End Runs Around Vista?

BusinessWeek recently ran an article that indicated that HP may be working on a version of Linux to ship on its hardware:

The ecosystem that Microsoft (MSFT) has built up around its Windows operating system is showing signs of strain. In one of several recent moves by partners that sell or support the company’s software, Hewlett-Packard (HPQ), the world’s No. 1 PC maker, has quietly assembled a group of engineers to develop software that will let customers bypass certain features of Vista, the latest version of Windows. Employees on a separate skunk works team are even angling to replace Windows with an HP-assembled operating system, say three sources close to the company.

HP acknowledges the first effort. The company formed the “customer experience” group nine months ago and put at its helm Susie Wee, a former director in the company’s research labs. Her team is developing touchscreen technology and other software that allows users to circumvent Microsoft’s operating system to watch movies or view photos more easily than they can with Vista. “Our customers are looking for insanely simple technology where they don’t have to fight with the technology to get the task done,” says Phil McKinney, chief technology officer in HP’s PC division. After Vista was introduced last year, it drew criticism for slowing down computers and not working smoothly for certain tasks.

McKinney says any discussions about building an operating system to rival Windows are happening below senior-management levels. He doesn’t deny some employees may have had such conversations, but he says HP isn’t devoting substantial resources to such projects. “Is HP funding a huge R&D team to go off and create an operating system? [That] makes no sense,” he says. “For us it’s about innovating on top of Vista.”
WEANING FROM WINDOWS?

Still, the sources say employees in HP’s PC division are exploring the possibility of building a mass-market operating system. HP’s software would be based on Linux, the open-source operating system that is already widely available, but it would be simpler and easier for mainstream users, the sources say. The goal may be to make HP less dependent on Windows and to strengthen HP’s hand against Apple (AAPL), which has gained market share in recent years by offering easy-to-use computers with its own operating system.

HP’s moves come as several of Microsoft’s closest partners are stepping up their support for Windows alternatives.

To be honest, I’m almost surprised that HP or Dell hasn’t done something like this already. It’s clear that consumers do not like Vista and Apple is making huge strides recently. Moving to an in house Linux variant would give an OEM more control over their own destiny, better integration with their own hardware, product differentiation and higher margins. That being said, it would also come with the potentially steep downside of annoying Microsoft, who has proven they are willing to punish OEM’s for seriously considering alternative desktop Operating Systems in the past. We may be reaching a turning point though. At some point soon I think you’ll see that Microsoft just may be more dependent on the OEM’s than the other way around.

So, that brings us to the following question: why is HP letting this news out in this way. It could be a couple of things. It could be testing the waters to see how Microsoft will react. However, it could just be using this as a barging chip to get a better OEM deal on Windows, or more co-marketing dollars out of Microsoft. I’m not sure which direction I’m leaning at the moment, but I think it’s clear that one of the major OEM’s are going to do this very soon. With the recent announcement by Ubuntu that it is going to try to refine the Linux desktop experience to be more inline with the Apple experience, things look to be coming together nicely. The first OEM that sincerely jumps in the water on this one is going to have a significant lead IMHO.

–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

Patent Firm Acacia Loses Case Against Microsoft; More To Come?

It looks like Acacia, who recent filed a suit against Red Hat and Novell, just lost its first court battle. From a paidContent article:

The notorious patent holding company Acacia Research, which first came to light in the digital media industry for claiming broad patents in the streaming media field, has lost first of its many lawsuits to reach as far as a jury trial. In a federal court in Lufkin, Texas, the jury found that Microsoft (NSDQ: MSFT) did not infringe on an Acacia patent related to technology used to quickly power up computer, reports Marketwatch. Filed in 2006, the lawsuit sought as much as $900 million in damages from Microsoft, based on sales of its Windows XP OS. The news sent Acacia’s shares down nearly 35 percent in late Nasdaq trading.

As the story says, Acacia has distinguished itself as a particularly aggressive patent holding company, and has embraced the public spotlight that comes alongside suing high-profile companies. Earlier in the week, it announced a patent settlement with AT&T.

Let’s hope this is the first of the many cases they are trolling that end up with a loss. With the stock already plunging 35% on this one loss, a couple losses strung in a row could put significant pressure on the company to get a new revenue model. If patent trolls didn’t make money there would be significantly fewer of them.

–jeremy

HP CEO: Vista Never Had Its Moment in 2007

It’s clear that OEMs just don’t fear Microsoft like they used to. From a recent CIO article:

Wondering what’s happened to momentum for Microsoft’s Vista operating system in corporate America? Fact is, enterprise IT has continued to decline the Vista plate like it’s an undercooked holiday casserole. Listen to what Hewlett-Packard CEO Mark Hurd said yesterday: HP never saw a “Vista moment at any time over the past year,” he told reporters on a conference call to discuss HP’s fourth-quarter earnings.

HP was happily announcing that revenue for its personal systems group has spiked to $10.1 billion; that’s up 30 percent compared to fourth quarter a year ago. But that success sure isn’t because businesses planned a Vista upgrade and refreshed systems at the same time.

On the contrary, Vista did not play into HP’s sales uptick, Hurd declared. That uptick is all about sales in emerging markets including China, he says. In fact, HP says that revenue from Brazil, Russia, India and China increased 37 percent; it’s now nearing 10 percent of HP’s $104.3 billion in sales.

I can practically see the steam coming out of Steve Ballmer’s ears when he hears Hurd say this out loud. This isn’t the way Vista was supposed to play.

Just a few short years ago you would not have had the CEO of a company like HP admitting something like this, even if it were true. With growth coming from emerging markets such as BRIC and viable alternatives becoming available, the stranglehold Microsoft had on most OEMs is fading fast. That’s good for the OEMs and good for the consumers. It’s good for just about everyone but Microsoft, really. Real competition looks like it may come sooner than many would have thought.

–jeremy

Linux wins Nigerian school desktops back from Microsoft

It looks like the open letter to Steve Ballmer from Mandriva may have had an impact. From the article:

Mandriva had closed a deal in mid-August to provide a customised Linux operating system and support for 17,000 Intel Classmate PCs intended for Nigerian schools, but found out last week that the company deploying the computers for the government, Technology Support Center (TSC), planned to wipe the computers’ disks and install Windows XP instead.

Now, however, a government agency funding 11,000 of the PCs has overruled the supplier. Nigeria’s Universal Service Provision Fund (USPF) wants to keep Mandriva Linux on the Classmate PCs, said an official who identified himself as the programme manager for USPF’s Classmate PCs project.

“We are sticking with that platform,” said the official, who would not give his name.

Mba-Uzoukwu wrote that Microsoft is still negotiating an agreement that would give TSC US$400,000 (£190,323) for marketing activities around the Classmate PCs when those computers are converted to Windows.

“Microsoft is able to offer a comprehensive education solution – including software, training and support – on the 17,000 Classmate PCs for 200 schools across Nigeria,” the statement said.

After public statements from Mandriva officials implied the marketing deal is legally questionable, Microsoft said last week that it complies with international law and the law of the countries in which it operates.

It’s not clear how much TSC would pay for each Windows XP licence. Efforts to reach senior managers at TSC, which is a subsidiary of Alteq.ict, an IT consulting business in Nigeria, were unsuccessful.

However, details on Mandriva’s deal with TSC have emerged. Mandriva is providing a customised OS for Nigeria for under $10 (£4.7) per licence, including support, according to its local partner.

It’s clear that Microsoft is willing to go to pretty great lengths to ensure that it’s able to put some stakes down in the growing third world economies. I’m not a lawyer, so don’t have any insight into the legality of this $400,000 “marketing” deal, but it seems that for now the machines are going to be delivered with Mandriva and stay with Mandriva. I have a feeling we haven’t heard the end of this story though.

–jeremy

Patent Infringement Lawsuit Filed Against Red Hat & Novell II

(A follow up to previous coverage)

As you may have guessed, this topic is being discussed heavily around the web. Mark Radcliffe points out that Open Source companies are likely becoming a more tempting target to patent trolls due to the stunning growth in the sector (keep in mind that Microsoft, Apple, et al. put up with this kind of thing all the time):

Although I and many attorneys in the open source industry have long been concerned about patent challenges to open source companies, this case appears to be the first by patent trolls against an open source licensor. The open source industry provides a tempting target because of its rapid growth. This morning, Eben Moglen at the Software Freedow Law Center Seminar on FOSS issues noted that Brad Bunnell of Microsoft joined Acacia on October 1 . According to news reports, Brad spent sixteen years at Microsoft at a number of positions which included General Manager, Intellectual Property Licensing. http://biz.yahoo.com/bw/071001/20071001005590.html?.v=1

Eben raises the intriguing question about whether these incidents are related. Given the time that it takes to prepare a patent lawsuit, Brad’s hiring probably did not effect the filing of this lawsuit. However the hiring may indicate the addition of a new business line for Acacia: suits against open source companies. Steve Ballmer’s recent comments about Red Hat’s obligation to pay Microsoft for alleged use of its patents makes this lawsuit and the timing of the move interesting.

Matt Asay points out a list of coincidences:

* One or more former Microsoft licensing execs join Acacia or one or its companies;
* Ballmer makes his most recent statement regarding Red Hat;
* Almost the same day, Red Hat (and presumbably Novell) receive notice of the alleged infringement from IP Innovation (Acacia);
* Before either company has a chance to consider the letter and respond, IP Innovation files its lawsuit in Texas;
* Novell changes all of its IP indemnification the same day (which it has named “Technology Assurance Program” as contrasted with Red Hat’s Open Source Assurance Program Novell apparently isn’t interested in assuring open source, just technology ;-);
* Novell’s new program notes a change in the Microsoft/Novell deal that covers GPLv3 code distributed by Novell for downstream recipients.

Hmm….I forget sometimes who is on which team, but it certainly seems like two sides have been conspiring on this, and I don’t mean IP Innovation and Microsoft (which is almost a given).

Stephen Walli (who was still at Microsoft when the SCO suit was launched) gives some advice that I couldn’t agree with more: Take a deep breath. Be calm. He continues:

The U.S. Supreme Court continues to involve itself in the broken patent system. The Linux Foundation and the Open Invention Network are both geared for this particular fight. I have confidence that the Groklaw community will step into the breach of reporting and investigation again. IBM, Intel, and HP have a vested interest in the outcome, and nobody plays IP games the way IBM does. Over the next few weeks, lawyers will come together behind the scenes from all the interested parties on the defending side. Hopefully egos won’t be too large, and a coherent plan of negotiation will emerge.

Some of the more interesting questions for me will be:

* Why Red Hat AND Novell?
* Why not Microsoft? (Acacia went after Apple who settled. Microsoft would seem to have deeper pockets than Red Hat or Novell. It would seem to be the more interesting business discussion.)
* If Microsoft is not involved, should they be? If Apple settled, and then this suit settles, Microsoft should know they’re next on the list. Or are they trusting IBM et al to win this one for them?

To quote one of my favourite lawyers in this space:

“If the F/OSS community wants to be in commercial space, community members will have to learn to deal calmly with IP litigation. The F/OSS production model will work where it makes sense, and it will not work where it doesn’t. It’s really just that simple. Particular claims in individual suits—even one against a flagship program such as the GNU/Linux OS—will not determine the fate of the community. Such cases present factual issues that will get resolved one way or another; they do not represent a crisis for F/OSS production as a whole. Norm entrepreneurial rhetoric that plays off such cases should be treated as entertainment. Enjoy it if you like it, take inspiration from it if you must, but don’t confuse it with the way things actually get done.”

I’m sure some former colleagues at Microsoft are excited. Mr. Smith and Mr. Ballmer most assuredly. But just as with the SCO Group litigation, there is no reason to celebrate. They shouldn’t confuse this with “the way things actually get done.” Pax.

I do find it interesting that Acacia went from Apple to Red Hat / Novell, when Microsoft surely would have been a much more compelling target from a business perspective. It becomes a simple case of follow the money from there. More information will come out of this in the coming weeks and months, so staying calm and focusing on what’s important is surely the correct course of action.

–jeremy

Patent Infringement Lawsuit Filed Against Red Hat & Novell

Earlier this month, Ballmer reiterated his stance on patents and Linux:

Microsoft chief executive Steve Ballmer has warned users of Red Hat Linux that they will have to pay Microsoft for its intellectual property.

“People who use Red Hat, at least with respect to our intellectual property, in a sense have an obligation to compensate us,” Ballmer said last week at a company event in London discussing online services in the UK.

Red Hat quickly fired back:

Red Hat is assuring its customers that they can continue to deploy its Linux operating system with confidence and without fear of legal retribution from Microsoft, despite the increasingly vocal threats emanating from the Redmond, Wash., company.

In a scathing response to Ballmer’s remarks, Red Hat’s IP team said the reality is that the community development approach of free and open-source code represents a healthy development paradigm, which, when viewed from the perspective of pending lawsuits related to intellectual property, is at least as safe as proprietary software.

“We are also aware of no patent lawsuit against Linux. Ever. Anywhere,” the team said in a blog posting.

The Linux vendor, which is based in Raleigh, N.C., also gives customers open-source intellectual property protections through its Open Source Assurance Program, which includes a promise to replace the software if there is an intellectual property issue.

“This provides customers with assurances of uninterrupted use of the technology solution. Protecting our customers is a top priority, and we take it very seriously. Our confidence in our technology and protections for customers remains strong and has not wavered,” the blog posting said.

While many people thought Ballmer was just continuing his FUD campaign, a scant couple days later an IP infringement lawsuit was actually filed:

Plaintiffs IP Innovation and Technology Licensing Corp. claim to have the rights to U.S. Patent No. 5,072,412 for a User Interface with Multiple Workspaces for Sharing Display System Objects issued Dec. 10, 1991 along with two other similar patents.

Defendants Red Hat Inc. and Novell have allegedly committed acts of infringement through products including the Red Hat Linux system, the Novell Suse Linex Enterprise Desktop and the Novell Suse Linex Enterprise Server.

“Red Hat’s and Novell’s infringement, contributory infringement and inducement to infringe has injured plaintiffs and plaintiffs are entitled to recover damages adequate to compensate them for such infringement but in no event less than a reasonable royalty,” the original complaint states.

The plaintiffs also allege that defendants received notice of the patents, therefore the infringing activities have been deliberate and willful.

Plaintiffs are seeking an injunction from the court, increased damages and other relief that the court or a jury may deem just and proper.

T. John Ward Jr. of Ward & Smith Law Firm in Longview is representing the plaintiff.

The case has been assigned to U.S. District Judge Leonard E. Davis.

You have to find it ironic that “IP Innovation” is suing based on something seemingly obvious that was patented in a 1991 by Xerox. Things get interesting from there though. It seems IP Innovation LLC is a subsidiary of Acacia. Looking at Acacia closer, you see:

In July 2007, Acacia Research Corporation announced that Jonathan Taub joined its Acacia Technologies group as Vice President. Mr. Taub joins Acacia from Microsoft, where he was Director, Strategic Alliances for the Mobile and Embedded Devices (MED) division since 2004.

and

Acacia Technologies Names Brad Brunell, Former Microsoft General Manager, Intellectual Property Licensing, to Management Team

Monday October 1, 6:01 am ET

NEWPORT BEACH, Calif.–(BUSINESS WIRE)–Acacia Research Corporation (NASDAQ:ACTG – News) announced today that its Acacia Technologies group, a leader in technology licensing, has named Brad Brunell as Senior Vice President.

Mr. Brunell joins Acacia from Microsoft, where during his 16 year career he held a number of management positions, including General Manager, Intellectual Property Licensing.

So the SCOX trial isn’t even officially over and we already have a company with large Microsoft ties filing a clear patent troll case against Linux. You think they’d at least hide the connections better this time. It should be noted that IP Innovation appears to have previously gotten some money out of Apple for this, so it’s not simply aimed at FOSS. How much of this are we going to have to go though until the system is actually fixed? Too much. Let the SCO II games begin.

–jeremy

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