Paying For Free Software

Something I didn't touch upon in my post yesterday about Microsoft and Yahoo (actually the adaptation of a story I had translated for Newsweek Japan, which periodically asks me to write about the high tech industry) is the cost effectiveness of the investment. Instead of something over $44 billion for Yahoo, I thought that Microsoft could have a different strategy. Put aside $500 million, which is practically a drop in the bucket for them (even cheaper than EU fines for unfair competition). The company would host a contest, looking for the hundred best and most interesting ideas for future web businesses.

The winners would get $5 million, some as a monetary price, and the remaining as seed money. That way, Microsoft would, for relative chump change, become a super-charged venture capitalist working on a scale that, for most, would be completely inconceivable. Out of 100 ideas, if they have smart people doing the picking, I'd guess that it would be safe to figure that five might wildly succeed, to create markets that might be worth $10 billion each. That is, I think that the law of large numbers, with some intelligence stacking the deck, is bound to turn up at least that number of winners. Over the period of a few years, that $500 million investment turns into $50 billion of businesses in which Microsoft has majority ownership. Now that would be a way to stop following others and take a commanding lead.

So I was a bit surprised this morning to get my daily mailing from Slashdot and learn that Google, while not doing exactly that, is in a similar space, at least. In the Google Summer of Code, the company pulls together 1,500 college students, 2,000 mentors, and gives each student (each winner had to fill out an application and compete for the spot) $4,500 to fund an open software project, and offers each mentor $500 for participation. The students have to license their code to the mentors.

Will Microsoft take my advice? Are you kidding? They won't even read it or hear of it. However, if they don't learn that innovation has to be about business practices, and not software, they'll be going nowhere new fast.

US Auto Makers Shoot Themselves in the Gas Tank

With market share slipping and the future generally looking drab, you'd think that US auto makers would decide that leading in what they would offer to consumers would be smart business. But New York Times reporting suggests that the CEOs of Chrysler, GM, and Ford - can't really call them the Big Three anymore - are pushing on Congress to undercut mandatory increases in fuel mileage:

The executives argued that the bill’s proposal to increase mileage requirements for cars and light trucks would be impossible to meet and would gravely damage the automobile industry.

It would increase the average mileage requirement for passenger cars to 35 miles a gallon by 2020, up from 27.5 miles a gallon now, and would apply to light trucks and sport utility vehicles as well.

So these business "leaders" are saying that they can't increase average gas mileage by 8 mpg in 13 years? Time and again I've heard CEOs bemoan how too many employees are negative and stuck in old thinking - not being positive. But you've got three engineering giants, even if not the three biggest, that are just giving up. To me it sounds like another case of corporate whining of how business is just too hard. Too bad. Think the Japanese and Koreans won't be at those numbers, or lower, within the same time frame? It's as though these executives are intent on commercial suicide. It doesn't matter whether the government is mandating this. Wake up, people! When gas prices keep hovering above $3/gallon in this country, it's the market that will be making the demands. But God forbid that these dinosaurs make a strong fight for their existence. Clearly the big problem is not in labor costs, but in trying to do business without imagination, daring, and resolve. Anyway, how much courage does it take to run out of a burning building?