Vindication At Last! (Alternate Title: "I Think Scoble Is Screwing With Me")

Over a year ago, there was a lot of debate about an equal rights bill in front of the Washington state government. I happened to disagree with the bill (for non-homophobic reasons), but many people agreed with it. At the time, Microsoft had changed its public stance from favoring such legislation to stepping back to decline comment (which I agreed with). However, one person who strongly disagreed with Microsoft was Robert Scoble. Shortly after he publicized his opinion, Microsoft buckled and took a side in favor of the bill. I made a joke that Robert would take credit for the change in stance, and he came out directly and insisted that I was wrong about him doing so.

Until today:

BRAD ASKED: “What’s the one thing your most proud of about your time at MSoft, the one thing you might do differently, and the one thing you didn’t get to do but wanted to?”

MY ANSWER: Getting Steve Ballmer to change Microsoft’s support of a Washington State Gay Rights bill which led to its passing.

On a related note, I think I've always underestimated the power of Robert's blog. For the past week I've gotten a dozen or so hits per day for people searching for "Ed Kaim" on Google. I typically get one or two a day, so this big jump surprised me. Sure enough, it all started when Robert mentioned in passing that I saw him at Borders last weekend. However, Robert didn't link to me, so all the people who have no idea who I am (but yet seemed to want to for some reason) had to go to Google to find the blog

7/3/2006 7:59:09 PM (Pacific Standard Time, UTC-08:00)      Comments [1]  

The Beginning Of The End Of Intellectual Property

Poor SCOX.

Today, two thirds of their IP claims against IBM were thrown out by a judge because they were unable to pinpoint exact lines of code that were copied. Anyone who has ever worked with IP understands that it's not about a handful of lines of source--it's about methods and processes.

Is SCO right? HELL YEAH.

Let's look back at where Linux came from. In a nutshell, it's actually two distinct pieces: the Linux kernel and the GNU system. Ignoring the kernel for a second, the GNU system is really where the issue is. The GNU system is a complete rip-off of UNIX and absolutely trampled the IP of its owner, which is now SCO.

The GNU system was developed using UNIX as a test fixture. It started off as an effort to identify small pieces of UNIX that could be ripped out and replaced with virtually identical components. For example, when the GNU Telnet was finished, the official UNIX Telnet could be removed and replaced with it. It would be designed to provide an identical UI wherever possible, and would use and expose the exact same interfaces (or else it wouldn't run). At the time, companies selling UNIX didn't really care if a customer replaced a piece of their licensed OS since they had already paid for it.

Over time, the components replaced got larger and larger until people were able to discard the original UNIX OS (except for the kernel) and just have the replacement components provide the same experience. It was quickly realized that a kernel clone would be needed to replace the dependency on UNIX, which is where the Linux kernel comes in (which was ironically a clone of another kernel, minix). When combined, these two elements provide a virtual clone of UNIX, except that all of the source code is freely available. Sure, the source code to the replicant components could have been developed without reviewing the source of the originals, but does this really mean that they weren't infringing on the IP of the system? If someone else envisions a system, architects it, models it, hands you a working prototype and test fixture, and you simply implement what they designed, is that really unique development? Are you really the independent owner of the methods and processes that went into creating that system?

The availability of Linux completely screwed UNIX resellers, whose OS resale businesses had all but died out at that point anyway, so there weren't many people to complain, especially since they didn't own the IP. Some, such as IBM, were really services companies that occasionally sold software, so having this churn was actually a huge revenue opportunity. One problem IBM ran into was that they had access to UNIX source code (to be held confidential under contract) and regularly used it to improve Linux, which was against the terms of the contract. SCO keeps a page of quotes from IBM where executives have clearly stated that they have taken source from UNIX and integrated it into Linux, providing it for free and as open source.

I completely understand how some people get upset at the idea of a company like SCO buying the rights to UNIX just so that they could sue IBM and other Linux champions. However, their suit is incredibly valid, or else anyone who makes a living off of software IP had better start looking for a new career.

6/29/2006 9:00:44 PM (Pacific Standard Time, UTC-08:00)      Comments [5]  

Catching Phishers

Microsoft has a team dedicated to finding and nailing phishers. Here's the first success story.

6/22/2006 4:50:28 PM (Pacific Standard Time, UTC-08:00)      Comments [0]  

Reason #887 Adobe Software Sucks

I *absolutely hate* Adobe software. Every product I've ever used from them has made me beg for a competitive Microsoft counterpart. I never got up to speed on using Macromedia tools, and now I feel much better because they were sucked into the obnoxious vacuum that is Adobe's ability to make everything around them awful.

Today's complaint: why does Premiere Elements need 49MB of disk space to uninstall? Is this part of Adobe's scorched Earth initiative?

At least it's not as bad as my experience with their activation. That's a topic for another post.

6/19/2006 11:26:43 PM (Pacific Standard Time, UTC-08:00)      Comments [2]  

My Take On Microsoft's Stock

I found this post from Rory Blyth to be somewhat surprising. In a nutshell, he feels (as do many) that Microsoft's core problem is customer perception. In other words, if customer perception were higher, then the stock price would be higher. While this is partly true (the stock price would go up if Microsoft sold more product) I don't think it's enough to justify the stock price.

I've always liked Steve Ballmer. I've only had the chance to meet with him personally a few times, but he was always incredibly sharp and seemed to already know what I was there to tell him. His enthusiasm is contagious. Sadly, his future as CEO is in question.

How do these things come together?

The first time I ever heard Steve speak in a public presentation, he made a joke about rating CEOs by the value they created for investors. Based on his theory, Bill Gates was the best CEO of all-time, having created $500 billion in market cap value for investors by the time he stepped down. On the other hand, Steve Ballmer's current record stands to be the lowest in history at a total loss of $270 billion.

The hard numbers aren't really fair. When you look at Microsoft, it's been going through a tremendously tough time over the past five years. Since Steve's been at the helm, the dot-com bubble has burst (not his fault) and the US has significantly changed culturally (also not his fault). At the same time, several key products from Microsoft have slipped, resulting in a delay in new product revenue.

Stepping back to Rory's post, I read through to the end with much anticipation. He sets up a great analogy about how people had lost their infatuation with Microsoft. However, we part ways when it comes down to who exactly those people are.

To Rory, those people are customers, who have a personal problem with using Microsoft software. I understand his perspective, but I don't think it has anything to do with the stock. Instead, I feel that the people who have lost their zeal for the stock are investors. Let's take a few facts into consideration:

1. Microsoft's revenue has risen steadily every year. I don't remember them ever not reaching projections, but I do know that they always seem to sandbag their forward-looking revenue, resulting in targets that are easy to exceed. Regardless, this tells me that more money is being spent on Microsoft products every quarter than ever. This wouldn't be happening is customers were being lost. Yes, an argument can be made that this model could be harmful at a small scale, but it doesn't really make an impact when you're talking about the scale of $50 billion/year in revenue.
2. Last week, Microsoft hit its lowest point in years at $21.45. It closed today at $22.55, which factors out to a P/E ratio of 17.5. Who else has a 17.5 P/E? General Electric? Nope. They're at 21.30, which means they're expected to grow considerably more than MS over the next few years. AT&T? Nope, they're at 18.30. Even Coca-Cola is 20.60! These companies do give out higher dividends than Microsoft, which means that there is more short-term benefit to investors, but also indicates that these companies feel they can't invest it better in their businesses.
3. Within twelvish months Microsoft will ship new versions of Windows and Office that will definitely drive upgrades. This doesn't have a big revenue impact from big corporations since much of Microsoft's revenue is from recurring software assurance, but it will have a huge impact on smaller businesses, especially now that Small Business Server, Dynamics, and their other small business friends are making huge inroads worldwide. Consumers might take longer to warm up to Office 12 (and many will be licensed at work, so they'll be allowed to install it at home, but how many know that is up for debate) but Vista will be a huge hit. There hasn't been a compelling reason to upgrade PCs in some time, and this will definitely be the incentive needed.

In the end, I'm convinced that Microsoft's financial future is going to be fantastic, and I haven't even accounted for success from their MSN, entertainment, and Windows Mobile divisions. I just think that it's going to take some convincing of financial analysts, who have much more influence than Slashdot trolls.

Regarding Rory's view on evangelism, I have mixed feelings. On one hand, I think evangelists that go out to extol the virtues of shipping products are among the most valuable assets to Microsoft's sales force. However, Microsoft also has a tendency to aim evangelists at products that haven't shipped yet. Could you imagine how excited people would be about Vista if there hadn't been so many evangelists out there overselling it for the past 5 years? Given that almost every visible feature has been played out (even many that have been since cut) it's incredibly difficult to get people excited.

Bringing Steve back in the picture, I do think he's great for Microsoft. Unfortunately, analysts may have already decided that they're not going to get behind the man who has seen more than half their investments disappear over the past six years.

6/19/2006 6:49:44 PM (Pacific Standard Time, UTC-08:00)      Comments [0]  

Bill Gates Retiring From Microsoft (Eventually)
Everytime someone leaves Microsoft, there are the flurry of "they had such an impact" blog postings and emails. This time it's undebatably true.
6/15/2006 6:17:14 PM (Pacific Standard Time, UTC-08:00)      Comments [0]  

Robert Scoble Is Leaving Microsoft

Wow. No word yet on where he's landing, but I'm very curious too see what he does at the new startup. Although I sometimes disagreed with his methods, Robert was able to drive significant change in a huge company as an individual contributor, which is an amazing feat.

Good luck Robert!

6/11/2006 12:46:55 AM (Pacific Standard Time, UTC-08:00)      Comments [2]  

R.I.P. WinFX (2003-2006)

WinFX has been officially retired as the name of what you get when you take the .NET Framework 2.0 and add WPF (Avalon), WCF (Indigo), and WF (WWF (in-application BizTalk for clients)). It'll now be called .NET Framework 3.0, which is pretty easy to comprehend. I must admit that I'm a little surprised by the move. After hearing for years about how the .NET brand was going away, it's pretty clear at this point that it's definitely not.

.NET began life as an ingredient brand that was designed to own the Web services space. Just like Microsoft used 2000 for a generation of products to signal to customers that those products were Y2K-ready, .NET was supposed to tell businesses that the branded product was Web services-ready.

The .NET Framework and Visual Studio .NET launched in 2002 and absolutely rocked the Web services space. They also did a great job across the board for other types of development, but since the marketing was so Web services-focused (the right thing to do at the time), some customers raised concerns about the products being for Web services, only. Of course that wasn't the case, but there was enough customer confusion that it sort of soured the brand for other product teams. If you can remember way back then, there was supposed to be Windows .NET Server, Office .NET, etc. With the exception of Passport (which has since been unbranded and seems to be heading towards the new Live brand), everyone else bailed on .NET and it became almost exclusively a developer brand.

Over the years, the .NET Framework has continued to accrue great brand value. However, when .NET was dropped from the Visual Studio naming in 2005, it seemed to be in-line with the strategy to retire .NET. It seemed clear that the final .NET product, the .NET Framework, was to evolve into WinFX, but this delivered new customer concerns regarding the future of .NET Framework applications, which many companies had made huge bets on. There's been kind of a hybrid story explaining how the .NET Framework would be around for "reach" scenarios (but not as "reachy" as Web apps) and WinFX would be the ultimate "rich" platform. Unfortunately, more choices actually produces less clarity and can be detrimental to the success of the platforms. The retirement of WinFX clearly signals that the .NET Framework is the way to go for apps today and tomorrow, and that's a great thing for the long haul.

6/9/2006 7:56:54 PM (Pacific Standard Time, UTC-08:00)      Comments [0]  

Roller Hockey Comes Back To Redmond!

I don't know how this slipped past me, but apparently the Marymoor folks are making my dreams come true:

The roughly 200,000-square-foot pad will convert two grass soccer fields into a multi-sport event area that can accommodate...roller hockey....

6/8/2006 11:01:40 PM (Pacific Standard Time, UTC-08:00)      Comments [0]