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. Warning: EPO Surveillance May Have Just Gotten Even More Intrusive

    BlueCoat, which the EPO uses to enable oppression inside its European premises, has just gotten even nastier and staff may be at risk



  2. Victim Card Ends up in Another Blunder for Battistelli and His Six Bodyguards

    Battistelli is wrecking what's left of the EPO's reputation (after decades it took the Office to earn it) as the media continues to scrutinise his appalling regime



  3. Italian Report About EPO Now Available in English

    An English translation of a TV program which earlier this month documented some of the glaring problems at the EPO



  4. The EPO is Doing Great, Says EPO-Connected 'News' Site

    IAM 'magazine', a longtime ally of the EPO, gives people the impression that all is fine and dandy at the EPO even though that's clearly not the case



  5. Microsoft Has Killed Nokia (and Its Own Mobile Ambitions), But Watch What it Does With Patents

    Microsoft announces many more layoffs, having already caused tremendous damage to the Finnish economy, and patents are left astray for Microsoft's favourite patent trolls to pick



  6. EPO Management Under Growing Stress From Croatian Law Enforcement Authorities, German Politicians, Italian Media

    Things are not as rosy as the relative calm may suggest, and in the coming weeks we expect some major events other than the protest at all EPO sites across Europe



  7. Microsoft, a Dead Company Walking, Resorts to Malware Tactics, Now Truly Indistinguishable From Crackers

    Microsoft is essentially taking over people's PCs and installing on them a large piece of malware, complete with keyloggers, against the will of these PCs' owners



  8. Links 26/5/2016: CentOS Linux 6.8, Ansible 2.1

    Links for the day



  9. The Latest EPO Victim Card (Played by Željko Topić) Should be Treated as Seriously as Those Bogus Claims of Violence by a Judge (Updatedx3)

    In its desperate pursuit of a narrative wherein the staff of the EPO is violent and aggressive the management of the EPO, renowned for institutional aggression, finds (or claims to have found) a little tampering with a bicycle



  10. Links 25/5/2016: Nginx 1.11, F1 2015 Coming to GNU/Linux Tomorrow

    Links for the day



  11. The Media Starts Informing the European Public About the Downsides of UPC While EPO Accelerates Its Lobbying for Ratification

    The EPO's shameless UPC promotion takes another step forward as the European press outlets (even television channels) begin to explore the secret deal that's negotiated by patent lawyers (with corporate clients) and patent offices, not the public or any public interest groups



  12. Some Details About How the EPO's President is Rumoured to be 'Buying' Votes and Why It's Grounds/Basis for “Immediate Dismissal”

    Some background information and a detailed explanation of the systemic financial dependency, created by Battistelli at the cost of €13 million or more, which prevents effective oversight of Battistelli



  13. How the Patent Lawyers' Microcosm Continues to Boost Software Patents Filth by Misdirecting Readers, Relying on Highly Selective Coverage

    Under the guise of reporting/analysis/advice the community of patent lawyers is effectively lobbying to make software patents popular and widely-accepted again, based on one single case which they wish to make 'the' precedent



  14. Documents Show Zagreb Police Department in Investigation of Vice-President of the European Patent Office

    Željko Topić's troubles in Croatia, where he faces many criminal charges, may soon become an extraordinary burden for the EPO, which distances itself from it all mostly by attacking staff that 'dares' to bring up the subject



  15. [ES] Interrumpiendo la Propagánda Distractante de Battistelli: los Empleados de la EPO Protestará de Nuevo en una Quincena

    La exágerada extravagancia (desperdicio de dinero) en la Ceremonia de Premiación al Inventor Europeo de la EPO tendrá que competir por atención de los medios con miles de empleados de la EPO (en todaslas sedes de la EPO) marchándo en las calles para protestar por los abusos de la EPO



  16. Windows and Microsoft's Other 'Burning Platforms'

    It's not just Windows for phones that's reaching minuscule market share levels but also Windows, but Microsoft is skilled at hiding this (cannibalising Windows using something people do not even want, then counting that cannibal, Vista 10)



  17. Links 24/5/2016: CRYENGINE Source Code is Out on GitHub, Jono Bacon Leaves GitHub

    Links for the day



  18. Links 23/5/2016: GNOME 3.22, Calculate Linux 15.17

    Links for the day



  19. 'Celebrity' Patent Trolls and the Elusive Battle Against Patent Trolls (or Eastern District of Texas Courts) Rather Than Software Patents

    Some of last week's more important reports, which serve to demonstrate how the system is attempting to tackle a side-effect of software patents rather than the patents themselves (their irrational scope)



  20. The Circus of Patent 'Reporting' (by Omission) on the Subject of Software Patents in the US and USPTO Bias

    look at some of the latest oddities in the US patent system and much of the reporting about software patenting (more or less monopolised by those who profit from it, not harmed by it)



  21. IP3 Demonstrates That Today's Patent Systems Devolve Into a Conglomerates' Game, Won't Protect the Mythical Small Inventor

    Multinational corporations bring together their shared interests and steer the increasingly-inseparable patent systems according to their needs and goals, but has anyone even noticed?



  22. Disrupting Battistelli's Distracting Propaganda: EPO Staff to Protest Again in About a Fortnight

    The overly extravagant (waste of money) EPO European Inventor Award will have to compete for media attention with thousands of EPO staff (in all EPO sites) marching in the streets to protest against the EPO's abuses



  23. Corrupting Democracy? Growing Frequency of Rumours That the EPO's President Battistelli is 'Buying' Votes of Small Member States

    Several sources suggest that rather than appease the Administrative Council by taking corrective action Battistelli and his notorious 'circle' now work hard to remove opposition from the Administrative Council, especially where this is easier a task to accomplish (politically or economically)



  24. [ES] Los Mitos de la EPO ‘Calidad’ de Patentes y de ‘Creación’ de Patentes: Basados en Ventas de Cafe y Trauma

    La carrera hacia el fondo, o la ridícula asumpción de Battistelli de que otorgar más y más patentenes más rápidamente (e.g. usando PACE) sería beneficióso a largo término, puede guíar al final colapse del valor de la EPO y la pérdida de su lárgamente ganada reputación a nivel mundial



  25. Links 22/5/2016: Systemd 230, Debian Installer Alpha 6

    Links for the day



  26. EPO Patent 'Quality' and 'Patent Creation' Myth: Capsule-Based Coffee Sales and Trauma

    The race to the bottom, or Battistelli's ludicrous assumption that granting more and more patents faster (e.g. using PACE) would be beneficial in the long run, may lead to the ultimate collapse of the EPO's value and demise of its long-earned reputation worldwide



  27. Guest Post: How Vista 10 Imposes Itself on Users of Windows

    A reader's experience being nagged by Microsoft, as documented and explained by this reader



  28. [ES] El Notorio Tirano de la EPO, Benoît Battistelli, Se Reune Con Otros Tiranos, Reportes de Que ‘Limpia’ el Consejo Administrativo

    El régimen de Battistelli, talvez la fuente de verguénza más grande, alegadamente está “cortejándo países pequeños/corruptos para asegurárse de que los delegados que votarón contra él serán remplazados”



  29. [ES] Comentadores Anónimos Debaten Si la EPO de Battistelli Puede Revocar las Pensiones de Empleados Que Se Atreveen — GASP — a Buscar Empleo Alternativo

    Una mirada a las causas de desesperación e imensa presión en la EPO, donde las pensiónes pueden ser cortadas como medio de represália y la gente puede ser negada empleo aún después de dejar la Oficina Europea de Patentes (EPO)



  30. [ES] Otra Casi Vacía Presentación de la EPO en La Hague

    El propagandístico “estudio social” de Battistelli (básicamente un montón de engañosas afirmacionesdisfrazadas como ‘investigación’) ayuda a demostrar que los empleados de la EPO no tiene absolutamente fe en la gerencia


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