Marketing Memos

There is an old sight gag that IT managers have pulled on unsuspecting users for years.  When users start piling new and changing requirements onto an application spec, the IT manager will write on the white board "fast, cheap, right" and say "Now pick any two."

What is interesting is that there may actually be a way to get all three.

When polled, non-IT management in companies are unhappy about application delivery.  Forrester reports that “… nearly one-third are dissatisfied with the time it takes their development shops to deliver custom applications, and the same proportion is disappointed by the quality of the apps that are ultimately delivered.” Much of this unhappiness arises from the inability of words to communicated needs and desires.  If you doubt this, try clearly explaining your personal needs and desires to your spouse.  Even among intimates it is not a simple process.

Thus when a user and an analysts initiate that long dance of requirements gathering and documentation, the seeds for disappointment are planted.  It is only after much code has been written that the user has an opportunity to object to the framework, business rule implementation, and style of the application.  Reworking often consumes as much time as the original design,
and by the time IT delivers the application in a barely useable form, the needs
may well have changed.

The hype curve is accelerating on the "prototyping" market.  Tools in
this space allow an analysts, or even a sober end user, to rapidly sketch out an
application’s look, feel, input, and output.  By working through
interactions and outcomes early in the development process, total development
time drops and end user satisfaction rises.

The prototyping market is relatively untapped, and the initial players are
gouging enterprises because they can.  This market is well to the left of
the chasm, and thus early adopters are willing to pay premiums to get the
benefits of rapid and accurate application delivery.  Firms like Axure,
iRise, Serena and Sofea flower this virgin meadow.  They all have varying
degrees of sophistication, ranging from "paint the look and feel" to fairly high
fidelity renderings of the final application.

One of our clients (who I am not at liberty to name) is looking a step
beyond, to making the prototype the actual application.  After all, if a
prototype is of high fidelity, and if you can easily map data into databases,
the added effort to deploy the finished application into production is small. 
If the prototype is web based and there are no client/server issues, then it is
easier still.

This market is too immature to make predictions, but I’ll hazard one anyway. 
With application development in perpetual backlog, and with the need for
business process innovation to drive new revenue and outmaneuver competition,
prototyping, RAD and web apps will merge.  With this combined power, agile
firms will gain market power over competitors by delivering new capabilities
internal and external much more quickly.  Apps will be done right the first
time, done more quickly, and done for less total cost – fast, cheap, and right.

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Any time a news bulletin begins by quoting lawyers, you know it cannot be good news.

Hence the most predictable event of 2007 began with Microsoft shysters rattling their Monte Blanc sabers with naked threats of suing Open Source vendors for usurping Microsoft patents.  Horatio Gutierrez, Microsoft’s vice-president of intellectual property and licensing initiated legal blackmail by opining "The alternatives to licensing are alternatives that
aren’t very attractive for anyone."

That was as subtle as a Russian invasion.

Microsoft contends that various Open Source solutions employ 235 of their patents.  No Open Source Sacred Cows are omitted, with Microsoft citing Linux, Open Office, and various email programs as illegal interlopers.  Microsoft even claims the Linux "user interface" has improperly leveraged Microsoft IP (Now, but "user interface" do they mean Gnome or KDE?  They can’t possibly mean X-Windows that proceeded MS Windows by a considerable period of time.)

A recurring theme in Microsoft’s veiled threats is eerily similar to the now near defunct SCO — bombastic claims are not being public vetted.  Microsoft is very closed lip about what specific patents are allegedly being violated and how.  SCO tried this tactic against IBM and is facing delisting, bankruptcy, and a permanent mention in the Software Scoundrel’s Hall of Fame, just below Microsoft current position therein.

Larry Augustin, a former Silicon Strategies Marketing client via his VA Software days, doesn’t buy the threat either.  He recently blogged "If Microsoft believes that free and open-source software violates any of their patents, let them put those patents forward now, in the light of day."  Fat chance Larry.

And herein lies the backbone of Microsoft’s move and recent Novell bed matting:  There is good chance that Microsoft’s claims would be difficult to prosecute, and in doing so would give the Open Source community the information they need to fix any alleged  violations.  SCO faced the same conundrum.  The difference is that SCO was tiny and poor compared to IBM, the giant whose shins they chose to kick.  Microsoft is huge compared to Linux market share leader Red Hat.  IBM stood firm, Red Hat likely would not.  Thus bluffing and blackmail are more tenable tactics for Microsoft than actual litigation and revealing their hand to those who could remove the source of the threat by changing the code in Linux and Open Office.

If that was not enough chess for you, take into account that blackmail and litigation may be the only tools available to Microsoft.  No vendor of GPL-based Open Source can pay royalties to Microsoft for the patents.  GPL is fairly explicit about this saying that payment of royalties of verboten, with the only recourse being that you must stop distributing Open Source at all ("If you cannot distribute so as to satisfy simultaneously your obligations under this License and any other pertinent obligations, then as a consequence you may not distribute the Program at all." ).  Imaging Red Hat losing in court, and having to get our of the Linux distro biz. 

This puts Microsoft in a tough spot.  Drive Open Source vendors into court and they may well drive them out of business without killing Open Source itself.  The revenue stream goes away but the market share threat remains.  Linux would not die, but the means of distribution and support would change.  It would be like nailing Jell-O to the wall, and very unprofitable.  Thus Microsoft seeks to tap into Open Source revenues by making their enemies their partners.

There is a useful old adage that says "Keep your friends close, and your enemies closer."  Microsoft is in effect trying to make their competitors their partners, and extract money from them at the same time.  If this sounds a bit like a neighborhood mob protection racket, then you are not alone.

The troubling part is not that Microsoft is acting like a schoolyard bully and rifling for other vendor’s milk money.  It is that they are executing their eternal "embrace and extend" process through forced and polygamous marriages.  Since Open Source vendors cannot pay royalties, they must enter into partnerships to avoid litigation and being forced by GPL to exit the distribution business.  Terms of these partnerships are set to ensure Microsoft’s place in the data center, and to allow Microsoft to influence new features in vendor distributions.  Since the main distributors also are the primary maintainers of Open Source stacks, there will be considerable pressure to include impure elements into future releases, and possibly make Open Source even more vulnerable.

The Open Source community was already taking action, with changes to the still-born GPL3 license.  Fearful of the Microsoft/Novell pact, they sought to make life even harder on Open Source distributors with tweaks that would prevent such partnerships in the future, by enforcing a "blanket indemnity" for all users and partners.  This in effect would force make Microsoft offer open-ended indemnity to their customers who used partnered Open Source products.  Slick move guys!

The business lesson herein is that force works, but only if the target is direct (such as the when Verizon went directly after Vonage’s jugular) and your foe cannot easily change the either the rules of the game (GPL3) or the source of conflict (Open Source code).  Microsoft will bluster, bully, and maybe even send one of it’s stockpiled attorneys for a little face time with Red Hat.  But in the long run (and it is the long run that counts) they will be out maneuvered.  Marketing requires building on something real, and thus far there is little real behind Microsoft’s meanness.

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Sometimes passages in an otherwise mundane press release consumes your mind like a sumo wrestler at an all-you-can-eat buffet.

Dell’s recent announcement about adding SuSE Linux to their line-up caught more than a few folks attention.  Considering that Novell and Microsoft were in on this announcement raised Open Source conspiracy theories to new levels, leaving such purists to wonder what company would sign-up next and be the forth horseman of the software apocalypse.  I doubt that even the misshapen love child of Michael Dell and Bill Gates could bring about the End of Times for Open Source, so I decline to be more paranoid than otherwise necessary.

But what did catch my attention was the competitive push Dell announced. 

"Dell will purchase SUSE Linux Enterprise Server certificates from Microsoft and establish a services and marketing program to migrate existing Linux users who are not Dell Linux customers to SUSE Linux Enterprise Server."

Simplified, Dell is grabbing discounted SuSE licenses through Microsoft to take Linux business away from other box vendors.  Microsoft’s spin on the agreement was pure IP F.U.D. :

"… Dell is the first major systems provider to join the business collaboration that was formed by Microsoft and Novell in response to customer demand for greater interoperability and intellectual property (IP) assurance."

Hmmm.  Maybe a little extra paranoia would be a Good Thing.

The message to the market is clear:  Microsoft and Novell believe Linux/UNIX IP is still in play.  Given the imminent demise of SCO (facing delisting and with less than one year of cash left at current burn rates), odds are the disputed IP will be grabbed through channels by one or the other of Microsoft or Novell (though Red Hat buying SCO’s carcass and unilaterally releasing the IP to would be a fun ploy).

Novell, Microsoft and now Dell’s marketing angle is simply to ease people to brand preference primarily through fear.  In business, one cannot stand discontinuity, and computers are now the very source of business continuity.  Anything that threatens the flow of data is as unwelcome and dangerous as a thermonuclear exchange. Dell could peddle off-brand Linux, as it does with Ubuntu, but they need an enterprise-grade Linux with enterprise-grade support for their top-end customers.  That means SuSE or Red Hat, or both.  Dell got to the top of their mountain through standardization, reducing risk and variables.  They perceive Linux to be the same — remove risk and variability, and gain market.  Joining the Novell/Microsoft pact is a tentative step for Dell in switching loyalties from Red Hat, the market leader, to SuSE, the alleged market IP owner.

Perhaps as important as IP F.U.D. is OS virtualization.  The under-reported angle of the Microsoft/Novell blood pact is their cooperation on virtualization.  Virtualized machines are the new norm, and heterogeneous shops want to mix OSs on commodity hardware without fear of interoperability
crisis.  Novell and Microsoft agreed to support and enhance virtualization interoperability and assure that at very least SuSE Linux would not bomb Windows out of a server, and that Windows would not disrupt SuSE (all bets are off concerning any other flavor of Linux).

For the market mavens, this is a classic one-two punch, providing both carrot and stick motivations.  A Dell spokesdroid summed it up pretty well:

"This move  … for customers  … who want to migrate to SUSE Linux Enterprise Server for the IP assurance and interoperability benefits."

Carrot = virtualization interoperability.  Stick = IT disruption when Microsoft or Novell demands Red Hat reparations.  Push and pull motivations are impossible to ignore and difficult to resist.  Expect these two concepts — IP F.U.D. and virtualization vitamins — to be the new mantra from Microsoft, Novell, and now Dell.

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Interoperability is one of the sacred goals of IT, and even consumer computing.  If operating systems, utilities, and applications do not work together, user productivity matches the low level I achieve on Friday around cocktail hour … which is "none at all."

Open Source is ripping profitability out of the IT software market in part do to growing interoperability.  Unlike traditional technology vendors, Open Source benefits from creating the greatest amount of interoperability possible.  More commercial vendors keep margins high by locking in customers to their suite of products.  This is partially achieved by minimizing interoperability with competing and non-partner solutions, and thus raising switching costs should a customer consider "dumping and jumping" to a different stack.

Linux/GNU and their compatriots have been a model for interoperability.  They collectively seek to create as much of the stuff as possible, assuring most of the components of the Linux stack work extremely well together.  Without traditional profit motives, the only barriers to interoperability were time and complexity (the time it takes to code interoperations, and the complexity of supporting multiple points of interoperation).

But this interoperability has been done on a handshake when developers from different projects found need and motivation.  This has led to odd partnerships, some necessary exclusivity, and a bit of weariness by IT in adopting Open Source solutions for fear that necessary interoperability that exists today might not exist in the future.  Open Source has now grown to a point where consumers desire a bit more structure.

The Open Solutions Alliance (OSA) has started adding structure.  This happened pretty quickly for an organization that didn’t exist three months ago.  But when you have founding members like CollabNet (who now owns SourceForge Enterprise), EnterpriseDB, Hyperic, JasperSoft, SourceForge.net, SpikeSource, and Unisys … well, you have a bit of muscle to get things done.

What OSA initiated is an interoperability roadmap — an attempt to specify some well-defined interoperability standards in the business software space.  That’s right, interop in applications.  The objective is to document standards and best practices for Open Source developers to use when building their software.  The OSA will help by prototyping working code to demonstrate the principles of the standards. The initial prototype will be the Common Customer View.  This standard joins information held in different applications (CRM, ERP, etc.),  business intelligence software, and for demo sake, a legacy point-of-sale application.

This presents new issues for software marketing professionals.  If you are a traditional application vendor, you will eventually encounter new competitive threats.  All other things being equal, interoperability between Open Source applications would be a deal-making differentiator. 
Your products will either have to interoperate with best-of-breed commercial applications, interoperate with Open Source applications using OSA standards, or both.

If you are a dual-source vendor, these standards will become part of your value proposition.  This is a boon to dual-source vendors, creating an advantage over best-of-breed commercial applications while adhering to the Open Source promise of lower cost and greater flexibility.  I can foresee a time when the old networking-centric Interop trade show could become the application-centric Interop event, where all the application software vendors demonstrate live how they work with all the other vendors in the building.  Interop launched standards-based networking, and OSA may launch standards-based applications.

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