Bonum Certa Men Certa

Bill Gates Called “LUNIX” a Threat Back in 1997

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Summary: Where is Joachim Kempin today? And what did he talk about with Bill Gates? We have some answers.

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ESTERDAY we showed that Microsoft has all sorts of secret teams, in this case the "Delta Force". We sometimes wonder about Microsoft's so-called "special projects". Read the following about Kempin for example:

Like Microsoft's other golden boys, Kempin is neither officially resigning nor being let go. Instead, he will be put out to pasture and oversee as-yet-undetermined "special projects" for CEO Steve Ballmer

Kempin has been a problem child for Microsoft for years. This is a guy who lost his hunting license earlier this year for allegedly using his SUV as a weapon (as in ramming antelopes with his car instead of shooting them).

Kempin once told me he had written into his contract a stipulation that he didn't have to talk to the press. And no wonder: Kempin, more than just about anyone else at Microsoft, knew where the manufacturer bodies were buried.

But Kempin's main claim to fame is that he did more than just about any Microsoft executive (with the possible exception of Bill Gates) to get Microsoft hauled into federal court on antitrust charges.


There is more background information here.

Indeed, little public information is available on the 55-year-old Kempin. According to testimony he gave to the Department of Justice lawyers in October, Kempin joined Microsoft in 1983, where he started out in Germany as country manager. Four years later he landed in the United States as vice president of Microsoft in charge of the then-fledgling company’s support organization and the U.S. OEM group.

[...]

Under Kempin’s tutelage, Microsoft launched the Market Development Agreement (MDA) licensing concept in 1994. The drill for hardware makers went something like this: If OEMs wanted to license Windows 95 but didn’t promote or sell it, they would pay a fairly hefty price per copy. If they agreed to co-promote the operating system in ads or issue a Microsoft-endorsed press release noting they had decided to offer their customers Windows 95 preloaded on new systems, they got a better price.


Kempin is not yet at the age of retirement, so where is he today? And what were those "special projects for CEO Steve Ballmer" -- the ones that CNET talks about?

One might ask, why the interest in Joachim Kempin in the first place? Well, the man was unambiguously threatening OEMs which 'dared' to offer GNU/Linux, among other things. We mentioned him many times before, but a broader Google search reveals little of interest. There is nothing in Wikipedia, either, but there is a private profile in Facebook and evidence that he was giving money to US politicians, just like the Ballmers and Gateses paid Obama last year. At one stage (maybe not at present), Kempin also served in The National Bureau of Asian Research (NBR).

Joachim Kempin joined NBR's Board of Directors in 1999 and, because of his extraordinary service to the institution, was elected as the first Honorary Director in June 2002.

[...]

He began as General Manager of Microsoft's German subsidiary and moved on to spearhead groups such as Product Support Services and International Products Localization. Subsequently, he managed all business operations for Microsoft's intercontinental subsidiaries. Mr. Kempin played a long-term, key role in the OEM division.


“We need a much better strategy to undermine JAVA momentum than we have today.”
      --Bill Gates
Our fascination with Joachim Kempin has everything to do with his anti-Linux actions. And yes, he actually used the term "anti-Linux". Member wallclimber and I decided to look for more evidence of Kempin's so-called "anti-Linux" and we easily found some more, this time in the Web site of the US Department of Justice (before it got corrupted by Microsoft [1, 2, 3, 4, 5, 6, 7, 8]). Here is Exhibit 61 from the US DOJ [PDF] (see the exhibit in its original spot [PDF] if you prefer). Therein, Bill Gates writes to Joachim Kempin with copies sent to Steve Ballmer, Paul Maritz, Jim Allchin, and Nathan Myhrvold (all of whom were top seniors in 1997). Gates writes about threats from Novell, the Web, Java, and also addresses Kempin's pricing methodologies for stifling these emerging trends.

How about this bit?

The biggest threat is absolutely the JAVA phenomena and the ISV excitement that has grown up around that. We have to come in every day knowing that we have NOT solved this problem and in many ways we get weaker every day [Joachim Kempin] If we show the world a pass to easier programming then Java- the cross system issue might go away. I thought we had a project going on this?


Gates then adds:

Another "threat" that combines somewhat with the JAVA threat is low cost UNIX systems LUNIX in particular.


He meant "GNU/Linux", not "LUNIX", but it was new at the scene. Even then, back when Linux was a 6-year-old kernel, Microsoft feared it enough to be listed as a top threat. A few years later (four to be precise), Gates wrote that their "most potent Operating System competitor is Linux."




Appendix: USDOJ exhibit 61, as text










From: Joachim Kempin Sent: Thursday, December 18, 1997 7:10AM To: Bill Gates Cc: Steve Ballmer, Paul Maritz, Jim Allchin (Exchange), Nathan Myhrvold Subject: RE As promissed OEM pricing thoughts

----Original Message---- From: Bill Gates Sent: Wednesday, December 17, 1997 5:10PM To: Joachim Kempin Cc: Steve Ballmer, Paul Maritz, Jim Allchin (Exchange), Nathan Myhrvold Subject: RE As promissed OEM pricing thoughts

This is a very thoughtful document. I have added Jim and Nathan to the discussion since I think they will have valuable input

The document basically points out that move to NT and volume increase are our ONLY upsides for the near future. Windows will be somewhat less than $50 and NT will be somewhat less than $100 in fact the public will probably figure out those numbers over time. (Are the DSP prices under these?) [Joachim Kempin] DSP is currently at $80 for win 95 and $150 for NTW and as long as we gain share we should not lower [Joachim Kempin] . WE have some lower prices in some development countries.

I agree that for the next 2-3 years this is the best plan If we avoid the JAVA threat changing the world I think we will have some upside in the future taking some of the OS and sending it retail/internet Getting this to be high volume is tricky but possible with a strong position I still hesitate on the leasing model but the popularity of the Net and some technical work we are doing will make that a possible approach.

One classic threat has been cloning of Windows APIs I wonder if there isn't more going on here than we know about. I know Noorda was funding 2 different efforts to clone Windows I guess the WABI code has gone into disuse There would be a lot of work and potentially patent problems for someone attacking us [Joachim Kempin] [Joachim Kempin] This is hard to do and hard to maintain- most customers will want the original and any price delta is too small to worry about

The biggest threat is absolutely the JAVA phenomena and the ISV excitement that has grown up around that. We have to come in every day knowing that we have NOT solved this problem and in many ways we get weaker every day [Joachim Kempin] If we show the world a pass to easier programming then Java- the cross system issue might go away. I thought we had a project going on this?

One key point that is not discussed here is nonPC form factors. [Joachim Kempin] I left this out intentionally. I have been talking to a lot of people so has Steve and I share most of the below. The key missing piece is compatibility in my believe CE does not run win 32 apps, not even all 16 bit apps. Developers wnat a seamless environment and a great programming tool and Java sells well here mostly on promisses- but it is convincing. Pricing we should just do as we did when selling DOS- get the biz and think about more $$ per units later.

After my latest trip to Japan I came away with a huge concern about non-PC devices. With great progress in screens, digital audio, digital video, speech, handwriting and the Internet there is a HUGE risk that we will not be called to provide the OS for these devices On the other hand there is upside. We have not been looking at this market properly Craig is way too optimistic. Companies are viewing JAVA as something they can adopt across a large range of devices and have it as a standard. We do not package our offering properly today. We need to get going on speech and handwriting. we need to get more flexible with various pieces. We are building a new VM to compete with the SUN VM. Our pricing for these devices will have to be low. We may find a way to make money on these devices by asking them to connect back to our "Megaserver" services.

GOVERNMENT EXHIBIT 61 MS7 007548 CONFIDENTIAL




We have not thought about how we win ISVs for these devices in a way that JAVA will not We have not thought about what the benefit of PC affinity would be

The high price of Windows for $500 machines does make these nonPC devices more attractive I need some piece of WindowsCE that is super cheap. I think we want to get a lot of money from devices where people create and edit documents and we will get very little money from devices where people just read documents. The boundry here is very unclear. I need to brainstorm with people more on this A low price could screw us and a high price could lose us all these design wins. We need a clever solution.

Another "threat" that combines somewhat with the JAVA threat is low cost UNIX systems LUNIX in particular.

We need a much better strategy to undermine JAVA momentum than we have today. We will have to have some dramatic things and we will have to have rolling thunder SUN will have to show where SUN is going to try and make money on the JAVA phenomena. We need to have our clone work against them to be cheap but go beyond what they do

----Original Message---- From: Joachim Kempin Sent: Tuesday, December 16, 1997 5:37PM To: Bill Gates Cc: Steve Ballmer, Paul Maritz, Joachim Kempin Subject: As promissed OEM pricing thoughts

<< File.draft OEM DT OS PRICING doc >> feedback appreciated



Credit: wallclimber

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