Microsoft's mesh-ianic complex

Whatever doesn't kill us makes us stronger. Both Nietzsche and Kanye West famously used these words.

That was the message that came across loud and clear during Microsoft Chief Software Architect Ray Ozzie's talk on Wednesday at the Sanford Bernstein Strategic Decisions Conference. Ozzie argued that competition from Google and free and open source software (FOSS) have forced Redmond to innovate instead of resting on their Windows/Office laurels. A cynic might reply that Microsoft has little choice in the matter if it wants to stay in business.

But what I found most interesting about Ozzie's talk was what he said about the future of computing. In a word: mesh. As May Jo Foley blogged at ZDNet.com, Ozzie continued to talk up distributed, mesh-like operating systems, possibly beyond Windows. To make that happen, Ozzie stressed the need for software development kits (SDKs) that can be used across many different devices. Just coincidentally, Microsoft is moving in this direction with its much-discussed Live Mesh and accompanying Live Mesh SDK.

Software developers are taking a wait-and-see attitude regarding Live Mesh, but remain hopeful in part because of the success of Visual Studio. As one of them wryly commented to BBC News technology reporter Maggie Shiels, “The proof is in the pudding but at the moment it's all demo-ware and advertising.”

Microsoft has a huge opportunity to earn some serious street-level support in the years to come by meshing well with the likes of Apple, Google and YouTube. An open mesh sandbox – supporting open standards and FOSS – will go a long way to deliver the hearts and minds of developers.

IP is no laughing matter ... or is it?

PatentlySilly.com is a humorous outpost on the Web that catalogs the latest and greatest of the oddball patents that get awarded in the U.S. each month. Reading about these actual patents is great -- the Weed Cutting Golf Club and Pet Operated Ball Thrower are two of my recent favorites. PatentlySilly.com is a little like The Onion, but for real.

And that brings me to my main point: developing software as a corporate asset and intellectual property is serious business. At Black Duck, we've built our entire company around empowering organizations that engage in component-based software development – that is, almost every company that builds software – to successfully navigate the IP waters by managing licensing issues for all the open source code they find and reuse.

Without the threat of lawsuits hanging over their heads, these companies can focus on what's really important – planning the next corporate weed golf.

Have a great holiday weekend even if you don't play golf.

My love affair with the OLPC's XO laptop

I have to admit I’ve fallen in love. (Sorry ladies, it's not that kind of love: I’m as constant as the Northern Star with respect to Susana.) My love affair involves a laptop. It happens so infrequently because there have been so few great breakthroughs in personal computing technology since I hauled around the Compaq Luggable in 1987.

I'm not saying that because I’m a curmudgeon; I can fall in love with technology. To prove that point, let me admit that I’m a little bit giddy while writing this.

Here’s why: For the last week I've been using the “$100 laptop” by the folks at the One Laptop Per Child foundation (OLPC). OLPC founder Nicholas Negroponte gave one to Susana and me. Nicholas invested in MessageMachines, and I greatly admired him as an entrepreneur and an IT intellectual before he gave me the XO.

The XO laptop -- it's called the XO because if you turn the logo 90 degrees, it looks like a child -- runs on Linux with a wide-ranging suite of open source applications for basic laptop users. The combination of an open source operating system and applications is the best means yet of lowering the total cost of ownership, which is open source software's (OSS) primary consumer benefit. Then there's the built-in wireless connectivity that helps bridge the digital divide by giving children worldwide access to a network-ready laptop. This fact alone makes Negroponte worthy of a Nobel Prize.

What's interesting is that this OSS-based laptop will absolutely lead to proprietary software and hardware sales. While the XO doesn't come preinstalled with Microsoft XP or Vista, children and their teachers will need more sophisticated software applications, networking and hardware capabilities over time, so they'll graduate to higher-end hardware. There’s no CD/DVD drive in the XO at all, for example, and no hard drive and only a 7.5-inch screen. As the children grow up, they'll naturally migrate to proprietary products, which are fine with me. To adapt a phrase from Richard Stallman, I believe “the future is hybrid,” as opposed to purely open.

More on the XO's openness: I discovered a button located on the keyboard that allows children to view the source code (what XO refers to as the “programming”) behind certain applications. The XO laptop’s highly accessible and flexible user-interface, called Sugar, also promotes sharing and learning. This makes the XO a true OSS machine, from its philosophical underpinnings all the way through its uncomplicated functional capabilities available with one touch of a keyboard button.

My favorite feature is The Neighborhood, which provides, to quote the documentation, a

View of all the connected XO laptops within a child’s community, and what activities they are sharing. Each child is represented by a different color. If there is a shared document or activity being collaborated on by a number of children, it will show up within this view.

The Neighborhood provides an easy-to-use view of the network meshwork in the neighborhood, but it also helps facilitate interactions with immediate “friends” and the building of a community. When combined with The Friends, The Home, The Activity views and Browse, XO provides all the elementary functionality of a desktop plus a means of stepping up to more advanced applications, such as SynthLab a mini-lab for acoustic- and electronic-circuit construction.

For an adult, it takes a short time to adjust to XO's looks. It has a shiny green-and-white plastic outer cover, a handle and two leaf-like antennas. It looks like DreamWorks went out to create Shrek’s personal laptop based on a Fisher-Price design.

The XO is spill-proof, rainproof, dustproof and ruggedized for impacts due to being dropped. There is no fan on this little wonder, it’s as silent as a Caribbean wind gust and it weighs just 3.2 pounds. It gets six hours of heavy activity or 24 hours of reading battery life from one charge. (The battery is made of innovative lithium ferro-phosphate, costing $10 to replace and is good for 2,000 charges, compared to 500 for a regular laptop battery.) It has a nifty built-in video camera and a screen that rotates into a tablet configuration. It also has a microphone, memory card slot, gamepad controllers and graphics tablet. The XO is the complete personal computing laptop for children and adults.

There's just so much to love about the XO laptop. I look forward to seeing how it will give new hope to the children of the developing world. In 10, 20 or 30 years, I believe we'll witness a new generation of IT leaders who are getting their start even now on these small green-and-white machines.

I really hope the Nobel Foundation is paying attention.

Eight European countries beat U.S. in broadband penetration

Isn’t it time the United States developed a national broadband policy?

Eight European countries are now ahead of the United States in broadband penetration, according to figures released today [Wednesday]. "We have four countries that are world leaders -- Sweden, Denmark, the Netherlands and Finland," said Viviane Reding, the European Union's (EU) telecommunications commissioner. "We have eight countries that have higher penetration rates than the U.S. and Japan. We are not doing badly at all."

Badly! Europe is kicking America's butt!

If my tech-savvy American readers still aren't depressed enough, the EU press release has more gory details:

Denmark, Finland, the Netherlands and Sweden are world leaders in broadband deployment with penetration rates over 30% at the end of 2007, says the European Commission’s 13th Progress Report on the Single Telecoms Market issued on 19 March. These EU countries, together with the United Kingdom, Belgium, Luxembourg and France, all had broadband penetration rates higher than the US (22.1%) in July 2007. 19 million broadband lines were added in the EU in 2007, the equivalent of more than 50,000 households every day. The broadband sector generated estimated revenues of € 62 billion and Europe’s overall penetration reached 20%. However, there is considerable scope for further consumer benefits from a reinforced single market, strengthened competition and reduced regulatory burden for market players.

The U.S. has been against national planning because we do not want to take on the appearance of a centralized economy. We think it's undemocratic and un-American. The common response to calls for central planning or even national strategies is “let the markets decide.”

The problem is that the markets are not addressing the broadband problem fast enough, and as a result the U.S. is losing its competitive edge. I testified in front of the Senate on this issue (read the blog post here).

Yes, I know there are some other very serious problems that need national attention: the economy, the environment, human rights (check out Tibet) and so on. But we can't let IT slip off the radar screen either.

I hope that America's anemic broadband network begins to become an issue in the presidential campaign. In the past, IT issues did not seep into the national political discussion, probably because they were perceived as too techie. But if ever there was a bona fide “pocketbook” issue this year, making sure we have the infrastructure in place to keep millions of IT jobs in America must surely be it.

The good news is that there are changes are afoot. Michael Arrington over at TechCrunch identified Barack Obama and John McCain as the two candidates with the most progressive, thoughtful and “right” positions on IT. So no matter what happens on the Democratic side between now and the party convention, we're guaranteed to have at least one IT-aware candidate on the ballot in November.

Let's just hope the politicians do something about the broadband problem -- and soon. Otherwise our economy could soon be facing a giant blue screen of death.

All a-Twitter

In the last three days I have added Twitter to my blog, Facebook, BlackBerry and Firefox bookmarks. You can send a Twitter message, or "Tweet," from any of your registered devices or webpages.

So far Twitter has not changed my life. I was hoping to be able to quote “Sam” (Natalie Portman’s character), who famously said in the movie Garden State that The Shins "will change your life." Sorry, not this time, but Twitter is cool.

The buzz around Twitter is significant among the “highly mobile-Web 2.0” or “mobile Web” crowd. It’s like a new form of instant messaging about tiny chapters in your life. The Twitter website says it’s a “social networking and microblogging service utilizing instant messaging, SMS or a web interface” that answers the question, “What are you doing?” Every time you see something interesting on the Internet or in life, you Tweet it. It’s very ephemeral.

The buzz around Twitter has invited rabid technology comparisons (some say it is a microblog, others say it is SMS, or IM, or a Web 2.0 communications vehicle). I think it’s most like IM from a communications standpoint because you are sending a short messages to a public audience through a small text box by pressing the submit button. This is one of its strengths. Also, there have been a lot of blog posts written about it (see here and here) and discussions at Web 2.0 events. There's a “newbie’s guide to Twitter” here. Twitterholic tracks the top 100 Twitter users here. And so on.

Here are two weird things: The heaviest Twitters in the Boston area are PR people. This has no doubt contributed to the buzz. Also, the demographic for Twitter is not the classic F-book crowd. It’s an older demographic. (See Chris’ blog post for more data.)

Suffice to say that I like Twitter because it informs a whole bunch of people who I care about and who care about me. I also like it because it is the next cool thang.

Why you should shun VC conferences

I've received a number of phone messages and direct mail solicitations for the Venture Capital Workshop and Conference, which will be held in New York City on Tuesday, March 4, and in Boston on April 8.

I was surprised to get invitations to this type of conference for two reasons. First, because Black Duck Software is not an early stage venture, and we don’t need the money. And second, because I thought this form of investor jamboree was dead. Maybe that was wishful thinking. It seems like such a '80s thing to do.

The appeal is of these conference is that – for a fee – an early stage company can find a room full of eager venture investors who want to hear an investor pitch. This beats having to make individual pitches on Winter Street in Waltham, MA, or on Sand Hill Road in Palo Alto, CA, or in front of standalone VCs on the east and west coasts.

I think these conferences are a total waste of time and money for entrepreneurs seeking venture capital. Let me tell you why.

You remember that room full of VCs? Well, it actually contains an audience consisting mostly of other parties with other interests. Or undesirable investors. One quarter of the room is occupied by other entrepreneurs waiting their turn to make a pitch, listening to pitches to polish their own. Approximately one half are accountants, attorneys, business brokers, consultants, and others who will try to sell you their services. And the remaining quarter are junior, ill-advised, or simply stupid investors. (A slightly old but still relevant description of an entrepreneur's experience at a venture conference can be found here.)

My Dear Brothers and Sisters: There is a better way.

First, do a Google search of your area VCs. Type in, for example, “Boston venture capital”. VCs like to invest locally, no matter what they say about doing remote investments. Traveling is not fun, detracts from their current investments, and cuts into sourcing time. If you are located far away from the center of VC clusters (Silicon Valley and Boston), then use Google to vector in on some closer locations. Also, I would recommend getting at least one advisor who has been VC-funded and network your way into a VC pitch.

Second, call on a partner in the firm with an interest in your venture area. If you do not know any partners in the firm personally, you have a choice: Cold call them starting with their executive assistant (the key to scheduling any partner), or identify a principal or associate. Get their names from their website.

Alter your approach according to your audience. With a partner, you should go in assuming you have one shot. With a principal or associate, come prepared to encounter stupid questions, but your aim is to make them your evangelist inside the firm. In either case, you objective is another meeting.

Finally, bring a great story -- your total addressable market, growth plans, and other elements of the business. Answer the question: Is this a billion dollar idea? If it isn't, how can it built to be?

Whatever else you do to attract the attention of VCs, don’t waste your valuable time and money at a venture conference. You're far better off taking that time and money and churning it into your business.

Boston VC Panel Discussion at the Vilna Shul

Tonight there was a panel discussion held at the historic Vilna Shul entitled “The Venture Capital Industry: Looking Back on 2007 and Looking Forward to 2008” with three leading venture capital investor from the Boston-area: Larry Bohn from General Catalyst Partners, Jonathan Seelig from Globespan Capital Partners and Alan Spoon from Polaris Venture Partners. Scott Kirsner, Innovation Economy columnist from the Boston Globe, was the moderator and did a great job, as usual.

This was a candid, insightful discussion. An excellent panel Paraphrasing, here’s what they said:

With respect to 2007:

• Alan: There is a great value at this time in this market for startup investments; venture investing is well positioned as an asset class.
• Larry: the enthusiasm is back and innovation is back at rational prices.
• Jonathan: Ditto points made by Alan and Larry, plus enthusiasm for web and capital efficient investments.

With respect to 2008 and beyond:

• Alan: The rate of change is indeed accelerating. He will invest in portability and mobility; customization and vertical markets; e-commerce; the notion of cloud computing; life sciences – nanotech, stem cell research, and green or ener-tech, plus Asia.
• Jonathan: Energy, technology and Japanese investment interests. He asks what is the right capital structure for these investments, in particular, ener-tech companies? Also investment interests include advertizing measurement of the effectiveness of media spending, and companies addressing the battle over the utility bill.
• Larry: Indicated that the market has become frothy. Companies have to hunker down this year. If Boston-area companies are doing a C round, they should consider going to CA for investors.

There was some whining about Boston vs. CA. There was also concern expressed across the panel about a recession this year and it’s impact on investments, in particular, enterprise or B2B plays.

Other bloggers covered the event, including:

• Chris Herot wrote a nice summary of the event on his blog.

• Scott Kirsner wrote a brief summary on his blog.

• Dan Bricklin wrote an thorough blog posting complete with pictures.
  

Trends of 2008

Each year I summarize the trends for the coming year. These trends are derived from things I know something about and especially from watching Black Duck’s business; talking to customers, partners and analysts; listening to our sales force and reseller channel; and taking note of market feedback and suggestions from Black Duck and other executives, and many others. (Fashion and celebrity trends are not included; wrt these topics I plead ignorance.)

This year I have identified seven (7) trends, or eleven (11) trends – depending on how you count them. I think this is the year of the market segment, so I identify four markets which will emerge in 2008. If you regard them as sub-trends you get 7; if you see them as major trends, you get 11 trends. In either case, there is significant market maturity in the open source arena so trend spotting is being more complex:

1. An increase in the number and magnitude of lawsuits and legal actions. There is no question that the most significant event in the FOSS-world in 2007 was GPLv3. Second most significant is a series of events-- the lawsuits and legal actions brought by the Software Freedom Law Center (SFLC) on behalf of the BusyBox and other GPL software developers.

Simultaneously, Black Duck has seen a significant expansion in our business in 2007 for three reasons: (1) Companies have established and documented the controls necessary to comply with Sarbanes-Oxley (SOX) and have moved from "documentation" to "process improvements." Now they are figuring out how to automate those controls and reduce the cost of compliance. (Black Duck plays a role here as companies take control of their software assets); (2) the market for software compliance will evolve and expand over the coming years as more enforcement actions are taken, and (3) more corporations are thinking beyond compliance and realizing that Black Duck products are ideal for integration into new software development methodologies or the application development lifecycle.

The year 2008 will be the year of compliance and enforcement. It will also be another very strong year for Black Duck as we introduce a new product line expansion that will help software developers early in the application development lifecycle.

2. GPLv2 will continue to dominate, GPLv3 will grow steadily and the Affero license will be newsworthy. The introduction of GPLv3 was in many ways one of the defining events of 2007. In 2008 v3 adoption will continue to increase as more open source projects are released, but v2 will continue to be popular for projects involved with software distribution. It appears that v3 adoption is taking longer than expected because software developers and especially their attorneys have not warmed-up to v3’s new patent provisions.

We also believe that in 2008 the GPLv3 adoption numbers will not be as closely watched. Except for the first year anniversary of the introduction of v3 and lawsuit announcements, this issue will simply fade into the background. We believe that closer attention will be paid to the GNU AGPLv3 (so-called Affero) license, especially with respect to Google's and other on-line services' adoption.

3. VC funding for Open Source Vendors (OSVs) will decline. The US model for VC funding of FOSS projects was to identify an established project with a vibrant community and build the company from there. MySQL was the first big one; this year it will likely go public or be acquired. Many other OSVs followed in 2007 resulting in a significant industry. In 2008, there will be many fewer OSVs created from open source projects. Many of the ventures which were first funded in 2005-2006 will be sold or merged into other entities this year. Open source, however, will be a big part of the software development culture. It will continue to fuel the business models of innovative startups and new ventures, and will become the backbone of enterprise computing.

Another indication of market maturity is manifested on the marketing side as OSVs are finally learning to call themselves as market makers rather than relying on “open source” messaging as the primary go-to-market positioning vehicle. SugarCRM within the CRM market and EnterpriseDB in the database market are two examples of this trend. This will lead in stronger market differentiation for these players who mainstream their messages and result in more VC being invested in these OSV leaders.

4. FOSS use and OSV formations will soar in specific market segments in 2008:

a. Healthcare. A sector that has suffered from cost concerns from its inception will be receptive to open source adoption this year and significant growth in FOSS use. While there are quite a few open source projects in healthcare – such as IBM’s Interoperable Health Information Infrastructure (IHII) and Eclipse Open Healthcare Framework (EOHF), both built with an open source framework, and the Veterans Health Information Systems and Technology Architecture (VistA) – in 2008 there will be significantly more standalone projects and use of open source in healthcare applications. The issues of reliability and security which have previously stymied its adoption will become a thing of the past. In 2008, the US healthcare sector will become a hotbed of open source software development – albeit on a small scale. 2009 will witness more widespread development efforts.

In the developing world, open source will play a major role in healthcare information systems and will make a big difference.

b. The Worldwide Mobile and Telecommunications Industry. Open source has been used aggressively by ODMs since the mid-1990’s as a way of driving down the cost of development. Embedded Linux and databases were first, and then some open source applications and utilities (such as Log4j) formed the M/T open source stack. Asterisk, the leading open source telephony platform, has emerged as a momentum driver, in addition to legal actions involving alleged open source license violations against telecommunications market leaders BT and Verizon.

c. The Government Sector, including Government Contractors. I was amazed to find that at the AFEI (www.afei.gov) Open Source Conference on December 11^th and 12^th, all the attendees referred to open standards as open source. (Bernard Golden of Navica had the same observation.) There are increasingly more federal government software development managers and IT managers who plan to use or adopt open source in 2008. This will drive additional adoption downstream: Among the big contractors, sub-contractors, SMBs (see below), minority businesses, etc.

d. Small-and-Medium Businesses (SMBs) will increase their use of FOSS in large part because it will be integrated into their practice areas by value-added resellers/integrators. Open source projects will also mature to address vertical requirements of SMBs. For example, a point-of-sale solution for dry cleaners is based on the open source OpenBravo ERP.

e. Inter-corporate (multiple large scale enterprises) projects in the US. Corporations working together on open source projects will think about their industry problems and solutions in a much more expansive way. Last year some projects gained significant traction. For example, the pharmaceutical industry has launched Farmavita.net solutions. Going forward, look for more industry collaboration around open source. One vertical ripe for this type of initiative is the auto industry.

5. Open Source adoption, OSV formation and Proprietary/Closed Source Software Maintain Market Share Balance. Many open source projects originated in Europe, such as SuSE in German; Linux and MySQL in Sweden; Mandriva, Zope and Plone in France; Drupal in Belgium; Alfresco in the UK, and others. Several countries like Spain, Belgium, the Netherlands, Italy and others did not witness growth in open source adoption. This was due in part to the strong local base that Microsoft has established in these countries. In 2008, open source projects and adoption, and new OSVs, will grow substantially in Europe, especially in the smaller countries of Europe (i.e., countries other than Germany, France, and the UK).

Asian open source projects and adoption will continue to expand. However, the difference maker will be OSVs. European OSV growth is slow in the last 2-3 years than the US, but will catch up as VC funding turns down.

In 2008 proprietary/closed source software will not be impacted by this growth. In most cases proprietary/closed source software will maintain market share. In cases or segments where market share is lost (DB, CRM, etc.), overall market will be maintained by other segments where established product in very large numbers or new products (Windows, Office, point solutions, etc.) lead to a net-zero change.

6. Outsourcers will Use More OSS and Publish Code Contents. While many outsourcers have used open source aggressively since the year 2000, mainstream outsourcers, mainly in India, have been in a state of denial about their use of open source. As outsourcers in Eastern Europe, Vietnam and China pose significant competition to Indian outsourcers, the fierce, new competitors are using open source to gain competitive advantage.

In 2008, outsourcers worldwide will increasingly publish the contents of their code to their clients. They have enjoyed a honeymoon in recent years because enterprises have focused on project delivery as opposed to the contents of the deliverable. Enforcement actions and lawsuits by the SFLC will lead technology companies and enterprises to pressure outsourcers to provide complete reports of code contents with great specificity.

7. The final decline of LinuxWorld. In the early years (2002-3) LinuxWorld was an important incubator of LAMP stack projects and OSV formation. In those times, foundations were a major vehicle for involvement in the FOSS community, and the attendees were mostly hobbyists and small developers. The 2007 LinuxWorld was dominated by hardware vendors and maturing and established OSVs.

In the US in 2008, OSBC and vertical software shows will emerge as the new center of gravity for visionary business people and developers and LinuxWorld will further decline in significance. LinuxWorlds outside the US will continue to prosper as these markets gear-up in OSS adoption.

--- ooo ---

One of the fun parts of writing a blog is that you can actively and accurately refer back to your predictions, in a self-criticism mode, and monitor how you are doing. I will be interested to see how these trends play out. Another fun part of writing a blog is soliciting feedback.

Gentle Reader: What do you think of the trends outlined above?

DL goes to Washington

On Wednesday, I went down to Washington to testify to the U.S. Senate Committee on Small Business and Entrepreneurship as part of hearings with the title "Improving Internet Access to Help Small Business Compete in a Global Economy." There were two panels of experts – including two of the five FCC commissioners -- who shared with the Senators on the committee how important it is for the federal government to develop a national broadband strategy. The message we all delivered was that if the U.S. wants to stay competitive in a global, wired world, we need to make sure that broadband Internet access is both cheaper through increased competition and more widely available, especially in rural areas.

The Democratic and Republican members of the committee, which is chaired by Senator John Kerry (D-MA), listened attentively to our testimony and asked some good questions. When my turn came, I testified that Black Duck's software updates are so richly complex and bandwidth-intensive that we're forced to send them on DVD by snail mail rather than push them through the slow Internet pipes many of our customers are forced to use. I also made the point that a farmer working his field in rural Denmark has faster and cheaper Internet access than someone in New York or Boston.

The hearing was only the first of what I hope will be many more. What we face in America isn't a shortage of ambition to take the Internet in new directions. In fact, I said during my testimony that entrepreneurs are finding a way to succeed in the Web 2.0 world, despite Internet bottlenecks. But not having those obstacles -- at least when it comes to delivering our products and collaborating with talented people around the world – would make what we build that much more powerful to the customers we serve.

By the way, if you'd like to see the all of Wednesday's testimony, keep your eyes peeled for the video that will be archived here. In the meanwhile, I have included some pictures taken by the American Electronics Association who lined me up for this testimony. Let me know what you thought of my testimony, my tie, or both.

OSS Disruptor

Peter Gali wrote a piece in E-week today that quotes Gartner as saying “open-source software [is] the biggest disruptor the software industry has ever seen and postulated it will eventually result in cheaper software and new business models. Open-source products accounted for a 13 percent share of the $92.7 billion software market in 2006, but should account for 27 percent of the market in 2011 when revenue is expected to be $169.2 billion, according to Gartner research."

SCO Poops Out!

After failing to convince a U.S. District Court judge last month that they owned the copyrights on Unix and were due royalties from Linux distro's, SCO Group has filed Chapter 11 bankruptcy.

SCO had a simple reason for pursuing the lawsuit: They wanted to use an expected financial windfall to finance the growth of their business. In May 2003 (six months after I founded Black Duck) SCO sued IBM for violating their alleged Unix copyrights (first for $3 billion, then $5 billion), but all but lost the case in 2005. In making his ruling in the SCO-IBM case, that judge gave SCO the legal equivalent of a smack upside the head:

Viewed against the backdrop of SCO's plethora of public statements concerning IBM's and others' infringement of SCO's purported copyrights to the Unix software, it is astonishing that SCO has not offered any competent evidence to create a disputed fact regarding whether IBM has infringed SCO's alleged copyrights through IBM's Linux activities.

But SCO was undaunted. Their next legal target? Novell.

Last month, when a different judge turned down their claim against Novell, SCO's stock price plummeted, and SCO's board chose the Chapter 11 route to keep the lights on. As SCO president and CEO Darl McBride told ZDnet,"Chapter 11 reorganization provides the company with an opportunity to protect its assets during this time while focusing on building our future plans."

Translation: SCO wants to reduce the chance of having to pay much, if anything, to Novell. Last month the U.S. District Court judge ruled that Novell, the defendant in the latest SCO lawsuit, was the rightful owner of the UNIX copyrights. And since SCO has been using UNIX in their product line for free, the two companies were scheduled to go back to court on Monday to learn how much royalty money SCO owes.

A large monetary judgment for Novell might well spell doom for SCO – and SCO knows it. With Chapter 11 protection, SCO hopes the judge will let them live to sue another day.

So what can we learn from all of this? It's proof that suing large companies is an reckless business model. No matter how you slice it, innovation almost always works out better than litigation.

Good News on Patent Reform

Earlier this past week, the House Judiciary Committee approved the Patent Reform Act of 2007, as amended, by voice vote. On Thursday night the Senate Judiciary Committee passed an amended version of the Patent Reform Act of 2007 by a vote of 13-5:

• The YES votes were Leahy, Kennedy, Biden, Kohl, Feinstein, Schumer, Durbin, Cardin, Whitehouse, Specter, Sessions, Graham, and Cornyn

• The NO votes were Feingold, Grassley, Kyl, Brownback, and Coburn.

Kudos to Ranking Judiciary Committee Member Congressman Lamar Smith who sponsored this important reform, and Massachusetts Senator Kennedy and Congressman Delahunt to supported and voted for it.

The legislation was supported by the technology super-powers as well (See entry on July 11, 2007 below) because it helped prevent frivolous patents, reduced legal costs, and introduced more balance into the defendants’ versus plaintiffs’ rights equation.

Next stop: The House Floor. The Patent Reform Act still must be approved by the full House. The US Senate has its own version of patent reform in process. Once both bills pass they must then be “resolved” in a joint Senate/House committee prior to the president’s signature.

Value of Open Source Investments

How much is an open source investment worth? $2.05bn have been invested in open source since 2000 could be worth as much as $30.7bn today.

http://www.businessreviewonline.com/os/archives/2007/07/many_happy_retu.html

Patent Reform: “One man’s meat is another man’s poison”

Tomorrow a hearing is set in the House to consider Rep. Lamar Smith’s (Republican, Texas) patent reform legislation (Patent Reform Act of 2005). There is a 50/50 chance that it will be brought up for a vote. It has a little something for everyone and everyone will be a little disappointed. A similar bill is being considered in the Senate sponsored Orrin Hatch (Republican, Utah). The two proposals will have to go to conference committee to reconcile the differences as a next step.

One controversial provision of the Smith bill will grant a patent on a “first to submit basis” – a standard that's common outside the United States.

Open-source advocates, such as the FSF, claim the Smith bill will do nothing to stem the rising tide of software patents being issued by the US PTO. The PTO itself, these advocates assert, need the most radical reformation. Technology companies hope this bill will the stem the tide of expensive litigation, while independent inventors complain that large companies with deep patent lawyer teams will be able to win the patent filing race. (“"The companies who are complaining about the system are bad players, crooks who took great liberties with others' inventions," Ronald Riley, President, Professional Inventors Alliance.)

Rep. Smith is trying to drive this bill through the House by year's end. If it does not fly, it won’t be considered until after the '08 presidential election. While the technology super-powers (Microsoft, Apple Computer, Intel, Oracle and Hewlett-Packard) are pushing for this reform, they are offset by pharmaceutical companies who are pushing against this reform.

It is interesting to watch players who typically do not work well together coordinating on this issue. It is equally interesting to see the FSF/GNU community not supporting these generally positive reforms.

Today’s Le Défi Américain

On the plane back from Russia to Boston I got to thinking about Jean-Jacques Servan-Schreiber, the French journalist who wrote Le Défi Américain (The American Challenge) in 1967. Incredibly for a European intellectual, he argued persuasively that the U.S. and Europe were engaged in a furtive economic battle in which Europe was completely outclassed by American on all fronts -- management techniques, technologies, and R&D capacity -- and on the verge of being set back permanently and for a sustained period of time.

Forty years later, in 2007, there is a new American challenge: Loss of geopolitical and economic leadership due to war in Iraq, loss of moral high ground, the impact of the dollar-trade-deficit syndrome, and other economic policies. Also, resisting some of the economic and productivity benefits described by Thomas Friedman in The World is Flat is retarding America's ability to remain competitive. Open Source is a very good example. As an extension, ODF (the Open Document Format) is another.

But the emergence of BRIC, and especially China, goes beyond the factors discussed in The World is Flat. It has something to do with America’s loss of power and capabilities. The competition has managed to learn from the teacher, and the student is now more capable and getting stronger with each passing day.

How does this affect American business' competitive position? How does this affect non-U.S. multinationals?

The beginning chapter of the economic and geopolitical history of the 21^st century is being written right before our eyes. No one knows how the book will end, but fewer people around the world are hoping American will be the main character.

How IBM Leads Leaders

Yesterday the IBM Business Leadership Forum concluded in St. Petersburg. Business leaders from 75 countries discussed innovation and the challenges facing those driving sustained innovation in their organizations.

IBM’s power and resources were in full view: With 355,000 employees in 170 countries, 700,000 business partners, and their impact on business, industry, government, and academia around the globe is immense.

I admired many aspects of the forum. Two speakers in particular stood out:

• Sam Palmisano was accessible, energetic, and engaging. I watched him while an uncomfortable business partner tried to educate him about his business. Sam kept his eyes locked on him and projected genuine interest.
• Irving Wladawsky-Berger was intense and Spock-like because of his logical mind and analytical capabilities. He was a very good panel moderator.

During the forum IBM asked attendees to complete a survey. Half filled it out, and the results were illuminating:

• When asked which kinds of innovation they were considering, a majority said business model innovation.
• A majority said expertise is the major factor that brings about improvements to their organization's workflow.
• Two-thirds said the main reason behind business model innovation was creating a sustained advantage in a commodity market. (Last year's answer was creating a competitive advantage.)
• Ninety percent said that access to key skills affected their ability to innovate.

As with every other conference I've attended, there were a few unconvincing notes. The subject of globalization got a little tiresome because of the generalities, but there were two retail case studies that were interesting. And more social networking and community (vertical) exercises would have been helpful. Services innovation also did not get enough attention.

All in all, though, I came away from the forum with much food for thought.