EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

04.11.09

Leaked Microsoft Memo: How Microsoft Changes the Prices at OEMs to Block GNU/Linux Sales

Posted in America, Antitrust, GNU/Linux, Mandriva, Microsoft at 2:44 am by Dr. Roy Schestowitz

Summary: Antitrust exhibit shows how Microsoft changes its pricing to suppress interest in Mandrake (GNU/Linux)

SOME PEOPLE wish to know why certain shop cease to sell GNU/Linux-powered computers (or sub-notebooks with GNU/Linux), or in some cases no longer make available GNU/Linux with comparable hardware. The truth of the matter is that Microsoft systematically sets the prices to deny GNU/Linux entry into the market.

We have just pulled an antitrust exhibit which shows what Microsoft is doing. As far as we are aware, this exhibit was never published or used by the courts before. The full exhibit (2003) [PDF] can be found as text at the bottom of this post. Here is the gist:

From: Brad Beadles
Sent: Tuesday, June 24, 2003 4:31 PM
To: Dale Watanabe
Co: Bret Arsenault; Scott Johnson (DENVER); Tim Schmidt (DENVER); David Brandt (DENVER); Ann Nicholson
Subject: LDS Church – Hewlett Packard
Importance: High

[...]

Outside of the hardware they are considering alternatives to their current standard of Windows O/S and MS Works on the desktop in these local units. They are considering Mandrake, Debian, Red Hat and Open Office because of their upfront costs. HP is quoting their system to include both the Windows O/S ($80) and MS Works ($15) for an overall software acquisition cost of $95 for the O/S and Application Suite The Open Source alternatives are $8.50 for the O/S of choice which is currently Madrake (Open Office is $0.00). As you can see, we have a price delta of $85 between the MS solution and the Open Source solution.

Is there anything we can do with/for HP to lower the O/S cost to become more competitive? Dell is quoting $30 for the O/S and the MS Works product team is giving us $25 for MS Works for a price point of $55 for the Dell software acquisition costs.

Microsoft talks about becoming “more competitive”. To understand what Microsoft means by that, this antitrust exhibit should be read.


Appendix: Comes vs. Microsoft – exhibit px08618, as text


From: Date Watanabe
Sent: Thursday, June 26, 2003 3:59 PM
To: Rick Wong; Rob Young (OEM)
Cc: Kurt Kolb
Subject: FW: LDS Church – Hewlett Packard
Attachments: RE: LDS – Open Source – Quick Update; RE: LDS – Open Source – Quick Update

I took this offline with our guy, Brad, but I think we should be concerned that they are breaking out the OS separately.

Dale

From: Dale Watanabe
Sent: Thursday, June 26, 2003 12:09 PHM
To: Brad Beadles
C¢: Bret Arsenault; Scott Johnson (DENVER); Tim Schmidt (DENVER); David Brandt (DENVER); Ann Nicholson
Subject: RE: LDS Church – Hewlett:t Packard

Brad,
1.. OEMs should NOT be quoting separate prices for OEM versions of OS and applications. If they are, they are violating their licensing agreement with us.
2, Given the fact that the prices that you quote from the OEM are no where near their true price from us, then the above is probably not a really issue, but the end user customer perception ends up getting skewed.
3. OEM OS prices are uniform based on volume, Anyone can figure out from IDC data, etc. that HP’s and Dell’s volume are virtually the same. We do not have any flexibility to change prices on a deal basis. But I don’t think that is the real issue here.

Please give me a call. Rather talk through this with you.

Dale
425- 706-8 796
Cell: 206-953-2233

From: Brad Beadles
Sent: Tuesday, June 24, 2003 4:31 PM
To: Dale Watanabe
Co: Bret Arsenault; Scott Johnson (DENVER); Tim Schmidt (DENVER); David Brandt (DENVER); Ann Nicholson
Subject: LDS Church – Hewlett Packard
Importance: High

Hi Dale,

Bret asked me to ping you with a competitive situation we are having with The LDS Church here in SLC. To net it out, HP and Dolt are their PC providers of choice. The Church has asked them to come back with systems that are under $500 for their local area offices and units around the world. This constitutes approximately 25,000 PC’s.

Outside of the hardware they are considering alternatives to their current standard of Windows O/S and MS Works on the desktop in these local units. They are considering Mandrake,

MS-CC-RN 000000784853
HIGHLY CONFIDENTIAL


Debian, Red Hat and Open Office because of their upfront costs. HP is quoting their system to include both the Windows O/S ($80) and MS Works ($15) for an overall software acquisition cost of $95 for the O/S and Application Suite The Open Source alternatives are $8.50 for the O/S of choice which is currently Madrake (Open Office is $0.00). As you can see, we have a price delta of $85 between the MS solution and the Open Source solution.

Is there anything we can do with/for HP to lower the O/S cost to become more competitive? Dell is quoting $30 for the O/S and the MS Works product team is giving us $25 for MS Works for a price point of $55 for the Dell software acquisition costs.

Regards,

Brad D. Beadles
Microsoft Corporation
801.257.6400

Utah Events and Information

http://microsoft.com/usa/offices/saltlake.asp

3/10/2005

MS-CC-RN 000000784854
HIGHLY CONFIDENTIAL

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

4 Comments

  1. John Nemeth said,

    April 12, 2009 at 8:44 am

    Gravatar

    Even if MS were totally free, their price wouldn’t be sufficiently low to be attractive, because thereafter one would be under their “influence,” which here is rejected as totally unacceptable and much too high a “price” to pay.

    I would pay the same price for a Dell, HP, etc. WITHOUT any OS, if the only option were to accept one with an OS from MS.

  2. SPM said,

    April 12, 2009 at 11:27 am

    Gravatar

    Including other things like advertising rebate could make the Windows price to come out less than zero (ie. Microsoft is paying the OEM not to offer Linux).

    Roy Schestowitz Reply:

    We have obtained proof related to this.

  3. Scott said,

    April 12, 2009 at 11:38 am

    Gravatar

    I was expecting to be shown how MS reduces their prices below that of Open Source. Instead, they still can’t even match the price. And they never will. What they will have to do is compete on features and quality. And that won’t work any better. They can never be as nimble with development as world-wide collaborative effort can be. The waves of free and Open Source software will continue to erode the rock of monopoly market share.

What Else is New


  1. The Death of Software Patents and Microsoft's Coup Against Yahoo! Made the Company Worthless

    A look at what happens to companies whose value is a house of software patents rather than code and a broad base of users/customers



  2. Munich Attack Mentioned by EPO But Not Ansbach

    The EPO does the usual right-wing thing (exploiting disaster/emergency for domestic crackdowns), but some bemoan the omission of the explosion at Ansbach (also in Germany)



  3. Kluwer Thinks People Are Clueless About the Unitary Patent System and Pretends It's Business as Usual

    Flogging the dead UPC horse at times of great uncertainty (enough to bring the UPC to a standstill)



  4. Almost Everything That the Government Accountability Office Says is Applicable to the EPO

    The Government Accountability Office in the United States produces reports which can serve as a timely warning sign to the European Patent Office, where patent quality is rapidly declining in order to meet 'production' goals



  5. Microsoft Says It Loves Linux, But Its Anti-Linux Patent Trolls Are Still Around and Active

    Highlighting just two of the many entities that Microsoft (and partners) use in order to induce additional costs on Free (as in freedom) software



  6. Links 26/7/2016: Microsoft Growing Desperate, Linux 4.8 Visions

    Links for the day



  7. Links 25/7/2016: Linux 4.7 Final, PostgreSQL 9.6 Beta 3

    Links for the day



  8. Leaked: Boards of Appeal Face 'Exile' or 'Extradition' in Haar After Standing up to Battistelli

    A look at some of the latest moves at the European Patent Office (EPO), following Battistelli's successful coup d’état which brought the EPO into a perpetual state of emergency that perpetuates Battistelli's totalitarian powers



  9. The US Government Accountability Office (GAO) Comes Across as Against Software Patents, Relates to the EPO as Well

    Some analysis of the input from the Government Accountability Office (GAO) with focus on the EPO and software patents



  10. In the US, Patent Trolls Engage in Patent Wars and Shakedowns, Whereas in China/Korea Large Android OEMs Sue One Another

    Highlighting some of the differences between the US patent system and other patent systems



  11. Links 24/7/2016: Elive 2.7.1 Beta, New Flatpaks and Snaps

    Links for the day



  12. Links 23/7/2016: Leo Laporte on GNU/Linux, Dolphin Emulator’s Vulkan Completion

    Links for the day



  13. Links 22/7/2016: Wine 1.9.15, KaOS 2016.07 ISO

    Links for the day



  14. Haar Mentioned as Likely Site of Appeal Boards as Their Eradication or Marginalisation Envisioned by UPC Proponent Benoît Battistelli

    Not only the Staff Union of the European Patent Office (SUEPO) is under severe attack and possibly in mortal danger; the increasingly understaffed Boards of Appeal too are coming under attack and may (according to rumours) be sent to Haar, a good distance away from Munich and the airport (half an hour drive), not to mention lack of facilities for visitors from overseas



  15. EPO Attaché Albert Keyack Viewed as Somewhat of a Mole, Reporting From the US Embassy in Brazil Until Shortly Before the Temer Coup

    Public responses to the role played by Albert Keyack on behalf of the United States inside the European [sic] Patent Office



  16. EPO Insiders Explain Why the EPO's Examination Quality Rapidly Declines and Will Get Even Worse Because of Willy Minnoye

    Public comments from anonymous insiders serve to highlight a growing crisis inside the European Patent Office (EPO), where experienced/senior examiners are walking away and leaving an irreplaceable bunch of seats (due to high experience demands)



  17. Patents Roundup: BlackBerry, Huawei, PTAB, GAO, Aggressive Universities With Patents, and Software Patents in Europe

    Various bits and pieces of news regarding patents and their fast-changing nature in the United States nowadays



  18. Glimpse at Patent Systems Across the World: Better Quality Control at the USPTO Post-America Invents Act (2011), Unlike the EPO Post-Battistelli (2010)

    While the EPO reportedly strives to eliminate pendency and appeal windows altogether (rubberstamping being optimal performance as per the yardstick du jour), the USPTO introduces changes that would strengthen the system and shield innovation, not protect the business model of serial litigants



  19. Blockstream Has No Patents, But Pledges Not to Sue Using Patents

    Blockstream says that it comes in peace when it comes to software patents, which triggers speculations about coming Blockchain patent wars



  20. Links 21/7/2016: Ubuntu 16.04.1 LTS, Linux Mint 18 “Sarah” Xfce Beta

    Links for the day



  21. Links 21/7/2016: An Honorary Degree for Alan Cox, Looks Back at DebConf16

    Links for the day



  22. EPO USA: Under Battistelli, the 'European' Patent Office Emulates All the Mistakes of the USPTO

    Conservative Benoît Battistelli is trying to impose on the European Patent Office various truly misguided policies and he viciously attacks anyone or anything that stands in his way, including his formal overseers



  23. Links 19/7/2016: ARM and Opera Buyout

    Links for the day



  24. Large Corporations' Software Patenting Pursuits Carry on in Spite of Patent Trolls That Threaten Small Companies the Most

    With unconvincing excuses such as OIN, large corporations including IBM continue to promote software patents in the United States, even when public officials and USPTO officials work towards ending those



  25. Battistelli Has Implemented De Facto EPO Coup to Remove Oversight, Give Himself Total Power, and Allegedly Give UPC Gifts (Loot) to French Officials

    Benoît Battistelli's agenda at the EPO is anything but beneficial to the EPO and suspicions that Battistelli's overall agenda is transitioning to the UPC to further his goals grow feet



  26. EPO Social [sic] Report is a Big Pile of Lies That Responsible Journalists Must Ignore

    A reminder of where the EPO stands on social issues and why the latest so-called 'social' report is nothing but paid-for propaganda for Battistelli's political ambitions



  27. Links 18/7/2016: Vista 10 a Failure, FreeType 2.7

    Links for the day



  28. Exploiting Perceived Emergencies/Disasters, Suspending the Rule of Law, and Suspending Judges: How Erdoğan is Like Battistelli, Except the Coup

    Pretexts for crackdown on law-abiding people or figureheads who are remote and independent the hallmark not only of Erdoğan but also the EPO's President, Benoit Battistelli



  29. The Impotence of Gene Quinn

    Attacking the enforcer of Alice v CLS because it's doing harm to his source of income, which makes him angry



  30. After the FTI Consulting-EPO Reputation Laundering Deal's Expansion in Germany Süddeutsche Zeitung 'Forgets' That the EPO Even Exists

    Relative apathy if not complete silence regarding the EPO at Süddeutsche Zeitung following reports of FTI Consulting's deal expansion (media positioning in Germany), with hundreds of thousands of Euros (EPO budget) thrown at the controversial task


CoPilotCo

RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

CoPilotCo

Recent Posts