Lessons learned by IT in 2009 #2: Microsoft sheds its 'Dr. Evil' costume

Turning the other cheek...works

Where James Plamondon's presentation to developer evangelists at Microsoft stops short of testifying to its current policy, is where the company takes the unprecedented step of declaring ceasefire. Where evangelism was war for Plamondon (who now works outside the company), the tack today looks less like Sun Tzu and more like Gandhi: sitting down in the face of a fight.

Whether directly inspired by Microsoft's change of tack, or affirmed in the course of changing their own course, companies elsewhere in the technology field made similarly extraordinary decisions to lay down their arms and build bridges instead of dams. Most notable has been Intel and AMD, which called an official truce last November.

Although AMD's and Intel's settlement gives AMD a share of the spoils, it was AMD which also made a significant concession. The fight against Intel has been one of the company's defining characteristics; a good portion of its marketing was based around the very story of fighting Intel, like an ongoing narrative of the battle of good against evil.

By setting aside that tack, AMD is left with proving its merits using more conventional means, such as technological prowess and market performance. But by limiting its weapons to just that, AMD sent a signal to the world that it believes it can champion Intel in a fair fight, with the result being a near doubling of its stock value since November 12.

What Intel gained from the settlement was a huge dampening of the momentum that would otherwise have driven the State of New York's case against Intel, filed earlier in November, the EC's ongoing investigation against the company, and the US FTC's latest formal charges. Reporting from The New York Times indicates that Intel had every reason to believe the FTC would charge it with molding its platforms to manipulate markets.

But with Intel's sole competitor now effectively indicating that any harm done to it has been put behind it, prosecutors worldwide are forced to prove Intel's intent to harm without AMD helping to demonstrate it was harmed. That will require cooperation from Hewlett-Packard, Dell, and any other principal vendors with which Intel may have made deals. The evidence of those deals clearly shows that Dell and HP were not only negotiating their terms, but in many instances the architects of the deals -- a fact which will make it difficult to prove that Intel intentionally manipulated markets.

The eventual outcome there, whether settled or ruled by judges, will probably be a microscopically granular splitting of hairs in which no side emerges the clear and singular victor, but all sides can claim some share of victory nonetheless. Such was the case last April with the settlement of what at one time was considered the poster child of all intellectual property disputes, until followers could no longer choose their favorite side: the Qualcomm v. Broadcom affair.

In a now-familiar pattern, Broadcom got the spoils of the deal on paper, and also earned the support of investors who now believe the company plans to do battle in the markets rather than the courtrooms. But Qualcomm emerged a victor there too, with a settlement that effectively unraveled the antitrust cases against it elsewhere. Although South Korea's FTC would impose a colossal fine against Qualcomm for leveraging its platforms to drive up licensing fees, the company followed up with deals with its former enemies that could end up more beneficial than anything Qualcomm was trying to leverage the hard way, making bridges instead of dams.

Finally, earlier in December, the one-time dartboard of the hardware industry, Rambus, became the latest symbol of peace. It graciously agreed to royalties caps suggested by the European Commission, in a case that Rambus came from behind to win in the US. After what appeared to be a devastating 2006 defeat to memory companies claiming Rambus withheld its standards strategy to garner high royalties down the road, the stalwart memory technologies company held out as its accusers were found guilty of their own conspiracy to keep DRAM prices high.

That left Rambus emerging from the affair in an almost angelic light, effectively having been proven guilty of nothing. Its agreement to cap DRAM royalties, in light of the civil equivalent of an acquittal, is an indication that even companies with the ammunition and incentive to fight it out, are declining to do so.

The peace problem

Whatever shall we do? Assuming this peaceful course of action plays itself out everywhere, without the polarizing influence of a single and singular, actively anti-competitive, dominant player in any technology market, we may have to resort to fighting about politics and sports. Some of us may reacquaint ourselves with old hobbies and lost arts, such as exercising or going out on dates.

Ever since the information technology business has become personal, there have always been generally defined "good guys" and "bad guys." Some had clearly earned the colors of their respective hats. However, for the most part, the ethics practiced by companies could almost always have been more accurately illustrated with various shades of grey. In 2009, those hats became whiter, everywhere.

As James Plamondon correctly pointed out, the press eats up stories of conflict. By resolving the conflict, the intensity of public scrutiny is reduced. Perhaps inadvertently, Microsoft, Intel, and others are discovering that waging peace can pay big dividends.