Over the last few days a debate has flared up over the GPL (the GNU General Public License). Specifically, the debate relates to the refusal of DIYThemes to release its WordPress Thesis theme under the GPL.

The details of the debate encapsulate a major nerdfest, with legal and technical nerds crawling out of their boxes and greeting the world. But beyond this, the debate has much wider implications.

In fact, at Vox Sapiens we wonder whether this debate will be seen as the tipping point that identifies the crest of the Open Source wave. We think that, maybe, the strength of the Open Source movement will wane from this moment because of the fear and confusion that is being created.

The heart of the current debate itself centers upon what constitutes a derivative work, because the GPL license mandates that any derivative work of a GPL-licensed product must inherit the GPL license. The representatives from the WordPress developers claim that themes written for WordPress are derivative works – and therefore must be distributed under the terms of the GPL. This means that customers who pay for a premium theme are then able to give away copies of this theme (recipients of these copies would not be entitled to support from the theme developers).

Many premium theme developers have been persuaded to adopt the GPL, but DIYThemes refuses to do so and the representatives of the WordPress developers are being urged to take legal action.

The case of DIYThemes is, legally, a bit of a red herring because a former employee has admitted that lines of original WordPress code have been copied and pasted into the Thesis theme. So it is pretty clear that DIYThemes would lose a copyright case on this point. But many commentators are blurring the issue by not differentiating between the “copypasta” and the definition of a derivative work.

To make matters worse, many commentators are also suggesting that customers of DIYThemes are also legally liable for using the Thesis theme, even though the GPL applies to distribution and not users.

The Vox Sapiens opinion is that the debate has escalated into one with only one possible outcome – and that is lose-lose. Furthermore, we see this war as different to previous technical or legal disagreements in the Open Source arena, and we predict the slow decline of Open Source as a result.

So it looks like SAP is going to buy Sybase, database vendor. But SAP is paying a lot of money for the company placed fourth in its main market. The price per share, at USD65 and a 44% premium to the pre-announcement price, hearkens back to the mid-1990’s when Sybase was still considered a serious competitor to Oracle, IBM, Ingres (another decliner), and Microsoft was not taken seriously as an enterprise computing vendor.

Here at Vox Sapiens we are not sure this is the right move for SAP. Firstly, Sybase is probably a poor choice at virtually any price. But there is plenty of commentary available on this elsewhere on the web.

So instead, here at Vox Sapiens we will discuss the company that SAP should have bought. And that company is Software AG (or “SAG”).

SAG is the second largest German software vendor, after SAP. The SAG headquarters are in Darmstadt, just south of Frankfurt and only 70km (45 miles) north of Walldorf, the home of SAP. There would be huge cost synergies achievable in a very short timescale. In fact, on cost synergies alone SAP has a huge advantage over any other potential acquirer of SAG. Furthermore, the market capitalization of SAG is approximately half that of Sybase pre-announcement, making it easier to swallow.

But more importantly, SAG is probably a much better fit strategically.

Sybase brings two things to the table: a database and mobile computing capability. What can SAP do with these?

Well the mobile capability is interesting, and fits with SAP’s strategy of moving access onto mobile platforms. But there are plenty of small companies with this capability that SAP could snap up at a fraction of the price of Sybase.

And the database is really no big deal at all. SAP has alliances with the three bigger database vendors, alliances that allow the SAP application(s) to work on these databases. And existing customers are highly unlikely to be persuaded to switch databases just because SAP owns Sybase. The cost of switching will be very high, and it is 99.99% certain that the former database couldn’t be eliminated entirely from the enterprise because other applications would be using it.

Furthermore, selling the SAP application to existing Sybase-only customers is unlikely to be significantly affected by the acquisition. The Sybase database sale is a very technical one, the key customer contacts are the CTO and the database specialists. Contact with these people will not give SAP the links to the senior executives to whom SAP would try to sell the application.

And SAP already has a database for customers that don’t have or want one from the leading three vendors – it is called MaxDB and is based on technology developed by … Software AG. MaxDB is actually a modified version of SAG’s ADABAS D database, licensed by SAP. So there are big opportunities here for cost synergies and for modifiying MaxDB even more to meet SAP’s requirements. ADABAS D should not be confused with ADABAS, another SAG database, and another leading technology that is closely linked to SAG’s Natural programming language.

An issue with the SAP application that many customers raise is the difficulty to integrate it with other applications. Many customers have to buy middleware, business process management (“BPM”) and other similar technologies to facilitate this integration. SAG bought webMethods in 2007, a company that produces middleware of the same name. SAG has also recently bought IDS Scheer (which created the ARIS enterprise modeling approach) giving it even more presence in the BPM market, and also a presence in SAP consulting. With webMethods and IDS Scheer, SAG presents a bundle of technology that SAP needs and can’t find in plenty of other companies as is the case with Sybase’s mobile technology.

So yes, at Vox Sapiens we believe that SAP has missed a trick. It should have bought Software AG.

The latest European passenger vehicle emissions standard (“Euro5″) was introduced in September 2009. Since that date, in Europe it has been illegal to sell new vehicles that do not meet this standard. Older models that only met the Euro4 standard can only be exported outside Europe to markets with more lenient standards. Within Europe the cars have little value – they can only be disassembled in order to reuse the components – and this value is therefore below cost.

This situation alone raises the possibility that dominant carmakers in the other markets will already be very suspicious of Euro4-compliant automakers. But it can get worse, much worse. Imagine that the government in another market introduced emissions standards that the locally dominant carmakers were not meeting, but with which the Euro4 vehicles were compliant. Imagine that, to compound that, the local market had only recently introduced a new emissions standard so many vehicles were in the early phases of their marketing cycles and the automaker had not had much time to prepare for the new emissions standard.

So the consequence is that the locally dominant carmakers find that (part of) their range is no longer legally saleable before they have achieved payback, plus they do not have new compliant models waiting for release to fill the gaps. And so the Euro4 compliant automakers find a hungry market for their formerly almost-worthless cars.

Well from July 2010, China will require compliance with Chinese5 emissions standards. And guess what? Chinese5 is basically the same as Euro4. So vehicles that become unsaleable in Europe last year remain compliant in China whilst some competing models in that market will be withdrawn from sale. And guess what else? Chinese3 emissions standards were only introduced in July 2008. So some of the vehicles to be withdrawn may have only been available for two years.

So perhaps there will be an opportunity for China to complain about dumping?

So Renault-Nissan and Daimler have agreed a cross-shareholding and cooperation on future technology. Here at Vox Sapiens we are not optimistic about this alliance.

Firstly, this seems very one-sided. New emissions standards is forcing Daimler to develop its small-car models (smart, A-class, B-class). So far it has made a right pig’s ear of anything below its C-class range, and is desparate for a partner that can help it. So this deal, if successful, helps to dig Daimler out of a big hole.

But Renault-Nissan have no similar burning platform. Both businesses will need to continue to cut costs to remain competitive, and one route is co-development of technology and even shared production. This agreement supports this option, particularly through Daimler’s engine technology contribution. But Renault-Nissan already has a lot of the necessary expertise in-house. Daimler’s engineers will add value, but not to the extent that Renault-Nissan adds value for Daimler in the small-car areas.

Second, the management’s comments don’t sound too confident about making the alliance work.

“The main difference is … that with Chrysler, we agreed on a merger but had no ideas about areas of collaboration, … This is just the opposite of what we did with Chrysler and I am very optimistic that the outcome will be the opposite as well,” Dieter Zetsche, Daimler’s chief executive, said.

OK, so this time Daimler is out of first grade. But second graders are not that mature. Will a 3.1% equity stake really be enough to influence Renault or Nissan as a shareholder? Probably not. And does a change in the value of a 3.1% shareholding in Renault and Nissan have a major financial impact on Daimler? Once markets recover, probably not. So getting value out of this deal is all about being able to influence the technical guys to work together. Daimler couldn’t do this when it owned all of Chrysler. What has happened in the intervening period to show that it can do it now, especially when it doesn’t have the management control to force cooperation?

And thirdly, and this concerns us greatly as another unknown for Daimler, the French government is able to control this agreement. Just this week, Christian Estrosi, the industry minister said: “It is a very strong undertaking of the French president that from now on the state will take part … in the industrial strategy of Renault.”

Wow ! Not much requirement to read between the lines there.

Although a senior government official tried to assuage concerns by saying “We will have our say about Renault, but not about Daimler,” we don’t see how having a say about Renault’s participation in this agreement can not impact Daimler.

Earlier this year the French government appeared to alter Renault’s manufacturing strategy by blocking the transfer of Clio production from France to Turkey. What happens if the Daimler-Renault-Nissan alliance plans to produce a co-developed engine outside France during the next economic downturn?

And the French state will buy 0.55% of Renault as this agreement dilutes its stake and it drops below the 15% required to meddle to the degree that it wishes.

We will sit, watch and wait for the tears.

So Microsoft (presumably on the advice of lawyers) used the DCMA (Digital Millennium Copyright Act) to force Cryptome.org’s hosting provider, Network Solutions, to close down the website and keep a lock on the domain name to prevent the site being relocated. Then a day later the complaint was rescinded, allowing the site to be restored.

This was a bad thing to do? Why?

OK, where should I start?

Well firstly, it brought huge publicity to the situation, and the number of people aware of it is now many orders of magnitude greater than it would have been. Cryptome.org’s typical readership is a combination of technogeeks, political activists and privacy specialists. Most would have a good idea where to find a document that other parties might wish to keep out of cyberspace. So even if Microsoft had been successful in forcing the removal of the document from the Cryptome.org site, it would have appeared somewhere else, and the people really interested in it would still be able to get to see it.

Secondly, Microsoft has egg on its face. Such a sharp reversal of policy in 24 hours hints at a lack of crisis management expertise in Redmond. Theoretically this could impact the share price, particularly because Microsoft is not a stranger to legal battles, albeit ones that focus on monopolies rather than copyright.

Thirdly, it is another thing to think about when registering a domain name, and could impact the US-located domain registrars’ businesses. If Cryptome.org had been registered with a foreign domain registrar, it would have been out of the reach of the DCMA. I assume this is one reason behind the choice of registrar for Wikileaks. Even if you are a non-US business using a non-US server your site can still be brought down, permanantly, if the domain name is registered through a US registrar.

And fourthly, and most importantly, this will really scare a huge number of Microsoft customers and potential customers. By bringing this action, Microsoft has made the general public aware that it is keeping track of what they are doing, and archiving the information that it knows. Long term, this could be very costly indeed.

This is just the latest in a string of similar foolhardy activities. Why did people not learn from Bridgeport Hospital, from Julius Baer, from Royal Dutch Shell, and from many other large organisations?

When will lawyers learn that just become something is “the law” and their client is “in the right” there might be very good practical and strategic reasons to avoid attempting to enforce it. And when will the large organisations learn to manage their lawyers instead of being managed by them?

The media report that General Motors was loathe to sell (a full or partial stake in) its European Opel operations to the Magna consortium because it is concerned that this will provide a conduit via which GM’s intellectual property (“IP”) might end up in the hands of GAZ, a competitor to the Chevrolet brand in Russia. Today the media report that GM has agreed to sell to the Magna-led consortium, but that there are conditions attached to the sale. I find this approach somewhat strange, and wonder whether it is a smokescreen.

We also read media reports that Ford is concerned about the possibility that a Chinese company (Geely being the most commonly quoted) might buy (a stake in) Volvo Cars as a mechanism by which to acquire automotive IP. Furthermore, Ford is reported to have concerns about Magna, which is one of Ford’s major suppliers too, owning a rival to Ford’s European operations (although Reuters reports that Magna co-CEO Donald Walker recognizes the need for “a clear barrier between the parts and car companies”).

For many years, the greater portion of automotive IP has not been developed and owned by the OEMs. Most IP sits in the supply chain. The OEMs work with the suppliers to define requirements for new parts, and the suppliers develop the IP as part of their work in producing these new parts (in fact, the failure to take advantage of this situation is one key reason behind the weakness of many suppliers, but that’s a story for another blog post).

The skills and knowledge in the OEMs revolve around:

1. Supply chain management – managing a cascaded supply chain of hundreds of suppliers providing tens of thousands of components is an enormous challenge. There might be some program management IP here, but very little automotive product IP.
2. Sales and marketing – the OEMs have done a great job of keeping their suppliers’ brands out of the general public’s awareness. Whereas, for example, Dell and HP have been unable to resist the “Intel Inside” initiaitive, the OEMs do not have to contend with “Denso Inside” or “American Axle Inside” or “Bosch Inside” slogans. As a result, only the automotive afficionados are interested in the source of components when buying a car.
3. Channel logistics – predicting demand, having the right models, with the right attributes (engine size, color, extras, etc.), in the right place at the right time. The performance of the Detroit 3 in this respect might also be the subject of another blog post.

So why do I think this is a smokescreen?

1. It is very difficult to protect product IP – your competitor only needs to purchase your product and dismantle it to discover 99% of the product IP that is embedded in it. Process IP is another matter, of course, but …
2. Russian tax laws make it advantageous for OEMs to supply CKD/SKD kits that are reassembled in Russia (whether this is the approach taken for Chevrolet and/or Opel vehicles, I don’t know), making it easier to determine the later-stage process IP. Furthermore, more assembly process IP can easily be obtained by luring away two or three key personnel.
3. Opel is the technology source for GM’s small car platform, which possibly represents GM’s future growth strategy. Does GM want to risk this strategy by releasing ownership of the technology to another industrial player?
4. Without Opel, GM ceases to be a global company. In particular, Russia is a market with a huge potential. And if GM loses control of Opel, what prevents the new owner targetting Russia and seriously affecting Chevrolet? At present, GM has the opportunity to ensure that Opel and Chevrolet present complementary product ranges in the Russian market; a new owner for Opel is likely to ensure the establishment of competitive product ranges.
5. By selling to a financial buyer, GM has the opportunity to buy back into Opel at a later stage when its finances are in better shape. Would an industrial owner be prepared to sell (at a realistic price)?
6. Magna, as the owner of Opel, will obviously become the preferred supplier to Opel. With Opel and the remainder of GM sharing many components (especially for the new small car platform), this gives Magna immense additional leverage over the remainder of GM.

Why might GM have a point?

In the interests of balance, here are some reasons why GM and Ford might be right to be concerned.

1. Shanghai Automotive Industry Corp (SAIC) bought the rights to the 25 and 75 models when MG Rover Group collapsed (it bid for the entire group but lost out to Nanjing Automobile). SAIC then transferred the assembly from UK to China where the same cars are assembled at a lower cost (see this Reuters blog). GM and SAIC have a joint venture, so maybe GM has seen at first hand some of the tricks used to transfer IP.
2. A Magna-owned Opel may be less concerned about IP for Opel components being utilized for parts destined for other OEMs, because the benefit still accrues to Magna