Microsoft Licensing Spare Technology
NEW STRATEGY MAY CHANGE IMAGE, GENERATES REVENUE
San Jose Mercury News
May 05, 2005
By John Boudreau
In what amounts to a garage sale of technology, Microsoft announced Wednesday that it will license some of the spare technology its researchers have developed to start-ups.
It's a way for the world's largest software company -- long accused of limiting access to its technology to block competition -- to generate some extra revenue while pursuing its new strategy of collaborating with others in the tech industry.
In late 2003, the Redmond, Wash., software giant, partly in an effort to show it operates fairly and openly, announced its intention to broadly license its technology.
Now, the company is opening up 20 technologies it is not using for its core products. Start-ups can gain access to the software and to training. Microsoft, in turn, will get royalties or a share of the company.
"We'll be managing that partnership like a venture capitalist would, but ours is on the technology side,'' said David Harnett, senior director of the newly launched Microsoft Intellectual Property Ventures, or IP Ventures.
The tech offerings include tamper-proof ID cards that incorporate biometric information, a face-detection and tracking system, and an online social network for sharing photos and for blogging.
It is not unusual for large tech companies to seek profits through investments and partnerships with start-ups and smaller companies. IBM earns about $1 billion a year from licensing its patents.
"We used to be a company just a short while ago that relied on trade secrets as its primary strategy,'' said David Kaefer, director of business development in Microsoft's IP and Licensing Group. He noted that Microsoft has recently reached legal settlements or sought partnerships with once-bitter rivals, such as Sun Microsystems and AOL Time Warner.
The announcement by Microsoft, which spends about $7 billion a year on research and development, could trigger a stampede by entrepreneurs seeking the "Microsoft magic'' -- its intellectual property, said Richard Doherty, research director of the Envisioneering Group in Seaford, N.Y.
"Suddenly it becomes, `Do I go to Sand Hill Road, or do I go to Redmond?' '' he said. "We think they have opened up the floodgates.''
The pilot company for IP Ventures is Redmond-based Inrix, which received the license to software that helps to forecast traffic tie-ups.
"They are certainly trying to be more open and make their technology more accessible,'' said Sam Jadallah, general partner with early-stage venture capital firm Mohr Davidow Ventures in Menlo Park. "I think that's good news. I think trade secrets are still part of everyone's technology strategy. But what happens when they have patented a lot of stuff and they can't use it all?''
For a start-up, "having a technology license from Microsoft, if it's core to what they are trying to do, could be hugely helpful,'' he said.
