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

Get Ready for Increase in PIPs and RAs at IBM, Red Hat, and Other Companies Devoured by IBM
IBM's "market cap" has just fallen to 199 billion dollars and it has about 70 billion dollars in debt
Like Kyndryl, Multiple Securities Fraud Investigations Into IBM
Remember what happened to Kyndryl
Who Next After IBM? (Bubbles Don't Last Forever)
the demise of companies with "ai" in their name/domain
GNU/Linux Estimated at 8% "Market Share" Today (in statCounter)
Days ago it said 7.1%, then 7.3% or 7.4%
 
IBM Down to $211.20, the Market in General is Up
No recovery for IBM today
UEFI 'Secure Boot' Still Not Secure in 2026, New Holes (or Bypasses) Still Being Found
In 2026 there are still many people who call it "secure" and pretend to themselves that it is about security. It's not. It never was.
Gemini Links 15/07/2026: Lab 6, Retrospective 2, and "Getting Back Into Gemini"
Links for the day
Links 15/07/2026: "Gianni Infantino Under Fire" and "Todd Blanche's Record Raises Alarming Questions About the Future of the US DOJ"
Links for the day
Allegedly More IBM RAs (Mass Layoffs) Same Day the Stock Crashed
No paper trail, so it never happened, right?
Techrights Was Right: Microsoft's Layoffs Tally Was False, Far More People Are Being Sacked
"The Xbox Bloodbath Is Actually Way Bigger Than It Seems"
IBM Sinking to Lowest Levels Since 2024, But Will Any Executives Be Arrested for Securities Fraud?
52-week high of $332.46 and now down to $212.94
Microsoft Whistleblowers Say "The Entire Thing is Going to Fall Apart" and There Are "No Benefits" to Being Part of Microsoft
"Multiple sources, who chose to remain anonymous for fear of reprisal"
IBM's Crash Continues Today
Stocks go up and down, but they don't typically go down by over 25% in a single day
How Long Before GNU/Linux is Measured at 20% in Chad?
The main way to get people to adopt Vista 11 is to sell them a new PCs and in poor countries it happens a lot less
Making Techrights Faster Down Under (Australia and New Zealand)
there's more to life than speed
Strikes at the EPO Approved for the Rest of the Year, "€1,3 Billion Taken From Staff Income"
Intensity can be revised and increased over time
Focusing on What We Really Ought to Focus on
Today we'll focus mostly on EPO affairs
Violence is Not a Joke
"Police say Widdecombe killing was targeted but motive remains unclear"
How to Properly Measure the Performance of a Patent Office
A "contribution from staff [which] is published by SUEPO Munich."
EPO "Cocaine Communication Manager" - Part XIV - "Not One of Us" (How the Group Dubbed by EPO Insiders "Alicante Mafia" Pushes Out Talent, Replacing It With Friends)
misuses the EPO's budget like it is a fountain of money for his friends
LibreTech Collective Abandons Microsoft GitHub and All Other Proprietary Software
Each time a project eliminates control by a hostile party it stands to gain
Links 15/07/2026: US Regime "Cuts Two Utah National Monuments by More Than 90%", "Hormuz is Less Crucial Than It Was"
Links for the day
Gemini Links 15/07/2026: Old Computer Challenge, "Trial by Fire", LLM Slop Destroying Companies
Links for the day
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Tuesday, July 14, 2026
IRC logs for Tuesday, July 14, 2026
Heshan de Silva-Weeramuni Becomes Program Manager at the Free Software Foundation (FSF)
Heshan's addition means that the FSF is growing after a solid financial year (best in years)
Michael McMahon Explains Distributed Denial of Service (DDoS) Attacks on the Free Software Foundation (FSF)
The real solution is a curb on botnets. A mitigation strategy, however, would involve going static.
Matters of Public Safety
"Police say Ann Widdecombe killed in 'targeted attack' as motive investigated"
The Register MS and Its Promotional Microsoft Content
It's not too hard to see what the business model of The Register MS is
IBM: From $306 to $212 in 7 Days, IBM Won't Go Up More Than 50% to Where It Was at 'Peak Vapourware'
There's a limit to how much or how long a company can fake its performance and its potential [...] Early this morning a few insiders ("traders") cashed in on their "pump-n-dump"
Red Hat Staff Needs to Start Looking for the Next Job
Workers can conveniently lie or deny it to themselves, but waves of PIPs ("silent layoffs") will sweep over more and more units or teams as the company runs out of money to play with
IBM the Next Bear Stearns
IBM cannot recover if all it has to show is vapourware
IBM Stock Collapses and It's Only the Beginning
Will GAFAM soon follow and will any executives be arrested for the accounting fraud insiders have long cautioned about?
I'll Be Extremely Difficult for Microsoft to Sell Any XBox Consoles Now
Microsoft understands this
How Software Freedom Would Benefit Everybody
A society that denies control by greedy companies would do a disservice to monopolies and improve all services to citizens
Links 14/07/2026: Harsh But Also Fair Criticism of Hey Hi (AI) Slop, 'Open' AI Shuts Down Its Own Products as Funds Run Out
Links for the day
Gemini Links 14/07/2026: Old CD Binder and AWK
Links for the day
In Defence of Physical Tickets
Tickets are not some "app" and not some "code" on some "screen"
Microsoft Layoffs Not Limited to XBox (False Narrative in the Mainstream Media)
Microsoft is becoming less relevant and workforce reductions won't end any time soon
Links 14/07/2026: Plagiarism Spun as "Training", Zelensky Announces Leadership Shuffle
Links for the day
The Register MS Has Just Published "AI" Webspam That Mentions "AI" 54 Times. It Was Paid to Do This.
Who pays for all this "AI" hype or "buzz"?
Gemini Links 14/07/2026: Self-Advocacy Online; "The Internet Is Dead: How the Web Lost Its Human Soul"
Links for the day
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Monday, July 13, 2026
IRC logs for Monday, July 13, 2026
Modern Technology Harms Women More Than Men (Because the 'Tech Bros' Who Dominate STEM Have a Poor View of Women)
“Privacy protects us from abuses by those in power, even if we're doing nothing wrong at the time of surveillance.”
Internet Relay Chat Trolls Are Not Expressing Opinions, They Are Saboteurs
For the record
Links 14/07/2026: "The Freedom of Information Act Is in Serious Trouble"; Irish Datacenters Use Up Almost 25% of Total Energy
Links for the day
The Register MS: "AI" Puff Pieces for Sale, Not Journalism at All, Just "Webspam"
The Register MS isn't the sole culprit
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Sunday, July 12, 2026
IRC logs for Sunday, July 12, 2026
How We Do Techrights (and What's Changing Next Week)
Many former news sites no longer yield much non-meaningless news (not anymore); there's a gap to be filled