NetApp Scores Windows Protocols

Network Appliance Inc. (Nasdaq: NTAP) -- benefiting from the U.S. government's antitrust settlement with Microsoft Corp. (Nasdaq: MSFT) -- today announced it has licensed a suite of more than 100 Windows proprietary communications protocols from Microsoft.

Under the consent decree it signed with the U.S. Department of Justice and nine states in November 2002, Microsoft is required to disclose and license certain elements of its technical information.

Microsoft's Communications Protocol Program will license to third parties, on a royalty basis, more than 100 proprietary protocols that were not previously available, including Microsoft's implementation of the Common Internet File System (CIFS) protocol. The terms of the DOJ settlement mandates that Microsoft license the protocols in "a fair and unbiased manner" (see NetApp Licenses Microsoft Protocols).

Analysts say NetApp's five-year protocol-licensing deal will mainly reduce the time it takes to develop support for Windows clients, as well as improve interoperability with Microsoft software.

"It's one of the first real licensing deals Microsoft has done for CIFS to a NAS competitor," says Steve Duplessie, senior analyst at Enterprise Storage Group Inc. "I'm sure NetApp's competitors are scrambling to find the area code for Redmond." [Ed. note: It's 425.]The broader significance of the deal, Duplessie says, is that "Microsoft needs to be able to become a licensing company in the storage space, and this could be the first successful manifestation of that."

In addition to the Windows communication protocols, NetApp is licensing the set of Windows Media protocols. Presumably it will employ these in its NetCache content-delivery appliances.

Financial terms of the deal weren't disclosed. On its Website, Microsoft says it has established standard pricing for licensing the protocols, but "due to the confidential nature of this information, the pricing schedule will be shared only with potential licensees that have signed a non-disclosure agreement." In addition, Microsoft says it believes "the license fees represent a small fraction of the potential value to be gained by the licensee." [Ed. note: Wait, isn't Microsoft supposed to have been humbled?]

More information about the Microsoft protocol-licensing program is available at http://www.microsoft.com/legal/protocols