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October 26, 2002 / gus3

Mr. Mundie didn’t get a clue

(Craig Mundie’s speech to the Stern School of Business got quite a bit of coverage in the Linux community. It generated a lot of reaction, some good, some bad, and some downright ugly. But rather than admit that he didn’t know what he was talking about, he sent a letter to ZDnet, who then published it on their website. Once again, my response.)

On May 3 I spoke at the New York University Stern School of Business about Microsoft’s position regarding source-code licensing. I wanted to articulate some of the benefits and drawbacks of the various ways commercial software companies could share their source code.

I described Microsoft’s shared-source philosophy, a balanced (in Microsoft’s favor) approach that enables commercial companies to share source code with their customers and partners while preserving the intellectual property rights that support a strong software business (and interfere with their ability to work on private projects). I also articulated some ways in which shared source differs from open source.

The reactions to my statements have been many and varied (but not so varied as many). I wanted an active debate about intellectual property and the software industry, and I certainly got one. (Was he surprised that so many people would be concerned about our personal freedoms?)

But this is more than just an academic debate. The commercial software industry is a significant driver of our global economy. It employs 1.35 million people and produces $175 billion in worldwide revenues annually (sources: BSA, IDC).

The business model for commercial software has a proven track record (if that’s the case, then why is it under such fire?) and is a key engine of economic growth for many countries (and ignores emerging economies, such as Latin America, Africa, and the Indian sub-continent). It has boosted productivity and efficiency in almost every sector of the economy (until the GUI came along, which is actually slower than text-based entry), as businesses and individuals have enjoyed the wealth of tools, information and other activities made possible in the PC era (and licensed by Microsoft).

Companies have the choice of protecting or relinquishing the intellectual property resulting from their research and development consistent with their particular customer and business needs. (One can protect and relinquish ideas at the same time. It isn’t a “one or the other” choice. That is the purpose of the Patent Office: to place ideas into public view, for public scrutiny, while protecting it for purposes of private, but limited, exploitation. After 17 years, it is made available for public use.) As the U.S. Department of Commerce stated in a report titled “International Science and Technology”: “Innovation relies on a partnership between the public and private sectors in which the government invests in long-range science and technology and in mechanisms to promote private-sector risk-taking and investment.”

(The above quote is terribly misleading, because:

  • There is no Constitutional provision or requirement for the public [federal government] sector to invest in the private sector
  • Innovation did not begin, and has never begun, with the federal government
  • Publicly-funded research is automatically public property)

We believe that one of these mechanisms is intellectual property rights (a very tenuous concept, since by common law, property must be tangible). Without intellectual property protection, neither innovation nor a healthy commercial software industry is sustainable. (Bullsh– again. There was no such thing as “intellectual property protection” when we got the wheel, the plow, books, the loom, ships, … and the list goes on. Innovation has been going on since before Homo sapiens walked the planet.) The last 50 years of public- and private-sector collaboration has demonstrated that when intellectual property rights are protected, innovators are rewarded for their efforts. (Was there such a term as “intellectual property” fifty years ago?) Furthermore, technology is advanced guaranteeing economic growth and a cycle of future collaboration, investment and innovation. (The advancement of technology does not guarantee the growth of the economy; Japan’s economy was horribly depressed after the Second World War.)

In my speech, I did not question the right of the open-source software model to compete in the marketplace. (His colleague, Jim Allchin, did exactly that; here, Craig Mundie is making a point of avoiding the same mistake.) The issue at hand is choice (that’s right); companies and individuals (both developers and end-users) should be able to choose either model, and we support this right. (No, they don’t. They want to lock the world into Microsoft-only environments; my first response shows how they manage to do just that.) I did call out what I believe is a real problem in the licensing model that many open-source software products employ: the General Public License. (Once again, he ignores the Lesser GPL, and BSD-style licenses, which avoid many of the “problems” he cites in his earlier speech.)

The GPL turns our existing concepts of intellectual property rights on their heads. (Only for some people, in particular those who find themselves threatened. Others find their views vindicated by the GPL.) Some of the tension I see between the GPL and strong business models is by design, and some of it is caused simply because there remains a high level of legal uncertainty around the GPL–uncertainty that translates into business risk. (I don’t see it as being risky for Red Hat. Despite all the naysayers in their early existence, they have built a pretty stable business. It can be done.)

In my opinion, the GPL is intended to build a strong software community at the expense of a strong commercial software business model. That’s why Linus Torvalds said last week that “Linux is never really going to be a rich sell.” (He doesn’t attribute his source for this quote. Besides, Linus Torvalds is not perfect, and is not an economist or marketer; he’s a programmer.)

This isn’t to say that some companies won’t find a business plan that can make money releasing products under the GPL. We have yet to see such companies emerge, but perhaps some will. Recent history tells us, however, that finding a business model that works is difficult. (He’s hedging his bets here, but he’s right when he says this.) According to ZDNet News, “Ransom Love, CEO of Caldera Systems…said he thinks Microsoft was right in its claim that the GPL doesn’t make much business sense.” (Ugh. This quote is now third-hand. How can we be sure that is what Ransom Love said?)

What is at issue with the GPL? In a nutshell, it debases the currency of the ideas and labor that transform great ideas into great products. (How very disingenuous. Linux has become a great product, with very little corporate protection. Furthermore, the GPL guarantees that each contributor receives credit for code, rather than being forced to turn over the code to a large corporate interest. This is exactly what shared-source developers will have to do.)

Alfred North Whitehead, the renowned British philosopher, logician and mathematician, observed: “It is a great mistake to think that the bare scientific idea is the required invention (exactly!), so that it has only to be picked up and used. An intense period of imaginative design lies between (something which Microsoft notoriously lacks; they prefer to “embrace, extend, and extinguish”). One element in the new method is just the discovery of how to set about bridging the gap between the scientific ideas and the ultimate product. It is a process of disciplined attack upon one difficulty after another.”

In other words, a critical flow of information and experimental data follows every major scientific discovery and results in the verification (thesis), refutation (antithesis) /span> or refinement (synthesis) of the new idea or theory. (This sequence of events has been going on since pre-history. It’s part of our nature.) To facilitate this process, neither copyright nor patent protections are available for abstract ideas or theories. (They aren’t? Then how did get their “one-click” patent?) This is as it should be (even though this doesn’t reflect reality).

Legendary inventors such as Alexander Graham Bell, Thomas Edison and Henry Ford (who held thousands of patents between them [and were innovative in their own rights, independently of government investment]) succeeded precisely because they were able to use (private) funding, management and market insight to deliver their innovations as unique, practical and useful products. (This assumes that all of their inventions and patents were useful, when in reality less than half of them ever became commodity items.) Arguably, the creativity and inventiveness needed to deliver their products was comparable to that needed for the underlying theory or discovery that made their business possible in the first place.

When comparing the commercial software model to the open-source software model, look carefully at the business plans and licensing structures that form their foundations. This comparison leads to the conclusion that the commercial software model alone has the capacity for sustaining real economic growth (but this comes at the cost of our individual freedoms, to do as we wish with our own ideas). Intellectual capital (notice the term shift here, from “property” to “capital”) has always been, and will remain, the core asset of the software industry, and of almost every other industry. Preserving that capital–and investing in its constant renewal–benefits everyone. (That’s exactly what Richard Stallman did, and does. The fruits of his labors, and the logical extensions of his philosophy, have benefitted far more people, of all cultures and walks of life, than the labors and philosophy of Microsoft.)


One Comment

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  1. Fredrick / Feb 4 2010 11:35 am

    Mr. Mundie sounds an awful lot like Ken Brown, formerly of AdTI, in regards to Ken’s amusing and pretty much completely false writings regarding Linux and the GPL.

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