Ballmer on Novell, Linux and patents

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Ballmer on Novell, Linux and patents

Since the announcement of the patent and business collaboration deal between Microsoft and Novell two weeks ago, some have labeled Novell a sell-out for making the agreement. But during a session this morning at the Professional Association for SQL Server (PASS) summit in Seattle, an audience member turned the question around on Microsoft CEO Steve Ballmer, asking if the Redmond company was selling out by collaborating with a Linux vendor.

Ballmer answered the question with a long explanation of the Novell deal, from his perspective. I'll post the full question and answer in the extended entry, below. In particular, it will be interesting to see how people react to Ballmer's comments on Microsoft, Linux and intellectual property -- including his view that, because of the Novell deal, "only a (Linux) customer who has Suse Linux actually has paid properly for the use of intellectual property from Microsoft."

(Update: See follow-up post.)

Additionally, he reiterated Microsoft's interest in striking a similar patent deal with Red Hat, something Red Hat says it won't do.

Read on for the complete text. (Here's an MP3, as well: 6:01, 6.9 mb.)

Q: "My question is about your deal with Novell and Linux. I thought Windows and Linux were trying to stay apart, and now I see you as kind of siding with the open-source community. Are you guys kinda selling out a little bit, or what's going on?" (Audience laughs, claps.)

Ballmer, laughing: "That of course is the $64 billion question. Let me explain what we did, and I think at the end of the day we'll all agree it's got a lot of positive attributes. Let me just do a small show of hands. How many people have Windows Server in their data centers? (It's a user conference for a Microsoft product, and hands are raised throughout the audience.)

"Good, that's what I figured. How many people would have Linux someplace in your data center? (Not as many, but still quite a lot.) Whoops, not what I would have hoped, but nonetheless. How many of the people who have both sometimes ask themselves questions about the interoperability between those two environments, anybody? (A good number raise their hands.)

"At the end of the day for basically the whole 18, 19 years that we've been pursuing the server and enterprise opportunity, our number one competitor in the data center for new applications has been Unix. Unix, Unix, Unix, Unix. Today ... the form of Unix that people want is Unix that runs on Intel architecture systems. I think everybody has kind of gotten themselves to the point of understanding, at the end of the day, Intel architecture systems are going to be most of what you have in a data center. What is the popular form of Unix on Intel? It's Linux. We have a lot of customers who have both, and while we have about 65 or 70 percent of the server business, Linux has about 20 percent and other forms of Unix have the other 10 percent, at the end of the day, we understand there's going to be Unix on Intel, and therefore Linux, for the long foreseeable future.

"Therefore, our job has got to be to help our customers get interoperability. And, of course, all vendors secretly are wondering when they do interoperability, did I do something that's going to help me win more of their customers, or something that's going to help them win more of my own customers. Of course, you don't know for years after. But interoperability is always good for the customer, and it's important. And we know customers want the interoperability that the hands showed between the Windows world and the Linux world.

"We've had an issue, a problem that we've had to confront, which is because of the way the GPL (General Public License) works, and because open-source Linux does not come from a company -- Linux comes from the community -- the fact that that product uses our patented intellectual property is a problem for our shareholders. We spend $7 billion a year on R&D, our shareholders expect us to protect or license or get economic benefit from our patented innovations. So how do we somehow get the appropriate economic return for our patented innovation, and how do we do interoperability. The truth is, because of the complex licensing around the GPL, we actually didn't want to do one without the other.

"What we were able to craft, with a lot of hard work with Novell, was an agreement essentially where we would do the technical work in a variety of different areas to improve interoperability between the two environments. And we agreed on a, we call it an IP bridge, essentially an arrangement under which they pay us some money for the right to tell the customer that anybody who uses Suse Linux is appropriately covered. There will be no patent issues. They've appropriately compensated Microsoft for our intellectual property, which is important to us. In a sense you could say anybody who has got Linux in their data center today sort of has an undisclosed balance sheet liability, because it's not just Microsoft patents. Because of the way open-source works, there's nobody who's been able to do patent coverage or patent indemnification behind that.

"So we built a technology bridge, and we built an IP bridge and a commercial framework that supports that. Novell said to us, 'Hey, look, if you're serious about this stuff, you better help us promote Suse Linux.' To which we said, 'You know we're trying to sell Windows, that's what we do for a living! Windows, Windows, Windows, baby! We don't do Linux that way here.'

"What we agreed, which is true, is we'll continue to try to grow Windows share at the expense of Linux. That's kind of our job. But to the degree that people are going to deploy Linux, we want Suse Linux to have the highest percent share of that, because only a customer who has Suse Linux actually has paid properly for the use of intellectual property from Microsoft. And we took a quota, you could say, to help them sell so much Suse Linux. That's part of the deal. We are willing to do the same deal with Red Hat and other Linux distributors, it's not an exclusive thing. But after a few years of working on this problem, Novell actually saw the business opportunity, because there's so many customers who say, 'Hey look, we don't want problems. We don't want any intellectual property problem or anything else. There's just a variety of workloads where we, today, feel like we want to run Linux. Please help us Microsoft and please work with the distributors to solve this problem, don't come try to license this individually.' So customer push drove us to where we got.

"But we haven't lost our -- well, you asked whether we'd sold out. I'll let you decide at this stage. We have been customer-focused."

Posted by at November 16, 2006 12:37 p.m.
Categories: Open Source, Server & Tools, Steve Ballmer

Comments

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#16614

Posted by unregistered user at 11/16/06 4:03 p.m.

"because only a customer who has Suse Linux actually has paid properly for the use of intellectual property from Microsoft".

Ummm, so identify this so called "intellectual property".

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