Dumping overseas

THIS POST is the latest part of a series that includes:

• Is Microsoft 'Pulling an EDGI' on Kerala? (Updated)
• Microsoft Vice President Teaches PR People How to Spin Anti-Linux Programme
• Microsoft Dumps on India, South Africa, Malta
• At Microsoft, “Fear Uncertainty Doubt (TALKING POINTS)” is Formal Strategy
• Extended Windows 98 EOL to Block Government Migrations to GNU/Linux and Free Software; More 'Donations'

Today we turn our attention to exhibit px09683 from Comes vs Microsoft [PDF]. It's all about EDGI and it contains more details that we did not divulge before.

This exhibit opens up with David Driftmier telling Orlando Ayala and Kevin Johnson, two chiefs who are closely involved in these GNU/Linux-hostile initiative, that:

A cross-group team has been working for the last two weeks on a proposal to have a more planned response process to defend against Linux and other low-cost/no-cost competitors in large education/government deals in both developed and developing subs.

According to this message, Jim Allchin wanted to focus on education first (ensuring children are made 'addicted' to Microsoft software), with the possibility of expanding to governments.

This is followed by a document which states that:

A common current scenario is one where a government wants to provide for a common technology platform across all schools in the country/province/state. They are either seriously considering open source due to cost and political pressures or are using Linux and StarOffice as levers to negotiate price with Microsoft.

Later on it mentions "two major issues that need to be solved." The second among them is:

How to effectively win against the no-cost/low-cost competitor in large government deals (i.e. "Don’t lose to Linux").

Yes, it says "Don’t lose to Linux." We saw this before.

According to Microsoft, "A completely ’free’ model for education is not desirable" because:

Approx. $1B annual revenue stream currently being realized through sales to academic institutions

They also used the term "naked PCs" to daemonise whatever is not saddled with Windows.

Regarding price, writes Microsoft:

We cannot and will not compete with Linux/StarOffice solely on price, however the price allure of ’free’ must be addressed as part of competitive response.

Also:

Scenarios not limited to Linux/StarOffice, nor are they limited to developing subs, although these are our current primary areas of urgency

Another interesting bit:

3) When local management determines that local empowerment will not provide the flexibility needed to win a deal, they will escalate to a regional response team. An example of potential members of the regional response team:

• Regional Education Director (or Government Director in the case of a non-Education deal)



• Regional Linux Competitive lead / Product Management

"Regional Linux Competitive lead..."

Here is Microsoft talking about "donations":

8) It is recognized that there will be times when software donations are part of the overall solution presented to a customer. In these instances we need to work closely with LCA to ensure these are managed and tracked in order to ensure that we receive the benefit and mitigate the impact on other deals. It may also be appropriate to institute a process whereby the product group funding provided through the special fund gets returned when donations are made, as it represents monies that do not end up flowing back through the product revenue stream.

Page 6 is telling. Microsoft says that stuff like these "donations" will "Increase our win percentage against competition" and at the same time:

• Improve our partnership with governments



• Improve Microsoft image

It's interesting to note that Microsoft refers to those which it donates to as "customers". Maybe it's long-term thinking (get a free sample to become a dependent customer later on). Maybe schools children too are just "customers". Maybe it refers to governments though.

Microsoft gives some examples of "wins". For instance:

Name: Girls Schools in Saudi Arabia Desktops: 20,000 (1200+ servers) Revenue: $4MM (50% OEM) Competitor Linux/StarOffice Product Mix: Windows2000 Server, Windows 2000/XP Pro, Office XP Pro, Front Page 2002, VB 6.0 Microsoft Investments to win:

• Create special package including media and guidance
• Highlight customer accomplishments (shared PR)
• Commitment to invest in E-Ministry ($450,000)
  • SE and two admin for a year (Contingent Staff)
  • Train 220 FTE’s on Office Tools
  • Initial implementation services
  • Minimal application development

Story: The local team created a special 3 CD kit that included CD’s for Tools, Teachers, and Students with appropriate content and products They also agreed to fund a special ministry of education training pilot. This investment ($450k) was funded through the additional margin on the per desktop price.

We previously wrote about Microsoft corruption in Hungarian education [1, 2].

Check this out:

Name: Hungary Higher Education Desktops: 235,000 students, 18,000 teachers Revenue: $2.2M over 3 years Competitor. Linux/IBM Product Mix: Windows XP, Office XP, Front Page, Visual Studio, BackOffice CAL

Microsoft Investments to win: 66% discount = $4 4MM off of normal Campus Agreement pricing Story: In this deal, the total amount of the deal represented the maximum amount of money that the customer had to spend. If we did not do the deal for this price, then IBM was ready to execute. As a higher ed customer, there was requisite technical knowledge to support a successful implementation, so additional services were not imperative. The sub also had a successful evangelism and knowledge transfer program in place with the technical universities.

What do they refer to by "evangelism"? This type of thing?

The document has many tables appended. These shed light on where Microsoft was dumping software. For the tables, view the original PDF.

The last page is rather fascinating too. It's a presentation slide on the face of it. It says very explicitly that the goal of EDGI is:

- Ensure primarily education (and secondarily government) customers can experience the value of Windows, Office and other Microsoft products

So primary education must lead the children become dependent on "Windows, Office and other Microsoft products." They always use perfumed words like "value" to hide the odor of their real motives. They perfume it only to themselves.

The "Opportunity" is to:

- Increase our win percentage against competition in education and govt accounts, especially in developing countries - Protect our product price points by removing discounts below empowerment guidelines

For the inquisitive, the full document is appended below as HTML. It took a long time to produce this. ⬆

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Appendix A: Comes vs. Microsoft - exhibit px09683, as text

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From: David Driftmier Sent: Thursday, May 30, 2002 2:47 PM To: Orlando Ayala; Kevin Johnson Cc: Sherri Bealkowski Subject: Education and Government Incentives (EDGI) proposal Importance: High

Orlando,

A cross-group team has been working for the last two weeks on a proposal to have a more planned response process to defend against Linux and other low-cost/no-cost competitors in large education/government deals in both developed and developing subs. Input has been provided by the Windows group, OEM, WWLP, LCA, EdSG, SLG, the international RVP’s and AlainC. Attached are the slides that will be included in the Windows BPR and the proposal itself is included for background. SherriB will be there for this pot[ion of the BPR to represent EdSG. Please let me know if you have any feedback or changes that you would like to see incorporated into the proposal or if you have any questions that we can address prior to the Friday meeting.

Also, I just received a call from Pat Fox in the Windows group and based on a conversation that he had with JimAll, Jim is going to recommend that we focus this initiative initially on the education market, with an eye towards expanding to the government sector if it makes sense later.

Thanks,

Dave

David Driftmier

Director, International Operations Microsoft Education Solutions Group +1 425-705-4113

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Winning Government and Education

"EDGI" (Education & Government Incentive) Program

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Executive Summary

In order to more effectively win in the large education/government deals where we compete against low/no-cost offerings, Microsoft will introduce a predictable and replicable process to engage in and win these deals. A common current scenario is one where a government wants to provide for a common technology platform across all schools in the country/province/state. They are either seriously considering open source due to cost and political pressures or are using Linux and StarOffice as levers to negotiate price with Microsoft. This scenario is closely tied to, but not limited to, the challenges seen in developing countries where economic pressures often force governments to seek low-cost/no-cost solutions (see Appendix for recent examples.)

Just as we are focused on delivering end-to-end solutions to our commercial customers, we will endeavor to approach these deals with an end-to-end approach at addressing the underlying needs of the community and/or educational institution. A plan similar to the Enterprise Agreement Services Incentive [EASI] will be put in place to help address these issues.

Goals

There are two major goals of the Education and Government Incentive program:

• Ensure government and education customers can experience the value of Windows, Office and other Microsoft products
• Address affordability, application compatibility, teacher training and curriculum, additional software needs

It is important to note that there are two major issues that need to be solved.

1. How to best help developing countries jumpstart the establishment of an effective educational infrastructure that can leverage the benefits of technology
2. How to effectively win against the no-cost/low-cost competitor in large government deals (i.e. "Don’t lose to Linux").

This proposal is squarely aimed at the second issue, although there is considerable overlap between the two. There are deals (primarily large government deals in developed countries) that fall outside of the first issue but are still included in the second. However, the majority of instances where Microsoft finds itself addressing the first issue, it will be addressing the second at the same time. Consequently, providing assistance to developing subs is a subset of the larger problem of responding to the large deals.

Assumptions

This proposal is shaped by some underlying assumptions about the business environment:

• A completely ’free’ model for education is not desirable for the following reasons:

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• • Approx. $1B annual revenue stream currently being realized through sales to academic institutions
  • The current pricing (deeply discounted) helps ensure that a healthy ecosystem exists where MS and its partners continue to innovate and deploy a sales force to work with customers to define and realize the full value of the software.



• Customer concessions cannot impact OEM royalties or rely on an OEM delivering "naked" PCs without an OS (i.e. no reduced price full OS offering or in academic space)
• Many subs do not have sufficient dedicated resources to drive the fully-integrated vertical ISS sales process needed to re-engineer the large customers’ vision of needs
• We cannot and will not compete with Linux/StarOffice solely on price, however the price allure of ’free’ must be addressed as part of competitive response.
• Scenarios not limited to Linux/StarOffice, nor are they limited to developing subs, although these are our current primary areas of urgency
• We do not want to develop a standard ’offering’ as this becomes not only our new price point, but also invites large customers to create new tenders which we may not be competitive with on price.

Plan

Taxonomy

In order to better analyze the opportunity, the following taxonomy is proposed:

• Developed country (e.g. US, Japan, Belgium) These countries typically have per capita GDP’s greater than USD$3,500.
• Developing country [Large, High Potential] (e.g. Brazil, India, China, Russia) These countries typically have lower GDP’s (< $3,500 per capita), large populations with the potential to support a considerable IT infrastructure in the next 3-5 years
• Developing country [Large, Low Potential] (e.g. Indonesia, Bangladesh). Same as above but with little potential for real IT infrastructure in the near term.
• Developing country [Small and Medium] (e.g. Eastern Caribbean, Philippines, Ecuador) Countries with low GDP and potential that is limited by their size.

Note: A revenue report is attached m the Appendix that shows countries currently generating revenue and their status according to the taxonomy above.

Funding

Since these opportunities are largely tied back to winning in a specific competitive environment (Linux and StarOffice) we are proposing a $50MM (approx. 5% of WW Education revenue) fund that is allocated from the Windows and Office P&L’s (30MM Windows, 20MM Office). This funding would be allocated out to the regions using the following percentages: Americas 25%, EMEA 35%, and Asia 40%, based on the majority of funds being targeted at developing countries. The regional funds would then be used

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to support large deals by providing monies on the customer’s behalf for value-add products and services (incentives) instead of offering low or no-cost software.

It is also important to note that in many countries, there exist untapped funding sources, especially in developing regions. Close cooperation between business groups and LCA will be needed to identify initiatives and programs from sources such as the World Bank, IDB, IMF, etc that can potentially be used to help fund the community development portion of large government deals.

Response

A process will be put in place whereby the following occurs:

1) Using the Global Education Leadership Team currently being established by EdSG, a global pipeline management process will be refined where top opportunities in education are surfaced and regularly reviewed with regional and sub management to ensure proactive support is provided where needed. If desired, EdSG will work with the government vertical to put a similar process in place for non-education deals.

2) Empowerment guidelines for subsidiary and regional pricing in education will be put in place, similar to those in force in the Enterprise segment

3) When local management determines that local empowerment will not provide the flexibility needed to win a deal, they will escalate to a regional response team. An example of potential members of the regional response team:

• Regional Education Director (or Government Director in the case of a non-Education deal)



• Regional Linux Competitive lead / Product Management



• Regional WWLP resource



• Regional LCA

4) The regional response team will engage with the local account team and the customer to provide a full-integrated solutions sales effort, in order to re-engineer what the customer sees as their needs so that they can understand how the MS platform will uniquely address their needs.

5) EdSG will work with LCA to produce a consolidated view of all Microsoft’s efforts in the academic space to ensure that customers understand the value of what we have already provided and can provide in the future. This would include initiatives by EdSG, LCA, MSR University Relations, Recruiting, CDDG, Developer Evangelism, Product Marketing Group, etc.

6) If needed, the regional response team will work with the Regional VP to draw upon the regional fund to provide additional value-add services and/or products in order to balance the investment the customer is making in the software (whether obtained through a School or Campus Agreement or through OEM PC’s)      Services and products may include:

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• Integration services



• Application Migration



• Training



• Curriculum content



• ...

7) New PC sales will be made as usual from OEMs to entity, though we may add some requirements on the OEMs as pre-requisite for participation in the program (i.e., meet certain system specs for education, or meet education specific training or channel needs)

8) It is recognized that there will be times when software donations are part of the overall solution presented to a customer. In these instances we need to work closely with LCA to ensure these are managed and tracked in order to ensure that we receive the benefit and mitigate the impact on other deals. It may also be appropriate to institute a process whereby the product group funding provided through the special fund gets returned when donations are made, as it represents monies that do not end up flowing back through the product revenue stream.

Benefits

There are several benefits to implementing such a program. First and foremost, it will enable more customers to obtain the benefit of using our technology. Additionally, the following are expected benefits of the proposal:

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• Increase our win percentage against competition



• Improve our partnership with governments



• Improve Microsoft image



• Protect our product price points by removing discounts below empowerment guidelines



• Have a process that is reactive, but predictable and controllable



• Ensure optimum use of resources (current one-off negotiations resource-intensive and painful)



• Centrally track use of resources enabling us to match both with business value received, instead of suffering hard-to-track revenue erosion due to one-off discounts.

Process

In order to ensure the most effective use of resources, it is proposed that we leverage much of the framework used by the EASI program The process will be largely duplicated and modified only where necessary to accommodate the differences in the target customer markets The same fulfillment and administrative vendor can be used, leveraging the known cost model.

Donations

It is recognized that there will still be a significant portion of these deals where software donations may be appropriate as part of the overall offering. The intention is not to limit a subsidiaries ability to do this, but to work cooperatively with LCA to insure the customer and Microsoft both receive the full benefit of the donation and that the donation is part of a larger partnership with the customer and partners to create a self-sustaining infrastructure. This will also help us track and recognize the investment we are making world-wide.

Community Affairs

Community Affairs will continue to play a key role in large education and government deals, especially in the developing countries. LCA has committed to working with the business to define a set of offerings that will provide end-to-end community development approaches and are responsible for the related economic development issues. These offerings may be tactical in nature and can be used as a component in a large negotiation, or may be a proactive and comprehensive plan that we offer to those countries in greatest need.

It is important that we recognize the role of timing in providing community affairs leadership. Presenting community development initiatives at the same time as a response to a large deal can often be viewed negatively by our customers. It is critical, therefore, that GM’s ensure that long-range community affairs approaches are synchronized with the business needs in the sub. This may also mean that we make community development offers that are not contingent upon the customer making related purchase commitments. An exception would be deals where we decide to donate a portion of the

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licenses being purchased in lieu of discounting the overall price, thereby preserving our unit price point and delivering the same overall cost to the customer.

The proposed investment funds are therefore not targeted at community development, but at ensuring we do not lose to low-cost/no-cost competitors. If there are needs for broader free programs, these should still be identified by the sub leadership and addressed with their LCA teams.

Qualification

One of the key issues raised during the solicitation of executive feedback is the need to ensure that specific guidelines are put in place to ensure that monies are used appropriately and this does not simply become another source of BIF for the subs. In order to address these issues, the following is proposed:

• Since each RVP will have a finite amount of funds, their use should be prioritized at the regional level.
• Initially, top current and projected opportunities should be reviewed and a prioritized list provided to the RVP by the regional education and government teams Based on the size of this pipeline, it may be determined that a portion of the fund should be left uncommitted for future opportunities during the fiscal year. After this initial prioritization, emerging opportunities will be compared to current opportunities to determine if they meet the same standard for investment, with appropriate trade-off decisions being made, if the funds are already fully committed.
• Opportunities will be divided between developed subs and developing subs according to a pre-determined taxonomy. Developed subs will normally benefit primarily from the consistent and streamlined sales approach of the response team, while the developing subs will most likely need the investment funds in order to be viable.
• Funds will be centrally tracked and reported (as in the EASI initiative), providing a high degree of visibility (and therefore accountability) for the funds usage.

Next Steps

Owner Virtual Team Action Date EdSG (US) Regional EdSG teams, SLG Publish Global Pipeline 07JUN02 Tracking process ALL Provide go29MAY02 ahead for BPR Richard Fade Obtain Exec 31MAY02 approval at BPR AlainC EdSG/OEM/Product Determine 07JUN02 Groups funding flow and controls

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RVP’s EdSG (US) Designate 14JUN02 regional response teams JimAll/JeffR Allocate 14JUN02 funding in P&L’s EdSG (US) SLG Detail sales MGB 2002 tools and strategies for regional response teams

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Appendix

Recent Deals

• BRIC Project - China education PCs
• Czech (School Internet Project) - 25,000 PCs
• Saudi Arabia (King Abdul Aziz Univ) - 4,500 PCs
• Saudi Arabia (President’s Girls School) - 25,000 PCs
• South Africa (Learning Bridge - education) - country-wide; EMEA proposal for all low-GDP countries
• Pakistan- 50,000 PCs
• Other MENA (academic, east med) - 64,000 (?) PCs
• US K-12 Access Device- up to 1MM laptops
• Michigan (K-12) - $10MM state program funded
• Colombia government - 200K PCs over 3 years

Anatomy of a Deal

Name: Girls Schools in Saudi Arabia Desktops: 20,000 (1200+ servers) Revenue: $4MM (50% OEM) Competitor Linux/StarOffice Product Mix: Windows2000 Server, Windows 2000/XP Pro, Office XP Pro, Front Page 2002, VB 6.0 Microsoft Investments to win:

• Create special package including media and guidance
• Highlight customer accomplishments (shared PR)
• Commitment to invest in E-Ministry ($450,000)
  • SE and two admin for a year (Contingent Staff)
  • Train 220 FTE’s on Office Tools
  • Initial implementation services
  • Minimal application development

Story: The local team created a special 3 CD kit that included CD’s for Tools, Teachers, and Students with appropriate content and products They also agreed to fund a special ministry of education training pilot. This investment ($450k) was funded through the additional margin on the per desktop price.

Name: Hungary Higher Education Desktops: 235,000 students, 18,000 teachers Revenue: $2.2M over 3 years Competitor. Linux/IBM Product Mix: Windows XP, Office XP, Front Page, Visual Studio, BackOffice CAL

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Microsoft Investments to win: 66% discount = $4 4MM off of normal Campus Agreement pricing Story: In this deal, the total amount of the deal represented the maximum amount of money that the customer had to spend. If we did not do the deal for this price, then IBM was ready to execute. As a higher ed customer, there was requisite technical knowledge to support a successful implementation, so additional services were not imperative. The sub also had a successful evangelism and knowledge transfer program in place with the technical universities.

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This page contains a large table. See PDF for the table.

Linux Account Wins/Threats/Losses

Account Country Date No of PCs Industry Linux Dnvers Reasons: W=n/Loss

Wins

Proven better TCO vs current environment Vassa Finland Gov’t Finland 11/1/2001 ? Pubhc Sector TCO, Standardization

and L~nu×. Proven better TCO vs Lappeenranta F~nland

current enwronment and Linux

Gov’t F~nland 11/1/2001 ? Public Sector TCO, Standardization

Losses

Account Name Country Customer No. of PCs Industry Reasons for Loss Other reasons for Segment Loss Corporate Express Australia MORG 400 Services Cost Dept of Education

Australia Academic 10,000 Pubhc Sector Cost

Northern Territory Beijing Local Govt. China Major 2,000 Pubhc Sector Govt Endorsement Central Excise &

India Major 900 Public Sector Cost

Customs Tata Institute of

India Academic 300 Education Anti-MS

Fundamental Research Government

Korea Corporate 1,000 Public Sector Govt Endorsement

Procurement Agency Department of General

Thailand MORG 1,500 Pubhc Sector Cost

Education University Systems Thailand Major 1,000 Public Sector Performance Department of Local

Thailand MORG 3,000 Public Sector Govt Endorsement

Administration Columbia Sportswear US MORG 182 Public Sector Cost

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This page contains a large table. See PDF for the table.

Advantage Sales & Marketing US 8,000 Public Sector Cost MS- Disastisfaction Mastertrade New Zealand MORG 400 Manufacturing Cost Kachingo NewZealand MORG 800 Retail & Hospitahty HNV Vendor Recommend Southern Cross New Zealand Corporate 300 Health Care Cost Coffee Bean & Tea Leaf Singapore SORG 20 Retail & Hospitahty Cost Total: 29,802 Threats Account Name Country Customer Segment No of PCs Ved~cal Industry Reasons for threat Other reasons for Threat Department of Defence Australia Corporate 40,000 Public Sector Cost Department of Education of WA Australia Academic 52,000 Education Cost Linux/Stan~ffice Department of Health WA Australia Corporate 11,000 Public Sector Cost StarOffice Catholic Education Office of WA Australia Academic 2,265 Education Cost Linux/Sta~)fiSce Association of Independent SchooLs of WA Austraha Academic 2,460 Education Cost StarOffice Dept of Education Western Australia Austraha Academic 45,000 Education Sun offering Other (Please specify) partnership with thedept to develop their vision 29 of 39 Universities in Austraha Austraha Academic 60,000 Education Cost

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This page contains a large table. See PDF for the table.

Political statement that says the dept willDept of Education -supply every student

Australm 25,000 Education Govt Endorsement

South Aust with a SS/Word Processor and database.

Belgian Ministry of

Pubhc Sector

Finance Belgium Major 28,000 Cost

Brazil Gov’t Brazil Major 220,000 Pubhc Sector Cost

Alcadm Mayor Venezuela 38,000 Education Cost

ANEP -K12 Uruguay 11,000 Education Cost SED Columbia 8,500 Education Cost Ministry of Education Chile 100,000 Education Cost Think corn Linux and Redoffice( StarOffice China

Govt of He Nan China Other 10,000 Public Sector

Other (Please specify) Partner) wdl offer source code to them all China gov. in

China SORG 1,000,000 Pubhc Sector Govt Endorsement

provices

Lower Saxony-Choose from

Major 13,500 Public Sector Cost

Germany List They are testing out toStock Exchange Hong Kong Major 1,300 Public Sector Other (Please specify) use L~nux as the dumb terminal Hong Kong

Hong Kong Strategic 80,000 Pubhc Sector Govt Endorsement

Government

Pdmary and Secondary

Hong Kong Academic Education

Schools 3,600 Cost Pico Wodd Hong Kong MORG 200 Public Sector Cost Ministry of Urban

Indm Corporate 400 Pubhc Sector

Development

Govt. of Goa India Academic 800 Education Cost

MIT India Major 6,000 Public Sector Cost

Haryana Govt Indm Academic 2,000 Education Cost

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This page contains a large table. See PDF for the table.

Ministry of Surface Transpor~ India Public Sector Ministry of Finance India Major 4,000 Public Sector Ministry of HRD India Major 8,000 Public Sector Govt. of TN India Major 1,000 Public Sector Govt. of Maharashtra India Academic 10,000 Education Govt. of Kamataka India Academic 10,000 Education Other (Please specify) Staroffice (AE) Govt. of Kerala Govt. of Gujarat Govt. of West Bengal India India India Academic Academic Academic 4,500 5,000 5,000 Education Education Education Other (Please specify) Staroffice (AE) Govt. ofUttar Pradesh India Academic 5,000 Education Govt. of Dehli India Academic 5,000 Education Govt. of Tamilnadu India Academic 30,000 Education Punjab India Academic 200 Education Rajasthan India Academic 1,000 Education Uttaranchal India Academic 2,000 Education Andhra Pradesh India Academic 10,000 Education Madhya Pradesh India Academic 2,500 Education Chattisgarh India Academic 5,000 Education Ministry of Defence ~Flex India India Other Corporate 500 Unknown 500 Financml Services Security Cost Linux/StarOffice StarOffice Planetasia India Corporate 200 Services Cost StarOftice IDBI Bank India Corporate 500 Financial Services I Cost Linux / StarOffice Adani Group India Corporate 200 Manufacturing Cost Lmux/Sta~Office H~ranandam Group Indm Corporate 300 Unknown Cost Linux/StaK:)ffice Zandu Pharma Nimbus Communications India India MORG MORG 150 Health Care 150 Services Cost Cost Linux / Sta~ffice StarOffice Ace Hardware Indonesia Corporate 1,000 Retail & Hospitality Cost Department of Finance Indonesia Major 1,000 Pubhc Sector Cost Department of Internal Affair Indonesia Major 2,000 Public Sector Cost

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This page contains a large table. See PDF for the table.

Department of

Indonesia 1,500

Transportation

Bank of Ireland Ireland MORG 10,000

Ministry of Education

Malaysia Academic 120,000

and 8,500 schools

Ministry of Finance

Malaysia Corporate 600

Treasury

Hong Leong Finance Malaysia Corporate 800

EPF Destop Financing

Malaysia Other

Scheme

Holland Railoonsult Netherlands Major

NZ Government

(G2000 ’all of govt’ New Zealand Corporate 20,000

agreement)

Urban Redevelopment

S~ngapore Corporate 600

Autority National Library Board Singapore Corporate 900 _S.!.n_.g_a_p_or__e3,000

. SMRT ........... , _Co_rpora!~ _ ........

MINDEF Singapore Major 22,000 iDA- HQ Singapore Corporate 40,000 S~ngtel Singapore Corporate 15,000 ITRI Taiwan Major 6,000 Bangkok Metropolitan

Thailand Major 7,000

Administration

Electricity Generating

Thailand Major 3,000

Authority of Thailand

MIMOS Thmland Corporate 600

Bank of Ayudhaya Thailand Corporate 400 Safeway US LORG 23,000 Advant~st Healthcare US MORG 50,000 Goldman Sachs US MORG 1,000 Eckerd US MORG 24,000

Pubhc Sector Cost Public Sector Cost Education Govt Endorsement

Public Sector Govt Endorsement Financml Services Other (Please Specify) Public Sector Cost Public Sector Cost

Pubhc Sector Cost SlarOffice Pubhc Sector Govt Endorsement Pubhc Sector Govt Endorsement

Pubhc Sector

. , ~.o~ E~nd_orse_rn~e_n~t_.

Public Sector Govt Endorsement Public Sector Govt Endorsement Telecommumcat~ons Govt Endorsement Public Sector Cost

Public Sector Cost

Strong Enterprise

Public Sector Other (Please specify) Training closing digital divide

Public Sector Other (Please specify)

positioning Financial Services Cost Pubhc Sector Cost Public Sector Cost Pubhc Sector Cost Pubhc Sector Cost

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This page contains a large table. See PDF for the table.

CSKAuto US 12,650 Public Sector Cost General Motors US LORG 15,000 Public Sector Cost CVS US MORG 12,300 Public Sector Anti-MS

Southern Me[[hodist

Education

Univ. US Academic 200 Cost. Anti-MS StarOffice deployed Sherwin-Williams US MORG 7,500 Retail & Hospitality Cost Unix Migration

BMC Soft, ware US Other 8,500 Services Other (Please specify) Th~nk Lmux ~s cool Dallas School Distdct US Academic 4,000 Education Cost StarOffice deployed Total. 2,285,275

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This page contains a large table. See PDF for the table.

WW Education Revenue Report - Revenue Shown in As Billed View

YTD o -I ~ ~% of Total WW Sales ~Growth Edu % of Total Region Location YTD Apr 01 YTD Apr 02 % Revenue Sub Revenue Japan Japan Japan 81,749,088 97,143,650 19% 12.1% 6% Total 81,749,088 97,143,650 t9% 12.1% 6% Asia Pacific Australia 15,106,731 21,204,613 40% 2.6% 9% Hong Kong 10,527,979 8,26/,253 -21% 1.0% 10% Korea 14,238,717 16,372,635 15% 2.0% 10% Ta~wan 8,502,050 7,571,206 -11% 0.9% 9% China y y y 1,217,014 2,416,230 99% 0.3% 3% New Zealand 3,341,284 4,346,072 30% 0 5% 10% India SC y y y 4,329,125 3,853,311 -11% 0.5% 4% Malaysia y 4,728,483 3,334,464 -29% 0 4% 8% Phdippines y y 1,088,315 1,729,083 59% 0 2% 10% S=ngapore 5,039,823 5,734,554 14% 0.7% 11% Thailand y y 382,519 524,414 37% 0 1% 2% Indonesia y y 126,715 177,300 40% 0.0% 1% Vietnam y y 22,013 46,631 112% 00% I% Asia Pacific Total 68,650,769 75,577,766 10% 9.4% 8% EMEA United K=ngdom 66,054,918 76,142,986 15% 9.5% 8% Germany 23,965,508 30,600,645 28% 3.8% 4% France 23,247,045 22,970,375 -1% 2.9% 5% Italy 10,470,680 10,466,659 0% 1.3% 4% Sweden 9,042,520 9,167,473 1% 1.1 % 5% Spa~n 7,518,684 7,591,318 1% 0.9% 6% Denmark 6,387,096 6,670,505 4% 0 8% 5% Belgium 5,845,661 4,620,865 -21% 0.6% 4% Finland 5,821,034 6,659,865 14% 0 8% 8% Norway 4,080,113 5,049,245 24% 0.6% 6% Russia y y y 1, 608, 526 5, 755, 319 258% O. 7% 14% Poland y 4,929,483 2,456,965 -50% 0 3% 3%

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Switzerland 3,772,464 4,634,758 23% 0.6% 2% Israel 3,312,443 2,956,033 -11% 0 4% 5% Turkey y y 2,266,102 3,261,813 44% 0 4% 6% South Africa y 2,238,501 2,629,929 17% 0 3% 3% Ireland 2,207,607 3,579,558 62% 0.4% 9% Portugal 2,241,635 3,209,184 4;~% 0 4% 6% Austria 2,548,052 3,954,086 55% 0.5% 3% Saud~ Arabia 1,541,516 3,028,268 96% 0.4% 10% Greece 2,510,254 3,343,376 33% 0.4% 13% Netherlands 2,668,312 7,420,838 178% 0.9% 3% Czech Republic 1,686,670 2,119,862 26% 0.3% 5% Egypt y y 1,300,962 1,653,856 27% 0.2% 9% Lebanon y 2,610,719 704,729 -73% 0.1% 4% Hungary y 1,442,131 3,975,372 t76% 0.5% 11% Morocco y 857,446 1,676,623 96% 0.2% 14% UAE ? 947,867 1,286,666 36% 0.2% 7% Baltics y 816,027 721,170 -t:2% 0.1% 6% Kuwait 837,731 1,187,363 4:2% 0 1% 8% Indian Ocean Islands y 382,296 408,958 7% 0 1% 9% Romania y 282,830 577,173 104% 0 1% 5% Oman "~ 252,142 385,674 53% 0 0% 4% Slovak~a y 115,896 287,282 148% 0 0% 3% Ivory Coast y 196,234 118,970 -39% 0.0% 3% Croatia y 194,339 85,053 -56% 0.0% 1% Tunisia y 240,338 227,192 -5% 0.0% 16% Nam~b~a y 133,899 64,614 -5:2% 0.0% 2% Sloven~a 111,060 190,060 7t % 0.0% 1% Kenya y 50,990 277,228 444% 0.0% 9% Bulgaria y 37,504 24,051 -36% 0.0% 1% Z~mbabwe y 63,692 121,242 90% 0.0% 4% EIV]EA Total N~geda y y 2,046 206,840,971 16,909 242,280,110 726% 17% 0.0% 30.2% 0% 5% Americas United States HQ 259,946,023 328,841,591 27% 41.0% 6% Canada 17,782,467 22,137,247 24% 2.8% 5% Mexico y y y 11,763,053 13,089,484 11% 1 6% 11%

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Brazil y y y 8,099,938 8,414,211 4% 1.0% 6% Colombia y 3,209,920 3,406,378 6% 0.4% 11% Caribbean y 3,677,975 3,170,374 -t4% 0.4% 7% Chile y 1,141,984 907,500 -21% 0.1% 5% Central America y 1,468,518 1,979,634 36% 0.2% 6% Peru y 1,227,054 1,249,111 2% 0.2% 10% Uruguay y 556,675 791,212 42% 0.1% 7% Argentina y 1,463,612 892,338 -39% 0_1% 3% Venezuela y 791,735 992,855 26% 0.1% 4% Ecuador Canbbean & CA HQ y 240,186 513,335 114% N/A 0 1% 0.0% 8% 0% Americas Total Grand Total Updated 5/2/2002 311,369,141 386,385,269 668,609,969 801,386,795 SmalliDe~yelGping!Su bs 24% 20% 48.2% 100.0% 3.9% 6% 6% ~arg.b~De’_v~i~.’pihg’ S ub~. (hig .h~

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Education & Govt Incentive Program (EDGI) Proposal

Goal

- Ensure primarily education (and secondarily government) customers can experience the value of Windows, Office and other Microsoft products - Address affordability, application compatibility, teacher training and curriculum, additional software and services needs

Opportunity

- Increase our win percentage against competition in education and govt accounts, especially in developing countries - Protect our product price points by removing discounts below empowerment guidelines - Have a process that is reactive, but predictable and controllable - Ensure optimum use of resources (current one-off negotiations resource-intensive and painful) - Centrally track use of resources and $$, enabling us to match both with business value received, instead of suffering hard-to-track revenue erosion due to one-off discounts.

Strategy

- "EDGI"- Education & Govt Incentive program, similar to "EA Services Incentive" program - Proposed $50MM fund allocated to RVPs for discretionary use to win education and government competitive deals (30:20 Windows:Office split) - Deal guidelines and escalation process being developed - Will address both developing and developed subs through same infrastructure, but developing subs will be the emphasis and will also be targeted w/special funding and partnership models (being developed with LCA)

Proposed Tactics

- Setup a predictable pipeline process where opportunities that exceed local empowerment are identified and escalated via regionally identified mgrs - Minimize OEM tracking/reporting complexities via program to enable educ or govt entity to build solutions with MS products - Incentive program $ can be applied to qualified PC purchases or services (training, curriculum development, app migration, etc) - New PC sales will be made as usual from OEMs to entity, though we may add some requirements on the OEMs as pre-req for participation in the program --    i.e., meet certain system specs for education, or      meet education specific training or channel needs - Develop umbrella business value collateral on benefits of choosing a solution built with Microsoft Windows (ie productivity, cost, ecosystem, etc)

MICROSOFT CONFIDENTIAL 9/12/2003 FOR INTERNAL USE ONLY

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