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● 05.25.07

●● The Economics of FUD

Posted in Courtroom, Deals, Deception, Finance, FUD, Intellectual Monopoly, Law, Microsoft, Novell, OpenOffice, Patents, Red Hat, SUN, Ubuntu at 9:13 pm by Shane Coyle

Once upon a time, I had opined that Microsoft’s true bounty in the Microvell deal was Novell’s complicity in Microsoft’s attempts to undermine the E.C. Decision and fines, and that the FUD was merely a bonus.

=> ↺ Microsoft’s true bounty in the Microvell deal was Novell’s complicity in Microsoft’s attempts to undermine the E.C. Decision and fines | ↺ FUD was merely a bonus

Apparently, I hadn’t any appreciation for just how much of an economic interest the monopolist has in using any and all means to defend their position for as absolutely long as possible. While reading through the Linux Foundation’s response to Microsoft’s recent patent saber-rattling, I was taken aback at the truly staggering sums involved:

=> ↺ Linux Foundation’s response to Microsoft’s recent patent saber-rattling

In the time it will likely take you to read this article, Microsoft will have made $500,000 in net profit. It’s instructive to note that the majority of that profit comes from its Windows operating system and Office suite of business software. Not coincidentally, those are the two product lines most threatened by Linux operating systems and Open Office.

Given the high stakes involved, it’s not surprising that Microsoft would take steps to protect its turf. In fact, it makes perfect sense. Let’s face it: If you were making $1 billion a month, what would you do? Perhaps engage in rhetoric and hyperbole to generate some old-fashioned FUD (fear, uncertainty, and doubt)? Just looking at the numbers, it’s easy to see that even if the scare campaign merely delays a customer’s migration from Windows to Linux by a single day, Microsoft is $34 million dollars better off.

Think about that – just one week of Novell-Fueled FUD pays for all of those SUSE subscriptions (7 days @ $34M each = $238M, MS payed $240M for 350,000 SUSE subscription coupons). Each and every day that Microsoft has been able to use Novell’s capitulation to FUD Linux since November 9th 2006 has been pure profit.

=> ↺ Novell-Fueled FUD | ↺ all of those SUSE subscriptions | ↺ Novell’s capitulation to FUD Linux

Does anyone still really want to argue that Novell was the party of advantage, as evidenced by the relatively larger (but insignificant to Microsoft, as these number indicate) payment for the patent covenant?

=> ↺ Novell was the party of advantage | ↺ relatively larger (but insignificant to Microsoft, as these number indicate) payment

As far as the statement from the the Linux Foundation, they have called on Microsoft ("a rational actor") to "work with the Linux ecosystem to restore confidence in the patent system by making sure they are issued only for truly unique, innovative, and novel functions that advance the state of the art." The statement also includes not-so-subtle reminders to Microsoft that they are not the only people to hold significant patent portfolios.

Joining in the patent cold war recently, on the side of Free Software and toting a significant and focused patent portfolio of their own, was Sun’s Jonathan Schwartz, who has pledged to rally to the aid of Red Hat and Ubuntu, if need be. (It should be noted that Sun engaged in a controversial deal with Microsoft back in 2004, in which Sun secured protection from potential IP claims regarding OOO by MS for only Sun StarOffice customers – sound familiar?)

=> ↺ pledged to rally to the aid of Red Hat and Ubuntu | ↺ Sun engaged in a controversial deal with Microsoft back in 2004

Of course, neither Microsoft nor Sun want to truly test their spurious software patents in a court of law, but moments such as these allow us some insight into the dispositions, and motivations, of the "leaders" of the software industry.

=> ↺ spurious software patents | ↺ dispositions | ↺ and motivations

In this case Microsoft, Novell and Sun all have a vested interest in the perpetuation of the software patent myth, and would prefer just an adjustment of the broken system.

=> ↺ vested interest in the perpetuation of the software patent myth | ↺ just an adjustment of the broken system

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