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| Authored by: Anonymous on Tuesday, June 25 2013 @ 05:18 PM EDT |
http://groklawstatic.ibiblio.org/pdf/Comes-2647.pdf
<p>
PLAINTIFF'S EXHIBIT 2647<br />
Comes v. Microsoft
</p>
<p>
<b>From:</b> Joachim Kempin<br />
<b>Sent:</b> Friday, February 07, 1997 12:04 PM<br />
<b>To:</b> Joachim Kempin; Dave Wright (OEM); Neil Miller; Gina
Fleckenstein; Bengt Akerlind; Ron
Hosogi; Don Hardwick; Candace Grisdale; Carl Sittig; Patrick Ohura; Yin-Hui;
Philip Wong;
Natalie Ayres; Teresa Ducharme; Kathleen Graves; John Yuh-Chung Wang; Doris
Medlicott;
Larry Edralin; Chris Mellin; Christine Bomstead; Debbie Flynn; Carl Guiledge;
Kurt Kolb; Mark
Buick; George Downing; Jim Nellis; Sandy Duncan; Risto Rautakorpi; Steve Mann;
Fred
Kamperman; Maurizio Zazzaro; Laurent Delaporte; Wim Deibeke; Zoigniew
Skurczynski;
John Jenkins; Olgierd Swida; Kevin Pearson; Scott Porter (ITL); Barry Spector;
Boo
Chapman; Joon Park; Elvin Kam; Kazuaki Okimoto; Reinaldo Caccaos; Bill Norman;
Bill
Shields; Karen Hurlbut; Tim Beard<br />
<b>Subject:</b> FY98 Planning Directions
</p>
<p>
FY98 Planning<br />
Directions_ doc
</p>
<p>
PLS, read and use as general planning guideline. Your director will issue a more
segement/region
specific statement within the next two weeks. DO NOT FOREWARD BEYOND THIS
GROUP.
</p>
<h1>FY'98 Planning Directions<br />
Joachim Kempin
OEM Sales</h1>
<h2>PREAMBLE</h2>
<p>
FY'98 could potentially see OEM revenue exceed $5B. In order to achieve this,
we will have to execute
flawlessly in certain key growth areas and do extremely well in developing key
customer relationships.
</p>
<h3>Key FY'98 Revenue impact areas action items:</h3>
<ul>
<li>Increase NTW adoption rate</li>
<li>Continue investment in people and marketing in countries where we lag
OS penetration</li>
<li>Actively sell Office SBE and NTS in SB/DSP channel - at the right
price</li>
<li>Increase OEM shipments of IntelliMouse</li>
<li>Lower MDA incentives</li>
</ul>
<p>
While the NTW share drive should be obvious to everybody, I would like to note
that a more intensive SB
share drive in all countries would have an even larger impact on the FY'98
results. Most countries should
build their plans based on 2-3x growth opportunities and not just on their more
moderate budget numbers.
While I will address the new product issue later, let me make sure we all
understand the need to present
the MDA as a goodwill measure from MS and set the expectation that these
incentives will change from
year to year as we see fit. This time we won't make promotional items a
priority, in particular, after Intel
changed their view. Do not discuss technology leadership campaign opportunities
with customers without
the OEM Director of Marketing approval as we will be very selective and work
with less then an estimated
10-12 customers next FY.
</p>
<h3>Relationship impact focus for FY'98:</h3>
<ul>
<li>Develop dependable, life-line website for OEM community</li>
<li>Continue focussed technology partnerships and make the results more
visible through marketing means</li>
<li>Help key partners grow in the defined marketing segments - in
particular Small Business!</li>
</ul>
<p>
The marketing people and SE's will be challenged to execute along these
directions. For the Website, we
will focus primarily on building one to manage the many SB relationships before
we extend this to other
customers. Last but not least, we have to continue to fight piracy.
</p>
<h3>Anti-piracy focus for FY'98:</h3>
<ul>
<li>Drive anti-piracy technology development and deployment beginning with
forced registration</li>
<li>Drastically reduce counterfeits</li>
<li>Increase "secret shopper" program to stop
HD-loading</li>
<li>Attack mouse counterfeits worldwide</li>
</ul>
<p>
Forced registration will be an issue Davewr and myself will address with the
product groups to determine
when this might happen on a product by product basis. Anti-counterfeit and
anti-illegal hardware loading
activities are solely an OEM field responsibility and these activities need to
be significantly stepped up and
taken more seriously in FY'98 by using more outside help and doing it more
systematically around the
world following Johnj's three phase model.
</p>
<h2>POINT BY POINT</h2>
<ol>
<li><b>Unit growth</b><br />
Needs to be determined on an account by account basis. Realistic assumptions
for Multi-Nationals
should be around 17-18% and Named accounts at 12-15% on average. As usual, they
both need to be
determined on an account by account basis. The SB/DSP business is trickier to
forecast. Careful
planning needs to be done in most Western European countries where we have
achieved great
penetration over the years. All other countries including NA need to set their
targets on more than
35% unit growth and present a marketing plan in how to exceed it.</li>
<li><b>NTW</b><br />
Current product shortcomings as well as NT 5.0 might slow unit growth. I
therefore recommend
against aggressive growth planning. In any case, we need to do this segment by
segment. While I
believe that 5-10% penetration for SBs and Named seems realistic, certain
Multi-National solution
provider OEMs could exceed 12-15% for the 98 FY. Account by account
considerations will be
needed to do this well.</li>
<li><b>Hardware</b><br />
We need to continue our drive to gain more market share in all segments without
compromising price.
Careful planning is needed to avoid any inventory issues. In addition, we want
to push IntelliMouse to
gain more S/Units. The new keyboard will give us an opportunity to increase
share while continuing to
sell today's keyboard aggressively to get us into a good starting position . . .
Some suggestions:
<ol>
<li>Plan 5-10% price erosion over the FY'97 in all channels.</li>
<li>Plan improved DSP channel penetration of absolute 5-10%.</li>
<li>Plan royalty accounts on an account by account basis, while gaining
new customers and switching
old ones to IntelliMouse in case they are selling DAD supported applications and
even more so
when IE 4.0 suppons the device better then IE 3.x does today.</li>
</ol></li>
</ol>
<h3>Office SBE/DAD Apps</h3>
<p>
The policy for this has been clearly set. Single apps are the preferred bundling
opportunities to pursue.
Office SBE will be made available to win against aggressive competitors in the
direct OEM segment and to
gain share in the small business segment. The latter needs careful consultation
with the local subsidiary
and director approval. Key things to look for when making the right decisions
is channel control. All
royalty agreements need to be per system agreements. Per copy agreements are
only possible at DSP
pricing. (See below).<br />
We need to actively sell Office SBE and Home Essentials through the DSP channel.
With the new revenue
recognition plan, we will be responsible for planning the budget. This being
the first year, I would like us
to take a cautious approach. In countries where the price is pegged to the FPP
price, we should not exceed
3% of bootable system penetration. I would support a more aggressive plan if
the price were being pegged
to the CUP model. In any case, close cooperation with the subsidiary is needed
which will have the
marketing funds for our selling activities. I would consider an average 3-5%
total penetration of bootable
GUI OS's a great success for the first year.
</p>
<h3>NTS</h3>
<p>
The policy calls for preinstalled server SW sold to royalty accounts on a per
system basis. Per copy
agreements are not in our interest and LAR or DSP opportunities should be
explored with OEMs instead.
There is no room for pricing much below price guidelines either. As a new
opportunity, we need to pursue
Wolfpack agreements with key industry players. NTS needs to be sold through the
DSP channel and its
price will be pegged to the FPP price. As in the case of Office SBE, we will do
the budgeting and revenue
sharing with the subsidiaries that will receive marketing funds - ensuring that
they are being used for
attracting more SBs. Careful planning is needed. If you assume that 1.6M
servers are being sold out of
80M total PC units, a 2% bootable OS penetration should be considered
aggressive, in particular when the
DSP price will be close to the FPP price and no Select or MOLP pricing will be
made available. I would
consider a 5% average penetration a great success for the first year.
</p>
<h3>Consumer Titles/Works</h3>
<p>
Continue to sell opportunistically and continue to increase our share for Works,
Money and Encarta as well
as the other attractive titles as they come along during the year. This is not
the greatest revenue opportunity
for us and it needs to be seen as making our products popular by using the OEM
distribution opportunity to
beat the competition.
</p>
<h2>SUMMARY</h2>
<p>
The key to our success in FY2000 to - "out-love our customers" -
starts with work in FY'98. We as a
division must improve how we work with our customers and delivering more value
will be a sure way to
win the hearts and minds of our customers. It is a requirement for each
individual in this division to take
responsibility for delivering value to our customers and working within
Microsoft to accomplish our
mutual objectives and attain the goal of OEM Job #1 "winning the hearts and
minds of our customers".
Second, driving growth of the overall PC market, and third, gaining profitable
non-OS revenue.
</p>
<p>
In more practical terms FY'98 will be the year to improve how we work inside OEM
between sales
management, marketing and technical support and how we translate this into
better customer relationships.
At the same time, we will be challenged to work closer with the MS field sales
force to leverage the
SB/DSP model in such a way that we as a company gain share in that segment and
increase total MS dollar
per PC unit. The new revenue sharing model should help here but we will need to
establish human
interaction and cooperation inside the company to make it work beyond the
numbers. Good planning and
good communication should be seen as the most essential components to achieve
this - so let's get started
and finish FY'97 with a bang!
</p>
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