In so many ways the timing of this move seems to be … unsurprising.

Microsoft claims software like Linux violates its patents - May 28, 2007 (Article actually placed online May 14 2007: 5:54 AM EDT).

First, the similar gambit of litigating indirectly through SCO is throughly dead. Second, the approach of clamping down on piracy and ratcheting up prices is not working out as well as Steve Ballmer might have hoped. Third, last week the Supreme Count handed down decisions that seem likely to tremendously devalue software patents.

No doubt the Microsoft lawyers are warning that they have to move now to get the most - or any - value out of software patents they presently own. Likely they have learned from the SCO experience, and the violations claimed are real. The Patent Office granted software patents by the truck load for trivial “inventions”. So much so that every significant piece software is likely to violate many patents. Of course, the problem with this approach is that Microsoft’s software is also certain to violate an insane number of patents.

Will Microsoft threaten or actually litigate? Take this as a measure of sanity for Microsoft upper management. Threats are cheap, and have at least some (if not much) payback. Litigation is incredibly dangerous for Microsoft, given that Microsoft too is vulnerable to claims of patent violation. Perhaps the Microsoft lawyers are counting on the eventual devaluing of software patents to offer a no-lose worst case scenario.

There may be a path for Microsoft out of this, but one that Ballmer may not be able to see.

The current strategy is to explore the high end of the price curve - more money for less value - which requires clamping down on piracy, which in turn means rude treatment of customers. In the long term this is a boon to Microsoft’s competitors, as customers are motivated to look at alternatives. Screwing your customers is a very risky strategy.

The alternative is explore the low end of the price curve, and how to offer the greatest value to the customer.

The opportunity is plain. Instead of a new version of Windows every few years, release a new version every year (a few months prior to Xmas, likely). Any new features ready at that time will ship - or wait until the next year. This predictable schedule is good for retailers, and easy for customers to understand.

Ever plug in a new piece of hardware, and have trouble getting it to work? Windows offers to look for a driver (with options meaningless to most users) … then usually fails (duh). This is not a service to the customer. Windows can ship with all the current most-used drivers, and with an internet connection should be able to find almost anything. To the customer this means you always get the best available drivers - and things just work.

In fact, it might make sense to release more often - say every six months. While changes to Windows itself are better left to less often, there are any number of items that are worth more frequent update - security patches, new drivers, virus signatures, malware removers, etc. What Microsoft does (in this model) is look for every possible way that update can improve the way the customer’s computer works.

The model from the customer’s point of view is simple. Once a year (or more often) you buy the current update to Windows. Pop in the disk, and an hour or so later you have a few new goodies and a better running system.

Pricing is tricky. Say the yearly update is $40 and the six month update is $20. Both are full unrestricted versions of Windows. At those prices the customer is going to be a lot less interested in (possibly risky) pirated versions of Windows - so Microsoft is going to make a lot more sales. Folk who can afford to will probably buy both, just to be sure they have all the latest. Even folk short on money can afford the $20 update (can you see the market for pirated software imploding?). Low prices, frequent updates, and regular positive experiences all build customer goodwill - which makes inroads from competitors very unlikely.

My experience with folk like Ballmer suggests that by their very nature, they cannot see this path, even when it is placed in front of them.