Myhrvold’s Business Model: “Invention Capitalist” or “Patent Troll”?

Former Microsoft CTO Nathan Myhrvold and his company Intellectual Ventures are discussed extensively in a feature article published in the latest edition of Fortune.

The fundamental question about Intellectual Ventures (IV) is whether it is an “invention capitalist,” as the polymathic Myhrvold would have us believe, or a “patent troll,” as executives from HP and Cisco contend. It’s a vigorous debate, and Fortune gives both sides a fair hearing.

From his time spent at Microsoft, Myhrvold has accumulated enough wealth to do whatever he wants, as often or as seldom as he wishes. At just 47, he presumably has many years ahead of him, so it’s puzzling to many that he would choose to launch a company that purchases and invent patents and then licenses them to manufacturers. As a project, it doesn’t seem to possess the gravitas or nobility with which an obscenely wealthy ex-Microsoft CTO would want to be associated as he saunters toward his golden years. Bill Gates aims for unprecedented philanthropic largess in his post-Microsoft incarnation, whereas Nathan Myhrrvold reputedly has hoarded from 3,000 to 5,000 technology patents.

While many in Silicon Valley are skeptical or hostile to Intellectual Ventures, assuming that Myhrvold and company are preparing to launch patent litigation like Microsoft issues press releases, Myhrvold claims his intentions are not nearly so sinister. He says he merely is following a well-established business model.

“We want to build a portfolio just like those companies have, with licensing approaches broadly like they have … I want to achieve what IBM has achieved. That’s my financial model. This is a play where I take portfolio theory and apply it to something illiquid to deliver a return for my investors. I don’t see that as evil. I don’t see that as particularly threatening.”

Also, it would seem there’s some ambivalence toward Intellectual Ventures in Silicon Valley. Microsoft is among its confirmed investors, and other reported investors include Intel, Apple, Sony, eBay, and Google.

HP definitely is not among Intellectual Ventures’ investment group, with an HP executive quoted in the story as follows: “We’re trying to run a business. We’re not in the business of running around the world pissing everyone off.”

Anyway, I recommend the article. Feel free to let me know what you think.

If nothing else, this quote from Myhrvold, on how big technology companies, with their phalanx of legal eagles, historically infringe with impunity on the patents of smaller industry players, warrants your expenditure of time and energy:

“This isn’t some X-Files conspiracy theory. I was in the meetings at Microsoft!”

Enough said.

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Why Microsoft Unveiled Its Unified-Communications Vision Now

Microsoft’s unveiling today of its vision, technology road map, and partner framework for unified communications was long on promises and short on near-term deliverables.

There’s no question that Microsoft is on the right track with its overall strategy for unified communications, and the product roadmap looks good if Microsoft can stick to the schedule.

Microsoft’s SIP-based Live Communications Server, renamed Microsoft Office Communications Server 2007 to avoid brand confusion with the Windows and Office Live Web-based services, is the real-time communication platform that will form the roadmap’s cornerstone, facilitating presence-based VoIP call management, multimode conferencing, and instant-messaging communication within and across existing software applications, services, and devices. Unfortunately, it won’t reach market until the second quarter of 2007, if all goes according to plan.

Similarly, Microsoft Office Communicator 2007, a unified communications client — which ultimately will be available in desktop, browser-based, and mobile permutations — that works with Office Communications Server 2007 to deliver a presence-based, enterprise VoIP softphone capabilities, plus instant messaging, and multiparty, multimode conferencing will be on the same schedule. The same goes for a new version of Live Meeting, a panoramic videoconferencing device called Microsoft Office Round Table, and for hardware IP phones and associated peripherals that Microsoft partners, such as Siemens and Motorola, will deliver based on a software platform from Microsoft.

Some pieces of the product-strategy puzzle will reach market before then, with Microsoft Exchange Server 2007 scheduled to be released in late 2006 or early 2007. and Microsoft Speech Server 2007 slated for commercial release late this year.

Clearly, Microsoft wants to position itself as a visionary industry leader at the vanguard of bringing unified communications to the enterprise, breaking down communication silos — such as email, IM, and voice — while layering integrated presence across those messaging conduits as well as across core business applications, so that productivity-enhancing real-time communications can occur efficiently and within contextually relevant parameters.

But why is Microsoft preannouncing so many products now, so far in advance of their commercial release?

One reason is competitive pressure. On the same today that Microsoft laid down its unified-communicaitons strategy, replete with announcements of hardware partnerships and product roadmaps, IBM was announcing that it is overhauling its Sametime enterprise IM system so that it integrates better with Microsoft’s Outlook, Office, and SharePoint applications.

The Microsoft links will be delivered early next year in Sametime’s new version 7.5, said Ken Bisconti, IBM’s vice president of workplace, portal,and collaboration products. Sametime 7.5 is currently being beta tested and is slated to ship in this year’s third quarter. According to IBM, about 25% of its Sametime installations are in hybrid environments, cohabiting, in effect, with Office and Exchange rather than in true-Big Blue Notes Domino settings.

“The two most interesting aspects of this announcement are the frontal assault on Microsoft and IBM’s emphasis on openness and interoperability for Sametime,” said Matt Brown, a Forrester Research analyst.

But it’s not just IBM that Microsoft must worry about. As VoIP continues to proliferate within enterprises, convergence of voice, video, and data finally is coming together in a meaningful way, underpinned by the standards-based SIP protocol and sophisticated, contextually-aware presence. As world converge, new competitors collide. Cisco and Microsoft, which have eyed each other warily for years, are moving gradually from classic “coopetition” toward a more clear-cut competitive relationship.

As IDC analyst Tom Valovic says, “The supplier that solves this problem is really going to stumble onto a huge business opportunity.”

Mel, Are You Sirius?

Speaking at an industry conference on media convergence at the Museum of Television and Radio in New York, Sirius Satellite Radio Inc. CEO Mel Karmazin mused publicly that his firm might be interested in acquiring its only competitor,  XM Satellite Radio Holdings Inc.

Karmazin allowed that the price would have to be right, and he acknowledged that regulatory issues might prevent a deal from being consummated.

Well, one would hope so. As much as I realize the Bush Administration has ushered in a period of elitist corporate cronyism in which government regulation appears to favor the rule of established behemoths over the principle of open competition, it’s difficult even for me to imagine that the Bush Administration would allow the merger of the only two companies in an industry.

Seriously, how would a merger of the only two satellite-radio firms in existence serve the interests of consumers or the principle of competitive market dynamics? The US government should not be in the business of blessing monopolies.