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Sendo vs. Microsoft: The Truth Comes Out
igotmybfg writes "The Register has a story which includes many details about the phone maker's Texas suit against the software giant. It seems that Microsoft had much more to gain from letting its partner fail than helping it to succeed: in the event of a bankruptcy, Microsoft acquired all of Sendo's intellectual property related to the z100 Stinger SmartPhone, and was then free to do whatever it wanted, which in this case turned out to be going behind Sendo's back and making a deal with Orange SPA." Read our original article about this to get more background information.
I mean, if I would have THIS clause in the contract, it is NORMAL to assume that MS would play hardball to then gain all the rights. This is to be expected. Unless they crossed some lines then (which to proove will be the problem of Sendo), Sendo got what they deserved - for neglecting the reality of harsh businesses practices.
Only summer comes, and the code isn't ready. It isn't ready in the autumn, either, and this starts to play hell with Sendo's budgets. December rolls round, and according to Sendo, bugfixes that carriers have requested are being refused by Microsoft. Sendo is in a cash crisis, and a call to VCs is spurned. So Sendo asks Microsoft for a further cash injection, which is declined:
"Microsoft refused with the full knowledge that this refusal would push Sendo to insolvency", claims Sendo in the filing.
This sounds an awful like the Mafia. Take over a business. Milk the shit out of it. Keep saying you will take care of it. Burn the damn place down when it fails (as if you cared in the first place).
Watching the free market in action is like watching a lion rip apart a gazelle on animal planet.
woohoo!
In MS's defense, there is no (nor should there be any) law against getting into really sweetheart deals at the expense of the other party. If I see an antique on eBay selling for $5 that I know to be incredibly valuable, I should buy it -- I'm under no imaginable obligation to contact the seller and let him know he's an idiot.
And so it appears in this case: whoever was making decisions at Sendo really, really screwed up. They gave MS the power to destroy them, then gave them huge incentive to do so.
That's life.
Every year during my review, I just pray the words "slashdot.org" aren't mentioned.
I mean, if I would have THIS clause in the contract, it is NORMAL to assume that MS would play hardball to then gain all the rights. This is to be expected. Unless they crossed some lines then (which to proove will be the problem of Sendo), Sendo got what they deserved - for neglecting the reality of harsh businesses practices.
This part doesn't suprise me much, having read up on the history of Microsoft's dealings with its 'partners' over the years.
What gets me is that this sequence of events started back in 2001, at the time that Judge Jackson was throwing the book at Microsoft for, amongst other misdemeanours, doing the very same thing they were evidently planning on doing to Sendo!
Even if Sendo's case falls flat, it will have served to make Microsoft's circle of friends even smaller. What more proof could you ask for to show that the people in charge of Microsoft have not learned to play fair?
-MT.
if Sendo engineers can actually integrate onto a Series 60 platform.
Just because the OS can't do what you need, then just bypass it. A classic example of this is SIM Locking to a particular network, or group of networks. The SDK (Pocket PC 2002 and Smartphone) doesn't support this. Sendo complain, HTC, MiTac, Samsung, and Compal work around it (to varying degrees of success).
You can try to twist this in any pro-microsoft way you like, but the plain fact is that they have again been very, very bad.
And we are not talking about some presumed badness that may or may not happen in the far future. We are talking about well-documented badness that happened just now.
Running your business partners into the ground and stealing their trade secrets is NOT normal business practice.
If you are a company with any intellectual holdings or patents, dont ever work with Microsoft. If you only manufacture things and dont know anything about what you do then its fine.
Its nearly written in stone since before. Microsoft is a midas touch to any company with any form of knowledge that works together with them. Sendo should have realized this ofcourse. Still that doesnt in any way defends what Microsoft did wich clearly fradulent behaviour and underhanded business practises. If every company behaived like Microsoft all resources would go to fighting instead of developing good products. This kind of mafia methods needs to stop now!
In my book thats bad for me and other consumers.
HTTP/1.1 400
You sleep with the devil, you're going to get hurt. Simple as that. Next time, just let them buy you outright and walk away.
That's what I thought on first reading the article, but maybe this extract is significant:
...summer comes, and the code isn't ready. It isn't ready in the autumn, either, and this starts to play hell with Sendo's budgets. December rolls round, and according to Sendo, bugfixes that carriers have requested are being refused by Microsoft. Sendo is in a cash crisis, and a call to VCs is spurned. So Sendo asks Microsoft for a further cash injection, which is declined:
"Microsoft refused with the full knowledge that this refusal would push Sendo to insolvency", claims Sendo in the filing.
So, it looks like MS failed to deliver the software on time, which caused a cash-flow problem for Sendo. According to the story, MS also refused to make a scheduled payment to Sendo, thus causing them further financial difficulties.
A friend of mine has an Orange/MS phone. Judging by the problems he has experienced (counter-intuitive address book, problems connecting via GPRS), I think MS have had genuine problems getting the software right. I mean, this phone shipped about a year after MS failed to deliver working code to Sendo, and it still isn't finished.
I doubt this is a conspiracy by MS to steal Sendo's IP, but it still looks as if they bear some responsibility for the situation. If they signed a contract and can't honour it, they should be held accountable for any damage that causes.
Let's face reality. That is the way business is exercised nowadays. I fully agree that it should not be that way, but there are certain points that enforce that behaviour. Hordes of shareholders demanding better results and higher profits every quarter are one side of the coin. Nobody believes that Microsoft will be able to keep its profits rising within the same industry for years and years. The aim is to increase the amonunt of industries and therefore increase the opportunities to push the Net Income even further above. No need to tell you that MSFT hat an income of $9.27 billion on sales of $30.0billion. Now it is your duty to show me a way to increase profits without increasing sales....
Summing up - The aim of Microsoft is to increase profits - no matter which methods they use. Time for the govt to step into the ring and show them what they are allowed to do and what they aren't.
OK. Biggest computer company.
Who have no phone market share. Show me they have a winning strategy in that marketplace and I'll believe you have a point in this instance.
You may be right about desktop apps but this is just not the same.
Similarly games companies, if looking to tie themselves to a console maker, would do better to tie themselves to Sony than MS.
From the article:
... I would say we're lucky this technology wasn't determined by American companies (and I basically don't care if they are European or Asean), or else we'd pay double for our phones, just for the patents to use the proprietary communication format.
To Americans, the telecom world's model of promoting growth through vertical investments (a Nokia or an Ericsson bails out the carriers) and through IP sharing (yeuch!), and promoting common standards (that's goddam Communism!), must look like a filthy and incestuous business.
Perhaps slightly unrelated (yes, mod me down), but I wonder if the cell phone market would ever have been that successful as it is now without these common standards, especially if you think that the mobile market/penetration is the largest in Scandinavia. Imagine a world where a Nokia phone could not communicate with a Sony/Ericsson, what a waste of resources would that be,
But hey, isn't that exactly what we have on the desktop?
Genius doesn't work on an assembly line basis. You can't simply say, "Today I will be brilliant."
1. Sendo sues MS.
2. MS fights for a little while.
3. Sendo gets more desperate, and settles with MS for enough money to appease their investors.
Case closed.
$8.95/mo web hosting
Microsoft acquired all of Sendo's intellectual property related to the z100 Stinger SmartPhone, and was then free to do whatever it wanted, which in this case turned out to be going behind Sendo's back and making a deal with Orange SPA
Erm... it clearly says: "[microsoft] was then free to do whatever it wanted". Which part of "was then free to do" do you all not understand? If Sendo would have had any managers with a vision and who could envision a set of concequences related to a buy out of IP by MS, this never would have happened... but no, they were eager to sell, money in the bank!...
Never underestimate the relief of true separation of Religion and State.
I am sure the Enron executives share your viewpoint, and wonder why they are in jail... After all, it's just doing business, isn't it?
Perhaps one day some of the Microsoft folks can join them. We can hope, at least...
Taking advantage of stupid or weak people/companies/customers/whatever is wrong, even if it *is* legal. It shouldn't be legal... One of those house-repair scammers tried to screw my grandmother (in her late 80's at the time). She did not fall victim, but others did. If she would have fell for it, would that have been OK? I see no moral difference between the small-time and big-time scammers.
Styrofoam IS biodegradable, you're just impatient!
Well - no.
Microsoft promised to have Stinger ready in summer 2001. Without Stinger, Sendo couldn't make any money. Over a year later Microsoft still hasn't got the product ready and is refusing to fix some of the bugs Sendo found. You get the picture?
So yes, Sendo was stupid. Everybody is stupid who thinks Microsoft can put out a working product in schedule.
1. Sendo sues MS.
2. MS stalls for a long, long time. Judge is too wimpy to issue an injunction.
3. Microsoft refuses to settle. Sendo goes bankrupt from the legal fees.
4. The Sendo's Creditors including the Accountants and Lawyers gain Sendo assets including the right to sue Microsoft.
5. (Even more) profit for Accountants and Lawyers
6. Microsoft now have no choice but to settle in order to cap the legal fees.
Like all magic potions and wonder drugs, fraud doesn't always work. Take Enron and especially the accounting firm that influenced some of their decisions. They're lying flat on their backs because of fraudulent behavior. Now if Enron isn't big enough in your definition, I don't know what is.
Anyone familiar with the term "critical path"? That is the path in the development cycle that affects all others, and ultimately the deliverablilty of the product. If you delay the critical path, you delay the product.
If you are planning a product that will determine the success of your company, you should make sure that critical path is kept in-house where it can be controlled. Sendo's management obviously didn't get this. (A better buisiness decision might have been to use an open source operating system and hire a bunch of developers to customize it for you.)
This is why many smaller broadband companies went belly up in the ".com roaring 90's". They depended on someone else (telcos and cable companies) to deliver on their critical path. That's just plain stupid.
-ted
(A better buisiness decision might have been to use an open source operating system and hire a bunch of developers to customize it for you.)
Their plan was to leverage Microsoft's marketing muscle in order for their product to be successful. Open source wouldn't have achieved that.
Unfortunately for them if you lie down with dogs, you wake up with fleas.
I'm not sure why you feel this way. While it's true that many of us here on Slashdot are aware of the seedier side of Microsoft's business practices, it's also just as obvious that the majority of the US is not aware. The fact that business continue to form relationships (at their own peril) and that consumers continue to purchase Microsoft's products indicates this. The problem just hasn't escalated to a high enough level to financially impact Microsoft yet. You can see this situation as another log on the fire, and maybe more people will be able to see the flames now; it all depends on how the civil case pans out.
GreyPoopon
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Why is it I can write insightful comments but can't come up with a clever signature?
I disagree. The only thing Microsoft has in their favor is the fact that they still haven't been able to provide an OS that meets carrier approval. They are accused of breach of contract, which appears to be true because they did not provide the software as promised, and they did not make a capital payment as promised. The fact that they still don't have a viable OS will serve partly as an indicator that failure to provide the software as promised was not fully intentional.
My guess is that unless Microsoft makes a contribution to somebody's retirement fund, breach of contract will be upheld, and you'll have a following battle over IP because Microsoft will no longer be entitled to the information they possess and are now using in conjunction with another company.
GreyPoopon
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Why is it I can write insightful comments but can't come up with a clever signature?
I mean, really. Anyone considering a deal with MS that involves the transfer, licensing, ownership of IP to Microsoft should click their heels together three times and say:
"Spyglass, Spyglass, Spyglass."
It's not like MS hasn't been caught redhanded pulling this sort of crap before.
KFG
If everyone is honorable and keeps their word, etc., as you imagine then any given economic system will work well whether it be capitalist or marxist. The great and abiding issue is how to yoke the baser impulses within humanity into a just, viable economic system. Quite simply, how do we encourage the honorable, and punish the thieves?
Scott
I keep hearing on /. about this thing called a Constitution which guarantees one to be innocent until proven guilty. I guess that only applies selectively according to the whims of geeks? Rights exist to protect ALL whether you agree with or even like others. I guess all the whining is really the releasing of a bunch of hot air from people with no life.
/. doesn't like Microsoft, ANY lawsuit, regardless of merits, is a good thing. Until the judge rules, neither side is guilty, PERIOD.
What did you expect IN THE FILING FROM SENDO?!?!?! "Microsoft treated us with the utmost respect, w screwed up and lost a bunch of money but we're going to use anti-Microsoft sentiment to push this case along and get a crack at the 40+ billion dollars they have sitting around just itching to be plundered by a bunch of lawyers."
The filing is Sendo's side of the case but since it's a lawsuit against Microsoft and
This is standard operating procedure when larger companies deal with start-up/small companies. My former company had basically the same deal with Dell for a $25k project! This is a hedge against the company going under and a large company being screwed by losing support and/or whomever buys the IP from the bankruptcy procedures.
A business's responsibility is to its stockholders, not its customers, not its partners or anyone else for that matter.
If anyone wants to know why American Capitalism is failing this view says it all. Customers don't mean shit. The unfortunate thing is so many people believe this bullshit that it's hard to speak otherwise.
Here is an idea. Start a _privately_ owned company and make a product and tell me again why customers don't matter. Seems that the minute the company goes public they are no longer in business to make anyone but Wall Street happy. This kind of idiotic thinking has just got to stop.
What gets me is that persons like yourself come to their defense so quickly. The same /.ers who complain about Microsoft also complain about Linux companies when they do equally "bad" things.
And furthermore, WTF are you talking about "innocent until proven guilty"? THEY HAVE BEEN PROVEN GUILTY, IN COURT, MORE THAN ONCE!
Sweet leaping Jesus, do you just ignore those facts so you can paint people who dislike Microsoft with a very broad brush?
Sticking feathers up your butt does not make you a chicken - Tyler Durden
Well, going more further, I would say - stay away from Microsoft in any form, either the partnership or their software. They are are harmfull and nothing good at the end of day is expected.
How can [Bill Gates] be evil when he wants to save children in third world countries from AIDS?
Well, according to several recent reports on his contributions to various efforts, he wants to save them from the threat of linux even more he wants to save them from AIDS.
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Those who do study history are doomed to stand helplessly by while everyone else repeats it.
sure it pays,
Now I don't know what your definition is of not working is, but if cash/assets are any measure of success i think the said "fraudsters" have done pretty well out of it don't you think ?, going to prison for 7 - 15years to come out a multi-millionaire from your embezzeled cash is hardly a failure.
You know, I have been wondering whether my dislike of Microsoft goes deeper than just not liking their products, and goes straight to the attitude and culture they encourage in the business world.
Consider some Microsoft ads that have been shown recently, pitched as "software for the agile business"...
- A wine seller noticed half of his stock was just destroyed in a tragic accident, then instantly updates his inventory and doubles his price so the guy currently buying cases gets screwed. Are we supposed to think this is how businesses should be run? Any reasonable store owner I know of carries insurance for these circumstances, because they understand that screwing the customer will lead to less customers.
- A bunch of Record Industry execs come up with a great marketing plan: somehow find out the E-mail addresses of everyone who bought a certain band's CD in a certain city, and send them e-mail direct marketing messages about concerts and other exciting offers. They even show that the fans are happy that they are getting this unsolicited spam! What gives?
I understand that the real point of the commercials was to show how well all the systems talk to each other, but I find their examples extremely outrageous.Maybe I'm just a disgruntled corporate drone, but is this how most "agile businesses" want to operate? Because if it is, we have more to worry about than just Microsoft!
Have you read the whole story about Midas? He, midas, turned people into gold when he touched them. That was profitable for midas but hardly for the ones touched by him. Not very fun being turned into gold and in the same time snuffed off?
HTTP/1.1 400
Dishonest business practices and the destruction of trust will kill capitalism. It doesn't need a Marxist-style revolution. It just needs what both Roosevelts nipped in the bud to succeed.
You are not alone. This is not normal. None of this is normal.
This is what Microsoft does all the time. The "partner" is rendered so weak by Microsoft that a fraction of what the technology is offered as a settlement and usually taken. FEW cases against Microsoft actually go to trial.
Here's how it work:
1) Microsoft promises to feature YOUR product so you sign an agreement
2) Microsoft stalls while it's engineers figure out what/how you are doing what you're doing and how they can Window-ize it. By Window-izing, I mean make it proprietary so it'll only run on a Windows based OS.
3) YOUR company starts getting fed up with all the Microsoft engineers running your engineers in circles and delaying the product.
4) YOUR company starts running low on capital and now is getting REALLY tired of Microsoft. Legal threats start here.
5) YOUR company files legal action against Microsoft for all the things they did illegally. The list is long. From stealing secrets, sharing them, stealing employees, delayed product, etc
6) YOUR company shrinks to 1/4th it's previous size and sales all but have dried up as Microsoft announces it's version of YOUR product to be released in the next quarter or two.
7) YOU and your one remaining lawyer decide to take the 1 million dollars Microsoft offers to settle the case.
8) YOU give your lawyer 3/4 of the settlement amount and you pay YOUR remaining closing costs to shut the lights out on your multi-billion dollar business which Microsoft now owns for a fraction of what it would have cost them if YOUR product hit the market.
This is what it means to be a Microsoft partner and those that have been down this road are not vocal about it. You don't put up signs when your business has been raped by Microsoft.... IMHO.
LoB
"Anyone who stands out in the middle of a road looks like roadkill to me." --Linus
This is business, and the fittest businesses will prevail. A business which signs a contract giving all of their property to the other party in the event of a bankruptcy when the other party can more or less determine when that business goes bankrupt is obviously NOT a fit business.
This is free enterpirse at it's finest: Sendo ceases to exist because it was simply a poorly run business.
The only thing Microsoft is "guilty" of is preying upon the stupid. The relationship succeeded just fine - for the only party in the relationship that had a clue as to what it was doing. (That wasn't Sendo.)
Next Slashdot News Story: "Man makes deal with Devil, sues when faced with eternal damnation after death."
paintball