Microsoft Goes "Open," Good and Bad News for RIM

Microsoft Corp. announced a significant change to its partner development and licensing strategy, in effect allowing open source and non-commercial vendors to develop applications that work with its applications without charge. Elsewhere, Research in Motion, Ltd. (RIM) improved sales while its customers complained of yet another brief server outage.

Focal Points:

• Microsoft is responding to complaints from customers, developers, and the European Court of First Instance by providing developers with free access to the communication protocol standards used in its high volume products. According to the company, its new interoperability moves will ensure open connections, promote data portability, enhance support for industry standards, and foster open engagement with customers and the industry. Interfaces that were available previously only with a patent license will first be available for Windows Server, followed later this year by Office 2007. Code availability will ultimately include Exchange Server, the .Net Framework, Office SharePoint Server, SQL Server, Windows Vista.
• Microsoft stated it published more than 30,000 pages of Windows documentation that previously was only available under license. Free access will be available only for open source and non-commercial software development – license fees will be charged on all revenue-generating applications. CEO Steve Ballmer called the financial impact from this shift "relatively minimal," but acknowledged Microsoft may lose some market share as a result of these policies.
• Research in Motion is experiencing greater subscriber growth than previously expecting, stating that it expects its new fourth quarter subscriber numbers to reach 2.09 to 2.18 million as opposed to the 1.82 million it projected earlier in the quarter. A substantial portion of the sales are from non-enterprise customers, where the company's Curve and Pearl smartphones have been well received. The company reports that approximately one-third of all customers are from the consumer market. A RIM maintenance process this week resulted in the third outage for the company over the last 10 months. The outage affected BlackBerry Internet Service customers – who are typically consumers – that use the BlackBerry desktop application versus the BlackBerry Enterprise Server employed by corporations. The maintenance took somewhat longer than expected, resulting in slow delivery of e-mail.

Experton Group believes Microsoft's moves to allow non-commercial access to its communication protocols without requiring a license fee result from increased market pressure requiring greater portability and European pressure to foster a more open environment with developers and corporations. Corporations should expect a majority of the protocols to become open over the next 12 to 18 months, though questions still remain about whether technical limitations will sufficiently enable development.

Reduced capabilities would result in somewhat crippled solutions, thus preventing the achievement of the desired full-fledged gains.

Though Microsoft clearly understands that it must work better in heterogeneous environments if it is to remain a key enterprise player in years to come, IT executives should still expect the company to protect the profit-rich sales the company enjoys by selling both its software and patent licenses. 

There is no denying that RIM is on a roll in expanding its base of both enterprise and consumer users desiring best-in-class handheld e-mail access.

Concerns still remain regarding the company's infrastructure maintenance and testing processes, as well as the requirement that all data transmissions to ultimately pass through a RIM-controlled solution. IT executives should pressure RIM to improve testing and software update practices, as well as to expand its data centers and allow greater enterprise flexibility in determining how and by whom data transmissions are managed.