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

07.25.10

Microsoft Kickbacks and Pressures on Dell: Lessons From Intel

Posted in Dell, GNU/Linux, Hardware, Microsoft, Windows at 1:10 pm by Dr. Roy Schestowitz

“We should whack them [Dell over GNU/Linux dealings], we should make sure they understand our value.”

Paul Flessner, Microsoft

Summary: The commonalities between GNU/Linux and AMD are explained in the context of Dell

DELL received a lot of flak and public backlash recently, mostly because of its fair/unfair description of Ubuntu GNU/Linux, especially when it comes to security. Pressure from Microsoft was a possibility [1, 2] and Dell became the focus of attention for reasons it did not crave. More recently, Dell was again accused of a “Confusing Take” (regarding Windows vs. Ubuntu) over at Tom’s Hardware and yesterday a storm started/volcano erupted in Slashdot, which linked to this British article. The headline says “Dell drops Ubuntu PCs from [UK] website… for now” and Glyn Moody wrote: “you mean *again*? can’t they make their mind up?”

We only alluded to this news yesterday when we wrote about Intel's crimes with Dell. We did not mention this immediately because we waited for more clarifications and commentary. Here is how GreyGeek put it (he gave us permission to quote in full):

DELL stops listing Ubuntu computers in the UK

http://www.pcpro.co.uk/news/359740/dell-drops-ubuntu-pcs-from-website-for-now

Dell has stopped selling consumer PCs preloaded with Ubuntu from its website, and doesn’t know when they’re coming back.

A search for Ubuntu on the Dell UK website returns only one laptop – the Dell Latitude 2100 from the company’s business range.

The Dell spokesperson also suggested Ubuntu is failing to win over the public. “The reason why they’re not on our main pages is because Ubuntu systems are primarily targeted towards advanced users and enthusiasts, and the vast majority of consumers purchase PCs with Microsoft Windows pre-installed,” the Dell spokesperson claimed.

One reason why consumers might not be snapping up Linux-based systems is that Dell’s own advice page warns anyone other than open-source developers to stick with Windows.

In checking perhaps I’ve found a web page that Dell missed?
http://www1.euro.dell.com/uk/en/business/4x_latit_2100/fs.aspx?refid=4x_latit_2100&s=bsd&cs=ukbsdt1
Clicking on the “Customize” button I find that the Ubuntu 9.04 offering is surrounded with a graphic PUSHING Windows 7.   It doesn’t matter.  The other DELL Ubuntu offerings are:
http://www.dell.com/content/topics/segtopic.aspx/ubuntu?c=us&cs=19&l=en&s=dhs&~ck=anavml
Mini 10n
Inspiron 15n  (no webcam!)
Vostro V13 (no webcam!)
Latitude 2100 (no webcam!)

What a measly selection.    With “friends” like DELL Linux needs no enemies.

DELL’s entire Linux effort for the last three years has been, IMO, one big gigantic FRAUD, with the intent to offer Ubuntu pre-installed on a few marginal boxes without significant customization available and for only one reason: so that Microsoft can avoid charges that it holds an illegal monopoly on the PC OEM desktop.  Which it does.

The only question remaining is: “What are the advantages to DELL for allowing itself to be controlled as if it were a wholly owned subsidiary of Microsoft?

Well, we have one answer to that question already.  Just yesterday (7/23) we learned that DELL corporate has agreed to pay a $100 Million fine, and Dell personally has agreed to pay $4 Million.  Two of his lieutenants have agreed to pay $4M and $3M each.   And what did the SEC fine them for?  

They failed to disclose material information to investors and used fraudulent accounting to make it falsely appear that the company was consistently meeting Wall Street earnings targets.

If THAT is a crime then Microsoft is guilty as well. That’s how they got to the top of the pile they are setting on today.    What DELL actually did was take payoffs from Intel to not use AMD chips.

The SEC charged that Dell did not disclose to investors large “exclusivity payments” the company received from Intel Corporation to not use central processing units (CPUs) manufactured by Intel’s main rival, Advanced Micro Devices Inc. (AMD).

“It was these payments rather than the company’s management and operations that allowed Dell to meet its earnings targets,” the SEC said.  “After Intel cut these payments, Dell again misled investors by not disclosing the true reason behind the company’s decreased profitability.”

The SEC’s complaint charged that the exclusivity payments made by Intel to Dell for not using CPUs made by AMD grew from 10 percent of Dell’s operating income in fiscal year 2003 to 38 percent in fiscal year 2006.  It peaked at 76 percent in the first quarter of FY 2007.

In fiscal year 2007, after Dell announced its intention to begin using CPUs made by AMD, the company and the individuals charged failed to disclose the basis for the company’s sharp drop in its operating results.  “In dollar terms, the reduction in Intel exclusivity payments was equivalent to 75 percent of the decline in Dell’s operating income” the SEC said, and Messrs. Dell, Rollins, and Schneider told investors in an earnings call “that the sharp drop in the company’s operating results was attributable to Dell pricing too aggressively in the face of slowing demand and to component costs declining less than expected.”

Intel is the subject of antitrust lawsuits brought by the Federal Trade Commission and several states.  In November 2009, Intel agreed to pay AMD $1.25 billion as part of a settlement in a private antitrust suit brought by AMD.

This reveals the injustice in prosecuting corporate white collar crime: that Dell and the other people involved at both companies did not face CRIMINAL prosecution and didn’t even have to admit guilt, even though there was enough evidence to force them to pay hundreds of millions in fines, which amounted to about 10% of their annual net profit.  Perhaps if Dell and the Intel management and major share holders had to spend some hard time in jail they wouldn’t be so willing to flaunt the law for obscene profits.  It’s like a hand-slap and defacto approval of their behavior.

DELL’s behavior with Intel suggests that DELL is staying afloat, despite the poor quality of their machines and their high return rates, because Microsoft is paying them to NOT include Ubuntu on their desktops in a significant way, including not giving Ubuntu front page representation.  It also raises questions about the other PC OEMs who won’t free up their desktop for competition against Microsoft.

How Microsoft got to the top of their pile of cash is shown specifically here:
 http://www.billparish.com/msftfraudfacts.html

Financial Pyramid Building Techniques Being Used by Microsoft:

Stock option programs are an excellent benefit and many companies use them responsibly. At Microsoft, however, stock option accounting is only one of its many pyramid building techniques, what could be called a cash generating component. Additional pyramid building techniques include the following.  It is important to note that the genius of the pyramid scheme is to leverage share growth from investors using a passive investment approach based upon indexing to the S&P 500.  Most smaller and mid size technology firms are not in the S&P 500 and therefore are locked out of this key aspect of the pyramid from the beginning.

1) Earnings Management: The first and most important tool Microsoft uses is the manipulation of earnings to ensure analysts’ expectations are met.  According to an ABC News 1/22/99 article by Michael Martinez, Microsoft’s own internal auditor, a respected 30 year veteran and former partner of Deloitte and Touche, was fired in 1996 after informing management that their earnings manipulations were illegal and violations of the SEC and FASB laws.  He was given the option to resign or be fired and later settled for $4 million after suing under the Federal Whistle Blowers Act.
2) Speculating on Their Own Stock:
3) Convincing Employees to Take Less Real Wages:
4) Publicly touting the stock
5) Controlling the media.
6)  Stock Option Accounting: (You really have to read this one.  It explains how Microsoft used YOUR tax money to pay for developing Win95!
7) Purchasing future sales via equity investments:
8 ) Managing the financial analyst community.
9)  Trying to Discredit Those Seeking to Expose the Scheme:
10)  Money Laundering:
11)  Corruption of Higher Education:
12)  Manipulating Investors Who Use a Passive Approach Relying on Indexes Such as the S&P 500.

Several Impacts from Microsoft’s Financial Pyramid Scheme Include the Following:

This scheme led by Microsoft is having many unexpected impacts, a few of which are noted here.  The upcoming book will  detail additional impacts and also explain how this situation affects a variety of people in different occupations.

1)  Government Will Be Defunded.
2)  The Retirement System Is Being Plundered.
3)  Business Owners Are Exposing Their Personal Assets By Not Paying Enough Attention To Their 401K
4)  The Dollar Is Being Devalued In Relation to the Yen.
5)  False Inflation is Emerging.
6)  The Integrity Of The Markets Is Being Destroyed
7)  The Fraud Is Accelerating
8 )  Microsoft auditor, Deloitte and Touche, issued a “clean” audit opinion. (The auditor for  Deloitte and Touche who originally did the work reported several of the problems mentioned above and was fired and his character impuned publically.  He sued and won almost $5M in damages.
10) Significant one day stock value declines at major corporations that pay more in cash wages than stock options are accelerating.
11)  Microsoft organized a lobbying effort to defund the Department of Justice, using supposedly non-partisan groups like the Citizens for a Sound Economy.
12)  Conversions to cash balance pension plans are increasing.  

>The State Gov agency where I worked switched to “Cash Balance” a couple years before I retired.  I had the option to not switch.  

This is another pyramid impact. What IBM employees still don’t seem to realize is that their lost pension benefits are resulting from fraud at Microsoft.  Microsoft is pilfering these cash balance plans into its pyramid scheme by overstating its earnings, thereby drawing a larger percent of the index based investment on the S&P 500 and correspondingly making it more difficult for companies like IBM to compete.  This forces these companies to cut back on real benefits in an effort to keep its earnings and stock price up.  This was also clearly identified in the original study.

These are some interesting thoughts on Dell, GNU/Linux, Intel, and Microsoft. Connected to this news (via Slashdot) we have reports from The Economist and from the Financial Times.

Intel seems close to putting behind it a decade of market abuse complaints from round the world in a settlement with the US Federal Trade Commission this week.

The deal will include concessions on the US chipmaker’s business practices, according to a person familiar with the settlement, but will not include fines because the FTC does not have the authority to issue civil penalties.

[...]

It also alleged Intel secretly redesigned key software to stunt the performance of rivals’ chips that were licensing its “x86” microprocessor design.

But, in addition, the FTC alleged that Intel was repeating in GPUs its tactic of slowing down competitors, such as graphics chipmaker Nvidia, so that it could catch up.

As we summarised this yesterday, Microsoft, Intel, and Dell are exceptionally corrupt and it pays off for them.

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

7 Comments

  1. williami said,

    July 25, 2010 at 5:17 pm

    Gravatar

    This is why I build my own Linux PCs… I have full control over what I want and don’t want on my computers, and I don’t have to pay the M$ tax.

  2. twitter said,

    July 25, 2010 at 11:16 pm

    Gravatar

    It’s incredible how much it costs to maintain the Wintel monopoly, and the whole thing is indeed a massive fraud. According to The Economist, Dell would have missed their earnings projections every year between 2002 and 2006 if it had not been for Intel’s anti-competitive exclusivity payments. This means that XP was an economic failure for Dell. I’ve known for years that resistance to new Microsoft operating systems was tremendous but even I’m shocked to learn what a huge failure XP really was. Vista and Windows 7 are even larger failures, as we can see by the nearly 80% portion of Dell’s revenues Intel’s kickbacks made. If the biggest, most favored vendors can’t make money off Microsoft who can? The entire Windows industry has been a fraud for at least a decade. It is incredible that so many pension funds were conned into purchasing Microsoft shares. That money won’t come back as Microsoft’s collapse becomes more obvious each day.

    Dr. Roy Schestowitz Reply:

    What’s shocking here is that Intel and Dell got only a slap on the wrist and they can carry on. It shows that crime pays off.

    Amicus_Curious Reply:

    Dell’s deal with Intel consists essentially of a price discount on Intel parts based on an exclusivity agreement. You can frame this as some dark malevolence, but in reality it is just a discount for a favored customer. Microsoft did essentially the same thing with its OEMs. The practice was deemed legal by the courts in the first USA vs Microsoft trial at the district level since it did not block competitors from more than 40% of the available market. In the settlement, Microsoft agreed to an open price list, which blocked this practice, although they were allowed to compensate partners for co-marketing costs such as where Dell might advertise “Designed for Windows 7″ or “Dell reccommends Windows 7″.

    Dell is in trouble with the SEC because they did not accurately describe this arrangement, claiming their cost efficiency was due to superior management overall rather than to a simple agreement.

    Other than a similarity of pricing, though, the Intel arrangment speaks nothing of XP, Vista, or Windows 7.

  3. gnufreex said,

    July 26, 2010 at 11:56 am

    Gravatar

    What is even more frightening, we are looking at MicroARM trouble ahead. http://www.informationweek.com/news/hardware/processors/showArticle.jhtml?articleID=226200195&subSection=All+Stories

    I can’t get why Microsoft need ARM license… other than to make incompatible ARM designs which use some of ARM patents and which would be disabled to run GNU/Linux. Then they could license those to everyone, and only support those with their Windoze shun those which run GNU/Linux. With little kickbacks and distorting reality, every MFR (manufacturer, or madafucker) will start claiming that there is no market for “old” ARMs that run non-Microsoft OSs.

    Crime pays off.

    Agent_Smith Reply:

    I don’t think ARM will fall in these M$ tactics. ARM’s market is huge, because it’s non x86, it’s fast, low power consumption . M$, despite a big share in the desktops, with the Wintel architecture, it’s not a big contender in ARM’s arena. It’s not even a contender. If ARM keeps doing what it has ever been doing, they’ll keep doing fine. If they fall for M$’s schmoozing, they’ll lose market. And, ARM is English. I don’t think brits want to loose their dominance on the RISC market.

    Dr. Roy Schestowitz Reply:

    Don’t forget that Windows programs are only compiled for x86 (except very few). It’s the programs that help Microsoft’s inertia.

What Else is New


  1. Two Things IBM and Microsoft Have in Common: Layoffs and Fake Hype Like 'Clown Computing' and 'Hey Hi' (AI) as Perceived 'Opportunity' for 'Growth'

    The infamous pair of monopolists, Microsoft and IBM, are both suffering during the COVID-19 lock-downs (no matter how hard they try to spin it and/or distract from it)



  2. IBM (Red Hat) Lectured FSF That It Needed More Diversity, But Was It Looking at the Mirror? IBM and Red Hat Are Even Less Diverse.

    Techrights examines Red Hat’s (IBM’s) hypocritical claims about the Free Software Foundation, founded by Richard Stallman back when IBM was the “big scary monopolist”; IBM employees were prominent among those pushing to oust Stallman from the GNU Project, which he founded, as well



  3. IRC Proceedings: Friday, June 05, 2020

    IRC logs for Friday, June 05, 2020



  4. Guix Petition Demographic Data, by Figosdev

    That old anti-RMS letter, which called for his removal (or resignation) from GNU (RMS is the founder of the GNU Project), as characterised by metadata of signatories



  5. When You Realise People Who Don't Support RMS Do Not Really Support GNU, Either

    The (in)famous letter against Richard Stallman (RMS), which was signed by many Red Hat employees with Microsoft (GitHub) accounts, doesn’t look particularly good in light of recent revelations/findings; it increasingly looks like IBM simply wants Microsoft-hosted and “permissively” licensed stuff, just like another project it announced yesterday and another that it promoted yesterday



  6. The Gates Press (GatesGate) -- Part III: What Happens When You Tell the Truth About Bill Gates and the Gates Foundation

    One might not expect this from a so-called 'charity'; the Gates Foundation's critics are often met with unprecedented aggression, threats and retribution, which make one wonder if it's really a charity or a greedy cult of personalities (Bill and Melinda)



  7. Links 6/6/2020: Bifrost Meets GNOME, Wine 5.10 is Out

    Links for the day



  8. Links 5/6/2020: LibreELEC (Leia) 9.2.3, Rust 1.44.0, and Hamburg's Pivot to Free/Libre Software

    Links for the day



  9. This Article About GitHub Takeover Never Appeared (Likely Spiked by Microsoft and Its Friends Inside the Media)

    And later they wonder why people distrust so much of the media (where paying advertisers set the agenda/tone)



  10. Raw: How Microsoft and/or the EPO Killed an Important EPO Story About Their SLAPP Against Techrights and Others

    Spiking a story about spiked stories about corruption



  11. The Linux Foundation 'Bootcamp' -- Badly Timed and Badly Named in June 2020 -- Only Uses Linus Torvalds Like a 'Prop' (for Legitimacy) While Promoting Militarised Monopolies

    Sometimes a picture says a lot more than words, especially in light of political events in the US and a certain Chinese anniversary we cannot name (Microsoft censors mentions of it)



  12. IRC Proceedings: Thursday, June 04, 2020

    IRC logs for Thursday, June 04, 2020



  13. The Gates Press (GatesGate) -- Part II: When Media That You Bribe Calls All Your Critics 'Conspiracy Theorists' (to Keep Them Silenced, Marginalised)

    The assault on the media by Bill Gates is a subject not often explored by the media (maybe because a lot of it is already bribed by him); but we're beginning to gather new and important evidence that explains how critics are muzzled (even fired) and critical pieces spiked, never to see the light of day anywhere



  14. GitHub is Not Sharing But 'Theft' by Microsoft

    Microsoft buying GitHub does not demonstrate that Microsoft loves Open Source (GitHub is not Open Source and may never be) but that it loves monopoly and coercion (what GitHub is all about and why it must be rejected)



  15. The Huge Damage (Except for Patent Lawyers' Bottom Line) Caused by Fake European Patents

    The European Patent Office (EPO) keeps granting fake patents that cause a lot of real harm (examiners are pressured to play along and participate in this unlawful agenda); nobody is happy except those who profit from needless, frivolous lawsuits



  16. Red Hat/IBM Got 'Tired' of RMS. Is It Getting 'Tired' of GPL/Copyleft Too?

    After contributing to the cancellation of Richard Stallman (RMS) based on some falsehoods perpetuated in the media we're seeing the sort of thing one might expect from IBM (more so now that it totally controls Fedora and RHEL)



  17. Links 4/6/2020: Proton 5.0-8 Release Candidate, GNU Linux-libre 5.7

    Links for the day



  18. IRC Proceedings: Wednesday, June 03, 2020

    IRC logs for Wednesday, June 03, 2020



  19. Social Engineering of Free Software, Based on Corporate Criteria

    What "professional" nowadays means in the context of coding and honest assessment of technical work



  20. Weakening GNU/Linux by Disempowering Its Leaders and Founders, Replacing Them With Microsoft Employees and GNU/Linux-Hostile Moles

    The coup to remove (or remove power from) Stallman and Torvalds, the GNU and Linux founders respectively, is followed by outsourcing of their work to Microsoft’s newly-acquired monopoly (GitHub) and appointment of Microsoft workers or Microsoft-friendly people, shoehorning them into top roles under the disingenuous guise of "professionalism"



  21. Sword Group Violates Its Own Commitment by Working for the EPO

    The European Patent Office (EPO) keeps outsourcing its work to outside contractors (for-profit private entities) to the tune of hundreds of millions if not billions — all this without any oversight



  22. In 2020 Canonical No Longer Fights for Freedom

    Freedom requires a GNU/Linux distro other than Ubuntu, which seems unwilling or unable/incapable of speaking about and promoting the ideals of GNU/Linux



  23. We Need to Use the F Word (Freedom) to Promote Adoption of GNU/Linux

    "People get the government their behavior deserves. People deserve better than that." -Richard Stallman



  24. People Who Want to Explore GNU/Linux With Ubuntu See This Today

    "Wait, am I in a GNU/Linux blog or another Windows blog," a visitor might think... or, is Microsoft 'taking over' messaging at Canonical? (Same with code)



  25. Links 4/6/2020: Septor 2020.3, Nextcloud and Blender 2.83

    Links for the day



  26. Hey, Where's Red Hat (IBM)?

    Red Hat is conspicuously silent at these critical times (in its home country); Must be too busy hailing and cashing in on Trump's military (state) while dishing out shallow and self-contradictory diversity PR/fluff…



  27. Microsoft's Latest Vapourware About Supercomputers

    Microsoft has spent almost two decades dropping supercomputers vapourware on the media, but those misinformation dumps always turn out to be 100% hot air, no substance



  28. 2020: A Time for Resolutions or Revolutions?

    There are nonviolent means by which the current system can be corrected; we need to convince peers and relatives to change the way they behave and not cooperate with unjust elements of the system



  29. IRC Proceedings: Tuesday, June 02, 2020

    IRC logs for Tuesday, June 02, 2020



  30. The Gates Press (GatesGate) -- Part I: Lost the Job After Writing an Article Critical of Bill Gates for Attacking Some Actual, Legitimate Charities (Because They Had Spread GNU/Linux)

    The sociopaths from the fake 'charity' of Bill Gates would go to great lengths to squash criticism and also to eliminate critics; this series tells the story of some of those personally affected


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

Recent Posts