Burning the Ships: A Review

by David Lane

In a world where distinctions between open source and proprietary software are becoming increasingly irrelevant, what role can IP [Intellectual Property] play in facilitating greater collaboration with the industry for the benefit of business and customers alike? (167)

While this quote appears near the end of Marshall Phelps and David Kline’s new book Burning the Ships: Intellectual Property and the Transformation of Microsoft, it does sum up nicely the thread that weaves through the book, a case study of how Microsoft reinvented itself and began leveraging its Intellectual Property for good (collaboration) instead of evil (punishment).

Putting aside the rah rah Microsoft tone of the book for a moment, it is a good case study of how a company can leverage its IP successfully. Additionally, it reviews the three key areas necessary to making successful use of IP:

  • Convincing the business units that IP is a corporate asset and not a business unit asset.
  • Convincing the company that IP should be leveraged for more than just punitive reasons.
  • Convincing the company that leveraging IP is not giving away the store.

One of the messages highlighted later in the book is the general lack of management skills possessed by senior managers in managing their IP portfolios. The authors make the case that this will change, or needs to change, especially as estimates of public companies indicate that upwards of 80% of their value lies in their IP resources, resulting in wasting $1 trillion a year by not capitalizing on their patents (138). Based on this assertion, I can easily see that this book will be required reading very shortly in most MBA programs. Should you find yourself interested in the authors' case, I believe it is worth checking Burning the Ships out of the library and taking a look at, even if you do not think you will ever have a need to deal with intellectual property.

The first half of the book tells the story of the arrival of Phelps and Kline, through different roads, to Microsoft and the process of turning around the company’s entrenched, man the walls, defensive posture with regards to its IP portfolio and making it a more collegial, share the wealth posture. Phelps did essentially the same job at IBM in the late 80s and built up Big Blue’s IP royalty stream to a massive $2 billion-a-year operation. It covers the key areas, listed above, and the tasks needed to resolve the issues through a series of stories describing the turnarounds.

The last two chapters deal with leadership and the future of IP in corporate America, especially in these grim economic times.

Of interest to the Open Source community is Chapter 4, A Very Secret Mission, which talks about Microsoft’s attempts to build a bridge with the open source community and the eventual deal with Novell. Before I cover that, I want to touch briefly on something from Chapter 6 to give you a flavor of the future direction that some at Microsoft see.

Under the heading Just Say No to the “Free Content” Farce, Microsoft Chief Counsel for Intellectual Property Strategy, Tom Rubin, in an address to the Association of Online Publishers in fall of 2008 is quoted as saying: Moving finally to the challenge posed by online media and user-generated content, the good news maybe that here, at least, the problem that needs to be surmounted is absolutely clear-–the “free content” model of publishing on the Internet simply does not work, at least for publishers. It’s a dead-end.(174)

As pointed out by Phelps and Kline, this is the elephant in the room with regards to the free content model and Ruben adds “it was high time for the media to end this self-defeating charade that “'information wants to be free'….” The argument of course is that without someone paying the saleries of reporters, high quality journalism cannot continue to exist. This follows very closely, Bill Gates’ assertion in 1976 that: …the prevailing assumption among computer users is that “hardware must be paid for, but software is something to share.” This attitude, [Gates] insisted, “prevents good software from being written. Who can afford to do professional work for nothing.”(132/133)

In 2004, when the whole SCO mess flared up, there were some rumors that, based on 2002 memo from HP, Microsoft was about to launch legal actions against the entire Open Source industry for infringements. This was not true on the surface and as the Chapter 4 goes on to illustrate, Microsoft was trying to find ways to work a negotiated agreement with Red Hat, a process that eventually fell apart, eventually to be replaced by Novell’s overtures and the eventual signing in November of 2006 of an agreement between Microsoft and Novell. Key among the issues is the way the two companies managed to circumnavigate (circumvent?) the GPL Section 7, 10, and 11 about fees being paid and patenting.

The book is written in a first person narrative, which occasionally is confusing because the context of who is talking, Phelps or Kline, is not always clear. It is not legalistic in its style, but gets a little thick in places and drops a lot of names. At times it seems like you are reading the organizational chart of the Microsoft Intellectual Property and Licensing department without it bringing much value to the overall discussion. There are also a couple of instances of redaction where the authors start to discuss something and then tell you they cannot tell you anymore about it. On review, those sections could just as easily have been dropped, and the thread of the narrative would not have suffered.

This is not a book that would be picked up, even casually, by most technical people. Yet I would still encourage anyone working on a project to read it, if only for the guts of why IP is so important to corporations and your part in creating IP. Further, if you are creating IP, either as part of a commercial project or on your own as a hobbyist, you need to know something about it and this is a very approachable way to get at least some background knowledge.

At times it reads like a combination of Microsoft marketing, and occasionally the evil Microsoft raises its head in the tone, especially in the last chapter. As we have seen with TomTom and the Linux Foundation's suggestions that File Access Table (FAT) be abandoned, Microsoft, despite some of the protestations in this book, is not shy about asserting its patents and other IP. If nothing else, having read this book gives you a slim glimpse into what might be on the near horizon for software development and a nice history of where it has been.

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