The earth shook … twice

I am far too fond of preaching about seismic market shifts.  But like any earth moving event, a large change is the herald of new realities, and those who ignore such seismic shifts get trapped under the rubble.

In as many weeks we have witnessed two seismic shifts in the software market that are worthy of worry and wonder.  One contains an undercurrent of suspicion, and the other a ray of insane hope.

Novell and the Evil Empire:  Most of the IT tech world collectively gasped when perennial foes Novell and Microsoft shared a stage and croaked forced love songs to one another (how anyone could sing romantically into Steve Ballmer’s mug is beyond the bounds of reason and digestive resilience).  I know personally the depths of loathing within Novell for all things Microsoft having shared a Brainshare stage with Novell’s (then) co-chairman and his guest, Linux Inventor Linus Torvalds as we gleefully and publicly slammed Microsoft’s fault-prone technology (Torvalds, being a perfect gentleman in all respects, said nothing negative about Microsoft or anyone else).  Novell has long had a nearly psychotic mindset and mission to destroy Microsoft given how Microsoft single-handedly wiped out Novell’s Netware-based PC networking empire.  Call it a passionate grudge.

Like politics, market realities make for some very odd bedfellows, and none stranger than Novell and Microsoft.  It may be a corporate shotgun wedding, but one in which both paramours get collateral benefits aside from a flesh-and-blood bed warmer.

With SCO breathing their last financial breath, barely having in reserve two fiscal quarters of cash at current burn rates, and destined to lose their UNIX copyright challenge, Microsoft knows (a) that Novell will hold some Intellectual Property (IP) keys to the UNIX/Linux universe and that (b) Microsoft uses or is dependant on those IPs.  Microsoft must play nice with Novell as they will soon key the king maker in those markets.

Novell faces a similar problem in as much as Linux, the center post of Novell’s Open Enterprise strategy, may well have some IP conflict with several hundred Microsoft patents.  Nowhere is this more likely than with SAMBA, which allows Linux to poach Microsoft’s foundation of file and print services.  Novell needs to protect itself from Microsoft’s litigation team, and offer their customers a level of legal security above and beyond potentially ruinous indemnification plans.

Given that the commodity server market was being divided evenly between Windows and Linux, it was time to call a truce of sorts.  Microsoft wins because they can now control part of the Linux destiny by proxy, and Novell wins because they have a FUD tool with which to club Red Hat senseless.  Coming on the heals of Oracle legally purloining Red Hat’s work to provide and support their own Linux distribution, Red Hat faces multilateral market mayhem …. which is exactly what both Microsoft and Novell want.

Lurking beneath these realities are the lawyers, a mutant species of dangerous but useful homo sapiens with which both Microsoft and Novell have great experience.  Microsoft’s covenant to not litigate against "non-commercial" Open Source developers is a shallow promise. 
Those who have read the agreement in detail claim that Microsoft has the ability to alter this covenant at will, which means anyone aside from Novell employees (who are contractually exempt) can be targeted at future dates. They also note that the covenant does not protect Non-Novell Linux end users, though I think Microsoft would suffer irreparable harm in the market and within anti-trust agencies if they even thought about suing Linux users.  But Microsoft can use the FUD to halt erosion of it’s server sales opportunities, and Novell can use the same to switch Linux devotees away from Red Hat (having Larry Ellison as part of the Red Hat dynamic only amplifies
buyer angst).

The final facet is the mutual pledge to collaborate on products, though the cited collaboration has drawn a collective yawn from the market.  The two IT software giants have proposed to support each other’s virtualization schemes (which they would have to do just to survive in the market), agree on a web services based approach to virtual and physical server management as well as federate their respective directories, and help Microsoft enter the 21st century by supporting (albeit in a limited way) open document formats for desktop applications.

Of these, mutual server management is the most compelling, and thus the most frightening.  If their solution is jointly proprietary, the rest of the industry is largely shut out of the homogeneous commodity server management space.  With x86/64 servers now the backbone of modern IT shops, and littering the racks of sites everywhere, and with such Microsoft/Linux based servers eating away at all competitors, this new partnership and collaboration is designed to block acceptance of alternative management tools.  If you run commodity servers, and you use both Windows and Linux, then you will turn only to Microsoft and Novell for the mutual management of both.

Open Java:  I’m not fond of eating my own words, but I will have to be humble (grumble) and acknowledge that my doubts about Sun opening Java were failed predictions given the weekend Grand Opening of Java under GPL.  Though having no immediate impact on the market, like Linux in the early days this is a market shift that shant be ignored.

One must stipulate that applications sell everything.  The only reason anyone buys a server or an operating system is in order to run an application.  Java runs applications, with the enormous benefit of not being very picky about which server/OS combination upon which it executes.  There are even OS-free Java-based devices, making the total market acceptance of Java deeper.

Putting Java under GPL (well, at least as much as they could given that there are some third party tidbits baked in) brings to the market a new dynamic.  As Linux created relative vendor neutrality about the operating system, GPL Java will bring vendor neutrality about the execution environment and programming language.  Already popular, Java now is free from the FUD constraints of vendor control, and can happily expand in the agora of ideas that a truly Open Source solution provides.

For the market this means a strong pull to put future applications on Java, and by default not put them on Windows or Linux per se.  Application vendors like Oracle will have a clean path/conscious to ignoring allegiance to one OS vendor or another (removing some of the nuvo market power created by the Microsoft/Novell announcement).  Likewise customers will have greater affinity for such products as the litigation threat by either Microsoft or Novell is diminished — it is relatively painless to move a Java development or execution stack from one OS to another, and thus banking your company on a GPL-Java application is less of a gamble.

(The interesting side note is that Sun decided to use the existing GPL version 2, and not the new and somewhat controversial version 3)

Why the market should care: In glacial terms, the operating system will become less important.  Microsoft and Novell are engineering short- to mid-term market strength by casting FUD and creating joint value to divvy-up the server market while blocking some essential markets to viable competition.  But the market always reacts to unhealthy consolidation of power, and Sun has given the market a long-term way out. 

  • If you are in the application business, you have a clear path to
    creating a more compelling customer value proposition.
  • If you are in the middleware business, you have fewer choices to make
    which is good for you, and ultimately good for your customer.
  • If you are in the OS business and are not Microsoft or Novell, you may
    want to consider a new line of work.
  • If you make hardware, these moves drive you even further toward a purely
    commodity market and you must develop an

    operational discipline
    that contains your costs to preserve your
    margins.

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