MICROSOFT INTEROFFICE MEMORANDUM

To: Debbie Dean, Stewart Kanzen, Gordon kanzan, Gordon Letwin, Scott McGregor, Leo Nikora, Leo Nikora, Steve Rowe, John Sabol, Tandy Trower, Greg Whitten

FROM: Steve Ballmer

DATE: December 10, 1994

SUBJECT: Systems Retreat Summary

cc: Paul Allen, Bill Gates, Jon Shirley

Attached for your information is a summary of our retreat held on December 1st and 2nd. Direct any questions you may have to me.

dgh

also: Scott Oki
	Jim Hams
	Adrian King
	Steve Snyder
	Chris Larson
	
DOS and GWB

Per System Money = units x $/unit - old advances + new advances

..

How do we make more per system money?

- More $/machine
- More/copy revenue (extensions)
- Home market
- More units
- More from IBM
- Dumb Terminals

..

DRI
	Strong in special deals, IBM Austin, Motorola, Atari, AT&T
	$53MM in sales (larger than MS?)
	
	Business
	MS_DOS		MS wins
	XENIX		MS wins
	Languages	MS wins
	Windows		-
	Multitasking	DRI Ahead
	8 bit
	
Net

We make money by selling one redirector/net card Goal: $2MM per year.	

..

Key Businesses

BASIC and DOS non-IBM

BASIC and DOS IBM

Windows (problems keyboard, Topview, VDI, standalone?)

XENIX

MSX

Retail Languages

Goal

Deliver $55M in sales for next two years 60% pre-tax

..

IMPORTANT MARKET TRENDS '85

* COMPATIBILITY WITH IBM

- H.P., T.I., DEC, SPERRY, TANDY, OTHERS
- NOT WANG, WHO ELSE?

* RETAIL DISTRIBUTION OPPURTUNITY GONE

- DEC, T.I., COLUMBIA DATA, ITT, ATT(?), MOST CLONES
- NO NEW PLAYERS WILL GET IN

+ SPERRY, NCR, ITT, BURROUGHS, HONEYWELL, ATT(?), DG(?)
- CDC, PRIME, DG(?), COMPAQ(?)
- SEEQA, CORONA, COLUMBIA DATA, MOST MICRO CLONES CLONES

* OS "EXTENSIONS" BATTLE

- NETWORK VS. A CAST OF THOUSANDS
- WINDOWS VS. TOPVIEW VS. GEM VS. ?

* MULTIUSER SYSTEMS
- NET AND XENIX/UNIX

* DOS SHAKEOUT WILL CONTINUE AND GET WORSE

- COLUMBIA DATA, SEEQUA, CORONA(?), TELEVIDEO(?), NS, VECTOR, GRAPHIC, ETC

(Lose Sperry only, lose Phillips bus)

- SURVIVORS WILL MAKE MUCH SMALLER COMMITMENTS

IMPORTANT MARKET TRENDS (MORE)

* XENIX STARTUPS WILL GROW FOR 286 AND 386

- SPECTRA, ETC

* VAR CHANNEL WILL GROW IN IMPORTANCE

- MULTIUSER APPS
- NETWORK APPS

* WILL THERE BE ANY NON-EMBEDDED APPLICATIONS FOR NON-INTEL CHIPS? WHAT WILL HAPPEN TO ZILOG AND NATIONAL

..

		MS-DOS

WINNERS IN '85

COMPAQ	15,000 u/mo.	Retail Only	Solid (if anybody)
T.I			Retail/Direct	Solid
H.P			Direct		Solid
DEC			Direct		Solid (?)
WANG (?)		Direct		(?)
ZENITH			Direct		Solid
TANDY			Direct		Solid
DATA GENERAL		Direct/Retail	Solid
SPERRY			Direct		Solid
AT&T			Retail/Direct	Solid
BURROUGHS		Direct		Solid
NCR			Direct		Solid
		40,000 u/mo.
		BIll at 50,000 units/month total

LOSERS IN '85

TELEVIDEO	(What will they do?)
COLUMBIA DATA	(Going nowhere)
KAYPRO		(Management)
HONYWELL	(DOA)
DATAPOINT	(
PRIME (DOA)
SEEQUA
XEROX
MANY NO-NAMES

MS-DOS ISSUES

* BATTLE IS OVER FOR OS - WE WON

- WINDOWS VS. GEM - WE HAVE NOT WON

- ISV PROGRAM IS KEY

* MULTITASKING DOS

- SOLID SCHEDULE COMMITMENT NOW

* NETWORKS

- XENIX IS BEST LEVERAGE

xenix key to DOS | compat our only value-added at key to Net

* BUNDLING IS BEST LEVERAGE

* BUNDLING/PRICING

- CHARGE MUCH MORE FOR DOS - 2, 3.X
- LESS FOR BASIC

- BUNDLE DOS/BASIC/WINDOWS/NET (?)

- STOP FAMILY PRICING, GET SEPERATE COMMITMENTS PER PRODUCT

- ACCELERATE 1ST YEAR QUATERELY PAYMENTS OR 1 YEAR UP-FRONT

* MAYBE WE SHOULD SKIP MT-DOS AND GO FOR DOS 5.0 (Multitasking in Windows)

- SCHEDULE IMPACT

- GREAT PRICING OPPURTUNITY!! DOS, WIN

* ROLL OVER FLAT FEES, WATCH INSTALLED BASE

XENIX

WINNERS/LOSERS IN '85

* TOO SOON TO CALL - LET'S PICK FROM ATTACHED LIST
* 150,000 UNITS IN '85
* KEY PAYERS

- ALTOS		(+) 16,000
- AT&T		(+)
- SPERRY	(+)
- SPECTRA	(?)
- DURANGO	(-)
- NCR		(+)
- TANDY		(+)

SEE ATACHED LIST

XENIX ISSUES

* IF THIS IS A KEY REVENUE FOR MS, WHY ARE WE WORKING WITH AT&T

- OMFs

* LANGUAGES ARE CRITICAL and late

- basic and cobol

- DEBUGGING TOOLS (SOURCE LEVEL)

* RETARGETABLE COMPILERS WILL HELP KILL OTHER PORTS OF UNIX

* CHARACTER WINDOWS PRODUCTS MAY BE BETTER THAN MS-WIN STRATEGY:
TECHNOLOGY NOT THERE, 386 BETTER TIMING (IF I WAS DRI I WOULD ATTACK MS HERE!)

* GRAPHICS MODE APPS MARKET UNCLEAR
- CHARACTER MODE BETTER SHORT TERM ('95 - '86) ?

* XENIX NET IS KEY TO STANDARD FOR DOS TOO.

* VERY FEW NON-COMPATBLE WILL EMERGE
- SEL ALL PACKAGED GOODS

* TRAINING, TRAINING, TRAINING

..
PLANNED 80286 MACHINES

OEM	Model	Announce	Account	Mode	MS-DOS	XENIX

...

http://edge-op.org/iowa/www.iowaconsumercase.org/011607/5000/px05002.pdf

-- 
 
court documents in the case of Comes v Microsoft.