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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Why Did Microsoft License Exchange ActiveSync to Apple?

Comments (235)

While I’m delighted that my iPhone syncs with my Exchange Server, I’ve been struggling to figure out why Microsoft licensed ActiveSync to Apple (and Google).  For a long time, I used a Windows Mobile device because of the integration with Exchange (I’ve never been a Blackberry fan).  Once the iPhone integrated with Exchange, that was it for me and I switched to the iPhone.

As I asked folks about this, I heard two reasons:

  1. The government made them.
  2. Ego: Microsoft wanted to be able to say “Apple licensed something from us”.

Neither of these is very satisfying to me.  No one said “licensing fee” – and I can’t image the magnitude of the license fee is material to either party.  Some people are speculating its a clever move by Apple but that leaves me perplexed as it is so obviously useful to Apple users that I can’t believe Apple didn’t do it years ago.

When Apple released Snow Leopard and we started talking about the upgrade for the Mac users in our office, one potential reason occurred to me.  After some discussion, we realized we needed Exchange 2007 to be able to have Snow Leopard connect to Exchange natively.  Hmmm – we have been running Exchange 2003 (very nicely, thank you very much) since – well – 2003. 

As a result, the only thing that motivated us to upgrade to Exchange 2007 is Apple Snow Leopard integration of Exchange ActiveSync.  If this is the reason, it’s a smart strategic move on Microsoft’s part.  As part of our Exchange 2007 upgrade, we are buying a two year “upgrade insurance” package so we’ll get an upgrade to Exchange 2010 for free.  Microsoft defers any discussion around switching to Google Apps for us for at least three more years.  While Microsoft runs the risk of losing desktop clients in the enterprise, I think they were going to lose these clients anyway to a Mac + Internet based solution so now they at least get to keep the server piece firmly in place.

While Microsoft has finally announced a version of Outlook for the Mac, it seems like a completely irrelevant thing at this point given how miserable and hated Entourage is (e.g. Mac users have already figured out a different email solution.)  Now with native Exchange integration into the free (and perfectly adequate) Mac email client, the discussion around this seems to be over.

Of course, I could be over thinking this.  Microsoft’s press release around this reads like “hey – look – we are licensing our IP – isn’t software IP great – aren’t we nice?” so there could be something here around software patents.  I’m struggling to reconcile Microsoft’s 2008 Interoperability Principles with the notion that they are licensing the IP to access these “interoperable software components.”  Per the press release:

“The Exchange ActiveSync IP Licensing program is another example of how we are continuing to deliver on our commitment to increased openness and collaboration,” said Horacio Gutierrez, vice president of intellectual property and licensing at Microsoft. “This technology is being sought out by our partners and competitors alike because it enhances their value proposition to their customers, and we believe that to be a testament to the innovation taking place at Microsoft.” 

It feels like there is a deep master plan going on here.  I just can’t seem to figure it out.  Now, if Apple would just implement Exchange Task sync on the iPhone, I’d be really happy.

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  • http://twitter.com/sfoskett @sfoskett

    It's really too bad Snow Leopard requires Exchange 2007. The iPhone is much more interoperable, and includes just about every syncing feature included in SL. This begs a follow-on question for yours, Brad: Why didn't Apple do 2003-capable EAS in Snow Leopard when they already did it on the iPhone? Support? Integration? Time? None of this makes sense to me…

  • http://intensedebate.com/people/bfeld Brad Feld

    Yeah – I’ve been struggling with that also.  Something “weird” is going on here.

    • http://twitter.com/tjcook @tjcook

      Perhaps that was part of the 'deal' between Microsoft and Apple–"If you want Exchange on OS X it has to be 2007". I think your concept of Microsoft seeing the life cycle of exchange extended through use cases like your own companies has a lot of legs to it.

  • http://intensedebate.com/people/bruce2096 Bruce

    As much as I'm willing to be annoyed by MS's products, they're aiming for a fairly unified environment that's getting more platform agnostic. The next rev of SharePoint should be more standards based and integrates well with their other products. The iPhone's doing incredibly well in the marketplace and Apple's hardware has a pretty dedicated following. If my long-term play is not only the Office suite but also powering the *entire* backend of the next-gen office, I'm sure as hell going to get rid of the excuses anyone might have to look elsewhere for office collaboration.

    On the flip side, it doesn't hurt them in any appreciable way. Sure, I'm not going to get a windows mobile device now since my iPhone plays nice, but I was never going to anyway. And, I can even think about dropping my Blackberry Enterprise Server (and separate licensing costs in these tight times) — at this point, for a huge chunk of my org, Exchange just works. I'm *much* more likely to go through at least the next rev since it's all working pretty well.

  • Luis

    It is not retrospective 'the government made them', it is proactive 'heading off potential antitrust scrutiny by pre-emptively licensing before the government makes them.' In principle, there is very little difference between Exchange and SMB/CIFS, which both the US and EU have found problematic from an antitrust/bundling perspective, so it isn't surprising that they've learned from that litigation that they should strongly consider licensing to other parties.

  • http://www.avisos.com.bo Franklin

    This is good news

  • http://blog.gb-studio.tv Grant

    This is a wholly unsatisfying answer, but could a large part simply be that the goal of each of Microsoft’s business units is to run profitibly and one business unit is willing to do deals that may ultimately hurt a different BU because they run fairly independently and autonomously? I don’t have anything to support this notion other than anecdotal examples of similar infighting in other large corporations, but couple that with an overall incentive to avoid anti-trust issues and it could be enough reason for deals like this.

  • http://intensedebate.com/people/JohnMilner JohnMilner

    I feel Microsoft knows it must maintain its dominance in enterprise messaging and the entire back-end infrastructure for enterprises. So if they are able to essentially lock in customers for at least a few more years and more fully develop and integrate their offerings it should provide a disincentive for customer to switch to Google apps as you mention. Having no first hand knowledge of the situation, I would think the potential anti-trust issues were less of a motivating factor than a more fundamental change in Microsoft's products end-user base. Apple's OS market share has been increasing over recent years and some enterprises (small, medium, and large) are starting to deploy OS X throughout their environment. I see it being the natural shift Microsoft needs to do to keep customers. To me it appears as a sign that enterprises providers are acting on the changing end-user expectations to access enterprises services regardless of the end client. We all know Entourage sucks and I'm sure Microsoft's Outlook for Mac will sell. But until then, and for their customers who are not familiar with Outlook (acquiring new customers who were in Mac predominate environments) integrating with Apple's native apps makes sense.

    At the end of the day most enterprise clients will buy their end-user products as well (the office suite) but there will be those that do not, and this allows them to capture or keep the server side.

    Reading this post raised tangential question, what impacts does this license have on Google Apps ability to sync through their Active Sync license with Snow Leopard which I asked about on my blog.

    • http://intensedebate.com/people/bfeld Brad Feld

      I think Google also have a license which means that both Apple and Google should be able to do this.  However, I have no clue if there are any weird restrictions on the license.

  • Pingback: Microsoft Licensing of Exchange Active Sync to Apple | John Milner

  • http://intensedebate.com/people/arinewman120 arinewman

    Another thought related to the commercial value of forcing the Exchange 2007 upgrade – if enterprises are running an OLD version of MS Server, this could also trigger the snowball-effect MS upgrade scenario they have perfected. If you hardware/OS are too old, not supported, your ActiveDirectory server doesn't have LDAP-push or whatever. You end up upgrading the box, the OS, the mail server and the directory just to keep employees happy with their iPhones. a bit extreme but hey…I could see the conversation between the two companies going down this road. We'll license ActiveSync, but you can only let it work with Exchange 2007, n'kay? Uh, OK.

    • Shurtleff

      This is exactly right. The 2007 Exchange upgrade, forces an OS upgrade and a number of other pretty major changes in implementation. Most of the folks I know supporting small and medium business have been holding off on going down this path as it is expensive on all fronts, hardware, upgrades, incompatibilities. If the iphone can be the lever to get folks to jump, well the customers forced the upgrade right?

    • http://intensedebate.com/people/bfeld Brad Feld

      Yup – exactly the logic we went through.  We ended up with a new server and a new OS, but don’t use AD so it didn’t matter on that front.

  • http://twitter.com/billbarhydt @billbarhydt

    I think this 100% driven by the MS Exchange team. They have to drive their own revenue growth and the more accessible Exchange is to potential Exchange clients (phones, pc's, etc) the more money they make by selling Exchange CAL's (client access licenses). I don't think there is any more to it than that.

    PS It took me 7 tries on Firefox 3.5/Snow Leopard to get the twitter connection to work to post this comment. (oyvey)

    • http://intensedebate.com/people/bfeld Brad Feld

      I know the Microsoft strategies are siloed, but this feels “oversiloed” to me.

  • Pablo

    I think the reason is that Microsoft is huge and each department is working as a separate company. So effectively the Exchange Integration product done by the Exchange department is competing with the Windows (desktop) and Windows Mobile departments. So probably there's not a single Microsoft strategy and that's why trying to find it only finds non-sense. The fact that you have to upgrade Exchange still supports the theory that the Exchange team is working on its own, for itself, competing against other departments if necessary.

    Crippling a product to have another one work would be an integrated Microsoft strategy. Paul Thurrott says Microsoft never done that, but I disagree. Passport could have been a success if it wasn't trying to push IE. IE could be the best browser ever but was a tool of diminishing the value of web apps to increase the value of desktop apps. Many teams follow the Microsoft agenda, many don't and I think we are seeing a move towards having no agenda, which in my opinion, makes Microsoft much more dangerous (I wrote about it http://pupeno.com/blog/comment-on-windows-weekly-

    Maybe it is a matter of being a powerful team inside Microsoft. Office is probably one of the two most powerful teams, so they get to disregard the overall Microsoft agenda, and make products for Mac OS X and now, even a web app that runs in Chrome and Safari. Passport, maybe not so powerful. Exchange, maybe it's powerful enough to follow its own agenda.

    • http://intensedebate.com/people/bfeld Brad Feld

      Yup – several folks have said this and given my experience with Microsoft’s siloed strategy internally, this makes sense.  It just seems like it’s too siloed in this case.

  • Jayson

    The Exchange licensing agreement was struck during the height of the Apple + Google love'fest. And a lot of Mac users and Mac IT shops were "Going Google" fast. Gmail was growing, Google Cal on the rise, and who knows what else Apple + Google were dreaming up together over sushi in Mountain View….

    Microsoft wasn't about to give up any revenue they make off Mac users OR anything to Google.

    • http://intensedebate.com/people/bfeld Brad Feld

      That’s an interesting view – that it was reactive to Apple + Google.  I hadn’t thought of that but in the “bigger strategy discussion” (if there was one) this seems like it should have played into it.

  • http://www.pindropsoup.com Dave Michels

    Active Sync can't be very difficult. Most likely Apple and or Google reverse engineered it and told MS they will use that or be happy to license it for a fair price. I know for certain MS has responded in a similar way when a different tech of theirs was reverse engineered.

    The MS license probably has a time clock (2 years or so) and an agreement not to reverse engineer in the future. MS hopes that the base that is created today will deploy Exchange servers and their new MS phones will catch up to the iPhone. When push comes to shove in a few years, they are hoping they will be in a better position.

    • http://intensedebate.com/people/bfeld Brad Feld

      Surprising very few people / companies have done anything with ActiveSync beyond Microsoft.  I had my first experience with a company that built sync to Exchange in 1999 (AnyDay.com).  Getting it right was non-trivial (and we ended up licensing software from Extended Systems).  So – I’m not sure how “easy” it is and I’m sure there are other licensing issues surrounding it given all the Interoperability Guidelines and other mumbo jumbo.

      I sure hope there isn’t a time clock on it.  If there is, then that’s a real issue for all end users.  I could imagine a situation where it was licensed only for E2007 and E2010 implementations – that would create a time clock around 2013 but linked to the server (e.g. there will be plenty of E2007 servers still in use in 2013).

  • DaveJ

    Reminds me of Sovietology, trying to figure out what the shadowy puppet-masters are up to.

    I found your comment about "discussion of moving to Google Apps" interesting. Google Apps – at least the spreadsheet and the word processor – are not ready for serious corporate use. They're AWESOME for quick and dirty documents or for just getting something started. But they just don't interchange that well with Office documents, and at a very minimum what good is a word processor without redlining?

    • http://intensedebate.com/people/bfeld Brad Feld

      Re: Google Apps – yeah – we were mostly focused on Gmail.  However, I typically use the free Google Docs for a lot of stuff I do and find it to be more than adequate.  Of course, most of what I do is write email anyway – who needs redlining for that?

  • http://twitter.com/frankm @frankm

    You are thinking of this as if Microsoft has a single, corporate strategy. I think today Microsoft is esentially the General Motors of the software industry, with each division doing what is right for them but doesn't necessarily fit into a coherent corporate strategy. When your focus is on revenue from anywhere in anyway, (why else would they want to so badly to get into advertising but to increase revenue?) the only option is to grow in any direction possible.

  • AndyA

    I think we should consider the cloud portion of this. Apple's need for Exchange Sync is obvious – a critical component of bringing the iPhone into the Enterprise mobility space. Adding the native aspects of Snow Leopard gives the desktop link to Exchange – this gives stickiness to Exchange as Brad points out, and makes Macs more relevant in the enterprise. But what was Microsoft getting out of this? I would speculate that this directly coincides with the launch of MobileMe. When the new iPhone came out with ActiveSync, it was directly tied to the update from .Mac to .Me. This too syncs with Exchange (when corporate firewalls allow). I think it's a pure revenue deal – I bet MS gets a piece of iPhone licenses plus MobileMe memberships. I wonder if there is more lurking behind the MobileMe service… maybe even MS Exchange servers…

  • AdminID

    From AppleInsider:

    In order to keep up with Microsoft's changing client strategy, Apple has pursued multiple efforts to deliver Exchange support for its clients. For the iPhone, Apple licensed the rights to implement a compatible Exchange Active Sync conduit with Exchange; it did not license any Exchange Active Sync software from Microsoft. Apple owns both the iPhone and Snow Leopard software that talks to Exchange.

    The client applications Apple has upgraded in Snow Leopard to connect to Exchange, including Mail, Address Book, and iCal, use WebDAV to talk to Apple's own Snow Leopard Server applications. Because Microsoft only supports its new Exchange Web Services API under Exchange 2007, Snow Leopard's new Exchange support requires a modern version of Exchange. The iPhone's EAS works with older versions, including Exchange 2003.

    http://www.appleinsider.com/articles/09/09/05/ins

  • Jeff

    It's a bummer Apple didn't build in native syncing for Exchange Tasks and notes. I have found the iMExchange app to be a great alternative. For a free (read-only) version, iMLite Viewer does the job as well for quick access stuff.

  • Pingback: 为何微软将 Exchange 的 ActiveSync 授权给苹果? - 数码

  • http://intensedebate.com/people/smurchie Steve Murchie

    Or this maybe? http://www.infoworld.com/d/mobilize/apple-betrays

    Don't have an opinion myself – not following the story, but found the InfoWorld article interesting.

  • http://www.spywareremove.com Jimmy Lewis

    I have always wondered about this. Getting my Mac i was already confused as to why the supported mainly entourage instead of outlook and exchange. I bounce back from mac mail to entourage from time to time but i want my exchange and outlook back darn it. Good writeup on this. Very informative.

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