“We have increased our prices over the last 10 years [while] other component prices have come down and continue to come down.”
–Joachim Kempin, Microsoft’s OEM Chief at the time
“[...] current PC technology is totally sufficient for most office tasks and consumers desires and [...] any performance bottleneck is not in today’s PC’s but in today’s COM pipes. This in itself might slow down replacement cycles and life time shortening until we find true MIPS eating applications – a priority not only Intel should subscribe to.”
–Joachim Kempin, Microsoft’s OEM Chief at the time
“I’m thinking of hitting the OEMs harder than in the past with anti-Linux [...] they should do a delicate dance”
–Joachim Kempin, Microsoft’s OEM Chief at the time
A reader has advised that we write about the recent major revelation which revolves around “Vista-capable” deceptions. The topic is very broad, so rather than dissecting this story we shall provide many pointers with instructive remarks that bring together isolated (yet inseparable) observations.
To open up this post, here is what our reader, SubSonica, wrote in to say: “This article … refers to the consumer case against the “Windows Vista capable” marketing campaign on new laptops. It has links to some juicy email exhibits on the case worth keeping handy for future reference:
From a reader’s comment on the article:
Microsoft made decisions based not on consumers ability to get the full Vista experience, but based on the needs of Intel to be able to sell the older chipset without people knowing that it was obsolete as far as Vista was concerned. The “education” angle is pretty silly because it undermines the point of having a Vista compatibility logo at all.
But, Microsoft demonstrated very clearly with the “Plays for Sure” campaign and lack of Zune compatibility that they don’t really invest anything in these programs except for marketing. They do not back up their consumer eduction with engineering to fulfill the promises. I can’t see any excuse for Zune not being a “Plays for Sure” device.
At the end of this analysis we shall very briefly discuss collusions and their relevance to work on Mono and the impact of patent deals. Novell can now be seen as somewhat of a Microsoft partner striving to boost the success of both companies.
First of all, consider Microsoft’s well-proven exclusionary deals with OEMs. With that in mind, have a look at one of the more recent articles which investigates Microsoft’s strategy. It amounts to an ‘orgy of kickbacks‘. Look just how many companies appear to be involved.
The OEM-Hardware-Software Love Triangle
New article: E-mail: Microsoft ‘botched’ dealings with Intel, HP
Internal Microsoft e-mails revealed through a federal class-action lawsuit arising from the troubled launch last year of the Windows Vista operating system have provided a provocative inside look at the software giant’s machinations with Intel, HP and Dell.
The e-mails include an exchange in which one senior Microsoft executive described dealings with computer makers as “really botched.” Another manager complained Microsoft was “caving to Intel” and “really burning HP.”
The e-mails are included in 145 pages of documents unsealed by U.S. District Judge Marsha Pechman in Seattle late Wednesday. They include internal reports and some handwritten notes that offer a rare look inside at the famed “Wintel” partnership, and touch upon the alliance’s dealings with Hewlett-Packard, Dell and other computer makers.
It is becoming well known that Microsoft have achieved their current market share status by making major computer manufacturers sign licensing deals, so as to distribute a copy of Windows with every computer sold. What many people don’t realise, is how difficult it is to get a computer from the manufacturers without Windows.
This is first-hand experience of the power of Microsoft’s monopolistic practices, and it really does annoy me. It seems not so long ago that I praised Dell for their support, but along with Microsoft, they have now lost a customer entirely.
Needless to say, we are now looking to buy a system from a local shop with no OS.
Intel and Microsoft Closer Than They Have You Believe
Here is a group of articles with portions of interest quoted:
There are plenty of commercial relationships involving Microsoft that have more questions than answers: Citrix, Novell, the BBC, the NHS. But none has so many far-reaching implications, nor is so hard to examine, as the mysterious Ballmer-Otellini axis.
But whatever it is, it’s strong. It made Microsoft knowingly compromise its entire Vista launch strategy, to the extent that Vista now has a terrible reputation and MS is in court. That’s some compromise.
Microsoft and Intel–the world’s biggest one-hit-wonder–will both go the way of the dinosaur if they don’t realize that it’s time to change. They need to turn the corner to a new business model while they’ve still got some of those fat monopoly profits coming in. And I don’t mean simply diversifying as they’ve been trying to do for years; that won’t cut it.
Why do you think Microsoft’s stock has essentially flatlined for eight years? Ditto for Intel. Investors are wondering what comes next after the whole PC thing has run its course. Good question. Ballmer and Otellini definitely have some ‘splainin’ to do.
But perhaps the most surprised executive inside Microsoft at the move was Allchin, the head of the Vista development team.
“We really botched this,” he wrote in a thread responded to Poole’s e-mail. “I was not involved in the decision making process and I will support it because I trust you thinking behind the logic. BUT, you have to do a better job with customers that what was shown here. This was especially true because you put me out on a limb making a commitment. This is not ok.”
The notion of Microsoft making the decision specifically to help Intel’s quarterly results is drawing some attention in the industry today. Among other things, securities laws regulate selective financial disclosures.
“We don’t know who John Kalkman is,” said Intel spokesman Chuck Mulloy this afternooon. “We do know he’s not qualified to know anything about internal Intel financials or forecasts related to chipsets, motherboards or any other products.” Mulloy said Kalkman “would have no visibility into our financial needs in any given quarter.”
Let’s read that again:
…(Customers) are in the store buying a PC, not an OS.
I wonder if Mr. Goldberg appreciates both the truth and the difficulty inherent in his comment that consumers are looking for a PC, not an OS. To me, he could not more clearly state, “Windows is a commodity. The end of (our) world is near.”
We helped Intel make its figures. Sheesh
Microsoft suit John Kalkman blamed Intel to help “it make its quarterly earnings” by encouraging use of 915 chipsets which have integrated graphics.
More information in the following articles, for the sake of completeness and for future reference:
- Microsoft knew of Vista shortcoming prior to release
- Microsoft dropped Vista hardware spec to raise Intel profits
- Microsoft ‘Caves’ To Intel
- Has Vista lost all credibility?
- Full text: Microsoft execs on Vista problems
Here are some older finds that were published by Todd Bishop more recently: Microsoft’s Greatest Hits: Top 5 internal e-mails
Raikes highlighted the dominant market position of Windows and described the “pricing discretion” that Microsoft has been able to exercise.
In some respects I see the business characteristics of Coca Cola or See’s Candy as being very similar to Microsoft,” Raikes wrote, referring to two of Buffett’s high-profile investments. “E.g. in FY96 there were 50 million PC’s sold in the world, and about 80% of them were licensed for a Microsoft operating system. Although I would never write down the analogy of a ‘toll bridge,’ people outside our company might describe this business in that way.”
Raikes added later, “There is an R&D charge to the business, but I’m sure the profits are probably as good as the syrup business!”
The message didn’t turn Buffett into a big tech investor, but it was helpful to plaintiffs pursuing the company on antitrust charges. It surfaced years later as evidence in a class-action suit against Microsoft in Minnesota.
Mind the use of the phrase “toll bridge”. Look again at the earlier statement about people requiring computers rather than an operating system.
Here is another new one from Todd:
Software Notebook: A look back at Microsoft’s e-mailbag
“Today, if you e-mail things around, it’s very typical for the information to go far and wide,” the Microsoft chairman said in a 2003 address in Seattle. “The next thing you know, it’s in the newspaper.”
To give you a recent example of Intel-Microsoft collaborations, consider the one laptop per child project.
Intel and Microsoft Ganging Up Against Charity
Low-cost Linux laptops with AMD chips were bad news to Microsoft and Intel. They did not sit idly. Here are some highlights, some of which were covered here before.
Intel’s agreement with the OLPC Foundation included a ‘non disparagement’ clause, under which Intel and One Laptop promised not to criticize each other, according to Nicholas Negroponte in the latest article in the Wall Street Journal.
Still Intel tactics have violated that repeatedly to kill OLPC efforts in Nigeria, Libya, Pakistan, India, China and Intel is also still trying to pull those tactics in Mexico, Brazil. This is simply disgracefull of Intel, scandalous.
But Negroponte has signed an agreement saying that he is not allowed to criticize Intel, so he is not allowed to talk about these shameless tactics even though Intel is the one violating the agreement.
So only independant voices on the Internet can get those messages of truth out about Intels tactics.
In Nigeria, Intel came and donated 3000 laptops to counter OLPC efforts, then sells 17 thousand Classmates to Nigeria at a loss.
Then Microsoft corrupted Nigerian officials with 400 thousand dollars to install Windows XP on those instead of Mandriva Linux.
Microsoft Chairman Bill Gates earlier this year told the Microsoft Government Leaders Forum, “Geez, get a decent computer where you can actually read the text and you?re not sitting there cranking the thing while you’re trying to type” (see Bill Gates Mocks $100 Laptop).
I sincerely hope that no matter what the people who are running the OLPC project decide, that their project will continue and not get bogged down in a play of corporate greed and ambitions.
He is furious that Intel’s CEO Craig Barrett called the One Laptop a gadget. The Negroponte initiative is caught in the middle of a vicious fight between AMD and Intel, he said.
5. Mind Intel’s CEO’s feelings about Linux
That [Linux] software effort does not have the support of Mr. Otellini, who is concerned about incurring Microsoft’s wrath, the executive said. The two companies have a long history of tension over who controls the hardware and software direction of the “Wintel standard.” Intel has said it is supporting both operating systems.
Then came the litigation, but there are no ‘smoking guns’ to show a relation to Intel and/or Microsoft. Here are some of the things we know nonetheless.
Here’s what OLPC says was hidden from the court:
* LANCOR has no valid patent
* OLPC hasn’t sold any XO laptops in Nigeria
* it’s a non-profit
* the beta XO laptops tested in Nigeria were not for sale and were not given away
* OLPC never signed a EULA
* OLPC never reverse engineered anything
* its keyboards that will be distributed use all public domain techniques and not LANCOR’s Konyin keyboard
PJ: Thank you for responding. I think you misunderstand then one thing about OLPC. OLPC is a recognized charity under the law. Selling a laptop for cost does not make them commercial, Ade.
Many of my readers have been asking me, and I hope you do not feel insulted if I ask on their behalf, but is there any connection or have you had any contact with Microsoft or Intel?
The Boston Globe is reporting that LANCOR, the Nigerian-owned company that has filed suit against the One Laptop Per Child project for patent infringement, is actually helmed by a man convicted of bank fraud. He spent a year in prison.
PJ also added:
[PJ: I thought you might like to see the keyboard that LANCOR's thinks is being infringed by the OLPC. Here's the page for the entire world. Ah! Innovation. It certainly is an amazing technical advance to have 4 shift keys so you can do accent marks. What genius could ever think of a keyboard that can do an accent aigu? Genius, I say. Innovative genius. Nothing obvious here. So you can certainly understand why LANCOR claims it must safeguard with their lives the keyboard driver source code. For contrast, here is the OLPC's Nigerian keyboard. So different I start to wonder if this was about advertising a keyboard.]
…Dr Aja-Nwachuku said he was now assessing OLPC alongside other schemes from Microsoft and Intel.
[If you don't want a laptop from OLPC, because you feel you need schools, uniforms and chairs first -- not that any of that makes sense since the kids can sit outside under a tree and study with OLPC or at home -- why would he be considering the Classmate from Intel or a "scheme" from Microsoft? You tell me.] –
A little earlier you could find this in the same nation: Local OEMs boycott Microsoft, Intel
The local Original Equipment Manufacturers (OEMs) in the country may have commenced boycotting of placing orders on the Operating System (OS) dominantly supplied by the software giant, Microsoft Corporation and computer processor manufacturer, Intel Corporation offices in the country.
That Bribery Incident in Nigeria (Microsoft and Intel’s Classmate)
Wow! I’m impressed, Steve! What have you done for these guys to change their mind like this? It’s pretty clear to me, and it will be clear to everyone. How do you call what you just did Steve, in the place where you live? In my place, they give it various names, I’m sure you know them.
Hey Steve, how do you feel looking at yourself in the mirror in the morning?
Of course, I will keep fighting this one and the next one, and the next one. You have the money, the power, and maybe we have a different sense of ethics you and I, but I believe that hard work, good technology and ethics can win too.
So, even as Microsoft claims superior quality over Linux, they act as if they don’t even buy their own FUD. If they really believed that Windows was superior to Linux, they wouldn’t have to bribe people with “marketing help” to get them to choose Windows.
“We are sticking with that platform,” said the official, who would not give his name.
In the article “Africa’s digital poster child“, watch how Intel gave laptops and suffers a loss, especially at a time when the nation was adopting OLPC.
[Classmates in Nigeria]
The renovation has been paid for by the government and Intel, with the chip firm covering the majority of the costs of the technology.
There’s been some awful FUD flying around the OLPC world in the last few days, with misquotes, misinformation, and flat out lies being propagated left and right. Even Engadget, one of the better geektech blogs out there, got it completely wrong regarding OLPC CTO Mary Lou Jepsen’s departure from the project.
Classmate is more expensive, consumes 10 times the power, has 1/3 the wifi range, and can’t be used outside. Also, the Classmate doesn’t use neighboring laptops to extend the reach of the internet via hopping (mesh-networking) like the XO does. So not only is the XO cheaper than the Classmate, the XO requires less infrastructre expenditure for electricity and for internet access.
2 days before Intel CEO Paul Otellini would unveil the Classmate 2 or the Intel-powered XO at the CES, Intel announced that they are quitting the OLPC board.
Intel claims that they are quitting because of Nicholas Negroponte wanting them to stop the promotion of the Classmate/Eee to education in third world countries, but I think that the real reason is that Intel does not have a good enough processor for the OLPC project to use as an alternative to the AMD Geode LX-700. Intel has not been able to develop a processor to match the price, power consumption and performance requirements of the OLPC project. Paul Otellini could have looked like a fool at the CES if he had to unveil an Intel powered XO that was performing worse in terms of price and power consumption compared to the AMD powered one.
What We Have Seen and What We Should Learn
So, we have gone very off-topic perhaps, but the point to be taken here is that Microsoft’s special partners absolutely must not be trusted. As such, Novell with its involvements deserves to be looked upon with great suspicion. Its goal is to help Microsoft in exchange for Microsoft’s help to Novell (not to GNU/Linux).
As for as Intel and Microsoft go, crime runs through their bloodstream and we have not even presented here any of the endless crimes (primarily briberies) against AMD. The lack of regulatory involvement by the US government is a separate question altogether and it probably questions the ethics of government regulars as well. We shall leave it at that.
To close this post, here is an E-mail we received from a reader some hours ago. It probably concludes the main takeaways:
I know insisting in Microsoft’s matters would make you lose focus on Novell, but I think the source of the problem is Microsoft nevertheless and their continuous attempts at keeping a 90%+ marketshare for its cash cows, and trying to divide-and-conquer-then-destroy Linux and Free/Libre Software at any cost. If it could have made it to Red Hat we would be speaking about boycottredhat instead of boycottnovell. I think in the end the only way will be to boycottmicrosoft
Anyway, it is always handy to have legal documentation from Microsoft cases like the emails in order to shut up many big mouths and to desintoxicate people who believe in their PR campaigns and hollow promises.
“…this Windows Vista capable matter is an indication of who the real customers of Microsoft are, and how they can screw anyone…”So do as you like. If any, this Windows Vista capable matter is an indication of who the real customers of Microsoft are, and how they can screw anyone (in this case they screwed HP) no matter how important a partner is for them, in order to maximize sales of their cash cows -this one was intended to help prospective Vista sales by making users believe that by buying an intel i915 chipset-equipped machine they would be able to run Vista on it afterwards, incidentally helping intel to get rid of the surplus of stock of chipsets).
It was about that time that I was buying a laptop. I finally bought an AMD-64 based one with an Nvidia card, much more powerful than the intel 915 and it didn’t come with any “vista capable” sticker (in fact I bought it with XP since I didn’t want to pay for Vista, this notwithstanding, XP crashes so I wiped it altogether and I run only Kubuntu on it).
If you have any references you can add, please share. █