Why Microsoft Still Wins -- Even If Microsoft Loses

According to so much recent news coverage, the world is still hurtling towards Life Without Office. I think it's worth raining, one last time, on this misguided parade.Andy Updegrove, an attorney with a wealth of tech-industry experience and an expert on Internet standards like XML, has some great insights to share on this topic.

"The latest skirmish that i4i won in Texas," he writes, really doesn't matter very much." Amen.

Updegrove points out that the dispute between Microsoft and i4i is not really about patents; it's about money. As a result, no matter how the game between these two companies plays out, Microsoft still holds a winning hand.

According to Updegrove, Microsoft has an option that almost no one else has discussed yet: ignoring the court order: Microsoft can simply continue to sell Office and Word as they are today, defying the court's order, while it goes about pursing its appeals. The damages would continue to pile up, of course (assuming that Microsoft's final appeal ends in failure), but so would the profits in the meantime, without business interruption. This is roughly the approach that Microsoft has sometimes followed in the past (e.g., during its long-running bout with the European Commission), and even when the penalties are substantial, they may still be less than the interim profits made. Like most of the other potential outcomes, this one bodes ill for i4i: In effect, this always stacks the deck in favor of Microsoft, which can pay the legal costs of the i4i contest out of the rounding error of its balance sheet and make money even if it loses, while tiny i4i has to spend precious R&D and sales dollars to pursuing victory - and this after the inclusion of its technology in Word gutted its own product of commercial value and viability . . ." Of course, the game doesn't continue forever. It ends when i4i settles, almost certainly for a fraction of the current judgment, or when Microsoft finally prevails in court.

There is another reason why Microsoft has a strong financial incentive to fight: The usual patent trolls are getting uppity. (Anyone who doubts that these guys think of the U.S. District Court for Eastern Texas as one big marble-lined ATM might want to reconsider.)

What matters most, however, is Updegrove's assertion that Microsoft Office isn't going anywhere -- period.

But wait, there's more. Stay tuned for the next round of speculation about a related question: Will i4i try its luck against OpenOffice.org, Open Document Format or other open-source projects?

According to i4i, the company has already concluded that the current version of OpenOffice.org -- and presumably ODF -- do not violate its patents. There is some speculation, however, that future releases might tempt the company to revisit this question.

Bear in mind: An attack on OpenOffice.org or ODF would risk war with companies like IBM and Novell that use -- and have an interest in defending -- both technologies.

The last company that tried this against IBM was a rotting penny-stock carcass called SCO. We all know how that turned out.