the DOS gold mine is shrinking ..

Microsoft Memo

To: Steve Ballmer: Joachim Kempin; Paul Maritz; Russ Werner; Nathan My~~~
From: Bill Gates
Cc: Jon Shirly, Jeremy Butler, Richard Fade, Jon L~~~~~, John Sabol. Peter Neapert, Mike Maples, Scott Oki

Date: May 18, 1989
Subject: Operating System Strategy

My recent trip to Europe gave me time to gather data and think about our oerating system strategy.

The DOS gold mine is shrinking and our costs are soaring - primarily due to low prices, IBM share and DR-DOS. Making Windows a strong product benefits our gold mine and protects it in the following ways:

DR-DOS. I doubt they will be able to clone Windows. It is very difficult to do technically. we have made it a moving target and we have some visual copyright and patent protection. I believe people underestimate the impact DR-DOS has had on us in terms of pricing.

IBMs market share increase. The new IBM low-end machines are designed and priced assuming they can achieve 1M in sales. In addition to their other sales. This will destabelize many of our customers and cost us a lot of revenue. I think IBM's MCA strategy and the move to OS/2 and networking will increase their share. IBM's failure to exploit the 387 or portable markets is not likely to be repeated. I am impressed with their seriousness. We can make money from them with Windows - retail yields the highest dollars, but OEM makes it a standard. OEM is the best long term.

Lower prices. Microsoft can't get more than the folowing royalties for DOS alone.

..

With Windows offered by Comoaq and IBM I think we can get almost two ~~~~ what we could get ourselves. I don't hink any amount of system software can do better - even the world's best OS/2.

..

3. UNIX is strong for a varity of reasons, multiuser is more important - far more important - than we give it credit for. Government standards are a problem. I think we need to invest more people in this. I have been very sucessful explaining how a desktop binary standard is better than a source standard when I get to talk to the right people. The EEC meeting has me feeling better about this.

...

http://edge-op.org/iowa/www.iowaconsumercase.org/011607/5000/px05041.pdf

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court documents in the case of Comes v Microsoft.