Are the caution lights flashing?
A panini is a toasted sandwich Euro-style. Grab a couple of slices of bread, stick in some cheese and flip the switch on your Krups FDE312-74. A better plan is to hop a jet heading to Rome. Either way the metaphor of putting good stuff in a hot grill and pressing down comes close to capturing what happened to Google this past summer. For Google, life has been toasty.
For the first time in the 11-year history of Google, the summer months were unseasonably hot for the Web search giant.
The particular "pressure" to which I refer is the surprise move by Oracle to seek legal remedy for Google’s alleged improper use of Java. In the good old days before Oracle bought Sun Microsystems for about $6 billion, Google and Sun enjoyed what looked to me like reasonably cordial relations.
The Oracle matter has compounded Google’s legal hassles. Even Paul Allen, Microsoft co-founder and owner of a super-yacht, is piling legal documents on the Mountain View, Calif., search giant, for alleged patent violations. Whether those allegations are accurate now depends in large part on the U.S. justice system. Google is in a legal sandwich.
Let’s look at the Oracle matter.
I must confess that I thought the Java technology, which is widely used by many commercial enterprises, was open source. I assumed that I could download Java and use it. Obviously Oracle does not see Google’s actions regarding Java as appropriate. The Paul Allen matter is equally fuzzy. What is clear to me is that Google, like a Panini, is in a grill and the heat is cranked up. Google has little choice but to defend itself.
Those legal matters may be no more than a misunderstanding among mostly friendly commercial enterprises. But the Oracle matter seems to be a reversal of course with regard to Java. Oracle, at one time, was a reseller of some Google technology, including the Google Search Appliance. That tie-up may have wound down, but at one point a year or two ago, Oracle professionals were fast dancing with the Googlers.
The Google Panini problem might be an example of Silicon Valley’s version of tough love. As I understand the goal, Oracle believes that Google is or will make money from its Android platform. My view is that Oracle believes that the Java-like virtual machine Google created taps into some of Sun’s Java patents. Oracle owns the patents, and Oracle wants to be compensated for the technology Google has used without permission. The Teddy bear shaking may be a faux tantrum or petulant posturing to get Google to pay Oracle a technology toll. In Silicon Valley, lawyers can move egos as long as the Ford 150 arrives with a load of greenbacks. Does Oracle have a bigger goal in mind?
Google and its Android are important in the short term, but the long-term issue could be Google in the enterprise. Oracle does not want Google’s "freemium" approach to gain traction in markets where Oracle has a reasonably secure cash flow and a well-oiled business model. Instead of letting Google disrupt the enterprise markets where the bulk of Oracle’s revenue originates, the legal action against Google could be a big-picture, strategic move.
Oracle’s allegation is a particularly painful, even conflicted situation for Google. I have heard that Google has a number of former Sun Microsystems’ engineers on staff. Now Oracle owns Sun Microsystems and is free to change informal policies in place prior to the Oracle acquisition of Sun.
Google may have fallen into a feather bed of assumptions about what Google engineers could do with Sun’s patented technology. When the parties to a legal dispute have fundamentally different views about what is "correct," a cloud of uncertainty envelopes those embroiled in the matter. In this case, Google has to find a way to make the problem with Oracle’s claim of patent infringement go away. The longer the problem continues, the more difficult certain sales and marketing tasks become.
Google has the cash to write a check to Oracle to settle the legal matter. A one-time payment may not satisfy the database giant. Oracle likes its present business model that pivots on clients paying for products and services on what I think of as an "annuity basis" or as a "standing order." Stated simply, clients keep paying Oracle year after year. If I am correct, Oracle will want a regular stream of licensing fees and royalties flowing from Google for a long time.
The company is currently caught between the heated plates of a really big panini grill. On one side is the heat from Oracle and other legal matters, and on the other is the heat from Google’s need to make headway in the all-important enterprise software market. So the pressure is on.
I am no expert on open source. I do know that there are different "flavors" of open source licenses. The implications of those different licenses are lost on me. What’s clear from the writeups like "Oracle v Google: Why?" by RedMonk analysts (http://redmonk.com/sogrady/2010/08/14/oracle-v-google) is that the Google-Oracle matter may become the shootout at the OK Corral with regard to open source software. Oracle has already deep-sixed Open Solaris (opensolaris.com), and there is considerable consternation over Oracle’s owning the open source data management system MySQL. Is Java the next technology that will be morphed into a proprietary system and method? The uncertainty is likely to make Google’s enterprise sales more difficult. That is not desirable, particularly if Google’s online advertising revenue begins to soften.
Open source threat
Let’s assume that Oracle gets a deal with Google for Java and the variants, workarounds and clean room engineering the Googlers performed. Will that make Oracle happy with open source software that could challenge its core business?
In my opinion, Oracle will not be satisfied without extracting appropriate concessions. A complete victory over Google might be Oracle’s objective. Java, Google-style, is simply the focal point of Oracle’s preemptive effort to protect its core business. Open source software threatens Oracle on several levels. So Google is a particular instance of Oracle’s emerging policy toward open source.
First, in the data management and database world, open source software dangles a tasty piece of bait in front of corporate executives—free. That’s right. No license fees for software. No handcuffs to prevent an organization from changing code. RedHat, for example, makes software available without charge and then sells value-added services and specialized components. Open source-centric companies, therefore, have a different marketing angle and business model. Oracle sees open source products like MySQL as the tip of a potentially very large iceberg. It wants to navigate around MySQL, avoiding a catastrophic collision. Oracle may want to take steps to put open source in a cage, lock the door and throw away the key. A failure to achieve that goal could threaten Oracle’s core revenue flow.
Second, in the mobile space, Oracle does not have the same momentum that SAP and Sybase are working hard to achieve. As a result, finding a way to derive revenue from the Android (acquired by Google) juggernaut may be a particularly attractive opportunity. With Android already positioned as open source, Oracle might see a way to generate mobile revenues quickly, easily and with somewhat reduced risk. The repercussions of throwing a spanner into the humming Android machine could add some zest to the Panini.
Third, in the enterprise, Oracle’s Java matter could give some potential Google customers pause. The high profile of the Google-Oracle dispute could cause naturally conservative organizations to focus on commercial software until the open source issues are resolved. A "freeze" or slowdown for Google’s Enterprise group could be just what Oracle needs to cast doubt on the wisdom and potential risk of open source enterprise software solutions.
Google wants to build its enterprise business. Java and Android are key gears in the Google enterprise machinery. If Oracle can turn off the machine or reduce its momentum by dumping sand into the delicate internals, Oracle helps itself, puts a thumbscrew on the pesky open source software initiative and bolsters its bottom line.
Google has to find a way to escape the Panini machine before it gets burned, becoming singularly unappetizing to investors and enterprise customers alike.