Microsoft, Salesforce.com Conflict Suggests Future Cloud Battles

Aug 5th, 2010 | By technologynews | Category: Technology

Microsoft and Salesforce.com may have settled their very public disagreement
over intellectual property, but the feud could be an indicator of things to
come in the enterprise cloud space, where a number of vendors are engaged in
ever-fiercer competition for business clients.

“As you take a look at how the sundry vendors approach the cloud, they
love to talk about interoperability and open platforms, but those open
platforms come with a lot of inherent walls built around them,” Charles
King, an analyst with Pund-IT Research, told eWEEK in an Aug. 5 interview. “The
fact of the matter is heterogeneity is a fact of life among the enterprise
clients these vendors are trying to attract.”

With those clients choosing multiple cloud solutions for the workplace, the
potential for vendor overlap with regard to technologiesand the intellectual
property that underlies themonly increases.

“The vendors are going to have to find a way to work together
effectively,” King said. “The dustup between Microsoft and Salesforce
may be a portent of things to come, as the vendors work out their battles over
who-owns-what and who moves ahead.”

That being said, he added, out-of-court agreement between the two companies “could
be an indication of how soft the economy’s beencompanies realize that working
out some sort of compromise and payout is preferable to engaging in months of
litigation.”

Microsoft
and Salesforce announced Aug. 4 that their mutual patent-infringement lawsuits
had been settled out of court
. “Salesforce.com will receive broad
coverage under Microsoft’s patent portfolio for its products and services as
well as its back-end server infrastructure during the term,” read a
statement issued by Microsoft. “Also as part of the agreement, Microsoft
receives coverage under Salesforce.com’s patent portfolio for Microsoft’s
products and services.”

Salesforce.com is compensating Microsoft, but the exact amount remains undisclosed.

“We are pleased to reach this agreement with Salesforce.com to put an
end to the litigation between our two companies,” Horacio Gutierrez,
corporate vice president and deputy general counsel
of intellectual property and licensing at Microsoft, wrote in an
Aug. 4 statement. “Today’s agreement is an example of how companies can
compete vigorously in the marketplace while respecting each other’s
intellectual property rights.”

The two companies’ conciliatory statementsSalesforce released one of its
own, stating it was “pleased to put this litigation behind us”represents
a sea change from earlier this summer, when Salesforce CEO
Marc Benioff called Microsoft a collective of “patent trolls” and “alley
thugs.”

Microsoft’s initial lawsuit, filed in May, alleged that the cloud-computing
company had violated nine of its patents. Salesforce fired back in June,
insisting that Microsoft had infringed on five patents. As the conflict between
the two companies edged toward what seemed an epic courtroom battle, Salesforce
retained David Boieswho originally represented the Justice Department in its
landmark suit against Microsoftas counsel.

Some analysts see the conflict as first and foremost a licensing play, with
Microsoft seeking to monetize its large patent portfolio.     

“Microsoft is just sort of regularizing the relationship,” Roger
Kay, an analyst with Endpoint Technologies Associates, told eWEEK in an Aug. 5
interview. “There was initial hostility on Microsoft’s part because
Salesforce upended some assumptions in the Microsoft world and set the pace in
a certain domain.”

With that in mind, Microsoft
may have begun exploring how Salesforce’s technology potentially conflicted
with its own existing technology
leading, ultimately, to the late
unpleasantness. 

“If you look at what Microsoft is trying to do overall, it’s trying to
monetize its patent portfolio,” Kay said. “But it’s also trying to
come to agreements so it doesn’t reach litigation. In the end it comes down to
a question of licensing peace.”

 

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