Bonum Certa Men Certa

Microsoft's Internal Presentation on How to Fight GNU/Linux

Success and failure
Talking points galore



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



Today we shall look at Exhibit px08792 (re: EDGI, MGB 2002) [PDF]. This hardcopy document was scanned and tagged at least once again as another exhibit (possibly twice). In some cases, there is a minuscule difference, such as a reaction from somebody. When the reaction is from Gates, Ballmer, Allchin, Sinofsky etc. it's worthwhile having the second version.

“When the reaction is from Gates, Ballmer, Allchin, Sinofsky etc. it's worthwhile having the second version.”This exhibit contains a draft presentation ("need a slide" placeholders and empty summary at end) for the July 16-22, 2002 MGB (Microsoft Global Briefing) meeting in New Orleans (15,000 Microsoft employees + selected partners/contractors, no journalists) explaining how to combat GNU/Linux in government. Note multiple references to "http://linux" intranet. See page 13 which identifies EDGI "owner" (Microsoft-speak for whoever drives a project, initiative, or response) as Driftmier. Specific examples of successful actions in countries are referred to. Also, page 12 communicates concerning the IDC TCO study. We'll come to that soon (we have dozens of 'smoking guns' in the pipeline).

Let's go through it one step at the time, leaving minor stuff to the appendix where it can be read in full.

Top item in the agenda is "Selling Against Linux - Implementing on the Basics." It also targets StarOffice, by name.

There are some "talking point"-type slides, concerns about Samba, and a call to "Escalate to CompHot alias" as part of the "Field Competitive Strategy". We wrote about CompHot before. CompHot is a code name for something that, according to Microsoft, fights the "Linux infestation".

This is mentioned towards the end of this presentation:

Crisis Management



Escalation Programs



-Overview: There are three main escalation paths in Redmond    -Product: comphot alias    -Legislative & Regulatory: Davidkae -Crisis tools:    -Peter -anything to point to on http://linux?    -Q&A With GM’s faced with legislative challenges -Subsidiary Action: Ensure one person on teamis member of ’gosdft’ and '___’ aliases

MS-CC-Sun 000000071061 HIGHLY CONFIDENTIAL



Interestingly enough, it also states "Growing interest around Linux and Free Software" (not open source). They might refer to gratis software though, not libre.

In slide/page 12 we find:

Fiscal Responsibility



Global TCO Study



- Overview: IDC interviewed 100 customers, modeled data, and found that Windows and Linux have roughly comparable TCO:    > Web serving: Windows is 6% higher TCO over 5 years    > File serving: Windows 13% lower TCO over 5 years    > Print serving: Print 19% lower TCO over 5 years    > Networking: 11% lower TCO over 5 years    > Security servers: 34% lower TCO over 5 years - What it does: Removes myth of lower TCO as an argument to purchase Linux - Where to learn more: http:!!linux, TCO - Subsidiary action: learn to use TCO metrics credibly.. Then turn conversation to benefits of Win2K Server.

I would recommend that TCO be presented in the following manner:

1. Teach rep not to lead with TCO but to use it to counter assertions that Linux is free, or at least cheaper than Microsoft. The best thing for a rep to say is that we have "roughly comparable TCO." Then to turn the conversation to the technological advantages of Windows over Linux, plus the organizational advantages. 2. For sales rep to be able to describe our TCO metrics effectively, here’s a short summary.

To delve into the true story behind so called "free software," Microsoft commissioned market research vendor IDC to conduct a TCO analysis to quantify the hidden costs of using Linux in the ’real-world ’ The TCO analysis focused on major server workloads where Linux has made inroads in market share:

- Web

- File-print

- Networking-WlNS/DHCP/DNS, RAS, Directory, Cache, Other (router/hub/switch)

- Security- Proxy/Firewall/VPN, Authentication/Access/DRM/Certificates

Where did IDC get the data? IDC interviewed 100 customers over the phone who consider themselves late adopters (i.e.



The rest of that bit about IDC did not get scanned, but we already know that IDC is a vassal to Microsoft and we will show a lot more evidence of this in the future.

"REJ Studies" are mentioned as well. Who or what are REJ?

Regarding security, writes Microsoft:

   Develop a business policy for how we engage       foreign governments in security related technical       discussions and collaboration Agencies visited want to       engage technically; if we do so we can get       mindshare & funding that is or will be applied to Linux



That mentioning of "mindshare" is interesting because Microsoft says [PDF] that "[t]o control mental output you have to control mental input." It continues thusly: "Take control of the channels by which developers receive information, then they can only think about the things you tell them. Thus, you control mindshare!"

We wrote about Memoranda of Understanding (MOUs) several times in the past, e.g. in:



Here is Microsoft itself explaining those MOUs (it's called "Project Marshall"):

Owner: Kaefer

Industry Growth + IT Skills

Project Marshall



- Overview: Negotiate and implement MOU with government,academia and local industry outlining MS local commitment    -IT Economy Blueprint (McKenzie Study + Working Group)    -IT Sector Opportunities (hardware, software & service commitments,    co-marketing, source access, tech co-development, VC funding)    -IT Skills (teacher training, free certification, curriculum development)    -Academic & Research Cooperation (source access, IVlSR partnerships,    research outsourcing)

-What it does: Convinces government academic and industry elite that Microsoft is investing locally and committed to country’s success

-Status: in progress - approval pending - Subsidiary action: Provide feedback to initiative working group on feasibility, benefit, resource needs

Introduce by using China as best practice example

MOU Is something each subsidiary should work towards creating. The MOU Is a structured process thatallows us to develop a meaningful local partnership with industry, government and academia The process of negotiating and leveraging the MOU is as important as the substance.

MOU can contain - Budding and implementing an IT economy blueprint    -McKenzle style economic study    -Formation of MS industry and government working group

-Education and training    -Target both developer and knowledge worker environment    -Money and resources for curnculum development    -Money and resources for teacher training    -Subsidized certification on MS products

-Academic and research cooperation    -Source code access and community

-Product Iocalizahon -Commitment to expand opportunities for local firms    -Hardware manufacturing outsourcing    -Software outsourclng    -Service partnerships    -Financial commitment for VC opportunities    -Co-marketing financial commitment    -Source access for local industry    -Technology co-development



Notice how they subsidise people (teachers and students) getting addicted to Microsoft products as part of these deals.

McKenzle is used to defend them throughout these reports as well. There is also some stuff on "REJ Studies".

Later on they mention lobby groups that are used to achieve these objectives at high levels:

Coalition focus on Initiative for Software Choice    (www.softwarechoice.org)


ISC is a pro-Microsoft lobby group. The .org is supposed to make it seem like something else.

It would be Orwellian to say that Microsoft is in favour of software choice, but it says: "Subsidiary action: Form CLO team and follow RVP budgeting guidelines. Send CLO team to regional workshops in late fall. Support Initiative for Software Choice."

Microsoft tried the "choice" spin amid the OOXML fiasco in Malaysia. Their general manager/head of the region did that.

There is lots of fascinating stuff below, but for the few figures to be viewed, the original PDF is worth using as a reference.




Appendix: Comes vs. Microsoft - exhibit px08792, as text








NS-CC-Sun 0000000710040 HIGHLY CONFIDENTIAL




Winning In Government



Four Challenges and Four Solutions You Can Use Today



realizing potential MDB 2002

MS-CC-Sun 000000071041 HIGHLY CONFIDENTIAL




Agenda



- Selling Against Linux - Implementing on the Basics

- Piecing Together the Government Puzzle     -What Make Governments Different? - Competitive Response Roadmap for Government - Action Items - Discussion

MS-CC-Sun 000000071042 HIGHLY CONFIDENTIAL




Defending the Key Beachheads



[See figure in PDF]

The core of the Windows value proposition is Business Value + Volume

Research and academic includes HPC and Grid computing

MS-CC-Sun 000000071043 HIGHLY CONFIDENTIAL




The Windows Business Case



- Comparable server total cost of ownership; lower desktop TCO

- Delivers greater business advantage

- Easier to use & richer experience

- Much larger partner & ISV ecosystem

- Better accountability to customers

MS-CC-Sun 000000071044 HIGHLY CONFIDENTIAL




The Microsoft Innovation Case



- Need slide that calls out why our solution set is much more compelling and ultimately more interesting

Slide should call out need to have deep understanding of the customer requirement and subsequent development of a vision / scope document to help the customer solve problems or take advantage of opportunities (see the Holland vision scope work)

MS-CC-Sun 000000071045 HIGHLY CONFIDENTIAL




Field Competitive Strategy



-Focus on the business decision maker    -Avoid ’religious’ discussions at all costs -Identify & upgrade Windows NT 4.0 servers -Refuse to lose in the key beachheads    -File Servers: Samba       > $1.2B in annual revenue       > Windows NT Server 4.0 still 64% of installed base     Desktop: Linux + StarOffice       > 65% of MS revenue from Office + Windows -Samba & StarOffice = entry points to the high volume, high business value segment! -Escalate to CompHot alias

MS-CC-Sun 000000071046 HIGHLY CONFIDENTIAL




Piecing Together the Government Puzzle



Today the Four Troubling Things We Hear or See in Government:

-Complaints abut Licensing 6.0

-Complaints that they are "locked in an don't have a choice"

-Lack of trust in our technology and its security/privacy

-Growing interest around Linux and Free Software

Taken Together, Gov’t Wants A Company That Allows Them To:

-Be financially responsible

-Exert control & oversight for IT and its impact

-Protect national security

-Grow a local IT industry and a case of skilled workers

MS-CC-Sun 000000071047 HIGHLY CONFIDENTIAL




[See figure in PDF]

Reasons Government Elites Support OSS and Linux (IGES Qualitative Results, n=670) Commercial So,ware Alternative Build Local IT Industry 5 5 Simple Ucense 4 4 4 ~’~, 6 5 ~;~ 5 7 6 7 5 Hi~h ~uaIi~ 4 5 4 4 ~,.f.~5 5 6 5 4 Stron~ Security 6 7 6 8 4 4 7 8 7 4 4 6 Be~er Standards 7 6 6 6 6 7 5 6 5 7 7 7 MSAIternative (vow) 8 8 8 7 8 8 8 ~ 4 ~8 4 " 7

MS-CC-Sun 000000071048 HIGHLY CONFIDENTIAL




Piecing Together the Government Puzzle



- We have the technology products that government needs but this isn’t enough - Government have different needs than enterprise customers - Government decisions are driven by technology as well as politics - Winning will require a unique toolkit of programs and offerings

MS-CC-Sun 000000071049 HIGHLY CONFIDENTIAL




Competitive Response Roadmap



FY03H1 FY03H2
Fiscal Responsibility Global TCO Study EDGI Country REJ Study
National Security Gov't Security program Crypto Module
Industry Growth + IT Skills Growth and Opportunity Suites Project Marshall
Government Control Community Leaders Outreach Local Advisory Boards


Govt. Engagemment Program (GEP) is more than this, it is about building world class infrastructure ..

Laying out right people INvotong right people Broader engage for infrastructure

MS-CC-Sun 000000071050 HIGHLY CONFIDENTIAL




Owner: Kurman

Fiscal Responsibility



Global TCO Study



- Overview: IDC interviewed 100 customers, modeled data, and found that Windows and Linux have roughly comparable TCO:    > Web serving: Windows is 6% higher TCO over 5 years    > File serving: Windows 13% lower TCO over 5 years    > Print serving: Print 19% lower TCO over 5 years    > Networking: 11% lower TCO over 5 years    > Security servers: 34% lower TCO over 5 years - What it does: Removes myth of lower TCO as an argument to purchase Linux - Where to learn more: http:!!linux, TCO - Subsidiary action: learn to use TCO metrics credibly.. Then turn conversation to benefits of Win2K Server.

I would recommend that TCO be presented in the following manner:

1. Teach rep not to lead with TCO but to use it to counter assertions that Linux is free, or at least cheaper than Microsoft. The best thing for a rep to say is that we have "roughly comparable TCO." Then to turn the conversation to the technological advantages of Windows over Linux, plus the organizational advantages. 2. For sales rep to be able to describe our TCO metrics effectively, here’s a short summary.

To delve into the true story behind so called "free software," Microsoft commissioned market research vendor IDC to conduct a TCO analysis to quantify the hidden costs of using Linux in the ’real-world ’ The TCO analysis focused on major server workloads where Linux has made inroads in market share:

- Web

- File-print

- Networking-WlNS/DHCP/DNS, RAS, Directory, Cache, Other (router/hub/switch)

- Security- Proxy/Firewall/VPN, Authentication/Access/DRM/Certificates

Where did IDC get the data? IDC interviewed 100 customers over the phone who consider themselves late adopters (i.e.

MS-CC-Sun 000000071051 HIGHLY CONFIDENTIAL




Owner: Driftmier

Fiscal Responsibility



Education & Government Incentive Program (EDGI)



- Overview: Revenue adjustment program for new OEM PCs

- What it does: Allows us to compete with naked PCs and Linux PCs on cost    - Can offset cost of Windows through services,    training and/or direct rebates    Use only with approval and for select large    education and government deals - Where to learn more: email: edgihq

Add best practice example of where similar approach worked

What EDGI Is. A tool that supports the MS strategy for winning against low-cost/no-cost competitors in the government and government-driven education space EDGI is a framework for responding to large deals revolving a designated regional team to support the subsidiary using a consistent process This effort will be integrated into the overall sales process and utilize the same tools and processes EDGI is focused on the sale of OEM PC’s Geographically, EDGI is intended for developed and developing subs through there will be a special emphasis on developing subs.

EDGI is not a tool to help win commercial deals It is only a piece of our competitive strategy and is not applicable for small opportunities EDGI funding is limited

With EDGI we will increase our win percentage against the competition, especially in developing economies. We’ll protect our product price points by removing discounts below empowerment guidelines EDGI allows us to pursue incentives in a predictable and controllable way to ensure maximum use of resources We’ll track the use of resources centrally to we understand the tradeoffs we’re making

EDGI Background

In light of recent pressures from Linux and the open source movement in education in Malaysia, Taiwan, Brazil and many others, the Education Solutions Group [EdSG] and windows client group have been developing a plan to give you an additional tool to ensure that we can always match and thereby never lose to Linux in this space. The Education and Government Incentives [EDGI] plan will provide funding in the form of revenue adjustment so that we can Invest in deals that involve customers purchasing OEM PC’s This will enable us to compete with naked PC’s/Linux PC’s by meeting competition and matching prices ff necessary. While this process is being developed and implemented, we need to ensure that we don’t hold-up or lose deals while waiting for this to become available You are empowered to make commitments to return a maximum of the cost of Windows on GEM PC’s to the customer in the form of services, training, and/or direct rebates if necessary to match a lower competing price in order to win a large education and government deal when necessary. Until we get this formalized, account teams should email edgihq and their GM to ensure visibility to any deals that you intend to use this program for The team in Redmond (Dawd Driftmier and Pat Fox) will ensure you get the support you need to execute on this. As soon as we get the details finalized we will update you with all the specifics.

MS-CC-Sun 000000071052 HIGHLY CONFIDENTIAL




Owner: Charania

Fiscal Responsibility



Proactive REJ Studies



- Overview: Localized Rapid Economic Justification studies for 40 subsidiaries in FY03 - What it does: Allows us to go into a govt agency before there is a Linux TCO study    - MS shapes cost/value definition    - Proactively identifies where we are not competitive    - Regional teams of experts conduct the studies - Status: In progress - approval pending - Subsidiary action: GM input requested

Add best practice example of where this worked

Best practice: Belgian Ministry of Finance - see attachment mailed to David for details.

What it does. Allows us to go into a govt agency before there is a Linux TCO study

   MS shapes cost/value definition

   Proactively identifies where we are not competitive

   Regional teams of experts conduct the studies

MS-CC-Sun 000000071053 HIGHLY CONFIDENTIAL




Owner: Neault/Coburn

National Security

Government Security Program



- Overview: New government offering includes:    - Windows source access via secure website for sponsoring agency and contractors    - Redmond residency program to audit build process    - MCS/PSS efforts to support projects - What it does: Increases trust and transparency, removes significant OSS differentiator - Where to learn more: email Davidco - Action: ID technical & business owners for your sub

The government security team in June visited government customers in Korea, PRC, Singapore, Russia, France, and Brazil Met with deputy-minister level people from Defense, Intelligence, and E-Government agencies as well as their key Academic advisors and contractors

Add best practice example of where th~s worked (Saudl)? OVERVIEW: Government Security Program consisting of the following elements    Source Code access, sponsoring other government agencies and contractors       Access through MSDN Code Center Premium       Sponsoring agency manages a smart card bullet system       for maximum 25       Specific projects with 3rd party contractors or       consultants mutually agreed and authored by Microsoft

   Redmond visit to audit build process and discuss their critical projects       10 day visit includes interaction with product group,       visit to build lab, build own CD project,       pursuit and support of specific objectives outlined       in their proposal and product group and       senior management de-brief to share ideas       and capture customer feedback    Separate build lab infrastructure and support provided (building 25?)       Government submits proposal outlining specific goals and       objectives m coming to Redmond prior to arrival

   MCS/PSS support where required to support their projects       Create forcing function In agreement that leads governments and subs to allocate       necessary resources In order to be successful with related projects

   Feedback on security-related issues and development kits       Provide clear process for Iogging and following up on security bugs          reported as a result of source code review       Create process to capture feedback to be used to identify development          kit improvements Additional security-related documentation as below       Improve PAG, planning and operations guides, document          security-related deltas from version to version releases       Communicate technical reasons for the things we do       Answer why we do the things we do from a bigger picture          policy and architectural perspective

   Develop a business policy for how we engage       foreign governments in security related technical       discussions and collaboration Agencies visited want to       engage technically; if we do so we can get       mindshare & funding that is or will be applied to Linux

Staff 2 hub-spokes systems (Redmond - subsidiary/region) for government-centric security efforts (i) business approach & engagement/market development, (ii) technology/product design & collaboration Est ~15 heads worldwide (including MCS) some staff already in subsidiaries Must do efforts include

MS-CC-Sun 000000071054 HIGHLY CONFIDENTIAL




Owner: Matt Tomlinson

National Security

Government Security Program Training



- What:    -Policy, strategy, tactics, technology, tools -When:    -Sept 9-10, Bldg 33/Baker, Redmond -Who:    -Govt BizDev exec (or LCA) from subsidiary    -MCS/TS/TAM with infrastructure security    knowledge/responsibility from sub or region How:    -mailto:rebstern (Becky Sternberg) to register

MS-CC-Sun 000000071055 HIGHLY CONFIDENTIAL




Owner: Matt Tomlinson

National Security

Pluggable Cryptographic Modules



- Overview: Technology solution that allows substitution of MS standard crypto module with module built by government or other third party entity.

- What it does: Increases trust and transparency. Removes significant OSS differentiator.

- Status: in progress - approval pending - Subsidiary action: ?

MS-CC-Sun 000000071056 HIGHLY CONFIDENTIAL




Owner: Kaefer

Industry Growth + IT Skills

Growth & Opportunity Suite



-Overview: Suite of information including:    -IDC study looking at IT economies in 29 countries    -Overview of Microsoft partner model    -Government best practices for building local industry

-What it does: Basis for beginning discussion with government about building strong local IT industry -Where to learn more: email davidkae or go to http://Icaweb/WSG/CLO/Tools/Opportunities -Subsidiary action: Identify sub champion for this subject and engage with government leaders

MS-CC-Sun 000000071057 HIGHLY CONFIDENTIAL




Owner: Kaefer

Industry Growth + IT Skills

Project Marshall



- Overview: Negotiate and implement MOU with government,academia and local industry outlining MS local commitment    -IT Economy Blueprint (McKenzie Study + Working Group)    -IT Sector Opportunities (hardware, software & service commitments,    co-marketing, source access, tech co-development, VC funding)    -IT Skills (teacher training, free certification, curriculum development)    -Academic & Research Cooperation (source access, IVlSR partnerships,    research outsourcing)

-What it does: Convinces government academic and industry elite that Microsoft is investing locally and committed to country’s success

-Status: in progress - approval pending - Subsidiary action: Provide feedback to initiative working group on feasibility, benefit, resource needs

Introduce by using China as best practice example

MOU Is something each subsidiary should work towards creating. The MOU Is a structured process thatallows us to develop a meaningful local partnership with industry, government and academia The process of negotiating and leveraging the MOU is as important as the substance.

MOU can contain - Budding and implementing an IT economy blueprint    -McKenzle style economic study    -Formation of MS industry and government working group

-Education and training    -Target both developer and knowledge worker environment    -Money and resources for curnculum development    -Money and resources for teacher training    -Subsidized certification on MS products

-Academic and research cooperation    -Source code access and community

-Product Iocalizahon -Commitment to expand opportunities for local firms    -Hardware manufacturing outsourcing    -Software outsourclng    -Service partnerships    -Financial commitment for VC opportunities    -Co-marketing financial commitment    -Source access for local industry    -Technology co-development

MS-CC-Sun 000000071058 HIGHLY CONFIDENTIAL




Owner: Kaefer

Government Control



Community Leaders Outreach



-Overview: Government targeted image building initiative    -Key theme is realizing potential. Corp delivers tools around digital    decade, responsible leader and trustworthy computing    -Infrastructure encourages GM involvement    -Coalition focus on Initiative for Software Choice    (www.softwarechoice.org) -What it does: Allows Microsoft to engage proactively in public policy discussions about IT and its impact on local society and industry. -Where to learn more: http://Icaweb/w_sg/clo -Subsidiary action: Form CLO team and follow RVP budgeting guidelines. Send CLO team to regional workshops in late fall. Support Initiative for Software Choice.

MS-CC-Sun 000000071059 HIGHLY CONFIDENTIAL




Owner: Kaefer

Government Control

Local Advisory Boards



-Overview: Group of current or former government officials that provide advice and guidance that is used as feedback loop for product design and business decisions    -Boards include senior Microsoft executives at regional level and from Redmond    -Five largest subsidiaries have country advisory boards    -Three+ regional advisory boards -What it does: Demonstrates Microsoft’s commitment to listen to government input and use that input to shape product and business decisions. -Status: in progress - approval pending -Subsidiary action: GM feedback requested on the likelyvalue of the idea and guidance on possible roadblocks

MS-CC-Sun 000000071060 HIGHLY CONFIDENTIAL




Crisis Management



Escalation Programs



-Overview: There are three main escalation paths in Redmond    -Product: comphot alias    -Legislative & Regulatory: Davidkae -Crisis tools:    -Peter -anything to point to on http://linux?    -Q&A With GM’s faced with legislative challenges -Subsidiary Action: Ensure one person on teamis member of ’gosdft’ and '___’ aliases

MS-CC-Sun 000000071061 HIGHLY CONFIDENTIAL




Summary of Recommended Actions



- X - X - X - X - X - X

MS-CC-Sun 000000071062 HIGHLY CONFIDENTIAL




Discussion Time



MS-CC-Sun 000000071063 HIGHLY CONFIDENTIAL




Microsoft



realizing potential MDB 2002

MS-CC-Sun 000000071064 HIGHLY CONFIDENTIAL


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