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Using evolution to reduce competition

May 18th, 2011 No comments

The Microsoft purchase of Skype got me thinking back to my time as an advisor to the Monitoring Trustee appointed by the European Commission in the EU/Microsoft competition court case. The Commission wanted to introduce competition into the Windows Work Group server market and it hoped that by requiring Microsoft to license all of the necessary communication protocols companies would produce products that were plug-compatible with Microsoft products. The major flaw in this plan turned out to be economics, we estimated it would cost around £100 million to implement the protocols and making a worthwhile profit on this investment looked decidedly problematic.

Microsoft’s approach to publishing protocol specifications went through three stages: 1) doing everything they could not to do it, 2) following the judgment handed down by the court, 3) actively documenting additional protocols and making all the documents publicly available. Yes, as the documentation process progressed Microsoft started to see the benefits of having English prose documentation (previously the documentation was the source code) but I suspect the switch from (2) to (3) was made possible by the economic analysis that implied there would not be any competition in the server market.

Skype have not made their client/server protocols public, will Microsoft do so? I suspect not because there is no benefit for them to do so. Also I’m sure that Microsoft will want to steer clear of anti-trust authorities and will not be making Skype an integral part of Windows’ internal functionality.

What progress has been made in reverse engineering the Skype protocols? There is a community of people trying to figure them out but they have not made the progress that enabled Andrew Tridgell to quickly get something useful up and running that could then evolve into a full blown implementation of a Microsoft protocol.

What lesson can Skype product managers learn from the Microsoft experience of having to make their proprietary protocols available to third parties? I don’t think Microsoft intentionally did any the following:

  1. Don’t write any English prose documentation; ensure that the source code is the only specification of the protocols. This will make it easier for point 3) to occur,
  2. proprietary protocols are your friend, even designing ‘better’ alternatives to non-proprietary protocols,
  3. don’t put too much of a brake on evolution, i.e., allow developers to do what they always want to do which is to make quick fixes to the code and tweak it here and there resulting in a tangle that cannot be simplified. This will significantly drive up third-party costs as they will not be able to create a product handling a useful subset (i.e., they will have to implement everything) and the tangle make sit harder form them to sure that what they have done is correct.

What might be the short term costs of following this strategy? Very good developers are used to learning by reading code (lack of documentation is a fact of life for may of them). Experience has shown that allowing developers to make quick fixes and tweak code often results in difficult to maintain code (ok, so a small group of developers have to be paid above the market rate to ensure access to their code memory). If developers really do dig themselves into a very large hole it is always possible to completely redesign the protocols and provide a very major upgrade (Skype can always reinvent its own protocols, an option not available to third parties which have to follow slavishly behind; this option has always been open to Microsoft with its protocols, i.e., the courts did not place any restrictions on protocol changes).

Where did the £100 million figure come from? The problem of estimating development cost was approached from various angles. The one I used was to estimate the number of requirements at 50,000 (there are 38,158 MUSTs in the first public release of the documents) of which 1,651 occur in the SMB specification for which there is a 450KLOC implementation (i.e., samba source in 2006), giving an estimate of (50000/1651)*450K -> 13.6 MLOC in the final implementation. At £10 per line we get a bit more than £100 million.