01.30.09

Microsoft on Intel’s Anti-Linux: “Please Keep Confidential. This is a Nightmare”

Posted in Antitrust, Bill Gates, GNU/Linux, Hardware, Kernel, Microsoft, Steve Ballmer, Windows at 3:10 pm by Dr. Roy Schestowitz

Microsoft retaliates against Intel in order to abolish GNU/Linux

IN previous E-mails that reveal Microsoft’s fight against Linux at Intel, Bill Gates called it a "Jihad". This is a furious battle that Microsoft secretly had going against Intel’s support for Linux. This was so secret that Microsoft executives even abstained from telling their peers about it. “Please keep confidential. this is a nightmare…,” wrote Bill Veghte for example. There was great caution there because someone could lose a job over the mischief (leak), which Brian Valentine was eventually allowed to know about.

Let’s take this one small step at a time and handle this chronologically using the 3 exhibits we have at hand (full texts appended at the bottom). We start with Exhibit px06782 (June-July 2000) [PDF].

Joachim Kempin writes to people up at the top, namely Bill Gates and David Heiner. He states that:

As I mentioned at the retreat we have a huge problem with Intel going against us with Linux.

This is said in reference to the news that Intel is investing $100,000,000 in development that involves Linux.

This issue was not brought up by Joachim Kempin (OEM chief) however. It also involved familiar names like Steve Ballmer and Bill Veghte. This exhibit, while heavily redacted (what’s so confidential that it must be hidden from the courts?), does show Bill Veghte’s nervousness where he says:

Please keep confidential. this is a nightmare…

This whole thing came through Bill Veghte who spotted a CNET article. Tom Phillips, who reported to Veghte (probably his boss) and Kim Akers from the Windows team, writes:

Yes, but we need to be incredibly sensitive with this data. It was disclosed with extreme
concern. If Mary finds out that we know, someone will loose their job at Compaq who is
very helpful to MSFT.

Who is Mary? And who is that someone from Compaq (now part of H-P) who is “very helpful to MSFT”? Does Microsoft have ‘insiders’ in other companies? Companies that are intended — at least by their very nature — to focus mostly on hardware and remain impartial with only their own goals in mind? Is Compaq trying to accomplish the same things as Microsoft? The current collusion with Intel is a crime which Microsoft might be forced to pay billions in remedy for. At a later stage, we will present detailed antitrust evidence about Compaq and Microsoft.

Anyway, why would someone “lose their job”? It sure smells like some form of violation of ethics, if not a violation of the law.

It is explained a little earlier (by Tom Phillips) that:

According to Compaq insiders, the money is targeted at Enterprise and ISP/ASP Sun systems, where Intel will provide a stipend to Compaq $20MM for the efforts necessary to insure that these are Linux based IA32 (and eventually IA64) based sales. Compaq stated that it would rather vector the business to Windows, but that was not an option with Intel.

So Intel insists against Windows (we saw this before). Microsoft feels as though it needs to respond or retaliate.

We move on in time (just days/weeks) and find Exhibit px06791 (July 2000) [PDF]. Bill Veghte writes to Bill Gates, Neil Calvin, Mike Porter, Robbie Bach, Brian Valentine, Bob McBreen, Peyton Smith, Tom Phillips, and Thomas Koll. Here is the punch:

We do have some damage control to do with them and we are going to have to work hard to change the direction they are going down particularly in sw investments around Linux.

So a whole team from Microsoft flew all the way to ensure that Linux receives no investments? Well, since Jim Allchin sees a "huge threat" in Linux and feels "scared" of it, maybe all of this is predictable.

Here is the bit about Intel and Linux:

As a sidenote, I probed hard with John on how hard Intel was pushing Linux in general. I came away pretty convinced that these are not the guys that I was hitting with our OEMs here and the Far East (Bill/Steveb: if you have not read the piece of mail BrianV sent you last week on Intel and Linux, please do so). John’s guys are focused on the networking and telecommunications space and these were not companies or groups that I have been talking with. My bet is that it is coming from Mike Fister’s org.

In this message, for the uninitiated, “Bill” is Bill Gates, “Steveb” is Steve Ballmer and “BrianV” is Brian Valentine, who is now doing his damage from inside Amazon [1, 2]. He also corrupted analysts for anti-Linux studies.

Here is another bit about Linux where Tom Phillips is assigned to handle it.

We have the model in place based on our design wins at Dell and Compaq and in my opinion, we should be just as aggressive on price as we were with Dell. The two other appliance efforts that we will engage on are small business server (I talked at a conceptual level about Central service and Intel, with the WEN product and they liked the idea) and provisioning server. They were particularly enthusiastic about the provisioning server. We should engage in dialog but this will be a lively internal debate about whether we move to an appliance solution/strategy for this. This group is where there Linux Investment Is heaviest In my opinion and can cause us the most pain. TomPh will take the lead here.

More on Linux here:

–> Network devices group: Most of their stuff is on VXWorks today. They are doing some stuff in Linux and looking at Win2k. We need to accelerate this evaluation and where appropriate get them on board if there is real business here They aren’t particularly happy with vxworks so we should also think about them on WinCE with an aggressive source license.

This whole message was sent in reply to “Intel call – Paul Ottelini”. The message is omitted from the exhibit (“Privileged”), but this was sent from Bill Gates to Neil Calvin, Mike Porter, Robbie Bach, Brian Valentine, Bill Veghte, Bob McBreen. Copies were also sent to Kate Sako, Dan Crouse, Steve Ballmer, Joachim Kempin, Paul Maritzm, Eric Rudder, Bill Neukom, and Carl Stark.

Finally, we have this third exhibit, Exhibit px03112 (August 2000) [PDF]. It’s about Intel and it was sent from Joachim Kempin to Bill Gates. It’s utterly disgusting, but then again, Joachim Kempin was arrested for illegally shooting (and killing) antelopes for leisure, so phrases like “I am thinking of putting hitting the OEM harder than in the past with anti Linux actions” are by no means surprising. One person who used to work for Joachim Kempin told me about his strong accent and very hard stance, indicating that this is an unpleasant person. Anyway, here is his message to Bill Gates, in full (exhibit as a whole in Appendix C).

I have been trying to gather some background info. The more I dig in it becomes clear that Intel is connecting with all the UNIX groups inside the large OEMs who are not MS friendly in the first place and are encouraging them to go to Linux-which they call a unified UNIX(which seems stupid even to me)
they throw promotional funds at them to develop new devices based on this OS and are encouraging Itanium work by asking the OEMs to adopt their own apps(middle ware) and encourage some of their key ISVs to do so.
Some of the money is INTEL inside money- the just go beyond the normal rates or qualify Linux adds under the same scheme.
Some OEMs are telling me that the total outlay for Intel is between 100-200M$ year-but there is no hard data for the total amount. Siemens told me they were offered 5-6M$ for this 6 months ago and I know that they funded a netdevice in NEC and made approx. 10M$ available.
I have been sending for some time mail with this info and mentioned it during our exec retreat. The hard part is the answer- in one way we are married to them on the other hand they are destroying the basis for the marriage. To play this the hard way would prob cause more damage than we need and get more attention than we need. On the OEM side I am thinking of putting hitting the OEM harder than in the past with anti Linux actions, in addition I will stop any go-to-market activities with Intel and only work with their competitors (something which is easy to do because they normally put crazy demands on us).

Is that not extortion or blackmail? They pressure Intel with some sort of an embargo — the ransom being that they drop Linux. They use companies like AMD as a bargaining card against software competitors. On it carries:

For the rest of the company this is harder. I have been complaining that we have no real Linux watch-dog group in MS, a lot of people have some ideas and actions around this but nobody is really responsible- I will establish this for OEM, may be we should do it for the company as well.

Yes, Microsoft has a “Linux watch-dog group”. Sounds like one of those “attack groups” Microsoft casually refers to [1, 2]. More recently, Microsoft has been calling these "taskforces" (against Linux).

I do not think you can do more than explaining what that Linux is bad for Intel, let’s leave it there and do as they do- work underground with the clear understanding to promote and advantage the guys with less market share without declaring our strategy.
I would further try to restrict source code deliveries where possible and be less gracious when interpreting agreements- again without being obvious about it. The last thing we need need is them shutting us down- so this will have to be a delicate dance. But openess with them and sharing our real plans should not longer be done- they are not doing it either.

Sorry, Joachim. “Sharing our real plans” is now done. It’s out there for people to see the behaviour you engage in with Bill Gates’ endorsement. █

3 appendices follow.

Appendix A: Comes vs. Microsoft – exhibit px06782, as text

From: Joachim Kempin
Sent: Monday, July 03, 2000 1:31 PM
To: Bill Gates; David Heiner (LCA)
Subject: Attorney/Client Privileged

Privileged

-----Original Message-----

From: Bill Gates
Sent: Monday, July 03, 2000 10:19 AM
To: Joachim Kempin
Subject: FW: CNET.com - News - Enterprise Computing - Intel to spend $100
million on assist

As I mentioned at the retreat we have a huge problem with Intel going against us with
Linux.

Not sure why they are doing this.

-----Original Message-----
From: Brian Valentine
Sent: Friday, June 30, 2000 5:52 PM
To:   Bill Gates; Steve Ballmer; Carl Stork; Bill Veghte; David Heiner (LCA)
Subject:       FW: CNET.com - News - Enterprise Computing - Intel to spend $100 million on
assist

Attorney/Client Privileged - Don't forward.

Privileged

                    1

Plaintiff's Exhibit
6782
____________
Comes v. Microsoft

MS-CC-MDL 000000396175
HIGHLY CONFIDENTIAL

Privileged

-----Original Message-----
From: Bill Veghte
Sent: Friday, June 30, 2000 5:31 PM
To:     Brian Valentine
Cc:     Tom Phillips
Subject:       FW: CNET.com - News - Enterprise Computing - Intel to spend
      $100 million on assista

Please keep confidential.     this is a nightmare...

-----Original Message-----
From: Tom Phillips
Sent: Tuesday, June 27, 2000 10:33 PM
To:     Bill Veghte; Kim Akers (WINDOWS)
Sub3ect:       RE: CNET.com - News - Enterprise Computing - Intel to spend
      $100 million on assista

Yes, but we need to be incredibly sensitive with this data. It was disclosed with extreme
concern. If Mary finds out that we know, someone will loose their job at Compaq who is
very helpful to MSFT.
Thanks,
Tom

-----Original Message-----
From: Bill Veghte
Sent: Tuesday, June 27, 2000 10:22 PM
To:   Tom Phillips; Kim Akezs (WINDOWS)
Subject:       RE: CNET.com - News - Enterprise Computing - Intel to spend
      $100 million on assista

may I forward to BrianV?

-----Original Message-----
From: Tom Phillips
Sent: Tuesday, June 27, 2000 9:55 PM
To:     Bill Veghte; Kim Akers (WINDOWS)
Subject:       RE: CNET.com - News - Enterprise Computing - Intel to spend
      $i00 million on assista

CONFIDENTIAL | PLEASE DO NOT FORWARD
According to Compaq insiders, the money is targeted at Enterprise and ISP/ASP Sun systems,
where Intel will provide a stipend to Compaq $20MM for the efforts necessary to insure
that these are Linux based IA32 (and eventually IA64) based sales. Compaq stated that it
would rather vector the business to Windows, but that was not an option with Intel.

                    2

MS-CC-MDL 000000396176
HIGHLY CONFIDENTIAL

Thanks,
Tom

-----Original Message-----
From: Bill Veghte
Sent: Tuesday, June 27, 2000 8:53 PM
To:    Tom Phillips; Kim Akers (WINDOWS)
Subject:      CNET.com - News - Enterprise Computing - Intel to spend $100
       million on assista

we need to make sure this does not impact our server appliance partnerships if at all.

http://news.cnet.com/news/O-1OO3-200-2156395.html

                    3

MS-CC-MDL 000000396177
HIGHLY CONFIDENTIAL

Appendix B: Comes vs. Microsoft – exhibit px06791, as text

……………………………………………………………………………

From: Bill Veghte
Sent: Tuesday, July 11,2000 11:15 PM
To: Bill Gates; Neil Calvin (LCA); Mike Porter; Robert (Robbie) Bach; Brian Valentine; Bob
McBreen; Peyton Smith; Tom Phillips: Thomas Koll
Cc: Kate Sako (LCA); Dan Crouse (LCA); Steve Ballmer, Joachim Kempin; Paul Maritz; Eric
Rudder; Bill Neukom (LCA): Carl Stork; Davld Thompson (NT); Kin Akers (WINDOWS)
Subject: RE: Intel call – Paul Ottelini

Today Mike Porter, TomPh, Kim Akers, myself and folks from NSG flew down to meet with John Minor and his direct reports to get a state of the union on both sides.

Net, net, this group has gone off in a bunch of directions in the networking and communications space that does not track nearly as well as it could with MS efforts. There is frustration on both sides over this and we will need to do a couple more face to faces to get it back on track. (MikePo: chime in if you think I missed anything or misrepresent), I haven’t worked with John Minor before but he is quite a character to deal with. He opened the meeting, blustering a lot about our lack of action, painful licensing terms, terrible pricing, and poor technology and we went from there. He closed saying it looked like we were moving in the right direction but he would remain constructively skeptical until he saw the different groups closing some deals. John aside, his guys seemed pretty reasonable and there was a good sense of the opportunity and specific action items as we wrapped up. We do have some damage control to do with them and we are going to have to work hard to change the direction they are going down particularly in sw investments around Linux.

In general, we need to think about John and his team more like an OEM than a silicon vendor. They will push us very, very hard on price point, licensing terms, and cooperative marketing together. I think we are going to have to be willing to be a more aggressive with them or walk away from them. I don’t think there is a middle ground with this group. They don’t value our partnership particularly highly right now based on the track record of the last 18 months.I have attached a bunch of the details below and specific action items for Jawad’s folks, Peyton. and Joachim/Thomas, MikePo, and my team.

As a sidenote, I probed hard with John on how hard Intel was pushing Linux in general. I came away pretty convinced that these are not the guys that I was hitting with our OEMs here and the Far East (Bill/Steveb: if you have not read the piece of mail BrianV sent you last week on Intel and Linux, please do so). John’s guys are focused on the networking and telecommunications space and these were not companies or groups that I have been talking with. My bet is that it is coming from Mike Fister’s org.

Details:
-> John has 3400 people in his group. 1100 of whom he claimed were software engineers.
-> They were surprisingly unfamiliar with our networking and communications roadmap and how much progress we had made in Win2k even in things like TCP/IP stack. With Jawed out, I am not convinced sending Gurdeep down there is the right thing to do but we need to get them up to speed on the investments we are making. At a minimum, Jawad should visit Jn the first couple of weeks he is back.
—> John has four different teams; a communications building blocks group that is doing things like the call control work, the communications/server appliance group, the network devices group and a services/support group. In terms of interacting with each group. Peyton/Thomas, I think you take the lead on the first group, TomPh will own engagement with the communications/server appliance group, and the network devices group, Peyton, we should talk about because it wasn’t clear to me how much upside to MS there is engaging in dialog around.

Specific details on engagement with the three key teams ….
–> Communications Infrastructure team (not sure I have the name right but it is Howard Bubb’s group) I don’t have all the history between this group and MS but it is pretty clear that we have managed to drift pretty far apart thru Vathalla/Dialogic and the time is now to resuscitate. Peyton/Thomas, I think you guys should follow-up particularly with Howard Bubb and John to make sure we are clear on the messaging of our communications platform efforts. This probably means a face to face. Maurice is going to send a separate piece of mail on but they unloaded on me on how we weren’t being clear on our messaging about the opportunities for Win2k as a communications development platform. We have some damage control do do here.

–> Comrnunications/Server Appliances Group: We will engage with Scott’s team and go out and try and win a couple of server appliance design wins. I want us to focus first on the web blade, treating them like an OEM which is what they

1

Plaintiff’s Exhibit
6791
…..
Comes V. Microsoft

MS-CC-MDL 000000396186
HIGHLY CONFIDENTIAL

are in this case. We have the model in place based on our design wins at Dell and Compaq and in my opinion, we should be just as aggressive on price as we were with Dell. The two other appliance efforts that we will engage on are small business server (I talked at a conceptual level about Central service and Intel, with the WEN product and they liked the idea) and provisioning server. They were particularly enthusiastic about the provisioning server. We should engage in dialog but this will be a lively internal debate about whether we move to an appliance solution/strategy for this. This group is where there Linux Investment Is heaviest In my opinion and can cause us the most pain. TomPh will take the lead here.

–> Network devices group: Most of their stuff is on VXWorks today. They are doing some stuff in Linux and looking at Win2k. We need to accelerate this evaluation and where appropriate get them on board if there is real business here They aren’t particularly happy with vxworks so we should also think about them on WinCE with an aggressive source license.

—–Original Message—–
From: Bill Gates
Sent: Tuesday, July 11, 2800 2:09 PM
To: Neil Calvin (LCA); Mike Porter; Robert (Robbie) Bach; Brian Valentine; Bill Veghte; Bob McBreen
Cc: Kate Sako (LCA); Dan Crouse (LCA); Steve Ballmer; Joachim Kempin; Paul Maritz; Eric Rudder; Bill Neukom (LCA); Carl Stark
Subject: Intel call – Paul Ottelini

Privileged

2

MS-CC-MDL 000000396187
HIGHLY CONFIDENTIAL

Privileged

3

MS-CC-MDL 000000396188
HIGHLY CONFIDENTIAL

Appendix C: Comes vs. Microsoft – exhibit px03112, as text

……………………………………………………………………………………………..
—Original Message—
From: Joachim Kempin
Sent: Monday, August 14, 2000 1:57 PM
To: Bill Gates
Cc: Mike Porter, Carl Stork
Subject: Intel

I have been trying to gather some background info. The more I dig in it becomes clear that Intel is connecting with all the UNIX groups inside the large OEMs who are not MS friendly in the first place and are encouraging them to go to Linux-which they call a unified UNIX(which seems stupid even to me)
they throw promotional funds at them to develop new devices based on this OS and are encouraging Itanium work by asking the OEMs to adopt their own apps(middle ware) and encourage some of their key ISVs to do so.
Some of the money is INTEL inside money- the just go beyond the normal rates or qualify Linux adds under the same scheme.
Some OEMs are telling me that the total outlay for Intel is between 100-200M$ year-but there is no hard data for the total amount. Siemens told me they were offered 5-6M$ for this 6 months ago and I know that they funded a netdevice in NEC and made approx. 10M$ available.
I have been sending for some time mail with this info and mentioned it during our exec retreat. The hard part is the answer- in one way we are married to them on the other hand they are destroying the basis for the marriage. To play this the hard way would prob cause more damage than we need and get more attention than we need. On the OEM side I am thinking of putting hitting the OEM harder than in the past with anti Linux actions, in addition I will stop any go-to-market activities with Intel and only work with their competitors (something which is easy to do because they normally put crazy demands on us). For the rest of the company this is harder. I have been complaining that we have no real Linux watch-dog group in MS, a lot of people have some ideas and actions around this but nobody is really responsible- I will establish this for OEM, may be we should do it for the company as well. I do not think you can do more than explaining what that Linux is bad for Intel, let’s leave it there and do as they do- work underground with the clear understanding to promote and advantage the guys with less market share without declaring our strategy.
I would further try to restrict source code deliveries where possible and be less gracious when interpreting agreements- again without being obvious about it. The last thing we need need is them shutting us down- so this will have to be a delicate dance. But openess with them and sharing our real plans should not longer be done- they are not doing it either.

PLAINTIFF’S
EXHIBIT
276

MS010049218
HIGHLY CONFIDENTIAL

Thanks to cday for help with this post

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