As the ODF-OOXML world turns

I’m a bit behind on this, but it’s a topic I’ve been covering for a while now so I wanted to follow up. First, from the the 451 group:

Oh the drama. Most of us knew ISO approval of Microsoft’s OOXML format was not the end, but more of a beginning in the ongoing fight for the future’s file format. Any doubts of that were put to rest this week with a flurry of activity around OOXML’s approval, ODF adoption, Microsoft’s support and the stance of U.S. states and other governments.

Much of it started with Microsoft’s announcement that it would expand its Office 2007 format support, including ODF. The move, which means Office 2007 users will be able to set ODF as their default file format, is further evidence of changes at Microsoft and the need to support multiple formats and interoperability. However, it still drew criticism from a number of ODF proponents/OOXML opponents, whose concerns include the typical Microsoft skepticism, but also center on the software giant’s OOXML approval campaign and previous statements downplaying the market for ODF.

We also saw further objection to ISO’s OOXML approval, primarily an appeal from South Africa. As format expert and saga watcher Andy Updegrove points out here, the appeal centers on the approval process and also on the ‘business basis’ for OOXML’s fast-track approval. Despite that relatively rapid approval, Updegrove points out that, ironically, Microsoft Office users will not have the opportunity to use the file format until Microsoft’s coming Office 14, expected in 2010 at the earliest.

Microsoft credited customer and government demand for its new found ODF love, but we also saw indications it may also involve difficulties in backward compatibility with OOXML. As ZDNet’s Tom Espiner points out, ‘The company now says OOXML support would require substantially more work.’ This comes as no surprise to many open source software users who have come to the same conclusion over the years. In fact, the inability of Microsoft to support different versions of its own Office and format software has fueled many OpenOffice.org downloads over the last few years, including my own.

Still, customer demand as the reasoning behind Microsoft’s ODF support was reinforced by yet another development in the ongoing format saga: findings from the State of New York. While the state’s officials indicated it would be a mistake to name ODF or OOXML as the standard of choice, New York’s format wonks did indicate that openness is the path to the future. That does not necessarily mean ODF, but it certainly makes it more likely given the controversy, uncertainty and drama still surrounding OOXML.

Since that post, Brazil and India have also decided to appeal. The deadline to appeal has now passed. The India post by Andy contains some good “what comes next” information for those that are interested. The appeals all have some items in common, but each also has points made only by that country. It’s clear that Microsoft did some very shady things during this process. It’s a sad indication that the company is still not willing to compete on the merits of its products on the one hand. On the other hand, they recently announced that Office 2007 would support ODF but not OOXML:

Microsoft today announced that it would update Office 2007 to natively support ODF 1.1, but not to implement its own OOXML format. Moreover, it would also join both the OASIS working group as well as the ISO/IEC JTC1 working group that has control of the ISO/IEC version of ODF. Implementation of DIS 29500, the ISO/IEC JTC 1 version of OOXML that has still not been publicly released will await the release of Office 14, the ship date of which remains unannounced.

So they fast track an office format while a competing one already exists, push it through the approval process using tactics that are questionable at best and then decide to only implement the competing standard in the current shipping product. You couldn’t make this stuff up. It’s clear that the internal battle within Microsoft is still raging. Part of the company really want to change, but part of it really doesn’t. It remains to be seen which side will prevail, but it’s not difficult to see why many in the Open Source community remain wary.

–jeremy

Ozzie: Open Source a more disruptive competitor than Google

I’ve often said that for Microsoft to truly change, Ballmer will have to go. On the other hand, Microsoft should be clinging to some other top level execs with a kung fu grip. Ray Ozzie is one of those execs. The vision and leadership he’s shown over his career is exceptional. He gets it. With that in mind it wasn’t a real surprise to hear him say this:

Google has nothing on open source when it comes to potential competitive threats to Microsoft, according to Redmond’s Chief Software Architect Ray Ozzie.

Ozzie fielded a number of questions on his role at Microsoft and the company’s evolving technology strategies during an appearance at the Sanford Bernstein Strategic Decisions Conference on May 28. (I listened to his session via the Webcast.)

Ozzie reiterated that it often takes a strong competitor to truly galvanize Microsoft.

“Microsoft has built up a culture of crisis,” Ozzie told conference attendees.

Competitors like his former employer, Lotus, and now, Google, have spurred the company to make changes to its business to stay ahead, Ozzie said. But while Google is a “tremendously strong competitor,” Ozzie acknowledged, “open source was much more potentially disruptive” to Microsoft’s business. (He noted that, unlike Google, many open-source programmers aren’t beholden to shareholders.)

Ozzie said that competing with open source “made Microsoft a much stronger company.” He cited changes Microsoft has made to its business model — such as focusing on making its closed-source software interoperable with open-source products — as directly attributable to that competition.

You see, Google is a company… and Microsoft knows how to compete with companies (although they are proving completely unable to compete on the web, despite both huge efforts and large amounts of cash). Open Source is a movement, and that concept is proving troublesome for many at Redmond. Keep in mind that in my opinion Google would never have been possible without Open Source. Open Source enables companies like Google to exist, and that’s really powerful. It’s literally changing the rules of the game.

So why is Ballmer still in charge? I’m not sure. I thought the failed Yahoo! blunder may be enough to do him in, but it looks like that isn’t going to be the case. In a way, I guess many of us in the OSS world should be happy. The longer he’s around the more time we have to mature and hone our products and skills. It’s hard for a behemoth like MSFT to turn around, but once they do – look out.

–jeremy

Microsoft Walks Away from the Yahoo Deal

Unless you were in a cave over the weekend, I’m sure you’ve seen that Microsoft has walked away from its 40B+ Yahoo acquisition attempt. I’ve largely avoided the topic, but do have some commentary now. Note that many people think this is just a posturing attempt by Microsoft and that’s entirely possible. First let me say that I think the merger would have been spectacularly bad for Microsoft. The cultural and integration issues alone would have been nearly unsurmountable. Would the mail portion of the deal even have gotten regulatory approval? How many high profile departure would you have seen? How many projects that really give Yahoo much of its street credibility would have been crushed? I’m not sure that Flickr, delicious, Zimbra and many others would have gone to Microsoft given the choice. That being said I think the deal would have been bad for Yahoo as well. Microsoft has had a terrible track record on the web and has multiple cash cows to protect. In the end the only way I saw the deal being feasible would be if Microsoft spun things out into a fully autonomous company. I didn’t see any indication that was going to happen.

On to Ballmer, I really think this underscores the fact that he needs to go if Microsoft is going to turn itself around. He seemed to have no coherent plan here. It almost seems if he woke up one day really wanted Yahoo and just didn’t think it through. Microsoft wants to compete with Google so bad they seem to be getting irrational. It’s clear they can’t do this organically, but I really don’t think Yahoo was the answer.

Next come the shareholders. There’s already a ton of speculation that this will result in shareholders lawsuits. To me that makes no sense for a couple reasons. First, as a shareholder it will distract the company and further drive down the price of the stock. The more tragic part though is the current state of the street. Everyone is so concerned with the next days closing price that very few people take the long view anymore. Unless you’re day trading, if you invest in a company you should be looking at the long term. That means trusting management. IMHO shareholder lawsuits should be reserved for gross negligence and other egregious acts. We remain far too litigious and it’s going to come back to haunt us. FWIW, the stock currently sits in the mid-24 range, which makes it down about 12%. That’s not nearly as bad as some people were speculating. MSFT is up mildly.

On to morale. Most people within Microsoft seem to be happy about the deal falling through. Many jobs have been saved and they get to keep their $43B cash horde. This happiness may wear off as soon as they realize they still are not effectively competing in the space, but with that much cash they should be able to figure something out. Things aren’t as clear at Yahoo. Yang and co are clearly happy, but the rest of the staff seems to have people on all sides of the equation. It will take Yahoo having a couple very good quarters or making a really compelling announcement for that to change if I had to guess. It’s been a long few months if you work at YHOO.

So were do things go from here? There has been talk of Yahoo grabbing AOL. I can’t see that making any sense, but let’s hope Yahoo doesn’t do it just to look like they’re making moves. MySpace seems a little more reasonable. I also see reports that Yahoo should buy back a bunch of stock. At first glance that makes a ton of sense, since the board clearly thinks the stock is way undervalued at the moment. With only $2.5B or so in cash though, they won’t be able to make a big enough dent to really make it worth while. The money could almost certainly be spent better elsewhere.

Some additional thoughts:
* This deal would have been really bad for Open Source. Zimbra is the first thing that comes to mind, but Yahoo does more in the Open Source space than they get credit for.
* It looks like Bill Miller and a couple other huge holders would have gotten behind a deal in the $35 range. If Microsoft really wanted the company, they almost surely could have had it.
* It will be interesting to see if Yahoo moves forward with the Google outsourcing, or if that will prove to simply have been posturing.
* Yahoo must have made it really clear that if Microsoft went hostile, that they would poison pill themselves to death. We don’t get too many of these in our industry and Yahoo is actually setup poorly to defend against a proxy fight, since everyone comes up for election at once.

Additional reading:
Kara
NYT
“The distraction of Microsoft’s unsolicited proposal now behind us”

I’m sure I’ll have more thoughts on this as it unfolds.

–jeremy

OSBC: Footnote with Brad Smith

You have to hand it to Brad Smith, general counsel for Microsoft. Last night he delivered the “footnote” address at the Open Source Business Conference 2008. Not only was the general counsel for Microsoft going to have a tough crowd, but he agreed to talk for 30 minutes, then get questioned by a panel [Mark Shuttleworth (Ubuntu), James Bottomley (CTO, SteelEye and Linux kernel maintainer), Andrew Updegrove (standards lawyer extraordinaire), and Stephen O’Grady (Redmonk co-founder)] for 30 minutes and then get questioned by the audience for 30 minutes. As you can imagine some of the questions from the audience were less than constructive, but overall I think things went well.

Some of the highlights (as I remember them).

* Brad stated definitively that in his opinion the general Open Source community does respect IP. This is the first time I have heard someone from Microsoft say this in such a pointed way.
* He admitted that Microsoft had some messaging problems around Linux and Open Source in the past (a cancer, for instance). In his opinion Microsoft has legitimately changed its opinion on the topic, fueled by customer demand.
* Microsoft is generally interested in wider interoperability with the Open Source community, but admits there are issues around both patents and other items. Also remarked that while Microsoft did not initially lead this effort, market leaders typically do not.
* When asked more specifically about the patent issue by James (and then an audience member), his answer was that “there’s no easy answer to this problem.” He did add that he and Microsoft were more than willing to continue a dialog, but that compromise would be needed on both sides. It was pointed out that on some of the issues the Open Source methodology will not allow compromise, which kind of left things up in the air.

I think it’s clear that some parts of Microsoft really are opening up to the idea of change. I still remain skeptical that real change is possible while Ballmer remains in charge, but I do think the beginning of the foundation can start to be formed. Whether this will go somewhere substantial or whether it’s just lip service remains to be seen, but time will make that quite clear.

–jeremy

Microsoft Makes Strategic Changes in Technology and Business Practices to Expand Interoperability

A little late on this, but better late than never. By now, you’ve probably heard about the Microsoft press release regarding “New interoperability principles and actions”:

Microsoft Corp. today announced a set of broad-reaching changes to its technology and business practices to increase the openness of its products and drive greater interoperability, opportunity and choice for developers, partners, customers and competitors.

Specifically, Microsoft is implementing four new interoperability principles and corresponding actions across its high-volume business products: (1) ensuring open connections; (2) promoting data portability; (3) enhancing support for industry standards; and (4) fostering more open engagement with customers and the industry, including open source communities.

“These steps represent an important step and significant change in how we share information about our products and technologies,” said Microsoft chief executive officer Steve Ballmer. “For the past 33 years, we have shared a lot of information with hundreds of thousands of partners around the world and helped build the industry, but today’s announcement represents a significant expansion toward even greater transparency. Our goal is to promote greater interoperability, opportunity and choice for customers and developers throughout the industry by making our products more open and by sharing even more information about our technologies.”

As you may have guessed, the blogosphere was abuzz with activity shortly after the announcement. First, let’s start with the basics. The products covered in this announcement are: Windows Vista (including the .NET Framework), Windows Server 2008, SQL Server 2008, Office 2007, Exchange Server 2007, and Office SharePoint Server 2007, and future versions of all these products. The key promises are: “Ensuring open connections to Microsoft’s high-volume products”, “Documenting how Microsoft supports industry standards and extensions”, “Enhancing Office 2007 to provide greater flexibility of document formats”, “Launching the Open Source Interoperability Initiative” and “Expanding industry outreach and dialogue”. While I see the word Open Source being used quite a bit in conjunction with this release, I see very little reason why. This is about API and protocol access for the most part. This will certainly help Open Source developers, but it isn’t Microsoft actually opening any code (or even changing their stance on Open Source from what I can tell).

Let me say that this could be the beginning of a fairly major shift for Microsoft, a change that most feel is long overdue. As usual though, the devil is in the details. Is this announcement fluff or substance? The first major hole I see is that the “covenant not to sue open source developers”, along with some other pieces, only pertain to “non-commercial” distribution/implementation. This makes room for a lot of gray area on how you define commercial use. Also, from what I can tell, the patent provision terms discussed in the announcement are not compatible with most Open Source licenses. That being said, it’s also a far cry from Microsoft calling Linux a cancer, so it’s certainly a step in the right direction. The real driver here, however, is almost certainly customer demand and a landscape that is shifting underneath the feet of Microsoft. I think the 451 group puts it well:

“Nudged by the European Union’s Court of First Instance, but more likely the result of a hard look at market dynamics and the competition, Microsoft has opened up its APIs and pledged to work more openly with the rest of the industry, including the open source community, on interoperability and standards issues. It’s an acknowledgment that in today’s world, many more flowers bloom when platform companies make their APIs completely open for developers to write to, a la Google and MSFT’s recent investee, Facebook. This is yet another thing Google has taught the largest software company in the world. It appears on the face of it that Microsoft now intends to live by the merit of its products, rather than rely on lock-in.

“As a result, developers should gain the potential to tie applications more closely into Microsoft’s Windows, SQL Server, Office and Exchange Server products with greater flexibility and innovation, perhaps through self-sustaining developer communities. SharePoint could also benefit from a platform approach, becoming a de facto central application for large segments of the market. And Microsoft is aiming to make open source applications run as well on Windows as they do on Linux, enabling it to continue competing against Linux while at the same time accepting and working to support open source projects.”

As it stands, whether this is a major announcement or a marketing fluff piece will become apparent in the coming months (and years). As real news comes forth, I’ll certainly be following it and will post updates. In the meantime, here is some additional reading:

Mary Jo Foley
Response from Red Hat
Groklaw
Bill Hilf
Andy Updegrove

One final note. I think one thing is absolutely clear. If this is to be the beginning of real change for MSFT, Ballmer has to go. I’ve said that before and I stand by it. It will not be possible for them to change with him in charge. Don’t think so? During all the talk of openness from Microsoft during this announcement, I leave you with his words from the press conference:

BRAD SMITH: With respect to other (commercial) distributors, and users, the clear message is that patent licenses will be freely available.

STEVE BALLMER: Patents will be, not freely, will be available.

BRAD SMITH: Readily available.

STEVE BALLMER: Readily available for the right fee.

–jeremy

Time To Change Microsoft – Yahoo (MSFT/YHOO), Here's a Better Deal

A quick update on the Microsoft – Yahoo deal. Now that people have had a chance to digest the deal a bit, I notice the sentiment is turning negative. Microsoft shareholders are walking and employees of both companies seem unhappy. The value of the offer has shrunk over $2/share already. It also seem clear that Jerry does not want the deal to happen. The only winners so far seem to be short- and mid-term YHOO shareholders. While it’s unclear if another suitor will jump in or make Microsoft up the bid, it seems unlikely. It’s still possible Yahoo could outsource its search to Google, but it’s clear that doing nothing is not an option. Since I think the deal would be bad for Open Source in a lot of ways, I was glad to see a reasonable proposal posted recently. It’s clear that Microsoft just does not do the web very well. Despite piles of money and a lot of motivation, they continue to fail miserably. The fact that they had to make this offer shows just how little faith they have in getting things done on their own. Forcing Yahoo to become part of Microsoft would almost certainly be a disaster. How this is going to play out is still up in the air, but I’ll be watching closely.

As a side note, I’ve seen a couple posts made that indicate this deal could be the beginning of the end for Microsoft. I think that’s a bit dramatic, but I will say that the fact that Ballmer is still CEO does surprise me a bit.

–jeremy

Microsoft offers to buy Yahoo in $44.6 billion deal

It’s been rumored on and off for years now, but Microsoft just made an unsolicited $44.6 billion bid for Yahoo. The bid, which would consist of cash and Microsoft stock, values Yahoo shares at $31 a share, a 62% premium on Thursdays closing price. More analysis here. Yahoo has rebuffed Microsoft in the past, but this time the offer might be one they can’t refuse. The price of YHOO stock after the announcement indicates the market thinks there is a high probability of a deal. This deal is clearly about Microsoft not being able to compete with Google, and not being too happy about that. Ironically, I don’t think this deal will help them compete any better. On the other hand, Yahoo has been a huge friend to Open Source. In addition to things like YUI (which we use at LQ) and Hadoop, they acquired a great company in Zimbra. To me, Zimbra is one of the only real long term threats to Exchange. Unfortunately, I’m not quite as optimistic as Matt about the future of some of these Open Source initiatives if Microsoft were to take over. I’m not sure companies like Flickr, del.icio.us, MyBlogLog, Zimbra and others would have sold to Microsoft… and for good reason. The cultures at Yahoo! and Microsoft are just entirely different. Concerns like that sometimes go out the windows when $44B is on the table though. Long term, I think Yahoo could probably offer more shareholder value alone than as part of Microsoft. The market doesn’t really think long term anymore, however, and in the short term Yahoo is hurting.

–jeremy

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