posted by Nicholas Blachford on Tue 14th Sep 2004 05:49 UTC
IconOver the past couple of decades Microsoft have, through fair means or foul taken over the vast majority of the desktop computer business. This business however is no longer subject to the stellar growth rates of the past and Microsoft now need to find a new way to keep their profits up.

Editorial Notice: All opinions are those of the author and not necessarily those of

Microsoft have known market saturation was coming so been been trying to diversify into other areas for some time now. A strategy which when they move away from their core business, has to date been marked by an almost complete lack of success.

An example of this is the Xbox, it may be a nice console but has never managed anything better than joint second place with Nintendo's GameCube [Consoles] and every unit sold loses money, from a business point of view the Xbox is nothing short of a disaster.

Microsoft have had success in other areas however, it may have taken a long time but Microsoft are now the leading PDA OS by revenue. Unfortunately for them this is a now shrinking market with SmartPhones now taking over, stand alone PDAs are rapidly becoming pointless. The SmartPhone OS business is dominated by Symbian who already have 80% of the market.

Microsoft need a new way to make money and I think they've found one, one in which market share is irrelevant.

In "The Future of Computing" [Future] I suggested a way by which Microsoft could use the Xbox2 to muscle their way into owning the hardware market. The theory is admittedly a bit far fetched (I don't do close fetched!) but for a new business Microsoft don't need to do anything so dramatic or risky, all they need to do is what they've always done - copy someone else.

Consider the Mono project (an opensource .net clone). It's always been obvious to me Microsoft will wait until it's in wide use then start collecting money from the companies which use it. What's more, it's not only a source of income but one in which they've let the open source community do their work for them.

Now think of that same strategy using patents, but vastly expanded. It's IBM's idea of monetisation of patents they are copying, to the point of even hiring Marshall Phelps who implemented the idea at IBM.

Microsoft are applying for vast numbers of software patents, a process you can be sure is very expensive. You can also be sure there's going to be payback and if there's one thing Microsoft excels in it's making money. I fully expect Microsoft will use these patents to their full extent.

Microsoft expect to apply for 3000 patents in 2004 alone, evidently there's more to come:

"We're at an early state on that but it is something that we are pretty excited (about)," - Bill Gates on the Microsoft patenting program.

With the US patent office apparently happy to allow often overly broad patents on seemingly everything it'll be possible to get patents on everything. Microsoft will then be able to target anyone they want.

You may think you could fight a demand for money in court by challenging the patents, indeed 50% of patents challenged are overturned. Unfortunately IBM rather cleverly got around this by suing for infringement of many patents simultaneously. Even if many of the patents are seemingly invalid the cost of fighting them in court becomes prohibitive and companies just end up paying. I fully expect Microsoft will use this tactic to their fullest advantage, but they'll probably want the free use of your patents (at no charge of course) as well.

Table of contents
  1. "The MS Tax, Page 1/2"
  2. "The MS Tax, Page 2/2"
e p (0)    43 Comment(s)

Technology White Papers

See More