IT Investment Research

Oracle and Sun in Enterprise Software: An Alternate Theory for the DoJ Concern with Java

Since the June 26 announcement that the U.S.-Democratic-party Department of Justice (DoJ) was taking Oracle's (ORCL) acquisition of Sun (JAVA) off the fast track because of a "narrow licensing issue" related to Java, I have posted my guess that it had something to do with the GNU General Public License (GPL) under which a lot of Sun software is currently licensed. 

Dennis Gaughn of AMR is quoted in InformationWeek with the first vialble alternative theory I've seen.  (This as opposed to the hysterical or non-Java-related theories that have been thrown against the wall in the last two weeks.)  Dennis' thought is that the DoJ is concerned that so many enterprise applications companies use Java and that enterprise applications is a market in which Oracle participates.

His idea is worth considering but I think not for a few reasons:

• The enterprise-application companies listed are no more dependent on Java than they are on Microsoft (MSFT) .NET

• Sun participated in the enterprise applications market too if--as I hope it would--DoJ defined enterprise applications more broadly than AMR; DoJ would need to really look at all enterprise software

• Dependence on the Java Enterprise Edition (JEE) is receding as newer distributed computing platforms such as Spring and Ruby on Rails gain traction; if by dependence AMR means the enterprise application supplier uses the Java programming language, that's not a big deal

• If the issue involved tens of billions of dollars of enterprise software revenue as Dennis surmises, that would not be a "narrow licensing issue" as Oracle's outside counsel stated.

But boy if Dennis is right, and he has a good track record of being right, Oracle lawyers are already getting ready to go to the mattresses.  This battle will make the Peoplesoft/DoJ litigation look like a first grader's Little League game. This would not be settled in the near term as Oracle hoped and that would have major IT investment implications.

-- Dennis Byron

Software Developers Debate the Restrictive Nature of the GNU General Public License (GPL)

In a June 30 blog post, I described how the restrictions in the GNU General Public License (GPL) may be the sticking point for the Department of Justice relative to Oracle's (ORCL) acquisition of Sun (JAVA).  The restrictions could be interpreted as anti-competitive in the same way the European Union (EU) appears to interpret Microsoft's (MSFT) bundling of Internet Explorer into Windows as anti-competitive.  Both positions are real stretches of enterprise software market dynamics but legally arguable (that is, a lawyer wouldn't be reprimanded for wasting the court's and a judge's time).

As I said in the post linked to above, I am not qualified to explain the GPL's restrictions any further than the one sentence I included.  But a large group of enterprise software developers have an interesting debate of the subject going on at the blog of the Red Sweater software company.  The intitial blog post, "Getting Pretty Lonely," goes into much more detail than I could; the responses are civil and to the extent I read them (there are scores) and pretty rational and informative.

Here are two excerpts that I liked:

"In my opinion, all the legal mumbo jumbo ceases to matter once the original author’s intentions are made clear. So if the author of GPL-licensed code clarifies to me that it cannot be run on Sundays, then their GPL means it cannot be run on Sundays. But this is one of the problems with the GPL: its terms are not often understood, even by the authors of GPL-licensed code."

"I do know that the GPL stuff was deliberately created in angry reaction to the collossal cockup that was commercial unixes (sic) in the 80s. Windows won, because all of those commercial clones of unix (sic) were fundamentally incompatible with each other."

Simultaneously there is a similar recurring debate ongoing at the Open Source Initiative (OSI) license-review list about the advantages/disadvantages of GPL and the proliferation of open source licenses (there are two separate threads so it gets confusing and much easier to just get on its mailing list. 

You might ask why this matters to IT investors?  If you do, don't invest in IT companies.

-- Dennis Byron

Red Hat Exec's Influence-Peddling Charges against Gates Foundation, Microsoft Fail the Smell Test

I very rarely agree with the opinions expressed by Michael Tiemann, Red Hat (RHAT) vice president, founder of Cygnus—which he sold to Red Hat in 1999—and member of the Open Source Initiative license-discuss message board (which is where I tend to see his opinions). I do not agree that Microsoft (MSFT) is comparable to the Klu Klux Klan, that the U.S. District Judge that didn’t bust up Microsoft seven or eight years ago erred, and that

“the world wastes $1 trillion (with a 'T') dollars on information and communications technology.”

But I think Teimann is an accurate presenter of facts as he knows them even when I do not agree with his interpretation of the facts. Which is why I keep reading his posts.

So in my opinion he is the first reasonable person to write, as he did on July 2, that

“…the Bill and Melinda Gates Foundation is basically telling governments: if you want contributions/investments from us, then you'll give Microsoft cabinet-level access to inform policy, and you'll use Microsoft products. For example, donations to educational initiatives require installing and teaching Microsoft products.”

I google’d the Gates’ foundation’s name and the words “bribery,” “national sovereignty,” “unethical,” and similar terms and could only find such charges previously on web sites that are the IT equivalents of “holocaust deniers.”

Tiemann’s statement is quite a charge—and while I don’t doubt he is reporting what he heard accurately—I think he is interpreting it incorrectly.  Or that someone is trying to sucker him.

For one thing, the accusation does not pass the smell test. Why would the Gates do it in the first place? Microsoft’s big enough an employer worldwide to tie strings to its own donations and smart enough to get cabinet-level access any place in the world without any donations or any help from the Gates’ foundation.

And on the other hand, if it is correct, assuming the Gates’ foundation includes only Gates’ money, so what? They can tie any strings they want to it.  It would be dumb PR but it’s their money.  Presumably the Rockefeller Foundation, the Ford Foundation and the like tie strings.  Does anyone know if Bono makes his charity's recipients listen to his music if they want their debt cancelled? 

However, we do know that the Gates’ foundation also includes some Warren Buffet money.  Does Warren know how his money is allegedly being used to help the corporation that “created” the money?  He’s a pretty sophisticated investor so, if it's true, let’s assume he knows. 

And does the Gates’ foundation take money from others? Its web site says:

“The foundation does not and will not solicit donations of any kind.”

Mr. Tiemann, you're starting to get way out there on the fringe with the reality deniers.  Come on back from the ledge before you slip, please.

-- Dennis Byron

Huffington Post, Atlantic Over the Top on DoJ Investigation of Java Enterprise Software

In a June 30 post I noted that there were a lot of wild theories starting to circulate about why the Obama Department of Justice (DoJ) is investigating the Oracle (ORCL) acqusition of Sun (JAVA).   The noise level has ratcheted up as the mainstream media--digital and otherwise--grabs on to the story. The new opinions don't align with a statement from Oracle's outside counsel that the DoJ hold relates to a "narrow issue" about how Java is licensed. 

Don't let these misleading articles influence your investment strategies.

An Atlantic blogger thinks there might be some payback in this latest move by DoJ in retribution for Oracle beating DoJ relative to the PeopleSoft acquisition five years ago.  That would go against my theory that, athough this is a minor issue for the DoJ, it is consistent with Democratic-adminstration attacks on IT for over 50 years. Political appointees are most likely making the decisions, not career DoJ lawyers.

The Atlantic blogger as well as the Huffington Post also seems to misunderstand the variations of and importance of Java. This Huffington Post article is particularly over the top. It glosses over some information technology (IT) history in order to make its point and misses the point on a lot of present-day IT trends as well, including the most important trend. Java is not  a "critical part" in running our lives. In fact, the Java enterprise environment (JEE) is fading in overall IT importance (as would be expected of a 20-year-old technology). The client/mobile side of Java is ubiquitous but not critical (Have you always downloaded it when prompted to do so? Is everything still working?).

Right from the get go the article says "Remember Honewell and Bull.."  I can't tell if author does or does not realize that, in the context of this blog post, they were the same company.  But the real problem is the author's looseness with the facts or failure to check them. You don't have to "remember" Bull. Just put bull.com in your url box. (Sadly its headquarters no longer appears to be located in the seedy Parisian 20th where you could get a real midday meal--none of this nouvelle cuisine stuff--at the local coal yard. Now Bull appears to be located out in the far Paris suburbs past Versailles.)

Second, despite the article's attempt at IT history revisionism in comparing Sun as different than Digital Equipment, Sun was also stuck in an old paradigm. Sun was trying to sell a proprietary chip set with a proprietary operating system just as DEC was doing all during the golden years that the Huffington Post author seems to remember so favorably. The only difference between the two is that Sun chose server systems and Digital Equipment stuck with minicomputer systems at the point in time when the IT world, led by Microsoft, Oracle and SAP, moved past both by concentrating on software with its higher margins.

From a systems perspective during this period the world went in one of two directions: to Wintel with Oracle or to the LAMPtel (Linux/Apache/MySQL/PHP) stack. Some chose the hybrid WAMPtel stack (open source software on top of Wintel). The Java programming language--as compared to JEE--enables programmers to write software that would run on any of these stacks but such a layer-on-top-of-layer approach causes performance issues that hurt Java's popularity.

Third, in another example of the Huffington Post author misleading the reader, Java was not open source during the mid 1990s time period. It was not open sourced until a late-in-the-game Hail Mary pass thrown by new Sun management 10-12 years later in 2006-2008.  There seems to be some confusion in the author's mind between the Java Community Process and the open source community. I'll let the open source blogosphere explain the difference. 

Finally, and this is where both Huffington Post and the Atlantic misunderstand IT. Java already is a key part of the Oracle stack, which is why Oracle’s Larry Ellison did not want it to fall into IBM's or Competitor B's hands (see Sun shareholder meeting prospectus). It's not a matter of Oracle planning to stifle Java as the Atlantic fears or Oracle planning to close it up in some way not specifically called out by the hysterical Huffington Post author.

As menioned above, Oracle's outside counsel has said--subject to SEC prosecution so I assume he is not lying or even stretching the truth--that the open issue with the DoJ is over Java licensing, not Java's "critical part" in running our lives so that its "future must be ensured." Java's current license could be interpreted by some as restrictive and therefore anti-competitive.

But that would take a lot of interpreting by DoJ, especially since the JEE--the thing that might have been critical to our lives if it had been more successful--is being replaced by Spring, Ruby/Rails and other 21st century environments used by the vast number of Java programmers. 

-- Dennis Byron

DOJ's Sun-Oracle "Narrow Licensing Issue:" What is Copyleft?

There is some divergent commentary in the blogosphere about the new-U.S.-Democratic-party Department of Justice (DoJ) taking the Oracle (ORCL) acquisition of Sun (JAVA) off the fast track.  Bloggers and technical journalists are asking whether it has to do with a perceived competition between Sun’s open-source-variant MySQL data management software and Oracle’s flagship relational database products, or between Oracle’s or Red Hat’s versions of the Linux operating system, or something related to Oracle’s long-planned Fusion products (updated news is due on that subject on July 1, 2009). 

But it’s best to take Oracle’s outside counsel at his word, even if that word was put out in a press release cryptically titled “Oracle Issued the Following Statement”  at 5:00 pm Friday nite June 26 at the height of the Michael Jackson drama. This guy wants to keep his law license and probably wants to keep practicing securities law rather than chasing ambulances.

"We've had a very good dialogue with the Department of Justice and we were almost able to resolve everything before the Second Request deadline (which occurred over the June 26 weekend). All that's left is one narrow issue about the way rights to Java are licensed that is never going to get in the way of the deal. I fully expect that the investigation will end soon and not delay the closing of the deal this summer."

Traditionally Democratic-administration DoJs hold up mergers or initiate anti-trust investigations because of alleged illegal tie-ins of product features to the entire information technology (IT) market or to defend failed competitors in the IT market. But there doesn’t seem to be any grounds for either in this case unless the illegal tie-in relates to GNU General Public License (GPL) or the failed competitor is Sun itself.

The GPL, under which open source Java has been licensed since 2006, has restrictions in it that some might find anticompetitive. At one time Java was like most software in that it was its source was "closed," and it was licensed and supported for a fee.  Later Java was released “freely” but was not licensed under the GPL—which is one of a couple of score of popular open source licenses. This caused what the GPL’s author, the Free Software Foundation (FSF), called the Java Trap.

The new U.S. Democratic administration's DoJ can be excused for getting caught up in the intrigue of the FSF philosophy, where “free” does not mean at no cost, where “open” does not mean you can do anything you want with the code, and where “copyright” has been replaced by a concept called copyleft. I leave a precise definition of copyleft to the lawyers (and philosophers) but it roughly means that if you use GPL to license a piece of software, you also have to use GPL to license any software based on that software.  Most of the other dozens of open source licenses relate to software that is actually free the way most people think of the word, open in the sense most people interpret open, and based on the copyright principle with which most have worked since whenever. Such licenses, unlike the GPL, allow users to subsequently do anything they want with software so licensed, including release it with a closed license.

That all sounds like a narrow licensing issue to me. Maybe the DoJ's concern is more complicated than that but I can't figure how.

-- Dennis Byron

In the Obama-Administration Investigation of Sun/Oracle, Is the GPL the Narrow Licening Issue?

In taking the Oracle acquisition of Sun off the fast track, the new-U.S.-Democratic-party Department of Justice (DoJ) is opening up a Pandora’s Box of information technology (IT) market research issues such as we haven’t seen since the last U.S. Democratic administration’s DoJ investigation of Microsoft. (Luckily there have only been three U.S. Democratic administrations in the 50-plus-year history of the IT industry, which may account for the rapid and innovation-filled development of IT in the U.S. as compared to—for example—the retarding effects of Plan Calcul in France back at the birth of the IT industry or of the European Union Competition Commission across the EU in the last decade.)

The traditional Democratic-administration’s DoJ question for IT companies is “How can we find that product x—which may actually only be a feature—is part of a competitive ecosystem larger than itself so that we can regulate it?” There is a pattern of this attitude by the three Democratic-party DoJs in the U.S in the last 50 years. Johnson went after IBM (MVS) in the 1960s and Clinton after Microsoft (Windows) in the 1990s. Carter was not president long enough in the 1970s to screw up the IT market but he did come up with the recommendations of the National Commission to Review Antitrust Laws and Procedures, which would have hurt IT competitiveness. One of its concepts overflowed into the Microsoft action; it says success alone is reason to assume illegality.

Some of the other questions in the Microsoft investigation that might flow over into an Oracle-Sun DoJ investigation include: Is there illegal tie-ins at play in the marketing of the IT? Who is more important, the consumer or the failed competitor, in deciding whether to pursue anti-trust cases? How far can the government go in inhibiting free trade in the name of encouraging it?

But according to Oracle, there is only a tiny little remaining “narrow” issue related to Java that has caused the DoJ to temporarily side-track the acquisition. Specifically according to an Oracle outside counsel in a press release cryptically titled “Oracle Issued the Following Statement” released at 5:00 pm Friday nite June 26 during the Michael Jackson Demerol drama:

"We've had a very good dialogue with the Department of Justice and we were almost able to resolve everything before the Second Request deadline (which expired over the weekend). All that's left is one narrow issue about the way rights to Java are licensed that is never going to get in the way of the deal. I fully expect that the investigation will end soon and not delay the closing of the deal this summer."

That’s a strange one. Java is a programming language but is also part of an ecosystem so maybe there is really a feature vs. product issue. There was some sort of tie-in issues back when Sun was trying to actually make money on Java. But after Sun decided some time ago to try using Java simply to sell servers you wouldn’t think there was anything there. I doubt if either consumers or competitors are complaining because Sun is the failed competitor in this case. Although Java is theoretically quite prevalent (like a lot of software it is not always used everywhere it is installed), it’s not the sort of success that MVS and Windows are.

So maybe the DoJ's concern is simply a licensing issue. Sun began issuing most of the Java components under the Free Software Founation's GNU General Public License (GPL) in 2008. The GPL has restrictions in it that some might find anticompetitive. Wouldn’t it be ironic if after years of the Free Software Foundation trying to get the GPL into court (in order to prove something only the open source blogoblatherers understand) if the GPL was the “narrow” issue in which the DoJ is interested. 

-- Dennis Byron

Obama DoJ Takes Oracle-Sun Enterprise Software Deal off the Anti-trust Fast Track

IBM (IBM) is smart. IBM has been there before. IBM knew from experience that that U.S.’s Democratic Party does not like the information technology (IT) industry. The Democrat’s disdain for IT is probably because IT pretty much avoids unionization and moves too fast to be regulated. (Regulation is popular with Democrats because it--in turn--requires regulators, which in turn allows political payoffs.)

IBM foresaw that the new-U.S.-Democrat-administration’s Department of Justice (DoJ) would have more than a laizzez-faire interest in the first high-profile IT acquisition that came over its transom. IBM priced its offer for Sun (JAVA) accordingly.

Oracle (ORCL) outbid IBM, probably without figuring in a long drawn out DoJ investigation. Maybe Oracle even figured because it was a left-coast, California-dreaming, Democratic-party sort of company (once rumored to be putting Bill Clinton on its board), it would get a pass. Add that to the fact that Sun is a money-losing systems supplier that no one else except IBM really seemed to want and Oracle can be forgiven for thinking this acquisition would be fast tracked.

But Sun has a nebulous asset called Java that might need to be regulated from the Democrat's point of view. So instead the new Democratic-party DoJ is opening up a Pandora’s box of IT market research issues such as we haven’t seen since the last U.S. Democratic administration’s DoJ investigation of Microsoft. What is an IT product vs. a feature?  How should either be licensed? Who is more important, the consumer or the competitor, in deciding whether to pursue anti-trust cases? How far can the government go in inhibiting free trade in the name of encouraging it?

Worse yet, can those bizarre people at the European Union (EU) Competition Commission, who until recently regulated the size and shape of vegetables, be far behind?

Who knows?  IBM may even have been smart enough to have encouraged the DoJ to hold up Oracle-Sun approval through a back door on K Street. Or maybe the Obama administration decision to derail Oracle-Sun came via an IBM guy that walked in the front door (actually according to this blog post, through the side door to the Oval Office that leads off Patrick Leahy's Senate suite).

-- Dennis Byron

Put Up an Umbrella, Red Hat

Just as I saw some rays of hope in Oracle’s fiscal-fourth-quarter bad news reported on June 23, I see some seeds of rain in the forecast in Red Hat’s fiscal-first-quarter good news reported on June 24.  Tout sheets like The Register and the technical press look at Red Hat (RHT) revenue numbers in the same way they look at enterprise software suppliers such as Oracle (ORCL).  But the key number for Red Hat, because of its subscription revenue model, is deferred revenue as with other information technology (IT) service suppliers (such as EDS before it was acquired by HP or Shared Medical before it was acquired by Siemens).

Forget the double-digit growth numbers headlining many article in the press. In the last three months, Red Hat deferred revenue grew only $24 million (4%) or $3 million (flat) depending on how you look at it.  This exchange between a financial analyst and Red Hat includes the detail:

“Sarah Friar: And then just on the numbers, the difference… in deferred revenue on the cash flow statement versus what we can see on the balance sheet, is that all just a currency difference.

“Charlie Peters: … on the deferred revenue, let me just add a little bit (to what was said earlier in the conference call). The question is, the change in the deferred revenue, if you [take it] up the balance sheet, it’s about $24 million. The change in deferred revenue if you look at the cash flow statement, it’s about $3 (million), and part of it is currency, part of it is US dollar.

“I would break it down this way, in the short-term section there’s a positive change of $6 million and additional $14 million change from currency for roughly a $20 million change in short-term. And long-term consistent with what I said about the changing of the average life of the contract from 24 months historically last two quarters to 19 months this quarter, we have a US dollar reduction in long-term deferred of about $3 million.

“Which is more than offset with a currency improvement of $7 million for a net change in long-term of $4 million. Hope that provides everyone better clarification.”

I’m sure it does if you’re a CFO like Charlie Peters.  But the net of it is that Red Hat dodged another analyst’s question on new vs. renewal subscription business and its services/training business was down again sequentially.  The latter should be an important indicator of current (vs. renewal) business activity and as for the former, either way you look at deferred revenue (cash flow or balance sheet; long term or short term; $3, $4, $6, 7, $14, $20 or $24 million), almost as much of it is getting posted as revenue as is getting booked.  That’s not a good sign. Still one quarter does not make for good comparisons.

Then there is all the blogoblather about Red Hat being acquired. It is no coincidence that the two examples of IT services suppliers mentioned above have been acquired by HP and Siemens. The large multi-discipline IT guys want the kind of predictability found in Red Hat’s subscription model. But despite the tout sheets salivating over an acquisition of Red Hat, Red Hat doesn’t become a meaningful takeover candidate to a prudent large company until the subscription-revenue run rate gets over a billion.  And until it is clear from the deferred revenue calculation that the run-rate is growing.  That is the number to watch over the rest of 2009.

-- Dennis Byron

Mass Email Spammers Want Microsoft to Change Outlook 2010

It bothers me that nerds such as the CTO at Opera who wants the European Union to bail him out of his failure and odd people such as the VP at Mozilla/Google (GOOG) who compare Microsoft's Internet Explorer browser to malaria want to foist their market-losing software onto those of us that choose Microsoft products. Why can't these anti-free-market bigots, who proudly proclaim that they don't use Microsoft products anyways, just move on with their lives. Instead they insist that they know better than those of us who have voted over and over again for Microsoft (MSFT) for years with our pocketbooks.

Now admittedly, I only sent Microsoft the equivalent of about $12.50 a year for Office 2003 including Outlook, starting in 2006. Add that $50 to whatever Acer gave Microsoft for the copy of DOS loaded in the PC I bought in 1991, that HP/Compaq gave it for Windows in the the PCs I bought in 1995, 2000 and 2006, and that Lenovo gave the alleged monopolists for the laptop I bought in 2008. (The laptop came with XP and a free follow up copy of Vista, which I later insisted that Lenovo replace with another copy of XP.) I don't think I needed Microsoft phone support more than once or twice with all those products but I also used their online support occassionally. 

Overall I think Microsoft has made about $250 off of me (less in real dollars if you factor in inflation, any money Lenovo recouped from Microsoft for my XP-Vista-XP migration in 2007, and the hour they spent on the phone). 

Spending that $250 over two decades was my choice, rather than something dictated to me by a Eurocrat or an Obamacrat. Or worse, by a nerd or person that thinks malaria is funny. As much as marketplace losers like Mike Shaver and Hakon Wium Lie cannot admit it, I know I got a good deal.

Now however a new challenge to me and Microsoft has arisen and this one is going to cost me in time, something much more valuable than a few hundred dollars. The people that bring you spam email newsletters by the millions--a group called the Email Standards Project--wants Microsoft to change the feature in Outlook 2010 that allows you to use Word from within Outlook by default. That's a feature that Microsoft added in Office 2007.  In my copy of Office 2003, it took me two or three mouse clicks to enable me to use Word from within Outlook.  The spam newsletter guys want Microsoft to change this feature back to the way it was in Office 2003 because... well so--unless you do what I did--their spam newsletters won't look like spam. 

This is war. Not only is it going to take me 15 seconds or so to configure Outlook 2010 (I always skip a rev) the way I want it (to work most easily with Word) but if this pro-spam front group is successful, I'll have to spend a second or two on every piece of their newsletter spam deciding whether it is spam or not.  

-- Dennis Byron

(NOTE: I also received Word and Excel on one of those 1990ish PCs and the two applications worked fine until replaced by Office 2003 in 2007. In fact the old Word and Excel still work fine. For email, before I received Outlook with Office 2003, I used whatever email my ISP gave me, going back to when my "ISP" was Compuserve.)

Is Microsoft Really Abandoning the Browser Market Worldwide?

Certainly there is no one in computerdom that does not know already that Microsoft (MSFT) will be supplying its OEMs and retailers versions of Windows without a browser when it formally launches Windows 7 in October 2009.

But I have yet to see anything about what I believe to be the stories behind the story.

First, this strategic move by Microsoft has been couched by the leading software provider as a reaction to continued European Union (EU) investigations of Microsoft bundling practices. In fact, the news came out officially via an obscure blog post by a Microsoft Deputy General Counsel after the PC press heard about it from PC manufacturers. (I think a Deputy General in legal circles is like a Lieutenant General in the Army.)

The EU angle is a smokescreen. In reality I believe the real story is that Microsoft is abandoning the browser market all together and worldwide. Microsoft spends more just in browser development than all other browser providers achieve in revenue. Yet it does not receive a dime for its efforts. Microsoft shareholders have always been troubled by this neglect of their rights by Microsoft.

It is not coincidental that there is nothing in the Deputy General Counsel’s blog post that says Microsoft OEMs and retailers cannot order and ship the “E” versions of Windows anywhere in the world they want. Key partners may quietly be urged to do so. In a few years, this abandonment of the minor Windows operating software feature known as Internet Explorer will eliminate Microsoft browser development and manufacturing costs and boost profits.

Similar steps may eventually be taken by Microsoft for such bundled features and functions as Windows Update, Folder Management (also called Explorer but not to be confused with Internet Explorer) and Help.  To speed decision making within Microsoft, which can only be described as glacial, perhaps the EU could investigate the bundling of these functions as well. Clearly there must be some other EU nations like Norway (which also can only be described as glacial) that has thousands of young people sitting around idle and that therefore needs the EU to prop up a nativist software development group. 

In the meantime, this move by Microsoft relative to browsers will be accelerated by tying it to the second part of the strategy, a super-secret Microsoft project called NGUI (for next-generation user interface). NGUI has been in development since Ray Ozzie replaced Bill Gates a few years ago as chief technologist.

The simplicity of the approach is being described by analysts who have seen it as beyond belief. When you power up a device running Windows 7 a very attractive solid blue screen will appear (it's black in some prototypes already shipping with Windows). The screen has only four characters and a blinking underscore. With the NGUI technology, two of the characters on the screen indicate the server, anywhere in the cloud, to which you are attached. Currently there is a limit of only 26 possible servers and ‘C:’ is the default choice.  The meaning of the ‘\’ and ‘>’ after the 'C:' is in a category called 'reserved' by Microsoft engineers. Potentially it is believed that users will be able to type cryptic characters after the ‘>’ as a way to launch other software.

Besides the 'C:\>_',  NGUI’s solid blue screen is devoid of distracting graphics and especially devoid of annoying pointers to Microsoft competitor web sites. Pointers to competitors’ products were the approach the EU had hoped Microsoft would take in response to the complaint filed by Opera. (OPERA is traded on the Oslo exchange, with shares also traded as ADRs although the company does not seem to have filed a 20-F with the U.S. Securities and Exchange Commission). 

But when Microsoft considered the costs it sinks into browser functionality for which it receives no revenue Microsoft clearly made the right decision from an investor perspective.  The only thing I would like to see Microsoft do in addition is to abandon marketing in the EU altogether. 

-- Dennis Byron