Stepping up to a giant

After Vivendi Universal bought his digital music company, MP3.com, for $350 million two years ago, Michael Robertson could have retired and never looked back. Instead, the outspoken entrepreneur decided upon a second career that offered a tad more adventure: He decided to take on Microsoft. In 2001, Robertson started Lindows.com, a software start-up with the goal of turning the open-source Linux operating system into a genuine mass-market consumer item and a serious threat to the dominance of Microsoft's Windows operating system.

The Lindows version of Linux boasts a slick user interface modeled after Windows and streamlined installation routines that eliminate many of the headaches that could deter potential Windows converts. What's more, Lindows was one of the first software companies to put on the virtual blue vest for Wal-Mart shoppers, selling boxed software and partnering with hardware makers to sell low-end Linux-based PCs priced at $300 or less. And Lindows has tamed the sometimes chaotic jungle of Linux-based applications into the Click-N-Run Warehouse, a subscription-based service that offers one-click access to consumer-oriented applications.

More recently, Lindows ventured into potentially treacherous waters with the WebStation, a $169 version of the oft-tried network PC.

Along the way, Robertson has managed to antagonize Microsoft--the two sides are going to square off this December in what could be a landmark trademark case--as well as irk some open-source partisans. But Robertson takes it all in stride, saying that no amount of squabbling is enough to undercut the momentum behind Linux. He recently spoke with CNET News.com about legal, technical and philosophical issues surrounding Linux and his plans for Lindows.

Q: What's better about Lindows' approach to desktop Linux?
A: The key here is that Microsoft is the competition. If you're not ready to compete with Microsoft, you shouldn't be in the market, because that's where the victory will be won, taking business from Microsoft. It isn't a Red Hat versus Lindows.com competition or anything like that. Microsoft is the benchmark. Too often, people are comparing Linuxes to Linuxes. Who cares? You should be comparing your product to Microsoft Windows and see how it compares.

After so many attempts at Web appliances have failed, what's the reasoning behind deciding to offer a device like the WebStation?
This is more like a thick client. It has local processing power and all of the key applications locally. I think it's a dramatically different product architecturally and it will have success, while in the past thin clients have failed.

Does that mean you can do all your basic PC functions on one of these?
We do Web browsing, instant messaging software--that kind of thing. For e-mail, it's more likely that you'd simply use your Web browser. Most services now have a pretty robust Web mail interface. We also include OpenOffice. If I'm on the road, I check my e-mail, and if somebody sends me a PowerPoint presentation, I can download it to the machine, open it, edit it, save it. I have to e-mail it to somebody or e-mail it to myself to save those edits, because the machine doesn't have local storage; as soon as I shut it off, those changes go away--but you can still do an enormous amount of work with these tools.

Lindows has been consumer-focused until now. Does this become your corporate strategy?
Absolutely. We've had quite a few people come to us and say, "We've got enterprise application or we've got vertical applications, and we want a very simple, low-cost terminal we can deploy as part of this." This is really the ideal box for that.

And instead of competing in a pretty crowded low-end PC market, you're offering something nobody else has?
Absolutely. One of our key strategies at Lindows.com is that we're competing with Microsoft, so we need to go where they can't. Microsoft can't go into this environment because they don't have a version of their OS that runs off a CD. And their operating system costs $100, which negates the ability to have a $169 device.

If you log on to Wal-Mart.com, there are a number of flavors of Linux PCs. Is there any money to be made there, or is it more about building market share and winning over consumers?
No one is going to make much money on the software or the hardware when you're at a $250 price point. You have to have a richer back-end business model...and that's the direction this industry is going. The average PC costs $700, and it's dropping 20 percent a year in price. The whole world is going to be at sub-$500, sub-$400 PCs in the coming years.

Is it working for you?
We're not in the black, but the model is working. We're very much in the early stages where you invest to build the channels and things like that. But people everyday are buying additional software through us.

A lot of those ancillary applications are open-source things that are already out there and I can hunt around and download them for free. In those cases, aren't you just doing a better job of packaging and delivery? You seem to be creating a perception that Lindows is just profiting from the work of others.
Some of the products in our Click-N-Run Warehouse are open-source products that are available out on the Internet.

There's a long history of people paying for products that they could get and do themselves.

Others are not, such as the DVD player. We had to go and license the MPEG and pull those pieces together. But there's a long history of people paying for products that they could get and do themselves. We could all cut our own hair, but we don't, because some other guys can do it better and quicker--and if they charge a fair price, I'm willing to pay for it. That's the approach we're taking to the PC. Yes, this software is available freely, but it's only free if your time means nothing to you.

When it comes to supporting the open-source community, we're good about putting our code back into the open-source initiative. We're also financial supporters of many of the popular initiatives--Debian, KDE, Mozilla, Wine. We contribute real dollars to them. I would contend that the Linux community needs companies that are profitable, so they can keep funneling money into these organizations and encourage them to keep improving their product.

And it helps build Linux market share and get people out of the Microsoft camp, right?
Absolutely. What you see is that every day, the applications that are out there for Linux are becoming much more rich and in some cases, superior, to the Microsoft Windows equivalents.

You've purposely decided to not get involved in a lot of these open-source philosophical arguments. Is that because you're concentrating on a battle with Microsoft?
That's a good observation. We do really try to stay out of the politics and the religion of open-source...We've never attended LinuxWorld, primarily because that's not our market. We need to go to the mass market that maybe has never even heard of Linux before...Perhaps we make some choices others feel are unwise, but I think they make sense when you look at us trying to take it to the mass market.

Is this mix of open-source and proprietary software that you're pursuing going to be what's required for the Linux companies that survive?
Yes. Again, it goes back to the fact there are 50,000 Microsoft employees and 53 at Lindows.com. If that's the contest, were going to lose. It has to be 53 at Lindows.com plus hundreds of thousands of Linux developers around the world versus Microsoft, and now we have a shot. They have a 20-year lead in terms of installed base and applications, so it's critical for us to leverage the entire Linux community--as it is for anyone that wants to compete in this arena.

These have turned into confusing times for Linux with the SCO case. You've pointed to a contract Lindows signed with SCO. Are you saying that essentially indemnifies you?
It doesn't indemnify us, but we had a working relationship with SCO back when it was called Caldera. We paid them money to do some Linux work for us. And because of that, I think we're in great shape when it comes to dealing with the licensing type of issues involved here.

Are you promoting Lindows as the litigation-proof alternative?
It's not something that we promote. All we're trying to do is make sure that if people are reluctant to embrace desktop Linux because of the SCO issue, they should reconsider, given Lindows.com's relationship with Caldera. That's not our lead--avoid litigation, use Lindows OS.

Again, some of that is avoiding the politics of the situation...Are SCO's claims against IBM valid or not? We don't know. Regardless, we want our customers to be able to sleep at night knowing they're in a safe position. But that's not our lead. Again, the majority of customers we're trying to reach have never heard of SCO, so that's an irrelevant point to them.

All in all, would you rather not have the whole issue creating static in the marketplace?
Absolutely. It doesn't help Linux adoption in any way. It really hurts and impairs it. I think the quicker it's resolved in some meaningful way, the better Linux will be overall.

On another legal front, where are you with the Microsoft trademark case?
We are preparing for trial Dec.1 in Seattle, and it's going to be a fascinating trial, because somebody's going to lose a trademark. It's either going to be Microsoft losing Windows or Lindows.com losing the right to use the word Lindows. The amount of evidence we're going to present that Windows is--and has been--a generic term in computing for the last 25 years is going to open some real eyes. And Microsoft's tactics...a lot of stuff will come to light.

So your position is basically that the use of windows with a lower-case "w" as a computing term supersedes and overrides upper-case Windows?
Absolutely. Trademark law is pretty clear. You can't take a generic term and say, "I'm the only guy that can use this word." If you're in the airline business, you can't say, "I want the word 'jet.' I'm trademarking jet, and nobody else can use that word now." That's exactly what Microsoft has done. They've taken a generic term--they didn't invent it; it was in common and widespread use before they started using it--and then bought out all their competitors or drove them out of business and then pulled some trickery with the trademark office. They secured a trademark and then sat on that trademark for a bunch of years until they wanted to use it against a potential competitor--ourselves.

So it's not the same as if you came up with an open-source database and called it "Loracle?"
Yes, because "Oracle" is not a generic computing technology. "Amazon" is another good example--it's even a generic word, but not in their industry. So yes, you can trademark generic words as long as they aren't used generically within the business you're in.

I don't believe digital rights management is a good thing for consumers.

If you prevail and Microsoft loses trademark rights to Windows, it seems like that could really shake up the marketplace. Is that a prospect you're looking forward to?
Sure. If we prevail what you could see is AOL Windows, Gateway Windows, Dell Windows. How about Dell having their own version of an operating system they put on their computers? That would be a great thing and the kind of world that could potentially happen if Microsoft loses their trademark protection for Windows.

You're also taking a poke at Microsoft with your Xbox hacking challenge. What prompted that?
Well, I don't believe digital rights management is a good thing for consumers, and I believe the Xbox is Microsoft's first attempt at digital rights management. By digital rights management, I mean the hardware company or the software company deciding what you can and cannot use on your machine.

Xbox is in my view a predecessor to Longhorn or whatever the code name is for the next generation of their operating system, where they get to decide what software you run. And that's a very dangerous world for consumers. It means Microsoft will control what software you run, and you can rest assured Microsoft will put up a toll gate at every opportunity to charge you the maximum amount. And furthermore, they'll be able to determine what you can do with your own content. Can you encode your CDs? Can you watch your DVDs? That will all be determined by the software companies or the hardware companies involved. I'd rather have it be determined by the end user.

Speaking of digital rights, the digital music area is getting pretty chaotic. Are you glad you got out of the MP3 business when you did?
Part of me is. It's clear that even with the lessons of the last six years, the music industry hasn't figured out that if you put all these limitations on music that people actually buy, then they're simply going to turn to the black market and copy it. The music I download from Kazaa has more use and more value to me than if I go to iTunes and buy it. As long as that's the economic relationship, then commercial efforts are going to largely fail.

When I sold MP3.com, I was disappointed, because we didn't get to realize everything we wanted to. People gush about Apple's one-click download--that's great, but we had that with MyMP3 three years ago. And we would allow you to interface with any portable player. We had remote access to your music from anywhere. We had a lot of great features. I think we were ahead of our time and outran where the law is in many ways.