Because of the consolidation of the Unix industry into two major camps, the Open Software Foundation’s power over independent software vendors is enormous, and they feel that what they see as the Foundation’s blatant abuse of this power must be corrected. In a meeting reminiscent of the original Hamilton Group gatherings that led to the formation of the Software Foundation itself, (CI No 1,392), 13 software vendors got together in California earlier this month back to see what could be done. Whether legal action will result remains to be seen. One vendor came to the meeting armed with advice from his lawyer about possible violations of the 1984 National Co-operative Research Act, which requires joint ventures to pay fair market value for technology, although that line of attack was not pursued.
And Peter Alsberg, president of Addamax, who took part in the meeting, sought legal counsel last week because of his experience negotiating with the Foundation for his security technology. I think the industry would be poorly served by a suit, Alsberg said, but I have a fiduciary responsibility to my investors to understand our position. The Foundation did not choose the Addamax secure Unix products, going instead to Secureware, which Unify Corp product marketing manager Michelle Perry, another meeting-goer, described as a case of buying on price, not the best technology. Questions are also being raised over the way the security Request For Technology was reportedly changed along the way to make the Secureware decision more palatable. Alsberg and others at the meeting report a definite and consistent pattern emerging in discussions with the Cambridge club, beginning with an insistence on a paid-up licence well below the originator’s development costs. Alsberg, for instance, said that Addamax, which has spent $7m on research and development, was told in various conversations with the Foundation during the aborted procurement process that Addamax could expect to get only a modest six figures for all rights to the product, and that it might as well take the money because it essentially had no choice. Who else could it sell to? When Alsberg protested that this would put him out of business, the Foundation allegedly told him to find another business, suggesting servicing Foundation members using his technology. Alsberg says he seriously considered doing so. After discussions collapsed, Alsberg believes the Foundation used him as a stalking horse in continued negotiations with Secureware to drive Secureware’s price down even further. His feeling is that whatever was paid for the Secureware licence – and suggestions range from $750,000 to $1.5m – it is a tenth of what Secureware should have charged. Alsberg’s is the worst of the war stories, and he says he thought it was just us until he came to the meeting and started comparing notes with at least three of the other companies present. But no one at the meeting appeared to see any evil intent by the Software Foundation that would mean that they have a direction, one participant joked.
Rather they see it as misguided and derailed from its original track, too heavily involved in Unix politics and using a bad business model, perhaps due to a lack of middle management skills. All of the independent software vendors are concerned about the long term effects the Foundation’s tactics could have on the software industry, stifling investment and innovation because there will be no pay-out. Because of these concerns, at the end of the all-day meeting, the group wrote and communicated to the Software Foundation a tactfully worded and unanimous statement asking the Software Foundation to adopt a business model for acquiring technology that is economically viable to end users, Software Foundation and technology providers. It continued The Open Software Foundation should establish partnerships with technology providers to encourage continuing innovation. The statement is on unheaded paper and bears no signatures, as the Foundation’s operation
s vice-president Chuck Reilly is quick to point out. On the telephone with Foundation that day, only a handful of the participants were willing to identify themselves as being there, with some feeling that the Foundation, the champion of openness, might somehow retaliate against them for joining in the meeting. Dataquest, which provided a neutral ground meeting room for the independent software vendors is said to have taken a lot of heat from the Open Software Foundation for hosting the meeting, and eventually succumbed to concerns over the delicacy of its position and denied the group use of its facsimile machine to relay the communique to Cambridge, because its name would appear on the transmission. As a result, an observing consultant from another firm, Michael Killan, president of Killan & Associates, was called upon to read the communique to Reilly, and to director of business area planning Marie Burch, and marketing communications manager Eileen Coons. Reilly says the Foundation’s reaction was the result of incorrect information given to it by members of the press that the meeting was to consider antitrust litigation against it. The Foundation, which says it knows who was at the meeting and has talked to some of them since, is obviously irked that it was not invited to attend. Reilly says he was surprised that such an issue was not bought directly to the Software Foundation.
The pricing policy, he contends is a win-win situation, or at least the club always tries to do that – the Open Software Foundation does not want to put independent software vendors out of business. Although Reilly says he believes the Foundation’s current framework for negotiation is not unfair and he anticipates no modification, he added that if the disaffected software group comes up with public talks, face to face, we’ll input into discussions. But despite Reilly’s assertions that the Software Foundation already gets input from hundreds of independent software vendors, those present at the meeting felt that they had no formal access, let alone input, to the Open Software Foundation, hence the Foundation’s exclusion from the meeting. As to those that were there, Will Neuhauser, director of US operations for the French firm Chorus Systemes, flew in from France specifically for the meeting. Others present included Unisoft Corp president Brian Lovell, Visix Software Inc director of western operations Montgomery Kersten, Transarc manager of finance and accounting Gayle Kuokka, Adobe Systems operations director Ann Robinson, Sybase product manager Betty Burton, Peter Winston of Integrated Computer Systems, Legato Systems marketing vice-president Carol Realini, Netwise strategic relations director Larry Lytle and Jim Billmair, vice-president of systems software for MIPS Computer Systems Inc, the one hardware company represented. Franco Vitaliano, president of VMX Technologies was unable to be there in person, but called in over the phone. Ironically, Lytle, then with Hewlett-Packard Co, and Billmair, who worked for DEC, were instrumental in creating the original Hamilton Group, which in short order became the Open Software Foundation. In fact Lytle originally managed US operations for the Foundation, charged with recruitment.