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January 17, 2014

Licensing software means no resales, right?

No-saleAlmost for a long as software's been sold, it has not really been purchased. There were the days when a company would pay for the actual source code to programs, software which was then theirs to modify and use as they pleased. Well, not as they pleased entirely. Even a sale of the vintage MRP software source for MANMAN had conditions. You couldn't resell it on the market as your own product, for example.

Ownership of software has been defined by licenses-to-use in your enterprise market. When a municipality in Southern California switched off its HP 3000 Series 969 -- 12 years after it began to migrate in-house programs to Windows .NET -- the software on the old system immediately lost all of its value. Not the programs written to serve departments like Building and Permits. Those apps belong to the city forever. But the tools used to build them -- specifically a high-dollar copy of Powerhouse -- become worthless once the city stops using them.

You can pass along the value of MPE/iX and its included software subsystems -- TurboStore for backups, IMAGE/SQL, even COBOL -- when you sell and transfer ownership of an HP 3000. But third-party software is controlled by a different sort of license. At least it has been up to now. Here in the HP 3000's afterlife, there's a potential for another sort of license transfer. In the case of Powerhouse, its new owners Unicom Systems get to define license terms. It's never been a matter of ownership, because that always remains with its vendor. A retired product manager of Powerhouse checked in to remind us of that.

Bob Deskin was a constant voice in the Powerhouse community for more than 20 years, even passing out information about the 4GL after Cognos was sold to IBM. A decade after HP stopped building the 3000, Deskin retired from IBM, but he had a personal opinion to share about ongoing Powerhouse value.

"Keep in mind, as is the case with most software, the product was licensed to the buyer, not sold," he said. "And as such, the rights cannot be transferred without the permission of the owner, who is now Unicom."

When a computer becomes a vintage machine and has lost its original value -- like the Series 969 in Southern California -- a company is resigned to knowing it will never be worth the 70 grand originally paid for the product. Transferring rights is a process the vendor defines. Now Unicom has the opportunity to establish its own terms for that arrangement. So far, nobody from the Powerhouse community can recall a transfer of a license.

Alan Yeo of ScreenJet, a company deeply involved in development tools for the HP 3000, walked through the possibilities for considering a software license transfer of anything other than an operating system and subsystems on the 3000.

In general most software is sold as a "license to use" by an individual/organization. The terms of that license will determine if it is transferable and under what circumstances/terms.  It is not unusual in a license agreement for a license to be transferable with the agreement of the licensor and that such approval should not be unreasonably withheld.

The reason for this is that Companies, Organizations and the like quite frequently buy/sell parts of themselves, or complete businesses, and systems normally come/go as part of the deal. Thus it is quite normal for software licenses to be transferred to the new owners.

Most software companies -- if the software remains under support -- are normally only too happy to agree. A nominal administrative fee may be charged (although I have never seen one) and there may be some adjustment in the support fees charged. (For example, if the seller had multiple of copies on a discounted basis, and the new owner has taken one out of the bunch).

I have seen Cognos products change hands in this manner without any fees many times, and even seen support period balances carried over. At times, even when a company has been into liquidation and bought out again ("liquidation/administration/bankruptcy" is quite often a specific clause that terminates a license agreement).

So unless Cognos just chose not to enforce specific terms of their license at these times (which may be possible to retain support revenues) I would suspect that their license does allow transfer. But you would have to ask someone who has one.

If it does allow transfer, then the case of that Series 969 is interesting. Even though I suspect that the license does exclude the resale of the license, if the hardware and software was transferred as part of a business sale (like if someone was selling the legacy applications part of their business) then I suspect that theoretically Cognos would have found it hard not to allow a license transfer. Of course, how easy they made that transfer would depend on if there was an existing support contract, and if the purchaser of the business was intending to take out support.

We're going to have a chat with Unicom about these Powerhouse prospects soon, and we'll report back on what we're told. Unicom's Russ Guzzo is monitoring the Powerhouse newsgroup mailing list, where we've started to ask about the terms and the experiences of licenses and licensees.

05:35 PM in Homesteading, Migration | Permalink

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