Free Software Linux

You need look no further than the most recent Microsoft annual report to understand that Microsoft still does not “get open source”. Let’s start with page 12, “Item 1A: Risk Factors”, first risk section: Challenges to our business model may reduce our revenues and operating margins. Our business model has been based upon customers paying a fee to license software that we develop and distribute. Under this license-based software model, software developers bear the costs of converting original ideas into software products through investments in research and development, offsetting these costs with the revenue received from the distribution of their products. Certain “open source” software business models challenge our license-based software model. Open source commonly refers to software whose source code is subject to a license allowing it to be modified, combined with other software and redistributed, subject to restrictions set forth in the license. A number of commercial firms compete with us using an open source business model by modifying and then distributing open source software to end users at nominal cost and earning revenue on complementary services and products. These firms do not bear the full costs of research and development for the software. Some of these firms may build upon Microsoft ideas that we provide to them free or at low royalties in connection with our interoperability initiatives. To the extent open source software gains increasing market acceptance, our sales, revenue and operating margins may decline. No where in this section covering “open source” software does Microsoft hint at or acknowledge the possibility that Microsoft could leverage this model to strengthen its developer community, offer attractive licensing into emerging markets, leverage community based development to lead in web server standards, etc. This is more interesting, because the entire section lacks anything that Microsoft may do to counter, compete with, or embrace the risk it identified: open source software. Now take a look at the other paragraphs in this section 1A Risk Factors of the annual report. ALL of the other items called out as significant risks have something at the end of their paragaphs - what Microsoft will do about them. For instance: Advertising Subscription Business Models: “We are devoting significant resources toward developing our own competing software plus services strategies. It is uncertain whether these strategies will be successful.” Platform based ecosystems (vertically integrated model): “We also offer vertically-integrated hardware and software products;…” Piracy: “Throughout the world, we actively educate consumers about the benefits of licensing genuine products and obtaining indemnification benefits for intellectual property risks, and we educate lawmakers about the advantages of a business climate where intellectual property rights are protected.” And it goes on and on… but where is this wonderfully open painting of Microsoft collaborating with the open source community? Will Microsoft ever embrace it enough to have a chance of extending it? To be continued…

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