Thursday, February 09, 2006

Microsoft Ups Its Indemnification Package

The full release is here.


The strengthened IP protection will be available worldwide to Microsoft’s mobile and embedded partners and will include the following:

•The defense of OEMs and distributors against IP claims in every country in which Microsoft distributes or markets its Windows Mobile and Windows Embedded products

•Protection of patent, copyright, trademark and trade secret claims based on Windows Mobile and Windows Embedded software

•Removal of the monetary cap related to defense costs

VDC's View:

IP protection is certainly an issue assessed by OEMs employing embedded Linux. Over 60% of the OEMs using embedded Linux surveyed by VDC perform an IP risk evaluation. However, any concerns about IP risk do not appear to be substantially slowing embedded Linux adoption. Whether it is the existing IP indemnification programs offered by Linux vendors and others or a general lack of concern over the risks, OEM adoption is so widespread that Linux consistently ranks as the leading embedded OS in VDC surveys.

This announcement signals an extension of Microsoft’s indemnification program and further mitigates the risk to OEMs of Microsoft introducing patented technology into its Windows Embedded Platforms. The lawsuit filled by Visto in December 2005 against Microsoft shows that disputes over patented technology can come from a number of directions in the mobile and embedded software market. Although Visto is not currently going after Microsoft OEM licensees, the fear is that at some point it might - much like what SCO is threatening for users of Linux.

The real danger here, in my opinion, is an injunction or other ruling preventing an OEM from deploying that software on its devices or creating uncertainty about future availability. NPT’s lawsuit against RIM has resulted in a number of industry watchers counseling about the risks of deploying RIM devices. Microsoft has addressed the injunction issue in its indemnification package, however its remedies will take time to engineer or negotiate. Of course, with shrinking product cycles being the norm in the embedded systems industry, time is the real enemy.

This announcement seeks to shift the balance in software platform selection in Microsoft’s favor by planting small seeds of doubt in the minds of developers and risk evaluators at OEMs. It is just one more way in which Microsoft has differentiated itself vs. open source/Linux. Is this a huge announcement? No. But it should be seen within the context of Microsoft’s other strategic efforts to set itself apart from the open source model.

Clearly Microsoft continues to see open source - and in particular Linux - as its most important embedded competitor. And it should.