One way to hammer at Windows

Big Blue collects about $1 bn a year in licensing fees from its hoard of

40,000 patents. So it came as quite a surprise to some on Jan. 11 when IBM

pledged to make 500 of its software patents, valued at about $10 mn, freely

available to open-source software projects such as the Linux operating system

and the Apache Web page server software. Why would IBM allow others to use its

intellectual property free of charge?

In a word: Microsoft. The move is central to IBM's efforts to fend off

Microsoft Corp. and its Windows monopoly. While the computing giant will

continue to innovate and gather new patents as aggressively as ever, at the same

time it is stepping up efforts to bolster the world of open-source software. IBM

figures that doing so will give it a leg up in selling the software and services

that work with the open-source programs it helped develop. And that in turn

should help it gain an edge against its Redmond (Wash.)-based rival.

"They're poking their thumb in Microsoft's eye," says Alfred S. Chuang,

chief executive of software maker BEA Systems, a competitor of both tech giants.

IBM has a different tack. In a strategy IBM calls "collaborative

innovation," it shares some of its intellectual property, hoping to bolster

open-source alternatives to Windows, such as Linux. Such programs are shared by

thousands of companies and tens of thousands of programmers. "It's a

blending of both worlds, a balancing of proprietary and open technologies,"

says Jim Stallings, IBM's vice-president of standards and intellectual property.

It helps IBM create a non-Microsoft ecosystem. By selling a server with Linux,

IBM boosts chances of selling databases, application integration software, and

services. Big Blue is also creating "innovation networks," says

analyst Navi Radjou of tech market researcher Forrester Research "No single

company can have all the answers. They can't rely on themselves for all the

innovations. They need partners."

IBM, not Microsoft, seems to have the wind at its back. Increasingly, info

tech managers see open-source programs as trusted building blocks for critical

computing systems. But companies are also embracing a host of other

applications, including software for managing databases and writing custom

programs.

Not only do companies typically pay less for open-source software than for

traditional software; they're also less likely to be locked in by any one tech

supplier, Microsoft or IBM.

IBM hopes its move will spur others to contribute patents to an

"intellectual property commons." The 500 patents cover 14 categories,

from storage management and e-commerce to video processing. They're not aimed at

specific open-source projects; the idea is to give entrepreneurs and companies

free rein.

Tech companies have already pitched in key pieces of technology for

open-source projects. IBM spent more than $1 bn bolstering Linux and donated its

Cloudscape database, valued at $85 mn, and Eclipse software development tools,

worth some $40 mn. Sun Microsystems handed over a suite of desktop applications,

now called OpenOffice, which is a free alternative to Microsoft's pricey Office

suite.

It's harder for tech companies to make a buck in the open-source world, but

IBM feels it has no choice but to forge ahead. Better to give up a little-and

potentially gain a lot more in its unending battle with Microsoft.

By Steve Hamm in New York in BusinessWeek. Copyright 2005 by The

McGrraw-Hill Companies, Inc

Source: DQ-BW e-Biz section