Is Free Software Doomed? MS Claims 235 Patents Violated, Part 2

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... [continued from Part 1].

Others argue that Microsoft is at a turning point as they try to build a successful business around online services and advertising, waiting too long to adopt new business models similar to the ones that Google successfully launched. The Xbox 360 game console and the Zune digital media player have also proven to be unsuccessful.

A January 26, 2007 memo issued by Federal Aviation Administration (FAA) CIO Dave Bowen states he might permanently bypass upgrading the FAA's desktops to Windows Vista due to stringent hardware requirements and application incompatibilities, instead considering migrating workers to PCs running a combination of Linux and Google's online Google Apps productivity tools. NASA and the DOT have also resisted upgrading for similar reasons.

Other contributing factors include Dell's decision to start offering Windows XP due to customer demands. A lot of the "20 million" units reportedly sold by Microsoft in February are still sitting on shelves somewhere, not in end users' hands. Vista pre sales from the final quater of 2006 were deferred to the first quarter in 2007, accounting for $1.2 billion in sales, a quarter of the reported Microsoft gains.

Just yesterday, Bill Gates announced at a hardware developers conference that over 40 million copies of Vista have been sold so far.

Accounting changes have inflated Windows revenues. Until now, Microsoft reported income from Windows deferred 25% of the income over a 3 and a half year period. A Wall Street Journal story details how accounting treatment reflected the costs of upgrades and other add-ons Microsoft provides over the life of a system.

In various news reports, Microsoft claims that three quarters or more of its Windows sales are Vista. With businesses, that doesn't mean much. IDC analyst Al Gillen says "a business purchasing new laptops or desktops today is getting Windows Vista...but they typically strip Vista off and re-image with Windows XP so the system fits into their corporate standard."

Others claim that some of the "improvements" such as the Vista GUI and side bar widgets are copy cats based on Apples operating system. Some have even gone so far as to refer to Vista as the Windows ME 2. Major faux pas involving their Vista upgrade program haven't helped matters either.

Hardware vendors haven't seen boosts in sales for upgrades they expected when Vista was introduced. DRAM and CPU manufacturers haven't either. PC Magazine goes so far as to speculate that Microsoft's goal is to put old PCs out to pasture and that without Vista, consumers would have no compelling reasons to buy new PCs or to upgrade existing ones.

Will Microsoft be able to collect royalties from end users? It's hard to tell, but in all probability, unlikely.

Horacio Gutierrez, Microsoft VP of intellectual property and licensing said that Microsoft won't discuss specific patents publicly, but they have discussed them in private with companies such as Novell that struck deals with the company to exchange patent royalties for indemnification against litigation. "Microsoft's recent claims are an attempt to avoid going to court rather than to pick a legal battle with open source companies" he said.

"We've come up first with a licensing mechanism that is a reasonable way for companies in the business of distributing open source software to reach an understanding with us" he said.

He also acknowledged that Microsoft's decision to seek royalties for patents is a business one. "Microsoft invests over $6 billion in research and development a year, and that's an investment that results in innovation," he said. "Our shareholders have a right to expect that we are going to protect that innovation."

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