  Likewise, it would be interesting to know if Microsoft's .NET world conforms to the existing ISO standards based upon its own products.  Indeed the reaction to the question alone would be worth an interview.  (Are all conformance issues fixed in the .NET bug database?  I bet we could check in the open source world of mono.) 

The specifications review work will still (of course) be perfectly tedious. One interesting item will be the publication debates.   Should the standard in all its complexity be published as the XML schema itself?  The precedent was certainly set with the C#/CLI standards and the frameworks at Ecma International.  But that forces a different set of difficulties on reviewers, and one has to have the tools that can run presumably on more than Windows.  Which means there could be reference implementation code to leverage early, but at what cost and under what terms of use?  There are many ways to skin this cat. 

One of the more interesting Microsoft commentaries is from Jason Matusow (Microsoft Shared Source maven) .  It's good that he's getting his opinions in order.  Jason is a master of rhetoric, a brilliant presenter, and a glutton for punishment as the man from Microsoft that gets to present world-wide on Microsoft's open source and Shared Source strategies. 

I've long argued that technology standards is a classical game of diplomacy where after the receptions and tea parties are over, the job is to defend sovereign territory while expanding one's area of economic influence.  If you're really good, your best work goes unseen.  Microsoft would do well to convince Jason to take a new position as technology diplomat to sell the Office standards pitch.  It will require someone with his patience and skills and long experience presenting to governments and talking with the press and analysts to carry this forward properly. 

Let the games begin. 

Interviews and Blogs and National Public Radio

I was interviewed recently for a National Public Radio business segment titled "Microsoft Finds Itself at a Crossroads".  The story ran yesterday.  This interview is what provoked my post on Microsoft a couple of weeks ago and its follow-up.  I'm a little sensitive to what editors do to reporter's work to "punch up" a story.  (Think about what just happened to Shai Agassi from SAP.) 

I've been using the blog as backup to thoughts and ideas expressed in interviews that then pass through the editor's shears. Recognize that the one minute of audio on NPR was culled from a 30 minute interview.  The couple of quotes in Business Week came from about an hour and a half of discussion. Blogging (to me at least) is a great way to maintain the integrity of the ideas that would otherwise be lost on the cutting room floor.

The First Boston MySQL Meetup (and the next)

MySQL users in the Boston area congregated at Optaros Monday night.  A lot of them. I'm guessing close to 50 people.  It was a good gathering.  Here are good write-ups from Sheeri Kritzer (who is organizing it) and Mike Kruckenberg. Greg Corrin from O'Reilly provided books and t-shirts, as did APress (for whom Mr. Kruckenberg wrote the Pro MySQL book).  Mark Rubin (New England account executive) from MySQL provided the pizza.  (Thanks!)

Optaros will be hosting next month's MySQL meeting on 12 December.  I imagine the details  will appear on Meetup.com again , or keep your eye on Sheeri's and Mike's blogs.

Directions and map to the Optaros U.S. Corporate Headquarters are here for the uninitiated.  We're right around the corner from the TD Banknorth Garden and North Station, with access to the Green and Orange Lines.

Welcome back!

Open Source and the New Microsoft Strategy

I started the week posting why I thought MSFT wouldn't be trading in 10 years.  It is a dinner wager started at last week's Open Source Business Conference.  A few friends publicly chided me, and with good reason.  It is a rather bold statement. This week's leaked memos from Ray Ozzie and Gates give me hope however that I may get dinner sooner.  Let's look at the developing discussion.

Matt Asay tackled the US$60B war chest angle, and pointed out the survivability of IBM, HP, and Apple to counter my DEC example.  Stephen O'Grady outed himself as one person on the other side of the dinner wager in his del.ico.us links for 9 November, but in the same collection includes pointers to the ZDNet story on the Ray Ozzie and Bill Gates "leaked" memos, as well as this excellent news item on the French tax agency (Direction Générale des Impôts) moving 80K desktops to OpenOffice on Windows to considerable cost savings.

I responded to Matt in comments on his post, but collect that response here:

I agree that a $60B cash reserve of shareholders money sure looks like a lot for a company with a market capitalization of $260B depending on the phase of the moon. Of course when the market starts correcting the stock price down, that $60B looks more like an asset than a war chest.

I would also point out that each of his examples survived for different reasons:

• IBM is a much older corporation that has transcended its original product brands and has rolled over multiple executive management teams, so as a corporate culture they can withstand new executives and they're not trying to tie all their new advances to the Selectric typewriter brand.
• HP is a collection of companies flying in a general direction under a brand, similar to a GE.  It can rapidly "buy" and "sell" divisions to change the mix of offerings to customers.  While this might prove a little hard on the employees in the divisions, it is a viable way for a corporation to survive. 
• Apple has focused religiously on its customers and their brand from its inception. They focused on profitability over market share.  They are laser sharp in their drive for design. Without the extreme pressures for growth, they had a chance of maintaining the cult of the customer and customer focused design within their culture. 

Microsoft has much more in common with Digital Equipment Corp. than any of those three companies. 

The two memos from Ray Ozzie and Bill Gates are actually timely demonstrations of why I think MSFT won't be a trading stock in a decade. Robert Cringely does the best job of tearing the memos down here.  Most damning was the simple business observation that:

Remember that for Gates and Ballmer to be happy, Microsoft will have to maintain $2.5 billion per month in revenue and $1.5 billion per month in profit. That's FIVE TIMES the size of Google without Google's ad expertise or ad infrastructure.  It simply won't happen.

Even Matt took umbrage with the Ray Ozzie memo's focus on advertising for the simple reason that we as customers are looking for ways to avoid advertising, not embrace more ways for it to become central to our existence to support their business.  I'm a happy TiVo user because I can watch television the way I want to watch it. 

I would point out a couple more things in the leaked memos:

• Once again Microsoft is focusing on the competition as an aggressive follower, rather than focusing on the customers to deliver new solutions to problems they want to buy. Hint: Focus on customers.  That's where the money is. 
• Ozzie paints this bright new world then says: "But in many areas we have 80% of the product and technical infrastructure already built – we just need to close the 20% gap." What's the message for the team here?  If you work just a little harder we'll win?  We might move the stock and be able to reward you the way we rewarded employees in the end of the 1990s?
• It's not about tightly integrated innovation.  I don't want to be beholden to a single software vendor.  I don't care if my TiVo doesn't run the same software base as my Linksys router.  The successful companies are disintermediating the big companies. 

The complete failure in Ozzie's memo to recognize open source as a development tool or community as a customer engagement mechanism is stunning at this point in the industry.  So many of the things he wants to enable and compete against were precisely enabled through open source community developed software. He observes:

"The rapid growth of application assembly using things such as REST, JavaScript and PHP suggests that many developers gravitate toward very rapid, lightweight ways to create and compose solutions." 

The ratios we have been unable to escape in decades of software development are how few lines of bug free code a good developer can deliver per day, how many bugs an excellent software process will still deliver (~1:1000 loc), and the cost of maintenance over the history of an application in deployment (~80%).  Every new strategy around architecture and re-use (modules -> objects -> components -> web services) and every new programming paradigm (object oriented, little languages, dynamic languages and scripting) has been focused on beating these ratios by reducing the amount of code we write and maintain.  Software (just like I talked about business execution the other day) is hard work.  Collaborative development is proving to be the best way to develop high-quality re-usable components. 

Jason Matusow gave an excellent talk on open source at Microsoft at the Open Source Business Conference last week.  Clearly Jason "gets" it.  And I know for a fact that there are others at Microsoft that also understand the business tool open source represents.  I have certainly written about their trials and lost opportunities in this regard before.  But the executives in these memos effectively just told the world that open source is not core to the mission. Their loss.  But the company also just told all their employees that open source is not core to the mission. As I observed before, executive bandwidth is one of the rarest of resources at Microsoft. Getting executive sponsorship for projects that might save the company depends upon such bandwidth. 
 
The nice thing about this dinner wager is that if I'm wrong and I lose, I won't have to pay for ten years.  On the other hand if I'm right, I'll be able to collect a lot sooner if this is the way the company is going to execute. 

MySQL Boston Area Meetup, 14 November at Optaros Offices

MySQL users in the Boston area are meeting together next Monday, 14 November.  We have offered up space for them to meet at the Optaros offices.  Here are the details on Meetup.com. 

My understanding is that O'Reilly Media will be on hand this meeting as well. 

Directions and map to the Optaros U.S. Corporate Headquarters are here.  We're right around the corner from the TD Banknorth Garden and North Station, with access to the Green and Orange Lines.

Welcome!
 

MSFT will not be Trading in Ten Years

Update [11-Nov-2005, 12:32]: This post started some fun discussions (caught in the comments and trackbacks).  I've followed up with commentary here.

This began as a friendly hallway wager (for dinner) with friends at the Open Source Business Conference this past week.  The discussion has expanded, however, beyond a circle of friends so I thought it best to clearly state the "what" and "why" of the bet. To be clear, I don't wish the company ill will.  I just think they're about to discover some new realities.

Last Spring I posted an opinion on OpenOffice in a slightly different context.  Here are the bits relevent to this discussion:

• It will be OpenOffice on Windows XP that will cause a revenue slide, a few quarter on quarter losses, and the shareholders to react bluntly.
• Firefox has given Windows XP desktop users a taste of open source. The average consumer is merely downloading the binaries and discovering it's a more than good enough user experience.
• OpenOffice on Windows XP becomes an interesting next step. 
• With no licensing fee, it becomes a very inexpensive experiment to load OpenOffice on a large class of workstations in the average enterprise that already pays for Microsoft Office through its Enterprise Agreement. 
• OpenOffice reads Microsoft Office documents in a very direct manner. 
• The user interface is familiar enough.
• The ability to generate PDF for distribution in OpenOffice is also a god send.
• Once the experiment runs its course and the numbers become apparent, the enterprise procurement team can then have a different discussion with the Microsoft account exec when they arrive to negotiate the next three year enterprise agreement. I imagine they'll be able to at least call for a 20% reduction in Microsoft Office licenses.  (The sticking point for a larger percentage will likely be the Outlook email client, but even that switches nicely to Thunderbird on Windows XP.) 
  

This licensing negotiation will be even stickier if upgrading to the next version of Microsoft Office really requires Windows Vista to run. 

In the Innovator's Dilemma, Clayton Christensen talks about over delivering on functionality, but in the Innovator's Solution he gets into what actually happens in the market at that point.  When an encumbent starts over delivering, and customers can't absorb the new innovation fast enough, (and therefore are unwilling to pay for it) a call for standardization comes from the marketplace.

We have the terminology and economic models to actually see what's happening now.  We can witness forward so to speak, and not have to wait for a decade to dig through the data that would only have arrived too late to save the company anyway.

The standard has happened.  It's OASIS Open Document Format (ODF).  The vendor competition is driving this home.  Witness the speed of action from IBM and Sun supporting the Commonwealth of Massachusetts decision to require ODF for document archive purposes.  Andy Updegrove has a couple of excellent reports from last Friday's Open Document meeting in Armonk. 

Even if the political machinations that are ongoing in the Commonwealth cause the decision to be badly delayed, other governments will begin looking at the technology and route around the political minefields in their respective situations. Corporations will follow. 

Microsoft will react in very predictable ways.  (Here I'm even willing to give them the benefit of the doubt on their role in the Massachusetts political machinations.  I don't tend to ascribe to malice what can be explained by simple ignorance, or in this case the pettiness of politicians that weren't asked about an issue they felt they should have a say in.)  First, they will tell the sales force to "not lose to OpenOffice" because they believe it's about innovation and marketing, not value and solution.  They may even tweak compensation models to enable the sales teams to rapidly discount around the OpenOffice experiments.  This will accelerate their problem.  But regardless of whether an enterprise negotiates a discount based on lowered Microsoft Office licensing requirements or because the Microsoft sales team dropped the price, it's still lost revenue. 

Second, they will continue to hammer away at the message that it's about innovation, and tightly integrated innovation at that.  But the problem is that they've already innovated past the needs of most of their users in Office.  Delivering more innovation exacerbates the problem.  You can almost hear the bewilderment in Alan Yates statements around Microsoft Office formats versus ODF.  He doesn't "get" why customers would choose a "less innovative" solution. 

This situation is very different from Linux versus Windows: 

• Switching to a Linux desktop is a risk prone experiment in the eyes of the average CIO.  Here they can easily load OpenOffice beside Microsoft Office on the same machine for free. 
• Tightly integrated innovation still works in the delivery of Windows desktops.  Microsoft Office has massively over delivered and more innovation is the last thing customers really want. 
• Because of the fidelity between OpenOffice and Microsoft document formats, this situation is much more dangerous than the tough migration of Windows to Linux, and the speed that things change will likely be very very rapid. 

Microsoft Office represents a considerable amount of their revenue stream.  It won't take many OpenOffice experiments (15%?) to impact that revenue stream.  So there will be a down quarter or two and Wall Street will punish Microsoft through its stock price.  Microsoft will have to behave differently: they won't be able hire, compensate, and retain staff the same way.  They won't be able to execute in the same way.  A number of friends made reference to the war chest cash reserves Microsoft has as if this somehow proved the argument for them.  One has to remember that the cash reserve, large as it is, is the shareholders' money.  It's profits.  They won't simply be able to spend the cash reserve either. (Indeed one of the toughest things I learned in my first start-up was the hard decisions you are forced to make because of your fiduciary responsibility.) It will be interesting for the financial analysts amongst us to see how creative Microsoft becomes trying to cover for a down quarter out of the cash reserve. 

Microsoft is still on its original executive team.  When IBM stumbled and Gerstner came on board, IBM was already well past its first CEO and early brands around adding machines and later Selectric typewriters.  The Microsoft exec team still believes it's about delivering more and more value on the Windows and Office brands.  They will continue to execute on the current Windows and Office cash centers as well, because that is their high margin business, and that's what Wall Street rewards. 

Surrounded by the bricks and mortar of the Redmond campus, it's hard to think of a world without Microsoft, because there is obviously so much going on around you.  There are people everywhere.  The grounds are beautiful.  But as I sit here in Boston writing this post, I can remember a different time and a different company.  We wouldn't have believed Digital Equipment Corp. could fail either.  Yet in the space of 2 years from 1988 to 1990 they went from industry juggernaut at the top of their game to a very troubled organization thrashing about in a new market order. And a few years after that they were acquired by Compaq (at the height of their game). 

DEC had over delivered.  Customers couldn't absorb more and more innovative VAX technology each year.  Standards happened (POSIX/UNIX).  Customers migrated away from a vendor locked de facto technology to a de jure based standard with multiple implementations that were initially inferior to the de facto technology. The economic model works.  We are indeed watching history present itself. DEC employees went on to other jobs — some with Compaq — and some now with HP.  Buildings had new signs put on them.  The economy moved on and the high tech industry still calls Boston a home. 

Microsoft's hubris will be a belief that the software business is different.
Quod erat demonstrandum.
 

Nothing Goes Away on the Web

Tom Adelstein has published an article recently in which he pulls an article using the Way Back machine that I wrote for USENIX ;login: a decade ago on the U.S. government bid protest in which the question was debated as to whether or not NT was a "POSIX" operating system. 

When I was being qualified as an expert witness in this bid protest, opposing counsel certainly had every thing I had published in old fashioned paper form to that date on the table in front of them, trying to get me to contradict myself in front of the judge.  (The entire experience was a fascinating introduction to the legal process.)  I am fortunately coherent (if not completely articulate) in my opinions over time with respect to software standardization, development, business economics, and open source.  My opinions evolve, but I have not (yet) changed opinions on these subjects in any sort of contradictory way.

I worked at Microsoft through a period when email was in the news constantly because of litigation involving evidence exhibits of interesting emails.  The unwritten rule of email was never write anything that you weren't willing to see blown up in 100 point type on a court room projector.   Debates continue about personal email in a work context.  This discussion will no doubt evolve to instant messenger chats and text messages.  The RADAR open source project we released certainly allows all such traffic to be captured and indexed if you were a U.S. financial institution needing to track every communication and still wanting to use the most current technology tools available. 

And now we all blog.

Our lives, however, are no more transparent than before it all went online.  In a legal context, everything is still discoverable (in the legal sense), but now that discovery is easier and faster.  In the social context,  when we communicate we need always to consider the context, peoples' perceptions and memory (fickle that it can be), and how it will represent us not just now but in the future.  This applies whether in a blog posted editorial or a refereed journal article, in a letter or card to a loved one, in front of a room full of people at a conference or in the pub over beer with coworkers.  The online world hasn't changed this. 

Even the reach I may have world wide through a blog posting found by Google doesn't change the necessity to consider international values and perceptions, as we have always had world-wide distributed media, books, conferences, journals, etc. 

A friend once (enviously) accused me of saying things other people only think.  But for all the things I "share" there is still a wealth of private material buried deeply.  (Indeed I can hide it better by boldly sharing other things.)  We self edit and self mediate all the time.  The online world doesn't make our lives more transparent than we already were willing to share (or not). It simply makes those things we share more accessible. 

The Open Source Investment Bubble

Matt Asay recently posted about this China Martens article for which he was interviewed.  In it the question is asked as to whether or not we're in the Open Source 2.0 bubble.  Yes, we are — so what?

VCs invest in companies all the time.  Many of those companies fail.  Execution is hard work and VC funding hides a myriad of bad decisions until it's too late.  Jo Tango from Highland Capital Partners is quoted in the article saying:
What won't ever change are: What value are you offering so that you can charge customers? How can revenues exceed costs? How can you build a business thoughtfully over time so that it is sustainable?"

Exactly so.

Part of the problem is that we love to categorize things.  Is it a hardware company or a software company?  Is it an open source company or a closed source company?  The categorization I especially love to despise is "hybrid company".

Geoff Moore in his April 2004 Open Source Business Conference keynote offers up an example that may break us out of that problem of narrowing our thinking around labels.  He talks about "pizza" companies and the concept of core customer value propositions and business context.  For Dominoes Pizza it's all about 30 minute delivery.  The pizza is context.  For Chucky Cheese it's all about animatronics and the childrens party atmosphere.  The pizza is context.  For Papa Murphy's however, the take-and-bake pizza is core.

For all the companies on parade at the OSBC East conference this past couple of days, it doesn't matter whether it's a software company or a hardware company, and how they're using open source.  Open source is irrelevent to the discussion. 

A company exists to provide a return to it's stakeholders.  It does this by having lots of happy customers that give it money time and again, and tell all their friends about how happy they were giving it money.  (And I believe you succeed at that by having happy employees focused on making those customers happy.)  But while the statement of that is simple, the execution is hard work. 

I don't wish any of the companies I saw at this Open Source Business Conference ill will, but I also think many won't exist in three years time.  Even for a company with a viable business model and a great offering, execution is itself still hard work.  (And I'm not convinced all the companies I saw have great offerings.) 

And just as open source is somewhat irrelevent to the discussion about business models and offerings, the reverse is also true.  Regardless of the brilliant successes and train-wreck failures of these companies (and all of the others that are getting funded in the open source space), collaborative development with complete source code access remains an incredible way to develop software and FOSS licensing remains a powerful business tool for finding and engaging customers.  We don't use the internet any less after that bubble burst, nor will we use open source any less either.

Massachusetts Hearing on Open Document Format

Andy Updegrove was present.  Here are his impressions and his near verbatim typing of the proceedings.  It speaks for itself.