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

07.26.09

Antitrust: How Microsoft Came up with Windows Bundling

Posted in Antitrust, IBM, Microsoft, Windows at 8:44 am by Dr. Roy Schestowitz

Summary: A journey back in time shows Microsoft’s explanation of bundling

TODAY we take a look at some more fascinating Comes vs Microsoft exhibits. The first item, Exhibit PX00982 (1991) [PDF], shows how Microsoft was scheming to bundle with OEMs in order to block competition. That was almost 2 decades ago. Microsoft later compared OEMs to its "delivery people".

One of Microsoft’s most predatory people, Brad Silverberg [1, 2], suggests giving Windows for ‘free’ (bundling) and then sell it separately for an extortionate price. The same scheme continues to this date in order to artificially elevate the perceived value of Windows and virtually force people to buy Windows along with any computer.

>From: bradsi Sat Sep 28 10:56:44 1991
To: joachimk peterbre steveb
Cc: alean jeffl janre markbu richardb richardf ronh teresach
Subject: Re: Compaq Windows status

Date: Mon Sep 30 10:30:02 PDT 1991

you’re saying that when someone buys compaq dos for $99, they also get windows for free. but if you want windows alone, it cost you $150.

and compaq wants windows for free.

am I missing something why this is good for us?

don’t forget that today, retail is still 61% of windows revenue.

Joachim Kempin, who is also known for his predatory behaviour (see this for example), replies as follows:

From: joachimk Mon Sep 30 10:53:23 1991
To: bradsi
Subject: Re: Compaq Windows status
Date: Mon Sep 30 10:30:02 PDT 1991

Do not see this as a price issue. They will pay. Remember IBM did not pay for DOS, but see what happened?
See the strategic value: It will have lots of followers-OS1 can’t compete for now. IBM can only pitch OS/2 against it, but who wants this. The industry will rally even more around it and use it in every account against IBM.
Money: for six month thereafter no or very low impact. Next year we plan for it. Whereby WIN becomes over time -may be earlier than expected -a 90% OEM product.
Count Your profit, not the revenue.

One reader of ours explains that “this is important because it demonstrates that the prime reason for Microsoft bundling was to kill DR-DOS. They had to come up with the techno-waffle later on.” This is a reference to excuses like, “people can’t install it themselves” or “people love Windows because many people use it.”

The next exhibit, Exhibit PX00980 (1991) [PDF], was sent to Brad Silverberg and Joachim Kempin. It reveals what Microsoft had in mind when it conceptualised bundling.

On 9/25 Mark and I met with Clark and Alan. Among other issues that Mike brought up, he came up with an alternative way for Compaq to bundle Windows. On 9/26 we had a meeting with their Windows team.

[...]

Mike’s alternative way of bundling Windows would be that Compaq bundles Windows with MS-DOS. There would not be a seperate DOS SKU; there would not be any choice. When somebody buys the Compaq DOS product he gets Windows with it.

[...]

Compaq issues with bundle/preinstall that are addressed

1. The manufacturing preinstall problem
2. The updating of Windows when it is on the hard disk
3. Allows the end user the choice of installing Windows and allowing custom configuration of Windows according to specific requirements.
4. Simplify their localization issues.
5. Reduce cost – will not lose dos revenue with a preinstall and offset the cost of Windows by charging for it.
6. Still allowing the end user the choice to buy other operating systems for his system; not burden the end user with either the implicit cost of Windows or having to deinstall Windows and DOS.
7. It provides Compaq with a perceived leadership position with Windows by being the first oem to combine Windows and DOS.

For MS it does the following:

1. Compaq leadership position with Windows.
2. With slick technology, Windows/DOS can be installed quickly w/p much of the pain installing Windows today. Although it is not a pre-install, it will be much easier to get Compaq to preinstall in the future if they combine Windows/DOS now.
3. Gets many more Windows sockets out there. We believe that our attach rate today with Windows on Compaq 386 systems is between 25% and 35% based on their registration information. their current attach rate for DOS is 86%.
4. It raises the bar for other oems and makes it more difficult for DRI to compete.
5. Will increase our revenue from Compaq, depending on what we can get for the Windows royalty.

The intent to ensure a prevention of choice is hopefully evident based on the above.


Appendix A: Comes vs. Microsoft – exhibit PX00982, as text


PLAINTIFF’S
EXHIBIT
982
Comes v. Microsoft

File : c:\bradsi\mailbox.tld
Messages :

*******************************************************
From: joachimk Mon Sep 30 10:53:23 1991
To: bradsi
Subject: Re: Compaq Windows status
Date: Mon Sep 30 10:30:02 PDT 1991

Do not see this as a price issue. They will pay. Remember IBM did not pay for DOS, but see what happened?
See the strategic value: It will have lots of followers-OS1 can’t compete for now. IBM can only pitch OS/2 against it, but who wants this. The industry will rally even more around it and use it in every account against IBM.
Money: for six month thereafter no or very low impact. Next year we plan for it. Whereby WIN becomes over time -may be earlier than expected -a 90% OEM product.
Count Your profit, not the revenue.

>From: bradsi Sat Sep 28 10:56:44 1991
To: joachimk peterbre steveb
Cc: alean jeffl janre markbu richardb richardf ronh teresach
Subject: Re: Compaq Windows status

Date: Mon Sep 30 10:30:02 PDT 1991

you’re saying that when someone buys compaq dos for $99, they also get windows for free. but if you want windows alone, it cost you $150.

and compaq wants windows for free.

am I missing something why this is good for us?

don’t forget that today, retail is still 61% of windows revenue.

5671 C:\DN1LD2.MAI Thu Oct 03 08:50:14 1991

MS7090738
CONFIDENTIAL

MS-PCA 1179288
CONFIDENTIAL

PLAINTIFF’S
EXHIBIT
503
A. No. 2:96CV645B


Appendix B: Comes vs. Microsoft – exhibit PX00980, as text


Depo. Ex. 184
PLAINTIFF’S EXHIBIT
980
Comes v. Microsoft
HIGHLY CONFIDENTIAL

MS-PCA 1179286
CONFIDENTIAL

MS 5004035
CONFIDENTIAL

PLAINTIFF’S Exhibit
502
CA. No. 2:96CV645B

From peterbra Sat Sep 28 10:42:54 1991
To: bradsi joachimk steveb
Cc: alexn jeffl jonro markbu richab richardf ronb teresach
Subject: Compaq Windows status
Date: Sat Sep 28 10:42:26 PDT 1991

On 9/25 Mark and I met with Clark and Alan. Among other issues that Mike brought up, he came up with an alternative way for Compaq to bundle Windows. On 9/26 we had a meeting with their Windows team.

Mike’s alternative way of bundling Windows would be that Compaq bundles Windows with MS-DOS. There would not be a seperate DOS SKU; there would not be any choice. When somebody buys the Compaq DOS product he gets Windows with it. This is significantly different from there last try at a Windows SKU. It is the only proactive Windows Compaq has come up with since Stimac started thinking of their key disk approach.

The idea came from Jim Odon as a result of the number and quality of Windows questions that other oems asked at the OEM Briefing. This causes Jim to realize that Compaq’s Windows knowledge is slipping versus other oems. He feels the only way to regain this is to license Windows. In addition Odon sees this as a way to reduce his developement time and support of system utilities by having a Windows interface to them.

This Windows/DOS bundle has not been discussed internally at Compaq so it still unclear what the rest of their management thinks of it.

Although initially against this idea I think it does have some merits and should be looked at closely. For Compaq, it removes/reduces many of their objectives/problems with a Windows bundle. For MS, it makes a very strong Compaq statement for Windows and pushes forward DOS and Windows being one OS when we have some DRI problems.

Compaq issues with bundle/preinstall that are addressed

1. The manufacturing preinstall problem
2. The updating of Windows when it is on the hard disk
3. Allows the end user the choice of installing Windows and allowing custom configuration of Windows according to specific requirements.
4. Simplify their localization issues.
5. Reduce cost – will not lose dos revenue with a preinstall and offset the cost of Windows by charging for it.
6. Still allowing the end user the choice to buy other operating systems for his system; not burden the end user with either the implicit cost of Windows or having to deinstall Windows and DOS.
7. It provides Compaq with a perceived leadership position with Windows by being the first oem to combine Windows and DOS.

For MS it does the following:

1. Compaq leadership position with Windows.
2. With slick technology, Windows/DOS can be installed quickly w/p much of the pain installing Windows today. Although it is not a pre-install, it will be much easier to get Compaq to preinstall in the future if they combine Windows/DOS now.
3. Gets many more Windows sockets out there. We believe that our attach rate today with Windows on Compaq 386 systems is between 25% and 35% based on their registration information. their current attach rate for DOS is 86%.
4. It raises the bar for other oems and makes it more difficult for DRI to compete.
5. Will increase our revenue from Compaq, depending on what we can get for the Windows royalty.

Issues that need to be addressed to make this happen.

1. Length of time for Compaq to make a decision. How do we make this happen quickly so they can announce with Windows 3.1
2. Diminished value of Windows in the retail channel. Compaq would need to make sure that their SKU would not run on any other hardware. We might want them to charge some additional delta over and above their current price of $99 for DOS.
3. Lost retail Windows revenue – How much retail revenue will we lose against the gain of Compaq royalties.
4. What we will settle for for in a Windows royalty (of course Mike doesn’t want to pay anything additional for Windows).
5. Other customer issues if we do this


oem exclusivity slick technology for Compaq????
others that I can’t think of

I would appreciate any and all comments.

The following day Alex, Jon, Mark and I met with the Compaq Windows team to review and discredit their Windows preinstall focus group studies. In addtion we proposed a one SKU bundle/preinstall in conjunction with a MS/CPQ Windows 3.1 comarketing program commencing with the Windows 3.1 announcement.

Our attempts to discredit their focus group research back fired. We spent much of our time arguing over points in the focus groups with Andrea Morgan, their marketing research manager. because of her strong position, she is attributed for the timing success of the LTE line, Compaq management will continue to listen to her. The focus groups are much too subjective to refute the Compaq findings so Andrea is important to win over and not run over.

Compaq liked the idea of comarketing programs, but they did not see the need to license Windows to make this happen. They do feel that they are missing a very important message, Windows being optimized for Compaq systems. Their approach to this is a JIA Lan Man approach to it, however. They might even include a Windows optimization disk with their processors. In other words we did not get any closer to trying a one SKU approach.

With the upcoming exec review, I would like to move quickly on this Windows/DOS bundle. Is it viable for us and under what conditions.
Peter

HIGHLY
CONFIDENTIAL

MS 5004036
CONFIDENTIAL

MS-PCA 1179287
CONFIDENTIAL

Credit: wallclimber

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

What Else is New


  1. The European Patent Office, Aloof/Apathetic to Inventors and Human Rights, Simply Cannot be Trusted With the Unitary Patent (UPC)

    The European Patent Office (EPO), once a source of great pride for increasingly-unified Europeans, not only wants to enjoy impunity but also wants to attain new powers, despite demonstrating that its interests are anything but European and are often detrimental to Europeans, not just to European inventors



  2. Feedback About Battistelli's 'Meet the President' Event in Rijswijk (4th of February, 2016)

    President of the EPO, the self-absorbed Battistelli, as described by those who attended his self-glorification event earlier this month



  3. Microsoft Continua Usando Patentes de Software para Extorsionar/Chantajear Incluso Más Compañías que Usan Linux, Forzandolas/Coerciendoles a PreInstallar Basura de Microsoft

    Acer es el último gran OEM que se ha convertido en la caza de brujas por parte de Microsoft contra preinstalladores de Android/Linux, a quienes esta coerciendo en convertirse en transportistas de Microsoft (o enfrentarse a litigaciones sobre patentes de software, con altos costos legales sino bloqueos con altísimos costos por arreglos secretos).



  4. Nuevas Protestas Contra La Vil OEP en Medio de Crisis Nerviosa de su Empleado Español (Después del Matoneo Institucional de Los Chacales de Battistelli), España Rechaza la Patente Unitaria UPC

    Enfrentando enorme presión de no-tecnicos Eurocráticos como Battistelli, España permanece FUERTE y RESISTE la Corte Unitaria de Patentes (UPC), que pone más poder en las manos de un cuerpo ABUSIVO que grotescamente discrimina contra los Españoles.



  5. Sólo Media Docena de Patentes Cubana Registradas en la OEP, Pero el Trístemente Célebre Battistelli Va a Cuba a Acumular Apoyo Baráto

    Ahora que España esta antagonizando a la OEP (y especialmente la UPC) el Presidente de la OEP ayuda a crear piezas de hojaldre en español cuando visitó Cuba y sus vecinos hispano-hablanetes que históricamente son renombrados por su gobernabilidad desaparecida así como su ilegalidad (como la OEP misma)



  6. In Lawyerland, Simulated UPC 'Trials' and More Extraordinary EPO Propaganda for Change That Would Harm Europe to Help Patent Lawyers and Their Big Clients

    A look at the latest wave of lobbying for the Unitary Patent Court (UPC), courtesy of patent lawyers who profit from patent disputes, and the utterly shameless marketing from the European Patent Office (EPO)



  7. Apple and Microsoft Cannot Keep Up With Android (Linux), More Layoffs Reported

    Having failed to grow (in the operating systems market share sense), proprietary software giants lose loyalty, try to attack the winner (Android/Linux) with software patents, and inevitably make their staff redundant



  8. Links 12/2/2016: Russian's Government With GNU/Linux, India's Wants FOSS

    Links for the day



  9. New EPO Protests Amid Nervous Breakdowns of Spanish EPO Employee (After Institutional Bullying by Battistelli's Goons), Spain Rejects the Unitary Patent (UPC)

    In the face of enormous pressure from non-technical Eurocrats like Battistelli, Spain remains strong and resists the Unitary Patent Court (UPC), which puts more power in the hands of an abusive body that grossly discriminates against Spaniards



  10. Only Half a Dozen Cuban Patents Filed at EPO, But Hugely Unpopular Battistelli Goes to Cuba to Garner Cheap Support

    Now that Spain is antagonising the EPO (and especially the UPC) the President of the EPO helps create some puff pieces in Spanish as he visits Cuba and neighbouring Spanish-speaking nations which are historically renowned for defunct governance and lawlessness (like the EPO itself)



  11. Nepotismo de la UPC, Abusos Políticos, y el Envolvimiento en la UPC de la Firma ¨Legal¨ que la OEP Contrato para Matonear a Techrights

    La Corte Unitaria de Patentes UPC, un sistema arregaldo esta siendo embestida por la gargant de Europa por la OEP. (Nos están metiendo la yuca). Sus grandes clientes (incluso extranjeros), con sus abogados de patentes para que todo el mundo los vea.



  12. Miembro del Parlamente Europe Resalta ¨Las Continuas Violaciones de los Fundamentales Derechos de los Empleados de la OEP¨

    Pregunta a la Comisión Europea de parte de la MEP Portuguesa Ana Gomes, publicado en el sitio del Parlamente Europeo.



  13. Links 11/2/2016: LibreOffice 5.1, HMRC and FOSS

    Links for the day



  14. Microsoft Continues to Use Software Patents to Extort/Blackmail Even More Companies That Use Linux, Forcing/Coercing Them Into Preinstalling Microsoft

    Acer is the latest large OEM to have become a victim of Microsoft's witch-hunt against Android/Linux preloaders, whom Microsoft is coercing into becoming Microsoft's carriers (or face litigation over software patents, with high legal fees if not injunctions or high damages upon secret settlements)



  15. EPO Brain Drain (Even Directors Fed Up With Team Battistelli) and Rumours About Battistelli Becoming President of the UPC

    Words heard through the grapevine of the European Patent Office (EPO), where staff is overwhelmingly against the managers and some people, including high-profile staff, add to the exodus



  16. More Than 20 Years in the Line: European Patent Office and Claims of European Convention on Human Rights Infringement Against Applicants/Stakeholders

    Gross incompetence and potentially an infringement of the European Convention on Human Rights at the European Patent Office (EPO), this time impacting an applicant (one of many in a similar position)



  17. UPC Nepotism, Political Abuses, and UPC Involvement From the Legal Firm That EPO Hired to Bully Techrights

    The Unitary Patent Court (UPC), a rigged system that is being rammed down Europe's throat by the EPO, its big clients (even foreign), and their patent lawyers laid bear for people to see



  18. Member of European Parliament Brings Up “Ongoing Violations of the Fundamental and Employment Rights of the Staff of EPO”

    Question to the European Commission from Portuguese MEP Ana Gomes, as published in the site of the European Parliament



  19. La Oficina Europea de Patentes Pretende que No Pasa Nada y Prepara una Feria de Vanidad

    La estrategia de relaciones públicas de la OEP cuya destructiva estrategia de patentes continua sin disminución (por ahora), se engancha en Colombia y se esfuerza en manufacturar el mito donde el público, examinadores de patentes, y aplicantes de patentes todos estan muy felices con la OEP.



  20. La ‘Internacional’ Commisión de Comercio Impone/Reenfuerza Patentes de Software para Establecer Otro Embargo

    La Comisión Internacional (sic) de Comercio se esta entrometiendo en competición de nuevo permitiendo a un gigante de los Estados Unidos Ciso en este caso, a potencialmente bloquear rivales (no importaciones del extranjero) usando patentes de software.



  21. Links 9/2/2016: Linux in Robotics, Hyperledger Project

    Links for the day



  22. Besieged Benoît Battistelli Mimics 'Damage Control' Tactics of FIFA or Blatter as More Judges Start Getting Involved in EPO Scandals

    Rumours and a new rant from Battistelli reinforce suspicions that actions are being organised behind the scenes, possibly as part of an upcoming, high-level campaign to unseat/dethrone Battistelli, who has become a reputational disaster to the European Patent Office (EPO), much like Sepp Blatter at FIFA



  23. Several Political Parties Directly Challenge the European Patent Office for Ignoring the Law, Not Obeying Court Orders

    Politicians make it crystal clear that the EPO, despite its unique status, cannot just raise its nose at the rulings of courts of law, definitely not in Dutch territory where the EPO operates



  24. Even the Legal Community is Upset at Benoît Battistelli for the Damage He Did to the EPO

    A recent article from lawyers' media (in German) speaks of the great damage (or mess) left by its current president, who has become somewhat of a laughing stock and growingly synonymous with farcical trials even in the circles of stakeholders, not just his own staff



  25. EPO Union (SUEPO) Getting Busted: “More and More People are Joining the Union, but Fewer and Fewer People Dare to Take on Leading Positions There.”

    The union-busting actions taken by EPO management in collaboration with Control Risks (for weak accusations against staff representatives) and FTI Consulting (for 'damage control') as described in a recent article, in the words of SUEPO lawyer Liesbeth Zegveld



  26. Microsoft's Copyrights- and Patents-Based Attacks on GNU/Linux Carry on

    The SCO case is still going on and Microsoft has just signed a patent deal with GoPro over its FOSS-based software, relating to “certain file storage and other system technologies”



  27. The EPO's Benoît Battistelli is the Dictator Who Can No Longer Dictate Like He Used to

    The European Patent Office's mechanism of oversight is starting to work just a little because, based on a new report from Juve, Battistelli is now reluctant to make proposals that would prove unpopular among delegates



  28. La Más Detallada Explicación (hasta ahora) de ¿Qué esta mal con la OEP?

    La insistencia de la OEP que permanece arriba de la ley no sólo est bajo fuego en los medios pero también esta siendo desafiada basado en personas familiares con la aplicabilidad de la ley a organizaciones internacionales.



  29. Links 8/2/2016: Vista 10 Nags Help GNU/Linux, Nautilus Updated

    Links for the day



  30. The European Patent Office “is Acting as Though the Law Does Not Apply to It.”

    An article from Nieuwsuur which provides the words of Liesbeth Zegveld (for SUEPO) and Guillaume Minnoye (for the European Patent Office), reaffirming the EPO's bizarre notion that it is above the law, even in the face of human rights violations and a court ruling against the EPO


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