Bonum Certa Men Certa

Antitrust: How Microsoft Came up with Windows Bundling

Summary: A journey back in time shows Microsoft's explanation of bundling

TODAY we take a look at some more fascinating Comes vs Microsoft exhibits. The first item, Exhibit PX00982 (1991) [PDF], shows how Microsoft was scheming to bundle with OEMs in order to block competition. That was almost 2 decades ago. Microsoft later compared OEMs to its "delivery people".



One of Microsoft's most predatory people, Brad Silverberg [1, 2], suggests giving Windows for 'free' (bundling) and then sell it separately for an extortionate price. The same scheme continues to this date in order to artificially elevate the perceived value of Windows and virtually force people to buy Windows along with any computer.

>From: bradsi Sat Sep 28 10:56:44 1991 To: joachimk peterbre steveb Cc: alean jeffl janre markbu richardb richardf ronh teresach Subject: Re: Compaq Windows status

Date: Mon Sep 30 10:30:02 PDT 1991

you're saying that when someone buys compaq dos for $99, they also get windows for free. but if you want windows alone, it cost you $150.

and compaq wants windows for free.

am I missing something why this is good for us?

don't forget that today, retail is still 61% of windows revenue.



Joachim Kempin, who is also known for his predatory behaviour (see this for example), replies as follows:

From: joachimk Mon Sep 30 10:53:23 1991 To: bradsi Subject: Re: Compaq Windows status Date: Mon Sep 30 10:30:02 PDT 1991

Do not see this as a price issue. They will pay. Remember IBM did not pay for DOS, but see what happened? See the strategic value: It will have lots of followers-OS1 can't compete for now. IBM can only pitch OS/2 against it, but who wants this. The industry will rally even more around it and use it in every account against IBM. Money: for six month thereafter no or very low impact. Next year we plan for it. Whereby WIN becomes over time -may be earlier than expected -a 90% OEM product. Count Your profit, not the revenue.



One reader of ours explains that "this is important because it demonstrates that the prime reason for Microsoft bundling was to kill DR-DOS. They had to come up with the techno-waffle later on." This is a reference to excuses like, "people can't install it themselves" or "people love Windows because many people use it."

The next exhibit, Exhibit PX00980 (1991) [PDF], was sent to Brad Silverberg and Joachim Kempin. It reveals what Microsoft had in mind when it conceptualised bundling.

On 9/25 Mark and I met with Clark and Alan. Among other issues that Mike brought up, he came up with an alternative way for Compaq to bundle Windows. On 9/26 we had a meeting with their Windows team.

[...]

Mike's alternative way of bundling Windows would be that Compaq bundles Windows with MS-DOS. There would not be a seperate DOS SKU; there would not be any choice. When somebody buys the Compaq DOS product he gets Windows with it.

[...]

Compaq issues with bundle/preinstall that are addressed

1. The manufacturing preinstall problem 2. The updating of Windows when it is on the hard disk 3. Allows the end user the choice of installing Windows and allowing custom configuration of Windows according to specific requirements. 4. Simplify their localization issues. 5. Reduce cost - will not lose dos revenue with a preinstall and offset the cost of Windows by charging for it. 6. Still allowing the end user the choice to buy other operating systems for his system; not burden the end user with either the implicit cost of Windows or having to deinstall Windows and DOS. 7. It provides Compaq with a perceived leadership position with Windows by being the first oem to combine Windows and DOS.

For MS it does the following:

1. Compaq leadership position with Windows. 2. With slick technology, Windows/DOS can be installed quickly w/p much of the pain installing Windows today. Although it is not a pre-install, it will be much easier to get Compaq to preinstall in the future if they combine Windows/DOS now. 3. Gets many more Windows sockets out there. We believe that our attach rate today with Windows on Compaq 386 systems is between 25% and 35% based on their registration information. their current attach rate for DOS is 86%. 4. It raises the bar for other oems and makes it more difficult for DRI to compete. 5. Will increase our revenue from Compaq, depending on what we can get for the Windows royalty.



The intent to ensure a prevention of choice is hopefully evident based on the above.




Appendix A: Comes vs. Microsoft - exhibit PX00982, as text










PLAINTIFF'S EXHIBIT 982 Comes v. Microsoft

File : c:\bradsi\mailbox.tld Messages :

******************************************************* From: joachimk Mon Sep 30 10:53:23 1991 To: bradsi Subject: Re: Compaq Windows status Date: Mon Sep 30 10:30:02 PDT 1991

Do not see this as a price issue. They will pay. Remember IBM did not pay for DOS, but see what happened? See the strategic value: It will have lots of followers-OS1 can't compete for now. IBM can only pitch OS/2 against it, but who wants this. The industry will rally even more around it and use it in every account against IBM. Money: for six month thereafter no or very low impact. Next year we plan for it. Whereby WIN becomes over time -may be earlier than expected -a 90% OEM product. Count Your profit, not the revenue.

>From: bradsi Sat Sep 28 10:56:44 1991 To: joachimk peterbre steveb Cc: alean jeffl janre markbu richardb richardf ronh teresach Subject: Re: Compaq Windows status

Date: Mon Sep 30 10:30:02 PDT 1991

you're saying that when someone buys compaq dos for $99, they also get windows for free. but if you want windows alone, it cost you $150.

and compaq wants windows for free.

am I missing something why this is good for us?

don't forget that today, retail is still 61% of windows revenue.

5671 C:\DN1LD2.MAI Thu Oct 03 08:50:14 1991

MS7090738 CONFIDENTIAL

MS-PCA 1179288 CONFIDENTIAL

PLAINTIFF'S EXHIBIT 503 A. No. 2:96CV645B






Appendix B: Comes vs. Microsoft - exhibit PX00980, as text








Depo. Ex. 184 PLAINTIFF'S EXHIBIT 980 Comes v. Microsoft HIGHLY CONFIDENTIAL

MS-PCA 1179286 CONFIDENTIAL

MS 5004035 CONFIDENTIAL

PLAINTIFF'S Exhibit 502 CA. No. 2:96CV645B

From peterbra Sat Sep 28 10:42:54 1991 To: bradsi joachimk steveb Cc: alexn jeffl jonro markbu richab richardf ronb teresach Subject: Compaq Windows status Date: Sat Sep 28 10:42:26 PDT 1991

On 9/25 Mark and I met with Clark and Alan. Among other issues that Mike brought up, he came up with an alternative way for Compaq to bundle Windows. On 9/26 we had a meeting with their Windows team.

Mike's alternative way of bundling Windows would be that Compaq bundles Windows with MS-DOS. There would not be a seperate DOS SKU; there would not be any choice. When somebody buys the Compaq DOS product he gets Windows with it. This is significantly different from there last try at a Windows SKU. It is the only proactive Windows Compaq has come up with since Stimac started thinking of their key disk approach.

The idea came from Jim Odon as a result of the number and quality of Windows questions that other oems asked at the OEM Briefing. This causes Jim to realize that Compaq's Windows knowledge is slipping versus other oems. He feels the only way to regain this is to license Windows. In addition Odon sees this as a way to reduce his developement time and support of system utilities by having a Windows interface to them.

This Windows/DOS bundle has not been discussed internally at Compaq so it still unclear what the rest of their management thinks of it.

Although initially against this idea I think it does have some merits and should be looked at closely. For Compaq, it removes/reduces many of their objectives/problems with a Windows bundle. For MS, it makes a very strong Compaq statement for Windows and pushes forward DOS and Windows being one OS when we have some DRI problems.

Compaq issues with bundle/preinstall that are addressed

1. The manufacturing preinstall problem 2. The updating of Windows when it is on the hard disk 3. Allows the end user the choice of installing Windows and allowing custom configuration of Windows according to specific requirements. 4. Simplify their localization issues. 5. Reduce cost - will not lose dos revenue with a preinstall and offset the cost of Windows by charging for it. 6. Still allowing the end user the choice to buy other operating systems for his system; not burden the end user with either the implicit cost of Windows or having to deinstall Windows and DOS. 7. It provides Compaq with a perceived leadership position with Windows by being the first oem to combine Windows and DOS.

For MS it does the following:

1. Compaq leadership position with Windows. 2. With slick technology, Windows/DOS can be installed quickly w/p much of the pain installing Windows today. Although it is not a pre-install, it will be much easier to get Compaq to preinstall in the future if they combine Windows/DOS now. 3. Gets many more Windows sockets out there. We believe that our attach rate today with Windows on Compaq 386 systems is between 25% and 35% based on their registration information. their current attach rate for DOS is 86%. 4. It raises the bar for other oems and makes it more difficult for DRI to compete. 5. Will increase our revenue from Compaq, depending on what we can get for the Windows royalty.

Issues that need to be addressed to make this happen.

1. Length of time for Compaq to make a decision. How do we make this happen quickly so they can announce with Windows 3.1 2. Diminished value of Windows in the retail channel. Compaq would need to make sure that their SKU would not run on any other hardware. We might want them to charge some additional delta over and above their current price of $99 for DOS. 3. Lost retail Windows revenue - How much retail revenue will we lose against the gain of Compaq royalties. 4. What we will settle for for in a Windows royalty (of course Mike doesn't want to pay anything additional for Windows). 5. Other customer issues if we do this




oem exclusivity slick technology for Compaq???? others that I can't think of

I would appreciate any and all comments.

The following day Alex, Jon, Mark and I met with the Compaq Windows team to review and discredit their Windows preinstall focus group studies. In addtion we proposed a one SKU bundle/preinstall in conjunction with a MS/CPQ Windows 3.1 comarketing program commencing with the Windows 3.1 announcement.

Our attempts to discredit their focus group research back fired. We spent much of our time arguing over points in the focus groups with Andrea Morgan, their marketing research manager. because of her strong position, she is attributed for the timing success of the LTE line, Compaq management will continue to listen to her. The focus groups are much too subjective to refute the Compaq findings so Andrea is important to win over and not run over.

Compaq liked the idea of comarketing programs, but they did not see the need to license Windows to make this happen. They do feel that they are missing a very important message, Windows being optimized for Compaq systems. Their approach to this is a JIA Lan Man approach to it, however. They might even include a Windows optimization disk with their processors. In other words we did not get any closer to trying a one SKU approach.

With the upcoming exec review, I would like to move quickly on this Windows/DOS bundle. Is it viable for us and under what conditions. Peter

HIGHLY CONFIDENTIAL

MS 5004036 CONFIDENTIAL

MS-PCA 1179287 CONFIDENTIAL



Credit: wallclimber

Recent Techrights' Posts

BetaNews Has More or Less Died After Experiments With LLM Slop, Is Linuxsecurity Next?
It doesn't seem like BetaNews knows what it's doing, let alone what it talks about
Links 13/06/2025: Journalists Targeted by Cracking, China-Japan and Israel-Iran Tensions Grow
Links for the day
 
Online Search or Large Search Engines Aren't Working Anymore
business models that directly compete with interests of Web users
Holidays and Breaks
I've hardly taken any long breaks since I got married
Danish OpenDocument Freedom
"year of Linux"
When Abusive Law Firms (Working for Microsofters Against Us) Assert That Someone Writing in Social Media About Himself is Confidential Information
There was no reason to throw "GDPR" into 2 SLAPPs; they know it, but the goal was to increase the cost of a Defence and lessen the incentive to challenge the SLAPPs
Links 14/06/2025: Wars and L.A. Distortion Effect
Links for the day
Gemini Links 14/06/2025: Historic Ada Design and GeminiSpace.Club to Expire
Links for the day
Links 14/06/2025: India Plane Crash and Middle-Eastern War
Links for the day
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Friday, June 13, 2025
IRC logs for Friday, June 13, 2025
Gemini Links 13/06/2025: (Not)virtues and Project Yeet Broadband
Links for the day
Links 13/06/2025: US Reduces Nonessential Staff at Baghdad Embassy Ahead of Strikes in Iran, Invasion of California Debated
Links for the day
X11 is Free Software
Whether you agree (e.g. on politics) with the person/s forking it doesn't matter
The More Time Passes, the Better Our Advice on Social Control Media Seems
At the end of the day, any platform you do not control yourself is working for someone else
Twitter (X) is Dying, Now It's Just Like a Mafia-Type Operation of the Man Who Does Nazi Salutes in Public
a form of extortion
UK High Court Blasts Brett Wilson LLP for Misusing "GDPR" After Failed Efforts to Censor Critics Using 'Libel' Claims
No wonder this firm is rapidly shrinking
Recent Blunders in Microsoft GitHub (e.g. Slop-Generated Bug Reports or GPL Violations 'as a Service') Taking Their Toll?
Put bluntly, if you still use Microsoft GitHub, then you're slave to Microsoft
American Imperialism and Microsoft Plagiarism
Techrights will therefore do what Microsoft does not want it to do: it'll write even more about Microsoft
When They Have Nothing Left to Help Advance Abusive Litigation for Microsoft People... Other Than Throwing ~500 Pages of Someone Else's Work Into a PDF
Microsoft is having a very tough year
The Price of Exposing Corruption in Poland (and Elsewhere)
It's easier to participate in corruption than to merely do the right thing and oppose it
Slopwatch and Yet More Holes in 'Secure Boot' (as Usual!), Promoted Inside Linux by the Man We Are Suing
Today's Slopwatch will be short
Gemini Links 13/06/2025: People You've Left Behind, Life Update and OS Changes
Links for the day
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Thursday, June 12, 2025
IRC logs for Thursday, June 12, 2025
Links 12/06/2025: Portland Homeless Deaths Quadruple, COVID Cases Surge in Asia
Links for the day
Abuse Inside the Polish Patent Office (UPRP) - Part IX: Minimum Wages For You (Experienced Scientist), Alicante/EU Paydays For Me (Unproductive, Corrupt Official)
Does UPRP maladministration extend to the false belief that qualified and experienced scientists can play the role of circus clowns?
"The Liberating Power of Simply Telling People the Truth."
'polite' bullying
Who Imitates Who? Plagiarist as Client (From Microsoft), 'Plagiarism' at the Law Firm?
let's revisit the subject
EPO's Gareth Lord Asked About "Quality and Productivity" or, Put Another Way, Why the EPO Keeps Granting So Many Invalid/Illegal Patents
letter to Lord
EPO's Central Staff Committee (CSC) Scrutinises the Man Who Illegally Grants (and Forces Others to Illegally Participate in Granting) Software Patents in Europe
EPO compels examiners to break the law in the name of obeying illegal "rules" or "orders"
The Latest Rumour Says The Next (as Correctly Predicted Before) Wave of Layoffs at Microsoft is 3 Weeks Away, "Larger Than the First Wave"
Step 2
TV Licensing Used to SPAM Your Postbox, Now It Does the Same to E-mail
First they ask for your E-mail address; then they start nagging you via E-mail
The Toxic Playbook
Either you support Prince Mohammed bin Salman or you're a nazi
It's Possible That BetaNews Got Cracked, But Nobody Talks About It, The Site Contains an Outdated Old Image, No Activity
It's possible that they will never explain what happened to the site and users' accounts
Links 12/06/2025: Beach Boys’ Brian Wilson Dies
Links for the day
Gemini Links 12/06/2025: Video Game Diegesis and Steam Next Fest
Links for the day
Why the Militants Have Lost Every Battle Since 2022 (When Attacking My Wife and I in Various Ways, Even Attacking Our Employers)
This takes patience, sure, but at the end most evildoers face the consequences for their actions
Our Priority is Still Tackling Software Patents and Corruption in Patent Offices
Meanwhile we got compliments on our recent articles, which means that they are effective
Politics Will Impact Software Choices
Will those systems respect users' freedom?
EPO: Neglecting Children to Promote American Monopolies by Shielding Them From European Competition
Yesterday the Central Staff Committee at the EPO spoke about another "reform" at the Office
Slopwatch: Another Day, Another Slopfest, LLM Slop Scrapers Slow Down Our Site
We too have some slop issues; this past day this site and the sister site had to answer about 2.5 million requests (not counting Gemini Protocol) and it's slowing things down for everybody
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Wednesday, June 11, 2025
IRC logs for Wednesday, June 11, 2025