EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

01.14.09

Microsoft Chief: “Under NO Circumstances Lose Against Linux”

Posted in Antitrust, Bill Gates, Finance, GNU/Linux, Microsoft, Steve Ballmer, Windows at 11:35 am by Dr. Roy Schestowitz

Maze
Using money to starve and entrap competitors

IN THIS SERIES of posts we have already covered relevant antitrust material such as

Today we look at Exhibit px08562 [PDF] from Comes vs Microsoft. It’s about EDGI and it covers schools in developing countries. The exhibit comprises bits of internal correspondence at Microsoft and it involves high-level figures such as Steve Ballmer, Jeff Raikes, Jim Allchin, Chris Jones and one of the main men behind this anti-GNU/Linux push, Orlando Ayala.

he exhibit opens with the revelation that Steve Ballmer is (“steveb” in the E-mails) opposed to limits on dumping against GNU/Linux. To quote:

We went in to the BPR with $30MM in mind, but steveb said we shouldn’t cap it, since it’s “net accretive” to the P&L, ie if the field handles it correctly, it’s revenue that we wouldn’t have seen otherwise (ie if we lost to Linux), so even if we make only a few bucks per PC, it’s better than zero, plus we have the oppty to sell addl non-bootable sw into the customer.

Later we find Geri Elliott, who is a Microsoft employee with a hat in government — one that was (mis)used to cross out Free software from education.

Even before EDGI is formalised, says Microsoft’s Orlando Ayala:

Effective immediately, we are significantly enhancing empowerment by the GM to provide services and, where necessary, even dollars back to the customer to offset the cost of buying new OEM PC’s with *legal* Windows preinstalled instead of naked PC’s with Linux and/or other low-cost/no-cost software.

Offering “dollars back to the customer” is this case is what some people would label a bribe. It’s about suffocating the competition, never allowing it to exist or grow. This is done through negative pricing on the face of it (it pays off to Microsoft in the long term).

The “example scenario” Microsoft mentions:

The government of “X” is advocating using open source for all government-funded computers in order to keep “X” dollars inside the country and save the taxpayers millions of dollars. They are therefore looking at rolling out 50,000 PC’s with Linux to all their K-12 schools and run StarOffice for free or a locally-produced package that they can purchase for $5/desktop.

The planned solution:

In order to compete more effectively against Linux and other providers on these deals, we can now leverage the Education and Government Incentive [EDGI] program to help tip the scales to MS in the deal. After engaging the regional team. the region may use funds to provide services and/or rebates to the customer with the following limitation:
Not to exceed the estimated Windows royalties recognized by MS from the OEM selling the PC’s to the customer (in the example, 50,000 PC’s at approx. $100/PC for OEM Windows XP Professional would result in a maximum of $5M for the individual deal).

Initially (2002), this is targeted at:

LATAM, Africa, Middle East, South Asia including India and PRC.

It is important to emphasise that this is not the case of Microsoft adjusting its prices to compete more effectively. It’s a proper dumping (predatory pricing) tactic that specifically targets any gain made by the competition and this is done by a corporation convicted of monopoly abuse*. In bold font face it states:

It is essential, therefore, that we use this in only in deals we would lose otherwise.

General Magagers are referred to CompHot again:

Escalate to the “comphot’” alias…

CompHot, according to Microsoft, targets "Linux infestations". CompHot is a cryptic code word that would be too alien to outsiders. We mentioned it yesterday as well.

David Driftmier is responsible for EdSG, which conducts many of these anti-GNU/Linux operations, but the idea comes from higher above, notably Orlando Ayala, Bill Gates, and Steve Ballmer, based on other related correspondence. Pat Fox is in this loop as well.

Here is the punch lines from Orlando Ayala:

Bottom line do our best to show the great value of our software to these customers and ensure we get opaid for it under NO circumstances lose against Linux before ensuring we have used this program actively and in a smart way.

Yes, Microsoft is not worried about “Linux”. Not at all.

“[If I ask you who is Microsoft's biggest competitor now, who would it be?] Open…Linux. I don’t want to say open source. Linux, certainly have to go with that.”

Steve Ballmer (Microsoft’s CEO), February 28th, 2008


Appendix: Comes vs. Microsoft – exhibit px08562, as text


From: Pat Fox
Sent: Wednesday, July 24, 2002 9:01 AM
To: Dan Fowler (MSLI)
Subject: RE: *Microsoft Confidential” : Education and Government Incentives program

We went in to the BPR with $30MM in mind, but steveb said we shouldn’t cap it, since it’s “net accretive” to the P&L, ie if the field handles it correctly, it’s revenue that we wouldn’t have seen otherwise (ie if we lost to Linux), so even if we make only a few bucks per PC, it’s better than zero, plus we have the oppty to sell addl non-bootable sw into the customer.

Pat

—- Original Message —

From: Dan Fowler (MSLI)
Sent: Wednesday, July 24, 2002 8:58 AM
To: Pat Fox
Subject: RE: *Microsoft Confidential* : Education and Government Incentives program

Do you know much money was budgeted for this?

—– Original Message —-
From: Pat Fox [mailto:patfox@Exchange.Microsoft.com]
Sent: Tuesday, July 23, 2002 12:00 PM
To: Dan Fowler (MSLI)
Cc: Tom Baumbach (MSLI)
Subject: FW: *Microsoft Confidential* : Education and Government Incentives program
Importance: High

Thanks for making the time this morning. Here’s some background on EDGI.

PIs let me know if you have any questions.

Thx,
Pat

—- Original Message —-
From: Orlando Ayala
Sent: Tuesday, July 16, 2002 8:17 AM
To: SMSG Leadership Team; Pat Fox; Kurt Kolb; Sherri Bealkowski; Rogers Weed; Asia Pacific General Managers; EMEA General Managers; icon general managers; Geri Elliott; Linda Testa (LCA); Pamela Passman (LCA); Peter Wise
Cc: Steve Ballmer; David Driftmier; Rafael Perez-Colon; Mark East; Jeff Raikes; Jim Allchin; Chris Jones (WINDOWS)
Subject: *Microsoft Confidential* ’: Education and Government Incentives program
Importance: High

As many of you know, the Education Solutions Group [EdSG], and the Windows Client group team have been leading a cross-group effort involving LCA, OEM, WW Licensing and Pricing, and SMSG.

MS-CC-MDL, 000000651421

HIGHLY CONFIDENTIAL


The goal of this project is to provide a mechanism for emerging markets to build a rich, active, legal ecosystem around PC computing, and at the same time, make computers with Microsoft Windows preinstalled more affordable, especially in the education segment.

We recognize the critical importance of helping emerging markets build healthy and legal PC ecosystems and clearly the answer is having Windows be a core component. But in today’s difficult economic environment, it is clear that some institutions and countries are making decisions based on short-term price, rather than long-term cost and benefits of their IT investments. It is clear that Windows offers far more benefits to an emerging economy and to the immediate use of customers, we have to do more in emerging markets to help foster a Windows ecosystem.

Until all the details of the program have been developed, it is important that we have a way to address large PC purchases that involve low-cost/no-cost competitors in the education (and government} sectors, especially in emerging markets. Effective immediately, we are significantly enhancing empowerment by the GM to provide services and, where necessary, even dollars back to the customer to offset the cost of buying new OEM PC’s with *legal* Windows preinstalled instead of naked PC’s with Linux and/or other low-cost/no-cost software.

Example scenario:

The government of “X” is advocating using open source for all government-funded computers in order to keep “X” dollars inside the country and save the taxpayers millions of dollars. They are therefore looking at rolling out 50,000 PC’s with Linux to all their K-12 schools and run StarOffice for free or a locally-produced package that they can purchase for $5/desktop.

After extensive selling by the local MS account team, including the country GM, to convince them of the higher value, lower TCO, and overall advantages of the Windows-based eco-system in their country, the government still maintains that while there might be some premium attached to our software, it’s not enough to justify the investment and they will stick with their plan to go open source across all schools.

In order to compete more effectively against Linux and other providers on these deals, we can now leverage the Education and Government Incentive [EDGI] program to help tip the scales to MS in the deal. After engaging the regional team. the region may use funds to provide services and/or rebates to the customer with the following limitation:
Not to exceed the estimated Windows royalties recognized by MS from the OEM selling the PC’s to the customer (in the example, 50,000 PC’s at approx. $100/PC for OEM Windows XP Professional would result in a maximum of $5M for the individual deal).

An outline of the sales process is included in the attached program document.

While this program is available for both developed and developing countries, initial focus is being given to those areas where economic conditions often dictate low-cost/no-cost software as the only solution. This would include LATAM, Africa, Middle East, South Asia including India and PRC.

2/21/2003

MS-CC-MDL 000000651422
HIGHLY CONFIDENTIAL


Ideally, this will still result in a net positive on the Executive P&L as the OEM revenues would not have been realized if the deals had been lost. It is essential, therefore, that
we use this in only in deals we would lose otherwise
. Initially, we will track each deal, then reevaluate in aggregate at the end of Q1 and again at MYR to validate effectiveness.

IF an opportunity meets the criteria in the attached sales process and normal sales process has not been sufficient to close the deal then the GM should ensure that the following takes place:

1] Engage regional team in sales opportunity
2) Escalate to the “comphot’” alias for review by the competitive team, EdSG, and the Windows Client group.
3) EdSG wiil work with Windows Client Group and SMSG WW controller to ensure that funds are tracked and managed appropriately
4) Until appropriate OEM tracking systems are in place, it may be necessary for local account teams to validate appropriate Windows purchases by OEMs in order to ensure funds invested in customer do not exceed funds actually realized through the channel.

Action required:

1) RVP’s should ensure local response teams are designated as per the attached sales process. It is critical that we are really present and actively working in this accounts way before it is too late. We don’t want to be surprised by being “’out of the game:””
2) RVP’s should establish an approval process or empowerment guideline for their region
3) GM’s to communicate program to appropriate sales teams in the subs
4) GM’s to ensure regional response teams are engaged on any EDGI opportunities once teams are formed
5) EdSG (daviddri) to track and communicate EDGI account pipeline, work with Windows Client Group (patfox) to validate requests, and report back to results to RVP’s.
6) Bottom line do our best to show the great value of our software to these customers and ensure we get opaid for it under NO circumstances lose against Linux before ensuring we have used this program actively and in a smart way. We believe for those customers to stay with Windows is in their best long term interest to protect and expand the great value in their investment and also for our long term relationship with this critical segments in your markets. Use this actively as an opportunity to also build great relationships and recognition for our honest desire to partner with them because that is the true intention of the program.

As detailed processes are implemented, new, detailed guidance will be published. There will also be additional guidance provided at MGB. Questions may be sent to edgihq. As always, thanks for your efforts in continuing the fight to help countries realize their potential through truly great software!

2/21/2003

MS-CC-MDL 000000651423
HIGHLY CONFIDENTIAL


* The “convicted monopolist” part might be misunderstood. Microsoft was officially declared a monopoly, which isn’t illegal. They were convicted of abusing their monopoly status by using the very tactics described in this document.

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

What Else is New


  1. Links 30/1/2015: CERN Adopts 64-bit GNU/Linux, Inkscape 0.91 Released

    Links for the day



  2. Apple- and Microsoft-Friendly Media Continues Attacking Android/Linux

    Some of the latest examples where corporate media (funded and run by large corporation) distorts facts, selectively covers facts, and generally serves to protect the Apple-Microsoft duopolist world view



  3. Qualys Admits That Its Scare Campaign (So-called 'GHOST') Somewhat Baseless

    Even the company that bombarded the media with its "GHOST" nonsense admits that this bug, which was fixed two years ago, does not pose much of a threat



  4. European Unitary Patent and Court System in Trouble

    New resistance to the Unitary Patent amid allegations of misconduct in the European patent authorities



  5. Text of Ruling/Decision Against Željko Topić (Regarding Audi as a Bribe)

    The legal loss of Željko Topić laid bear for the public to see even outside Croatia



  6. Media Coverage of Demonstration Against Jesper Kongstad of the Administrative Council (EPO)

    Last week's EPO demonstration has been covered by Danish media, raising awareness of the "banana republic" state of the EPO



  7. Links 29/1/2015: Android Shipments in 2014 Exceed 1,000,000,000, LibreOffice 4.4 is Out

    Links for the day



  8. Corporate Media, Led Astray by Patent Lawyers, Continues to Distort the Reality of Software Patents Post-Alice

    The press of the rich and the powerful continues its attempt to preserve software patents, despite the US Supreme Court's decision to abolish a lot of them on the basis of abstraction



  9. An Estimated 1,000 EPO Employees-Strong Legion Engulfs Danish Consulate to Protest Jesper Kongstad's (of Administrative Council) Protection of Benoît Battistelli

    A large protest waged by staff of the EPO targets one of the key facilitators of Battistelli's terrifying tyranny



  10. Links 28/1/2015: Ubuntu Touch Windowed Mode, NVIDIA Linux Legacy Drivers Updated

    Links for the day



  11. Breaking: EPO Vice-President Željko Topić Loses Defamation Case in Croatia

    The EPO's notorious Vice-President, whose appointment at the EPO is still raising some alarming questions, has just lost his case in Croatia (one of many cases), motivating us to accelerate coverage about the persona known as Željko Topić



  12. Qualys Starts Self-Promotional FUD Campaign, Naming a Bug That Was Already Fixed 2 Years Ago and Distros Have Covered With Patches

    Responding to the media blitz which paints GNU/Linux as insecure despite the fact that bugs were evidently found and fixed



  13. The Openwashing of Microsoft is Now Threatening to Eliminate the Identity of Free Software

    More openwashing of Microsoft, including in the corporate media, shows just to what great an extent and how quickly the old "Microsoft Open Source" Big Lie grows feet



  14. Links 27/1/2015: Plasma 5.2, Dell Precision With GNU/Linux

    Links for the day



  15. Microsoft's Media Attack on Free Software and GNU/Linux

    Brainwash war is still being waged by Microsoft and its friends to convince people that Windows is universally dominant and that Microsoft is now part of the Free software world



  16. Microsoft Accounting Practices After Fire Again, After Previous Abuses and Book-Cooking

    After the infamous IRS brawl comes another confrontation between Microsoft and the SEC, which is unhappy with Microsoft for seemingly cooking the books again



  17. Links 26/1/2015: Debian 8.0 “Jessie” RC1, Linux Kernel 3.19 RC6

    Links for the day



  18. Links 25/1/2015: Android Wear 5.0, Tizen in Bangladesh

    Links for the day



  19. IRC Proceedings: January 11th, 2015 – January 24th, 2015

    Many IRC logs



  20. Links 24/1/2015: Zenwalk Linux Reviewed, Netrunner 14.1 Released

    Links for the day



  21. The Latest 'Microsoft is Open Source' Propaganda a Parade of Lies

    Microsoft myth makers continue their assault on what is objectively true and try to tell the public that Microsoft is a friend of "Open Source"



  22. Apple -- Like Microsoft -- Not Interested in the Security of Its Operating Systems

    Apple neglected to patch known security flaws in Mac OS X for no less than three months and only did something about that vector of intrusion when the public found out about it



  23. As Battistelli Breaks the Rules and Topić Silences Staff, New European Parliament Petition for Tackling the EPO's Abuses is Needed

    The neglected (by EPO) Article 4a of the European Patent Convention (EPC) and the European Parliament petition/complaint against the EPO's crooked management



  24. Links 23/1/2015: Red Hat on IBM Power, Meizu Leaks With Ubuntu

    Links for the day



  25. Links 23/1/2015: Plasma 5.2, Manjaro 0.9-pre1

    Links for the day



  26. Microsoft is Dying Due to Free Software, Tries to Infect GNU/Linux With .NET and to Infect Moodle in Schools With Microsoft Office and OOXML Lock-in

    'Free' drugs (a proprietary software analogy) the new strategy of Microsoft in its latest battle against Free software, especially in schools where choice is a rarity (if not an impossibility), with the premeditated intention of forming dependency/addiction among young people



  27. Microsoft Symptoms of a Dying Company: More Boosters Depart, Back Doors Revealed, Microsoft's Outlook Cracked

    Bad news for Microsoft shortly before the marketing extravaganza served to cover much of it up



  28. The Collapse of European Patent Office Management Culminates With Resignations

    No blood is spilled, but even the management of the EPO is falling apart as the Director of Internal Communication is said to have just resigned



  29. New LCA Talk: Open Invention Network's Deb Nicholson on Software Patents and Patent Trolls

    Deb Nicholson's LCA talk is now publicly accessible



  30. Links 22/1/2015: GNU/Linux Sysadmin Opportunities, TraceFS Introduced

    Links for the day


CoPilotCo

RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

CoPilotCo

Recent Posts