01.09.09

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Extended Windows 98 EOL to Block Government Migrations to GNU/Linux and Free Software; More ‘Donations’

Posted in Antitrust, Asia, GNU/Linux, Microsoft, Office Suites, Windows at 10:08 am by Dr. Roy Schestowitz

No dumping sign
Competition through suppression

IN THIS SERIES of posts, we take a closer look at how Microsoft has been fighting GNU/Linux by dumping ‘donations’ and specifically targeting deployments of StarOffice and GNU/Linux. Previous posts on this subject include:

In today’s summary we have exhibit “px07117″ from Comes vs Microsoft [PDF]. It shows Gates discussing his concern about “Linux” and how it needs to be fought against. The full text is in Appendix A at the bottom.

“It shows Gates discussing his concern about “Linux” and how it needs to be fought against.”Exhibit “px07118″ from Comes vs Microsoft [PDF] is similar to the above with some alignment, including the E-mail from Gates to Ballmer (and vice versa). The text is added as Appendix B at the bottom.

To give the gist of it, for those who are not interested in the full correspondence, Microsoft discussed extending the lifetime (EoL: End of Life) of Windows 98. They currently extend the EoL of Windows XP in order to block GNU/Linux on sub-notebooks and this is accompanied by predatory pricing.

Prominent figures in this correspondence are Orlando Ayala, Bill Gates, and Steve Ballmer. The main players are Kurt Kolb, Carl Sittig, and Richard Fade from Microsoft.

It all started with Bill Gates and Steve Ballmer conversing. Gates writes to Ballmer:

When I was in New York Premji who owns most of Wipro came up to me and talked about how we were losing the school projects in India to Linux on the client.

[...]

I am not saying this is easy to figure out but if we are going to avoid just rotling away to Linux we need to find boundaries like this and do something.

As we’ve shown in the past, Wipro is often acting as Microsoft’s accomplice as well [1, 2, 3, 4, 5]. It helps Microsoft colonialise India, digitally.

Here is another bit from the thread, which shows how Microsoft plans to suppress or dodge an open source policy from the government of Malaysia.

As indicated in the thread below, there is a push for open source in the govt. The Prime Minister has directed to look at Open Source as alternative in general and could potentially be implemented for school project. Rajiv feels that if Phase 2 had no change to Mimos for Win98 royalty the project could continue without a pause. But if Mimos declines because of price, it would throw the proposal back to the govt and open the door for changes. The irony here is that since thls is a School project, we want to to lend a helping hand, but our Win98 eol policy Is in the way.

GNU/Linux worries Microsoft:

But as said it will not be simple starting with how you define poor vs non-poor countries..and I am not sure that definition will prevent us to avoid very similar pressure in “non poor” countries which may use the Linux factor even harder after they learn what we have done in other places.. I also agree it will be very hard to exclude universities as there is where the huge Linux pressure comes from

The proposal of “donations” is made as means of battling competition:

let us work on this including the complication of OEM reporting, etc and see if we can get in place in the meantime we have told people not to lose even if we need to go with full donations in some cases..

In the second exhibit, Richard Fade asks:

Can the local ms team make a donation ?

Let’s not forget that Microsoft may have bribed Indian charities. Further, it says:

How do we not disrupt this business drive these countries closer to Linux? Win98 is not a covered product, can we create a rebate or something to keep the royalty OEM price the same?

It says “disrupt this business drive these countries closer to Linux.” Why can’t Microsoft make better products? Why does it just focus on “disrupting” its competition? It even has a "Linux Heat Map" and it encourages FUD as a strategy. This truly shows [1, 2]. █

Appendix A: Comes vs. Microsoft – exhibit px07117, as text

From: Kurt Kolb
Sent: Wednesday, May 15, 2002 8:31 AM
To: Carl Sittig; Richard Fade
Subject: RE: Windows royalty for school projects

It’s a little late 1o reverse course on Win98 EOL generally. Are you proposing it specific to your region?

—— Original Message ——
From: Carl Sittig
Sent: Tuesday, May 14, 2002 7:40 PM
To: Richard Fade
Cc: Kurt Kolb
Subject: FW: Windows royalty for school projects

Situabon in Malaysia relating to the thread below…
Mimos is a Named Account in Malaysia. They won a project from the govt for PC in Schools in 2 years ago. These are networked and based on Win98. After implementation delays by the govt, they started shipping against the 37K units last year. They have shipped 20K so far, and remaining 17K will ship after July 1. Current Price is $68 (minus special rebate of $7 put into place well before the Consent Decree, rebate continues to end of current license which ends in June). As you know, after July 1 Win98 drops off the royalty license and Mimos will have to fullfill from DSP @ $84.50.

Meanwhile, Phase 2 of the project for 60K units is approaching (Mimos has letter of intent) and it still requires Win98. Again this needs networking for schools and Win2K or XP Pro is viewed as too expensive for school project. Mimos is asking about the price and has indicated they would have to decline doing the new deal with the increased Win98 royalty (low margin deal).

As indicated in the thread below, there is a push for open source in the govt. The Prime Minister has directed to look at Open Source as alternative in general and could potentially be implemented for school project. Rajiv feels that if Phase 2 had no change to Mimos for Win98 royalty the project could continue without a pause. But if Mimos declines because of price, it would throw the proposal back to the govt and open the door for changes. The irony here is that since thls is a School project, we want to to lend a helping hand, but our Win98 eol policy Is in the way.

I have started other email threads on similar issue in countries where Win98 is the business 0S of choice (primarily India). Our eol policy makes sense where the transition is from consumer OS to consumer OS, or Business OS to Business OS, but Win98 hits a strange cusp of being a low cost Business OS that needs to transition to a higher cost Business OS. in countries that are already under price pressure.

I propose we carve out a solution for Win98 (for business) in this schenario. I follow your business desk idea below, which is definatety better than super-low OS royalty (or free), but my proposal is to just leave Win98 pricing alone. We can still get the $68 in most cases.

—– Original Message —–
From: Orlando Ayala
Sent: Monday, May 13, 2002 10:03 AM
To: Richard Fade; Steve Ballmer; Bill Gates
Cc: Michael Rawding; Jean-Philippe Courtois; Jim Allchin; Chris Jones (WINDOWS); Carl Sittig;
Kurt Kolb; Bill Landefeld
Subject: RE: Windows royalty for school projects

MS-CC-MDL 000000085906
HIGHLY CONFIDENTIAL

Richard and I will discuss this tomorrow.. by the way it is also important to say that the OS is not only the problem.. we also have huge pressure in the Office front, this is the case in the middle East and South America (200k bid under way in Colombia) SEA and China.. Yes Bill Landefeld is working on a programmatic approach (resulting from a couple of deals we have been battling recently) and we will discuss soon. But as said it will not be simple starting with how you define poor vs non-poor countries..and I am not sure that definition will prevent us to avoid very similar pressure in “non poor” countries which may use the Linux factor even harder after they learn what we have done in other places.. I also agree it will be very hard to exclude universities as there is where the huge Linux pressure comes from

let us work on this including the complication of OEM reporting, etc and see if we can get in place in the meantime we have told people not to lose even if we need to go with full donations in some cases..

—— Original Message —-
From: Richard Fade
Sent: Monday, May 13, 2002 9:34; AM
To: Steve Ballmer; Bill Gates
Cc: Michael Rawding; Orlando Ayala; Jean-Philippe Courtois; Jim Allchin; Chris Jones (WINDOWS); Carl Sittig; Kurt Kolb
Subject: RE: Windows royalty for school project

There have been several situations we have been working in the past 3 months Schools and government bids – where the organization letting the bid would be happy using Windows but is asking for naked systems or Linux as a means to cut costs. It is very complicated rolling this back through the OEM reporting process as Steve’s mail
suggests.
I made a recommendation to Orlando about 2 months ago that we establish a “Business Desk” function to address these situations and fund it with marketing money we use to support the bids. We proposed the regional VPs must OK a bid being designated in this program. I understand Orlando is currently working on where this should be administered with Bill Landefeld
This is a very different approach in providing blanket amnesty or OS royalties for K12 – I believe universities will also be a challenge in this regard hence we were proposing a more tactical bid driven approach – the downside to my proposal is we (the local MS team) must be very proactive and work all major opportunities – rather than have a proactive approach as you suggest.
There is another non PC related device which we are tracking along with the Windows team – called the Simputer-which is a portable device envisioned to help illiterate farmers utilize technology in doing business.

We are working a set of tactics re Simputer now.
Any direction on this appreciated – I have an 1:1 with Orlando tomorrow we can follow up then.

—- Original Message —
From: Steve Ballmer
Sent: Monday, May 13, 2002 8:38 AM
To: Bill Gates
Cc: Michael Rawding; Orlando Ayala; Jean-Philippe Courtois; Jim Allchin; Chris Jones
(WINDOWS); Richard Fade
Subject: RE: Windows royalty for school projects

As you highlight it is tough to do logistically but this is the first I paid attention to the issues Orlandoa and richardf should discuss
—– Original Message —–
From: Bill Gates

MS-CC-MDL 000000085907
HIGHLY CONFIDENTIAL

Sent: Sunday, May 12, 2002 10:36 PM
To: Steve Ballmer
Cc: Michael Rawding; Orlando Ayala; Jean-Philippe Courtois; .Jim Allchin; Chris Jones
(WINDOWS)
Subject: Windows royalty for school projects

When I was in New York Premji who owns most of Wipro came up to me and talked about how we were losing the school projects in India to Linux on the client.
He said he didn’t understand why we don’t make Windows free on the client for school projects K12 at least in poor countries. Likely it makes sense for all countries.
He mentioned some specific state bids that we had lost.
I talked to Jean Phillipe about doing this and thought if would become a worldwide thing.
I didn’t follow up on it though and from what Premji said this didn’t happen.
I absolutely think we need to do this. There are some options on how to do it – whether we still collect from OEMs or not and how we find out about these deals.
I am not saying this is easy to figure out but if we are going to avoid just rotling away to Linux we need to find boundaries like this and do something.
Who Should be tidying things like this in general? If you thunk this one makes sense then who should drive it?
If there is pushback on this lets prioritize it for the next SLT since I want to understand that better if so.

MS-CC-MDL 000000085908
HIGHLY CONFIDENTIAL

Appendix B: Comes vs. Microsoft – exhibit px07118, as text

From: Richard Fade
Sent: Friday, May 17, 2002 4:43 PM
To: Carl Sittig
Cc: Kurt Kolb
Subject: RE: Windows royalty for school projects

Can the local ms team make a donation ?

—Original Message —
From: Carl Sittig
Sent: Friday, May 17, 2002 4:08 PM
To: Richard Fade
Subject: RE: Windows royalty for school projects

yes, a bit strange, and down below we have people talking about giving this away to the schools in these countries, the technology change from Win9x to NT code base hits a wall for people
looking for Iow cost business OS .. Win98 is the winner in a lot of these developing subs and the demand generation to move people forward has been missing. The OEM is caught in the middle between MS and their govt’s pushing for low-cost product..

— Original Message —-

From: Richard Fade
Sent: Friday, May 17, 2002 4:01 PH
To: Carl Sittig
Subject: RE: Windows royalty for school projects

Changed my mind

This is a hard thing to do – you are saying “don’t’ change this because i know how hard this is” but “give me an exception ”

—– Original Message —-
From: Carl Sittig
Sent: Friday, May 17, 2002 3:57 PM
To: Richard Fade
Subject: RE: Windows royalty for school projects

invisible ink?

—- Original Message —-
From: Richard Fade
Sent: Friday, May 17, 2002 3:55 PM
To: Carl Sittig
Subject: RE: Windows royalty for school projects

—– Original Message —–

From: Carl Sittig
Sent: Friday, May 17, 2002 3:49 PM
To: Kurt Kolb; Richard Fade
Subject: RE: Windows royalty for school projects

I am proposing we do something specific in a few markets with the biggest impact (for instance the School project in Malaysia) Net, I see two issues wrt Win98:
1) Some countries have low DSP price for W98. OEM who buys 100-pack should get the low DSP price
2) Some counties use Win98 as the predominant business OS and/or have low cost requirements such as the Malaysia school project described below. How do we not disrupt this business and

MS-CC-MDL 000000085958
HIGHLY CONFIDENTIAL

drive these countries closer to Linux? Win98 is not a covered product, can we create a rebate or something to keep the royalty OEM price the same?

—– Original Message —-
From: Kurt Kolb
Sent: Wednesday, May 15, 2002 8:31 AM
To: Carl Siting; Richard Fade
Subject: Re: Windows royalty for school projects

It’s a little late Io reverse course on Win98 EOL generally. Are you proposing it specific to your region?

—— Original Message ——
From: Carl Sittig
Sent: Tuesday, May 14, 2002 7:40 PM
To: Richard Fade
Cc: Kurt Kolb
Subject: FW: Windows royalty for school projects

—– Original Message —–
From: Orlando Ayala
Sent: Monday, May 13, 2002 10:03 AM
To: Richard Fade; Steve Ballmer; Bill Gates

MS-CC-MDL 000000085959
HIGHLY CONFIDENTIAL

Cc: Michael Rawding; Jean-Philippe Courtois; Jim Allchin; Chris Jones (WINDOWS); Carl Sittig;
Kurt Kolb; Bill Landefeld
Subject: RE: Windows royalty for school projects

We are working a set of tactics re Simputer now.
Any direction on this appreciated – I have an 1:1 with Orlando tomorrow we can follow up then.

As you highlight it is tough to do logistically but this is the first I paid attention to the issues Orlandoa and richardf should discuss

MS-CC-MDL 000000085960
HIGHLY CONFIDENTIAL

—– Original Message —–
From: Bill Gates
Sent: Sunday, May 12, 2002 10:36 PM
To: Steve Ballmer
Cc: Michael Rawding; Orlando Ayala; Jean-Philippe Courtois; .Jim Allchin; Chris Jones
(WINDOWS)
Subject: Windows royalty for school projects