Software // Enterprise Applications
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9/13/2004
07:08 PM
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The Calm Before The Storm?

Few things are more dangerous than a wild animal that gets cornered and can't find a way to escape. Does the same truism apply to the world's largest software company?

Few things are more dangerous than a wild animal that gets cornered and can't find a way to escape. Does the same truism apply to the world's largest software company?

I'm referring, of course, to Microsoft. In a Securities and Exchange Commission 10-K filing this week, the company stated that it considers the open-source development model to be a major threat to its long-term earnings potential. Microsoft is particularly worried about its server software and development tools, both of which look to be increasingly vulnerable to open-source competitors.

10-K reports are pessimistic by nature; they provide important legal cover if a company's earnings plummet and angry shareholders decide to sue. Yet there is almost always a kernel of truth under all of that pumped-up pessimism, and it certainly seems that Microsoft executives believe open-source software represents a mortal threat to the company's future.

Redmond has more than a few weapons at its disposal to fight back, including the company's massive intellectual property portfolio. We've seen growing concern among open-source developers over Microsoft's ability to wreak havoc with its software patents, some of which could target key open-source projects such as Apache, Samba and Mono. There has also been a lot of debate over just how far Microsoft will go--or could go--with intellectual property litigation, which carries almost as many potential risks as rewards.

If this week's 10-K filing is a fair reflection of Microsoft's attitude, however, then the stakes in this game are much higher than they were before. If Microsoft executives decide that the open-source development model truly represents a life-or-death threat, then developers and software users alike may soon look back on this period as the calm before the storm.

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