I attended yesterday a landmark event (at least, that’s my opinion) for the European software industry. Microsoft France was celebrating the first anniversary of its start up ecosystem development program named IDEES (IDEAS in English) at the French senate. I had chosen not to blog about the event at first (because I’ll blog hell a lot about IDEES in the future, starting in a couple months – here’s why), but listening to what I listened to, and seeing what I saw, and talking to the people I talked to made me end up very optimistic about the potential of the European software industry – so I changed my mind eventually and decided to write a short note about the actual raison d’être of IDEES.

This very post isn’t about the actual content of the event (a couple speeches by senator Saunier and Eric Boustouller, MS France’s General Manager; a roundtable about “potential synergies between start ups and large caps” moderated by blogger and journalist Thomas Blard, involving corporate business developer Martin Duval from Orange, venture capitalist Eric Harlé from iSource, innovation cluster manager Patrick Cocquet from Cap Digital, developer platform & evangelism division manager Marc Jalabert from Microsoft France, business developer Laurent Kott from INRIA Transfert & CapIntech, and entrepreneur Thomas Serval from Baracoda & the Richelieu Committee; and an amazing forum with 25 start ups presenting their producs), neither is it about the reasons for my optimism about the prospects of the software industry in Europe (I’ll write extensively about it starting in May, 2007), but rather on the nuts and bolds of IDEES – in other words, introducing IDEES.

So, to get to the point, what is IDEES about? IDEES (click here for the official website, in French) aims at helping technology start ups by providing them with 4 different kinds of resources:

• technical resources (crème-de-la-crème consultants from the Microsoft Technology Center help you clean your code and test your scalability);
• marketing resources (more visibility in shows through presenting at the Microsoft booth; corporate account introductions; PR);
• help in internationalization (in 2007, the IDEES experience is to be reproduced under the brand IDEAS in both China and Israel, hence allowing sound, real cross developments for selected start ups; IDEES also supports a private initiative in Silicon Valley named FBIA, standing for French Business & Innovation Accelerator Program, aimed at helping French technology start ups settle in the US, a complex market)
• help in financing (many of the top venture capital shops in France are partners of the program). 25 start ups are to be selected every year to joining IDEES, a program managed by Julien Codorniou.

Through IDEES, Microsoft is not aiming at making equity investments or stealing innovative business plans. Actually, Microsoft has acquired just one business in France recently (that was Motionbridge, a mobile search engine solution – and it happened one year ago exactly) and rips off its acquisition map all start ups involved in one of its programs.

So, has Microsoft, like Bill Gates, decided it would become a philantropic corporation? Not at all. Actually, Microsoft benefits directly from the dynamism of its ecosystem. Here’s an example: a software start up with a cutting edge technology may, throught the credit and human capital Microsoft provides it with, seduce a large account and hence become stronger. Since Microsoft generates 95% of its revenues through its ecosystem (eg OEM) and that start up belongs to its ecosystem, all 3 companies end up with benefits. It’s a win-win-win deal between 1) the start up company which has generated a sale, 2) the client or large account who will benefit from the cutting-edge technology of the start up company, and 3) Microsoft which is very likely to have its technology included in the deal at some point (like OS Vista, or databases SQL Server) – although as far as IDEES’s concerned, partnerships are opened to start ups advocating the use of open source and free software.

Microsoft’s performances are indeed highly correlated to the dynamism of the industry of information technology. Read what the Seattle Times says about Windows Vista’s ecosystem development perspectives: ‘The 157,000-job gain IDC attributes to Vista is in addition to normal employment growth in the industry. Gantz acknowledged that those workers may not work on Vista exclusively. “It’s the share of employment that’s driven by Windows or that touches Windows,” he said. IDC forecasts that for every dollar of revenue Microsoft brings in directly from Vista in 2007, the rest of the industry will see $18 in revenue.‘ Read the entire article here.

Basically, Bill Gates’ vision has always be to build solid platforms and help software developers and entrepreneurs build applications on it. Microsoft started with desktop operating systems when Bill Gates, back in the 1970s when there was a handful computers on the entire planet, started believing there would be a single computer in every room at home and on every desk at the workplace. The vision expanded to mobile devices (PDAs and cellphones now converging on Windows CE & Windows Mobile), video games (XBox) and last but not least robots. The value of these platforms increases everytime a new application runs on it.

The same reasoning goes for other companies, including Microsoft’s competitors: the value of the Sony Playstation is correlated with the game catalog available on it; the value for retailers to sell iPods (low, imposed by Apple Inc. margins) is to benefit from selling high-margin iPod complementary devices like Bose soundbass system or running scratch; eBay’s success is measured by the number and dynamism of sellers and APIs available thanks to the eBay Platform Developers Program; the valuation of Google Inc. is justified by the size of its ecosystem: which website on the Internet doesn’t make use of Google in a way? The same goes for CISCO, Oracle (which is said to be currently launching a program largely inspired by IDEES), and all other successful technology companies. Sony, Apple, Google, CISCO, Oracle, eBay are all, like Microsoft, platform companies. And the value of a platform companiy can only be measured by the size, commitment, and drive of its ecosystem. Hence the need for coming up with initiatives such as IDEES to provide incentives for top independent software vendors using platforms devised by Microsoft to do everyday a better job. If they help Microsoft platforms, Microsoft will help them.

The Microsoft Corporation has once benefited from belonging to the IBM ecosystem. Why wouldn’t Microsoft help the next IT industry giant emerge from its own ecosystem? When all’s said and done, the whole point of IDEES is exactly to enhance the entire French software industry – including through signing partnerships with regional adminitrations such as Lyon and Mulhouse (more to come).

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