PLAINTIFF’S EXHIBIT 2658 Comes v. Microsoft From: Bill Gates Sent Weonesday. February 19, 1997 946 AM To: Jim Allchin (E~diange} Cc: Natriar Myhrvotd. Paul Mane Subject: RE “~.osinga Franchise — The Microsoft ~ndows Story (a new Harvard Case study) I agree that making sure applications are primarily on ‘Windows is something we have lost site of. rail against tile people who want tojust give things away like DirectX. I think exactly the same thoughts in your niessage~ However I think the problem is much less what we are doing than what we are not doing. I can cancel every give away and we would still have a major problem. We need a vision of what a Wndows application looks like - for example how can it sometimes run on the server and sometimes on the client. What Will we have that the Java Runtime will riot have? Cross-platform derr.arid is not coming from statistics. It is corning from the free-lunch syndrome we have allowed to develop. All of a sudden people think mat there is no drawback to being cross platform. No drawback in size. speed, interface, nchness, testability. Te some degree this is true because machines have enough memory now that a duolicate ruritime’ is not overwhelming. We should have people laughing at the idea of 100% pure Java whether they wnte in JAVA or riol However we have nothing aiong these lines. The fact that their runtirrie is changing, will keep changing, will be subsetted on some mactunes. will have to make someone money, will have to cnoose UI. etc... etc.. is just last because we are not there drying a positive agenda for Windows. The (act is that applications can be run on the server against an HTML client I would prefer this to be a Citnx like client but that is not tire key issue. Most applications will have very little client code in the future. For example Federal Express givir~g you their package status. The fact :s there will ~elots of machires where HTMlJsonie level of Java is all they wilt have ri common. Cheap devices and old PCs will be like this, It makes it very easy for people to think they should lust program to this. Our installed base not migrating is a major drag on ourability to promote something new. Lets work together to find the solution to this. Its critical. I can say I am more scared than you are but that is riot what will help us figure out where we should go. —Original Message— From: Jim AtichIn (xchange) MS7 011792 Serit Tuesday, February 18, 1997 5:17 PM F Ta: BIU Gates Cc: Paul Mariti Subject “Losing a Franchise — The Microsoft ~Mndowstory (a new Harvard Case study) S I’m sure this sub)ect got your attention. l~s what I worry about every day wtien I shower, run, eat, etc. Paul knows how warned I am, but I don’t think lye told you before. We all know we have many challenges. I think about the challenges however in two buckets. First, we have challenges that we have a unified strategy for and perhaps an implementation plan underway. Some of these are big issues, like ICC. but they are much less scary to me than the other bucket. You can say we aren’t doing things fast enough for ICC or marketing hard enough against the NC (and Ill agree), but our strategy and path is clear. We know that if we can execute fast enough we can stop this disease. The second set of challenges are the ones where we do not have agreement on our strategy within the company and the company is often working cross-wise internally. The cross-platform vision anti keeping \~ndows tire platform and tile center as of riovation fall into this category. In my opinion, Windows in the process of being exterminated here at MICrOSOL 1. Why are we doing so many things cross-platform? Are there more Macs. OS/2, or Unix clients today as a % or less than a year ago? I assume the argument le that we have to do things crass-platform because Netscape is (or says they will). So, we move our innovations cross-platform and dillute Windows. The alternative is to say N0 and push even harder on Windows. I know that we have to do some things cross-platform. But, our default today is to assume functionality needs to go cross-platform instead of assuming it doesn’t (and then later reluc~ritty moving it MS-PCA1541727 when necessary). I consider this cross-platforrri issue a disease within, Microsoft. On our current pati’. IE 4 will not be very integrated into Windows. The lE team is riot focused on this oroblem and I was re~uestedto sniul down my UUthefl team. Windows wi~ what ~eottier pIa~ormsget UNLESS ttte ~E fines ~uihey carli get team t do ~easily on the Mac, etc.. This is the wrong approad~. We shou’d be asking for speafic Innovations 10 restncted to Windows I cant fight this disease alone. The problem is tile comoany 5 not unified on tire szrategy. I ~ii convinced the path were on is the wrong one. We are playing into Netscaoe’s strengths and against our own. I hear lots of woras about how the software will of course be better on Windows because we nave more people working on WIndows, but I can’t sell abstract statements like ttus. We focuS attention on the browser battle where we have little marketshare instead of focusing the battle at integrating things into Windows where we have rrrarXetshare arid a great disthbution channel. When IE 4 first was discussed we were ~irrtegratrng the browser into Win<10w5. That is what we told everyone. That was a strong message for Windows. That message is now gone since IE 4 is going onto all platforms. It won’t be as rntegrated” (whatever they means technically), but all the words about WebPC and the like convince me we are determined to put a gun to cur rread and pull the bigger. I see the same pattern here as with Novell a few years ago. Some people believed we should drop Our work in TCP/IP and only dc only IPXISPX work. It took signficant effort in order to convince tile PSD ream to accept TCP for Windows 95. why’? Because we were in copy mode of Novell. We are doing it again. There is a time for this clone strategy, but the better long term approach is always to attack from a more strategic perspective. 2. The platform is Windows, isn’t it? duh... it would seem obvICus (But is it a browser/1E’ or mayoe Outlook’~) We are in a head-head competition with Netscape. They claim the platform is Communicator, etc., so ttiats why we say IE is the platform. however, that fights against our strength and plays to their strength. We are marketing lE as a platform. This is a mistake. The whole WebPC concept will totally confuse tire platform story. This is another nail the coffin for Windows. No amount of marketing will fix this. The meeting I had with the P~ team convinced me ofthis today. tMuen Paul asks me what’s innovative for developers in Windows I really struggle. I finally have a team working on this in the areas I control, but it isn’t enough. There are two things that are really critical for cxc running at the client UI and storage management. We are working on articulating directory access, multimedia (whatever remains non-cross-platform), etc. but UI and storage are the key pieces. We have done a bad lob with storage innovation But, we appear to just be giving up on the UI since it’s alt going to go cross-platform. I don’t support this. I believe smart people here could find ways to do things beyond wniat AWT or IFC can do if we tie it more into Windows. Remember these class libraries are layered. For example, no one is working on rrte~rabng Trident into the OS in a fundamental way. Maybe this won’t amount to much but nt’s the type of nvestigaoon we have to do. (Actually, I think there will be many gains in terms of performance and consistency til-oughoul the system.) We should move as little cross-platforTn as possible. Without a speafic UI focus on Windows I think we are in series trouble. Davidcol agrees he can’t support the OS changes we need and he is suggesting that we create a team again. This is not enough if the strategy isn’t synchronized — both marketing and development-wise. I am available to talk about any of this. Cii our current oath, I just Oont feel that Windows can win. Giver the exec retreat I thought I would send this to you for your thoughts. jim MS7 011793 ATTORNEY’ s CONFIDERTIAL EVES ONLY MS-PCA1 541728