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Comes v. Microsoft Exhibits by Number 0001-0499

Comes Homepage ] [ Transcripts ] [ Exhibits by Date ] [ Exhibits by Number ] [ Audio/Video ]


Comes Exhibits by Number, page 1 of 18

The exhibits are divided into 18 pages, due to length. This page contains exhibits 0001-0499. For the other pages in the collection:

Exhibit Description
0001 License Agreement between Seattle Computer Products and Microsoft, Jan. 6, 1981:

LICENSE AGREEMENT

This license agreement is made and entered into this 6th day of January, 1981, by and between SEATTLE COMPUTER PRODUCTS INC., a Washington Corporation (hereinafter referred to as SCP), and MICROSOFT, a Washington general partnership (hereinafter referred to as MS).

WHEREAS, MS desires to obtain non-exclusive rights to market the product defined in Paragraph 1, below, and

WHEREAS, SCP desires to supply MS with the same product under the terms and conditions hereinafter set forth,

NOW, THEREFORE, for and in consideration of the mutual promises and premises IT IS AGREED as follows:

1.  PRODUCT:

The product is a single-user disk operating system with utilities for the 8086 microprocessor which has been named "86-DOS" by SCP.  A description of the features of the product is contained in the SCP instruction manual titled "86-DOS Disk Operating System for the 8086 -- Version 0.3" dated 11-15-80 and in Exhibit A attached hereto which details some extended features.  SCP shall also deliver to MS test programs for 86-DOS within thirty days of signing of this contract.  SCP shall deliver test programs for the features outlined in Exhibit A along with the source and object code for those features.  The term "product" as used here shall be deemed to include and improvements, extensions (except extensions which change 86-DOS into a multi-user or multi-tasking operating system) or modifications made by SCP to 86-DOS during the life of this License Agreement.

2.  RIGHTS BEING LICENSED:

(a)  86-DOS OBJECT CODE TO END USERS:  This License Agreement conveys to MS the right to distribute 86-DOS in object code form only to an unlimited number of end users, either directly or through retail stores.  Such distribution does not include sales to OEMs (except as described in Paragraph 2(c), below), licensing for which is described below.

(b)  86-DOS OBJECT CODE TO OEMS (NO PER COPY ROYALTY):  This License Agreement conveys to MS the right to sub-license 86-DOS in object code form to OEMs for unlimited distribution to end users.  For each sub-license of this type sold be MS to an OEM, MS agrees to pay to SCP a royalty of $10,000.

(c)  86-DOS OBJECT CODE TO OEMS (WITH PER COPY ROYALTY):  This License Agreement conveys to MS the right to sub-license 86-DOS in object code form to OEMS for unlimited distribution to end users.  For each sub-license of this type sold by MS to an OEM, MS agrees to pay to SCP and initial fee of $1,000 plus a royalty of $25 for each copy of 86-DOS licensed.  Incidental sales of 86-DOS to any one OEM (right to use on up to 24 machines) shall be considered to be covered by the provisions of Paragraph 2(a), above.

(d)  86-DOS SOURCE CODE:  This License Agreement conveys to MS the right to provide a copy of 86-DOS source code to any OEM sub-licensed for 86-DOS as described in Paragraph 2(b) and 2(c), above,  For each OEM so provided a copy of 86-DOS source code, MS agrees to pay to SCP a royalty of $5,000.  The OEM purchaser of the 86-DOS source code shall have no distribution rights to this source code and may use it internal to its organization only.

(e)  DERIVATIVE WORKS:  This License Agreement conveys to MS and any of its OEM customers for whom MS has paid royalties to SCP and who have licenses for 86-DOS SOURCE CODE the right to prepare and have prepared Derivative Works based upon the product and distribute those Derivative Works in object code form only.  A Derivative Work shall mean a work which is based upon the product such as a revision, modification, translation, abridgement, condensation, expansion, compilation, or any other form in which the product may be recast, transformed, or adapted, and which if prepared without authorization, would constitute a copyright infringement.  MS shall not have the right to market Derivative Works without paying appropriate royalties as in Paragraph (a), (b), (c) or (d) to SCP.

(f)  SUBSIDIARIES:  The Licenses granted in Paragraphs (a),(b),(c), and (d), of this section include the right of MS and its OEM customers to grant licenses of or within the scope of rights and licenses granted to them, to their subsidiaries; and each licensed subsidiary shall have the right corresponding to license other subsidiaries.  Such licensing shall not increase the amount due for MS to SCP.

(g)  PATENTS:  SCP further grants to MS and its sublicensees and customers a worldwide, royalty-free, irrevocable, and non-exclusive license under any patents owned or licensable by SCP at any time during the term of this Agreement:  (1) to the extent necessary to exercise any right or license granted under this Section; and (2) to combine the product and or Derivative Works thereof with equipment.

3.  PAYMENT:

MS will pay SCP $10,000 upon signing this agreement.  Payment of the initial fee described in Paragraph 2(c), above, and royalties called for under this Agreement shall be due within 45 days of the date MS invoices their customer for the product for which the initial fee or royalty is due.

4.  PRODUCT IMPROVEMENT:

SCP agrees to work in a diligent manner to improve and update 86-DOS in the next year with substantial effort being expanded on this task during the next three months.  Specifically, SCP agrees to make the improvements outlined in EXHIBIT A by February 1, 1981.  SCP further agrees to cooperate with MS by providing limited help for any customizing MS may need to do for their customers of 86-DOS.

5.  WARRANTY:

(a)  SCP represents that the product is free from program error and meets the specifications called out in the instruction manual referenced in Paragraph 1 of this Agreement.  If program errors are discovered by MS during the first year of this Agreement, SCP will use diligent effort to attempt to correct these errors within fifteen (15) days of the time they are documented to SCP by MS.

(b)  If the program errors discovered by MS during the first year of this Agreement cannot be corrected within fifteen (15) days by SCP, then as MS's sole remedy, (1) the product may be retained by MS with an equitable adjustment in price as may be agreed by the parties, (2) the correction period may be extended as may be agreed by the parties, or (3) failing any agreement, MS shall be entitled to a return of 50% of the license fee described in Paragraph 3 upon MS's return to SCP of all copies of the product (including any copies which MS may have made) and upon delivery to SCP of a statement signed by one of MS's officers that MS has not retained any copies of the product. 

(c)  Ms may, by payment of $1,000, on or before the first, second, or third anniversary of this agreement extend SCP's obligation to use due diligence to attempt to eliminate and supply corrections for such errors within fifteen (15) days.

(d)  SCP further represents and warrants that no claim, whether or not embodied in an action past or present, of infringement of any copyright, patent, or other intellectual property right, or privacy or similary right, has been made or is pending against SCP, or to the best of their knowledge against other licenses, relative to the product.  Each party shall promptly notify the other in the event it becomes aware of such a claim. 

(e)  The rights and remedies granted to MS under this Paragraph 5 constitute MS's sole and exclusive remedy against SCP, its officers, agents and employees for negligence, unexcusable delay, breach of warranty, express or implied, or for any default whatsoever relating to the condition of the product or SCP's duties to eliminate and program errors.

THE ABOVE IS A LIMITED WARRANTY AND THE ONLY WARRANTY MADE BY SCP.  ANY AND ALL WARRANTIES FOR MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED.  MS AGREES SCP SHALL NOT BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES EVEN IF SCP HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

6.  TITLE, PATENT AND COPYRIGHT INDEMNIFICATION:

Subject to the limitations of this Paragraph 6,

(a)  SCP represents and warrants that it has the full and complete right, title and interest in the product (including the right to grant the licenses and rights granted herein),  and that the product does not infringe any copyright, or other intellectual property right (including without limitation, trade secret), or privacy or similar right, of a third party.

(b)  SCP agrees to defend at its expense any suit against MS based upon a claim that SCP does not have sufficient right, title, and interest in the product as furnished by SCP to make the License Agreement, or that the product as furnished by SCP under this agreement infringes on a United States patent or United States Copyright, and to pay the amount of any settlement of the costs and damages finally awarded after appeal, if any, in any such suit, provided (1) that SCP is notified promptly in writing of any notice or claim or of threatened of actual suit and (2) at SCP's request and expense SCP is given assistance for the defense of the same.  MS shall have the right to approve or reject any settlement proposed by SCP which would result in a recovery exceeding the limitation of Paragraph 6(f). 

(c)  Following notice of a claim or of a threatened or actual suit, SCP may, without obligation to do so, procure for MS the right to continue to use the product as furnished or, without obligation to do so, may replace or modify the product, such replacement shall cause the product to substantially meet the specifications referenced in Paragraph 1 of this agreement.

(d)  SCP  shall have no liability for any claim of SCP's lack of right, title, and interest to the product or any claim of copyright or patent infringement based upon MS's (1) use of other that the latest release of the product retrieved from SCP if such claim would have been avoided by the use of such release, or (2) combination of an SCP program with a non-SCP program or data, if such claim would have been avoided by the exclusive use of an SCP product.  For all claims and/or suits arising under this subparagraph, MS will indemnify SCP for all of its costs, damages, expenses and attorney's fees.  Any such costs, damages, expenses and attorney's fees shall not be payable until and unless there has been a final judgment adverse to MS.

(e)  SCP shall have no obligation to MS for any claims made against it which arise from the use, sale, license or other disposition of the product outside the geographical boundaries of the United States, the current members of the European Economic Community, and Japan.  MS hereby releases and discharges SCP from any and all claims resulting from such use.

(f)  SCP's liability to MS under any provisions of the License Agreement, including this Paragraph 6, or any transactions contemplated by the License Agreement shall be limited to the amounts actually paid by MS under Paragraph 3.  SCP's limitation of liability is cumulative with all SCP's expenditures being aggregated to determine satisfaction of the limit.  The existence of more than one claim or suit will not enlarge or extend the limit.  MS releases SCP from all obligations (including those of Paragraph 6), liability claims or demand in excess of the limitation.  The parties acknowledge the other parts of the Licenses Agreement rely upon the inclusion of this Paragraph 6(f) herein.

7.  MARKETING AND NON-DISCLOSURE AGREEMENT:

(a)  With the exception specified in 2(d) above, MS shall have the right to market the product in object form only.  Other than as authorized in Paragraph 2(d), neither MS nor its so licensed OEM customers shall reproduce, duplicate, copy or otherwise disclose, distribute or disseminate the product in source code form (code or listing) in any media except for their internal use.  However, MS ans its OEM customers licensed under Paragraph 2(d) shall be free to use and disclose to others without restriction all information in non-tangible form and any concepts, ideas, know-how, and techniques contained in the product in any way whatsoever.

(b)  For the sales contemplated in Paragraph 2(a), MS agrees to obtain the written agreement of each of its marketing customers to the Non-Disclosure Agreement attached as Exhibit "B" or, a similar agreement of which SCP approves.  For sales contemplated in Paragraph 2(b), 2(c), and 2(d), MS agrees to sign sub-license agreements with restrictions on source code disclosure similar to those in this agreement, and further agrees to submit the language of this portion of any sub-license agreement for SCP's approval.

(c)  MS's obligation under this Paragraph 7 shall survive any termination or expiration of the License Agreement and shall extend seven (7) years from the effective date of this Agreement.

8.  LICENSE AND PROTECTION OF COPYRIGHTS AND PATENTS:

(a) MS will cause to appear on the product containers or labels and media a valid copyright notice.

9.  PROHIBITION AGAINST ASSIGNMENT AND SUBLICENSE:

This License Agreement shall not be assigned by MS without the written approval of SCP; provided, MS may assign this License Agreement to any purchaser of substantially all the assets of MS's software business.  MS shall not sublicense its rights under this agreement to any other person or entity except as specifically authorized by this agreement.

10.  TERM OF AGREEMENT:

This License Agreement shall be effective from the date a copy signed on behalf of MS is accepted by SCP at its Seattle, Washington, office until its termination in accordance with the terms of this License Agreement or December 31, 2055 which is earlier.

11.  DEFAULT BY MS:

SCP may terminate this License Agreement by giving notice to MS: (a) if MS fails to perform or comply with this License Agreement or any provisions thereof, including failure to promptly pay any amount due under the provisions of Paragraph 2 and 3; (b) if MS fails to strictly comply with the provisions of Paragraph 8; (c) if MS becomes insolvent or admits in writing its inability to pay its debts as the mature, or makes an assignment for the benefit of creditors; (d) if a petition under any foreign or United States Bankruptcy Act, as it now exists or as amended, is filed by MS; (e) if such a petition is file by any third party or an application for a receiver of MS is made by anyone and such petition or application is not resolved favorably to MS within sixty (60) days.  Termination shall be effective thirty (30) days following SCP's giving of notice to MS if the occurrence giving rise to the right of termination  has not been cured.  The rights and remedies of SCP provided in this Paragraph shall not be exclusive and are in addition to any other rights and remedies provided by law in this Agreement.

12.  OBLIGATIONS UPON TERMINATION:

(a)  If the License Agreement is terminated, MS shall return all full or partial copies of the product in MS's possession or under its control to SCP within ten (10) days following the termination date, including any in-house copies MS may have produced.

(b)  MS's customers and sub-licensees shall be permitted the continued and uninterrupted use of the product and any object code derived from the product provided MS has paid in full royalties to SCP for any such customer of sublicensee.

(c)  At the termination of this License Agreement MS will be deemed to have assigned, transferred and conveyed back to SCP all rights, equities, goodwill, titles, or other rights in and to the product, as it was delivered by SCP to MS.  Termination under this provision shall not relieve MS of the obligations it has assumed under the License Agreement, including, without limitation, its obligations regarding the confidentiality of the product.  From and after termination MS will not use internally nor employ the product or portion of any product which MS may use, sell, assign, lease, license or transfer to any third parties.

(d)  Termination of this License Agreement as a result of MS's default shall result in acceleration of MS's obligation to pay all sums MS contracted to pay under this License Agreement except for unearned royalties.

13.  NOTICES AND REQUESTS:

All notices and requests in connection with this License Agreement shall be deemed given as of the day they are deposited in the U.S. mails, postage prepaid, certified or registered, return receipt requested, and addressed as follows:

MICROSOFT:

Microsoft
10800 NE 8th Street
Bellevue, WA  98004
Attn:  William H. Gates

SCP:

Seattle Computer Products
1114 Industry Drive
Seattle, WA  98188
Attn:  Rod Brock

or to such other address as the party to receive the notice or request so designates by written notice to the other.

14.  CONTROLLING LAW:

This License Agreement shall be construed and controlled by the laws of the State of Washington and MS further consents to jurisdiction by the state and federal courts sitting in the State of Washington.  Process may be served on MS by U.S. Mail, postage prepaid, certified or registered, return receipt requested, or by such other method as is authorized by the Washington Long Arm Statute.

15.  MODIFICATION:

This License Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and merges all prior and contemporaneous communications.  It shall not be modified except by a written agreement dated even herewith or subsequent hereto signed on behalf of MS and SCP by their duly authorized representatives.

16.  BINDING EFFECT:

Subject to the limitations hereinbefore expressed, this License Agreement will inure to benefit of and be binding upon the parties, their successors, administrators, heirs and assigns. 

17.  ACCEPTANCE:

This License Agreement is to be considered accepted by MS and SCP upon its execution.  Following acceptance, SCP will promptly provide MS with the current 86-DOS source code and object code on diskettes along with the current 86-DOS documentation. 

18.  GENERAL:

(a)  This License Agreement does not grant SCP any right to use the trademarks or trade names of MS or its OEM customers or the right to refer to MS or its customers in connection with any product promotion or publication of SCP relating to the product.

(b)  This License Agreement shall in no way preclude either party of its OEMs from independently developing or acquiring materials and programs which are competitive, irrespective of their similarity, with the product or from making similar arrangements with others.

(c)  Nothing in this License Agreement shall require MS to identify its customers to SCP.  SCP shall have the right to have MS's outside auditors verify all royalties due to SCP.  SCP can request that MS verify the legitimacy of any copy of the product discovered in use by a third party. 

IN WITNESS WHEREOF, the parties have hereunto set their hands and seals this 6th day of January, 1981.  All signed copies of this License Agreement shall be deemed originals.

Seattle Computer Products Inc.

By Rod Brock Its PRESIDENT

Microsoft

By William H. Gates Its PRESIDENT




EXHIBIT "A"

SCPDOS Modifications

1.  Directory expanded to include date.

2.  Date above to be input by user upon startup.

3.  Date above to be accessable and thus set/reset thru BASIC.

4.  Editor modified to
    A.  Ability to abort an edit of a line and of an edit session.
    B.  Ability to page thru and edit a program that is too large for memory.

5.  Updated and expanded documentation for all OS interfaces.

6.  SUBMIT facility comparable to CP/M.

7.  Support of disk blocking/deblocking (Jan 15).




EXHIBIT "B"

REGISTRATION - NON-DISCLOSURE AGREEMENT
86-DOS (TM) DISK OPERATING SYSTEM

Party __________________________________________________

Address ________________________________________________

City ____________________ State __________ Zip _____________

_______________________________________________________
Equipment on which software will be used

The party above named and below signed agrees that it is receiving a copy of the above named software for use on a single computer only, as designated on this registration form.  The party agrees to fill out and mail this registration form to MS before making use of the software.  The party agrees to make no copies of the reference software except for the purpose of backup for the above specified computer and to strictly safeguard the original software and backup copies against disclosure to persons not specifically authorized by MS.  The party further agrees that unauthorized copying or disclosure of this software will cause great damage to MS and Seattle Computer Products and that this damage is far greater than the value of the copies involved.

_______________________________________________________
Date

_______________________________________________________
Signed

_______________________________________________________
Title
0002 Agreement of Sale between Seattle Computer Products and Microsoft, July 23, 1981
0004 Joint Development Agreement between IBM and Microsoft, June 10, 1985
0006 Letter final draft of Microsoft Products Agreement between Zenith Data Systems and Microsoft, August 24, 1987
0008 Letter from Bill Gates to Robert Carr, GO Corporation, December 4, 1987 ("It is too bad that you never got a chance to make Framework into the mainstream product it deserved to be. In the objects we are building for the object oriented versions of our languages we will have a concept very similar to your frame.")
0010 Memo from Bill Gates to Jeff Raikes, Feb. 20, 1988, RE: Draft Agenda for Apps Division Retreat ("Will we win by category strengths or by family strengths?...How do we achieve our cross-apps design goals?")
0011 2/29/88 "Microsoft Memo" from Jeff Raikes to Apps Staff Retreat Attendees, Re: Summary of Microsoft Applications Strategy. Includes a situation analysis that includes this sentence: "Microsoft significantly trails Lotus, Ashton-Tatte, and WordPerfect in office productivity Pagesoftware for IBM PCs and compatibles." Page 3 lists UNIX market share as being too small to bother with, and outlines using Microsoft Works. Page 5 includes this: "Perhaps the greatest opportunity to differentiate our applications family is tight coupling with a cross-applications macro language. The languages group will develop 'macro BASIC'. We must provide the user scenarios and design goals, and work with languages in defining the interfaces necessary for Microsoft applications to exploit this approach." Page 8 says "WordPerfect is the dominant product, selling approximately 35K units per month in the US, or ~3 to 1 over PC Word."
0012 3/10/88 Microsoft Memo from Jeff Raikes to Apps Staff Retreat Attendees, Re Summary and Action Items from the Apps Staff Retreat, cc to Russ Werner, Pam Edstrom, Valerie Houtchens. "Action: I will set up a meeting for the network group to explain to program managers and apps developers how they would like us to take advantage of their APIs." Page 2: "Action: ChasSt should follow up with CharlesS and others to nail down our understanding of why WordPerfect is viewed as more usable than PC Word." Page 4: "There was a long (and somewhat heated) discussion about our goals with PC Word vs. WordPerfect. This is especially interesting because of the investment we are putting into Word War."
0015 DRI Confidential: Differences between MS DOS 3.x and DR DOS 3.x
0016 Letter dated May 16, 1988 from Robert Carr, VP Software, GO Corporation, to Bill Gates. Offer to "share our product plans and show you the demo in our lab on a confidential basis."
0017 Master Software License Agreement between Microsoft and Hewlett Packard, May 23, 1988 [Same as Gordon 0017]
0023 Email from jeremybu to richardf, cc to joachimk, June 22, 1988, Subject Unisys. "If we start letting the big manufacturers off the per system hook, our 100% goal for DOS penetration depends on our success with a larger numbr of smaller accounts, and that threatens our dominance."
0024 Fax from Richard Dixon to Dick Williams, cc Frank Iveson, June 27, 1988, Subject: Asian Business Report. "...Microsoft are saying DRI DR DOS is full of bugs and many rumors floating around to the issue."
0025 Handwritten notes, July 1988, recording Gates remarks re GO.
0026 Microsoft Memo from Joachim, July 5, 1988, RE: DOS 4.0 US Sales Policy ("Per copy prices quote at 3 times the per system prices. It is important that the customer buys the shell. DRI cannot copy it easily and we do sell mice to OEM's. I am interested in per system mouse bundles with MS-DOS 4.0 and the shell. Sell the shell before you sell the mouse. Do not lose because of price.")
0027 Nondisclosure Statement between GO Corporation and Microsoft, July 8, 1988
0028A Microsoft July 12, 1988 Trip Report at Hewlett-Packard Software Division, by Mark Chestnut. "The purpose of this meeting was to determine what would be required to gain HP's commitment to license Windows Word." Partially redacted. Re putting in "NewWave hooks for Windows Word".
0031 Microsoft Memorandum to Steve Ballmer from Adrian King, cc to Bill Gates et al, dated August 22, 1988, Re: Running Windows Applications on OS/2 Presentation Manager. Suggests Project Manager would be better to focus on alone, not Windows. "We all believe that fundamentally OS/2 with PM really is a better platform for a superios business application: 16Mb memory, a real task scheduler, good swapping algorithms, no expanded/extended memory weirdness... but these facors must be combined to demonstrate the overall superiority of the platform."
0033 September 15, 1988 letter to David Yeh from the General Manger of Kampac Equipment Systems, Singapore, declining to defer commitment to DR DOS, due to a lack of compatible software packages. citing example of Novell Advanced Netware 2.0a, which "failed to run". Handwritten note October 29, 1989 says, "Copy Dick Dixon - I found this in my files. Time to reapproach them."
0034A Email to billg, subject DR. DOS, dated September 22, 1988. "Here follow the three 'differences' (between DR and MS DOS) that Aaron has been able to find so far.... I have asked legal about the implications of having our apps identify DR DOS and then either refuse to run or run with terrible performance."
0035 Bill Gates memo, re DR DOS, September 22, 1988 ("You never sent me a response on the question of what things an app would do that would make it run with MSDOS and not run with DR-DOS. Is there any version check or api that they fail to have? Is ther feature they have that might get in our way? I am not looking for something they can't get around. I am looking for something that their current binary fails on. This is a fairly urgent question for me and I have received nothing.") [Same as Gordon 0035]
0037 Memo from Bill Gates to Jon Shirley, Jeremy Butler, Dave Neir, Mike Maples, Steve Ballmer, Scott Oki, dated October 31, 1988, cc to Adrian King et al, Re: Australian Trip Report. "Novell has a huge telecom deal that Daniel will look into to see if we can change (DISNET - 15,000 workstations!)... We are losing badly to WordPerfect."
0038 Memo from Bill Gates to Pete Higgins, November 7, 1988, cc to Jon Shirley et al, RE: Excel/Lotus. "Our industry is driven by 'common sense'. Very few people in the industry can analyze products and trends at the real technical level. 99% of the people in the industry rely on what they hear and they want to stay in line with what everyone else is doing....Excel is not viewed as a mainstream product. It is not viewed as gaining share." Presents PR ideas to create an impression the industry was moving to graphics and common interface and that Excel was the future.
0039 Microsoft Memo from Jeff Raikes to Pete Higgins, November 17, 1988, Re: Achieving Critical Mass for Excel, cc Jon Shirley et al. "While unique ideas are an opportunity, much of what is discussed below may be viewed as 'blocking & tackling'. I strongly believe that is how the critical mass will be built." Last page: "Encourage the used 1-2-3 business." Footnote: "BillG deserves credit for this idea, as he explained how Sloan of GM stuck it to Ford Motor in the 30's using this strategy."
0041 Microsoft Memo from Jon Shirley to Bill Gates et al, dated November 21, 1988, Re: Excel vs. Lotus. "I am opposed to the price reduction plan for the following reasons: ... It is amazing but true that a large number of pc buyers are willing to purchase software with SRPs of $400 to $500. That makes this business uniquely profitable....Word Perfect is trying to improve their pricing as the real costs of the business, and the 800 number, are recognized."
0043 Microsoft Memo from Scott Oki to Bill Gates et al, December 1, 1988, Subject: Kill Lotus Strategy. "The purpose of this memo is to revisit the rationale for my proposal of super aggressive pricing action as an integral part of the "Kill Lotus Plan" (more reasonably known as 'Let's Get 30% Share for PC Excel').... Pursuant to Billg's memo, a small task force met and came up with a proposal. The operative goal was to spend between $10 and $20 million to gain 30% share of the spreadsheet market over an 18 month time frame."
0045 Memo to Steve Ballmer, from Russ Werner, December 18, 1988, Re: October/November Monthly Status Report. [Typeface very difficult to read, but re Windows and DOS.]
0050 Letter of intent outlining "the mutual understanding between Micrografx and Microsoft concerning the licensing of Mirrors product from Micrografx to Microsoft." [Unsigned, undated other than typed in 1989.]
0052 Email thread from Nathan, January 1989, to various parties at Microsoft, re his suggestions, made at the request of SteveB. "One parting comment is that this reminds me of the Windows vs. VisiOn issue. The analogy isn't perfect, but the situation was that we ... preannounced Windows, signed up the major OEMs and showed a demo to freeze the market and prevent VisiOn from getting any momentum. It sure worked - VisiOn died, VisiCorp died, and Dos kep on chugging."
0054 Email from richardf to karenhu dated Jan. 10, 1989, Subject: Tandon/good news. "To be crisp: MS gives Zero (0) dollars for Shell (DOS4)... Tandon gives Per processor (system) license; includes the 486. If this is it Great!"
0056 Microsoft Memo from Hank Vigil, Phil Welt to Pete Higgins, Mike Maples, dated January 18, 1989, Re: Microsoft Excel Exchange program, cc Sharon Decker et al. "Microsoft will offer PC Excel purchasers either $75 or a copy of Windows 286/386 if they send us: Their Lotus 1-2-3 system disk..."
0058 Letter from GO Corporation to Microsoft's Jeff Raikes, documenting a joint project between Microsoft Corporation and GO, Feb. 10, 1988
0059 Letter from GO Corporation's Robert Carr to Microsoft's Jeff Raikes, dated February 13, 1989, re drawing up a confidentiality agreement and then a visit by Microsoft's Victor Grabner to "inundate him with information via various briefings and discussions that I'll host him through".
0060 This is a 63-page collection of reports on January 1989 activities. Memo from Microsoft's Russ Werner to Steve Ballmer, February 14, 1989 Subject: January Monthly Report: DOS/Windows. "IBM has taken up some management bandwidth as they come to terms with learning to love Windows for the HPC project." Financials per product for January. Then, on page 8, there is a January Status Report by Jody Snodgrass to Russ Werner. Next, on page 10, A February Objective Report by Melissa Hunley to Jody Snodgrass, dated Feb. 8, 1989. Then, on page 11, a February Objectives Report from Gregory C. Lowney to Jody Snodgrass. "Successful meeting with Novell." On the next page, there is a January Status Report, February 5, 1989, from Lisa Cram to Jody Snodgrass. Voluminous memo, mainly on Windows 3.0, marketing and budget issues. "Release preliminary information on Windows version 3.0 to select ISVs, IHVs, Corporate accounts, and OEMs.... We are currently researching our device driver strategy and plan to implement changes with Windows version 3.0.... We were reminded of Novell's 'distance' from their end-users. All Novell products are sold and supported through their dealer channel.... Although not specifically tracked, the general impression from the Novell support staff is that very few of their customers have problems with Windows. They could not identify any specific bug or incompatibility (later, however, their development staff was able to identify some specifics).... They committed to working with us on future software compatibility and development.... Approximately 800 organizations will be receiving a letter indicating our interest in keeping them informed on upcoming releases and a special non-disclosure form.... Beginning 02/23, ISVs and Corporate Accounts developers (having met the criteria outlined in the letter mentioned above) will be getting preliminary information packettes and Windows 3.0 binaries and pMode debugger code. The focus is on cleaning up existing applications so that they will run with 3.0 - a complete listing of all of the 3.0 enhancements will not be provided." Attached at page 24 of the 63 page memo is an email from Marianne Allison/The Waggener Group and Kathryn Hinsch of Microsoft to Rich Abel, Marty Taucher, Russ Werner of Microsoft, dated Feb. 9, 1988, subject: DOS and Windows Monthly Summary, Jan. 1989. "Microsoft Windows focus in January was on ISVs. This month we worked with Corel to help maximize coverage of their Corel Draw program." Extensive media report. On page 32 there is another memo from Mark Chestnut to Russ Werner, 2/8/89 Status Report for January, 1989. Mainly on OEM issues regarding RUP and DOS in ROM, with list of what each required to cooperate, if anything. Subheading on "DRI Competitive Issues", particularly in the Far East and "negative PR on DOS 4.0 in the U.S. and other parts of the world." Also "larger IBM relationship issues" discussed at a meeting with IBM. On page 40, there is a "Multimedia Systems Group January 1989 Status Report" by Rick Hargrove, Manager. IBM discussed and the "inevitability of an important Windows/386 bundle finally sunk in." On page 46, there is a memo from Betsy TInney to Chris Doerr, dated Feb. 7, 1989, About January Status Report. Mainly about ISV documentation and input. Next page, a Progress Report for Jim Groves, Feb. 7, 1989, listing "accomplishments in January", including "Documented new file formats... for ISV release; will be usable in revised form in Programmer's Reference." Next page, Memo from Laura Knapp to Chris Doerr, Feb. 6, 1989, January Month-End Report. "In addition to editing documents for the release, an interim style sheet design and tag implementation were completed for the February ISV release." Next page is Steven Wallace's Monthly Progress Report, January 1989, working on documentation. Page 50 is Joan Karsch's January Accomplishments, February Goals report to Chris Doerr. Manuals. Next page is Dan Brown's Status Report to Chris Doerr, working on users guide to Windows. Page 53 is Mark McCulley's Status Report to Chris Doerr. Working on ADI and DSP Documents. Next page is Peggy Etchevers's January Status Report and February Goals. Specs. Next is Marc Smith's Status Report dated Feb. 7, 1989. Page 59 is Microsoft Application Notes - Running Microsoft Paintbrush from Windows.
0062 Bill Gates memo, RE Microgrphx, thread beginning Feb. 21, 1989, to mikemap, cc to steveb. "Steve talked to grayson at the conference. The said they are willing to make it 10k for big companies and 1k for companies with less that either 3M or 2m in sales. Based on this us getting full use for you including source code and rights to incorporate wherever at noe extra charge after that seems like a shoe-in." Also discussed is a conference with IBM also presenting on OS/2 and problems brought up by ISVs, including WordPerfect and DRI, about marketing it.
0063 Email thread from russw to joachimk kellyw, cc to jeffl et al, February 24, 1989, Subject Zenith/Win 3. "Is there anything we can do to give Zenith an OEM exclusive on Windows 3 in exchange for their development participation, say for 30-60 days? No longer can an OEM get an implied lead just by virtue of their participation on the BAK - except in the case of Compaq and pinball. All I'm asking is that we give Zenith the same kind of break that we're giving Compaq on pinball. I'm not sure how this works, but I suppose it involves the withholding of the *final* BAK to other OEMs for *testing" for the previously committed window. This doesn't raise any red flags because of course (at least in theory), the BAK partner gets preferential access to code by virtue of his development role.
0066 Email from kellyw to jeffl, March 16, 1989, Subject: Greedy? attaching email thread from philw to kellyw, and others, March 15, 1989, Subject: Excel Pricing for Zenith Bundle in the Educational Channel. CC to arleny et al. Bundled pricing for hardware/software bundle, the only way to purchase. "These will be acedemic editions, and there are absolutely no returns."
0067 Email from rcarr to jk, st, ce, March 16, 1989, cc: kd. "We've received back a signed agreement from Microsoft in which they've agreed to assign at least a 1/2 time employee to joint project definition with us to explore potential applications for our machine." [Evidently GO Corp.]
0068 3/21/89 IBM cover sheet. To L.K. Loucks, J. A. Soyring, T.D. Steele, cc T.W. Rogers from R. B. Hanrahan. Comments: Do not copy letter from Microsoft. Distribute on need to know basis only." Letter to James Cannavino, President, Entry Systems Division, IBM, dated March 17, 1989, from William Gates. "Nearly four years haave elapsed since the initiation of our Joint Development Agreement....It is critical that we develop and articulate a strategy to establish OS/2 as the dominant workstation standard.... It is our proposal that we pursue the opportunities for OS/2 and DOS as follows....DOS will continue to play an important role in expanding the low end of the market and in supporting the tens of millions of machines that are out there today that do not have sufficient power to handle OS/2. We can shape DOS so that it is complementary to OS/2. Microsoft believes it would be beneficial to merge DOS and Windows....It is also important to allow DOS machines to participate on a network with OS/2 nodes boosting the demand for OS/2 based servers." Suggestion for development: "Microsoft leads. ... IBM provides input... IBM enhances DOSs if needed. Microsoft develops Windows.... IBM pays Microsoft royalty for Windows SKU.... For all the above mentioned SKUs, it is necessary for both parties to have access to all source code and have the right to do derivative works."
0069 Handwritted notes, 3/29/89, about a dinner with Bill Gates and others. Re GO product.
0076 April 14, 1989 Microsoft License or Addendum Summary Sheet, by Account manager Scott Baisch, OEM Company: IDEA Courier Incorporated. Date of Agreement: Feb. 28, 1989. Effective Date of Agreement: Jan. 1, 1989. MS Products: MS-DOS 3.3, 4.01 - $41.00/System; MS Shell 1.0 @ $8.00/System; MS OS/2 1.0, 1.1 @ $155.00/Copy; MS OS/2 LAN Manager 1.0 @ $325.00/Subset Copy. "Yearly Commitment: $500,000 (1st yr); $725,000.00 (2nd yr); $946,250.00 (3rd yr). Total Minimum Commitment over 3 years: $2,171,250.00.... Initial Term extended to three years to allow IDEA to pay all pre-existing minimum commitments. For renewal after the Initial Term, MS agreed to renegotiate the royalties provided IDEA exceeded their minimum commitments (and forecasted ship rates)." Handwritten note: "This is Sweet!"
0080 From richardf Wed Apr 19 22 16:20 1989
To: pattya
Subject: Phoenix/DOS 3.3
Cc: jeffl melvinh richardf
Date: Wed Apr 19 22:16:19 1989

Dammit, we have to wquit talking to these guys about price, just refuse patty
we are not going to agree with them or tell them anything that would be illegal or even remotely construed as illegal.
having said that i havbe told melvin his price for 3.3 is going up +5 over 4.01 in may. he has not communicated this to his troops yet.
\001All we told Jon at comdex was that we were goign to increase the price. Tell Steve you know i am in the process of making changes but i forbid you to talk about them, if we do not talk to these guys about pricing we are clean, and that is how we will stay.
richardf

>From pattya Wed Apr 19 10:35:03 1989
To: richardf
Cc: jeffl pattya
Subject: Phoenix/DOS 3.3
Date: Wed Apr 19 10:15:07 1989

Steve Kalman requested our current "action plan" regarding DOS 3.3. He said that Joachim agreed with Jon at Comdex that we both need to start charging more money for DOS 3.3 to increase the demand for the "cheaper" DOS 4.01.

Steve suggested that he add a $5 surcharge for DOS 3.3 on top of what the customers would pay at each particular volume, but didn't want to implement anything until he knew he was acting consistent with what Melvin's group is doing. Since I didn't know that JK agreed to this, I asked Robe if he had heard anything about charging more for DOS 3.3 -- He hadn't.

I need to know how to set Phoenix' expectations, especially since we apparently made a promise and don't appear to be keeping it.

I request that I be informed of exactly what we agreed to at Comdex and what, if anything, we plan to do to increase the price of 3.3.
Thanks
Patty

ps- talk with jeff or me about this please. not melvin's guys

0082 Microsoft Presentation for the 1989 IBM PS/2 Forum. Steve Ballmer's talk, with slides, about the joint development of OS/2. He says DOS has sold over 35 million copies, a market growing at roughly 10 million units a year. Slide on page 7 shows "Key OS/2 Applications" and includes WordPerfect 5.0. Says OS/2 won't catch up with DOS in numbers any time soon, but will be second most popular.
0086 Letter dated April 27, 1989 from Ralston Purina's J. Michael Palmer, to Bill Gates. "My purpose in writing this letter is to urge a more aggressive position at Microsoft with respect to delivering OS/2 PM applications.... The particular issue on which I wish to comment is waht I will call a 'Windows first, OS/2 eventually' strategy in applications development." Concern was that DOS with or without Windows was "too fragile" for their needs, and they wanted a multitasking operating system.
0088 Amendment "N" (14), Effective date 5/1/89, Products Academic Edition Excel 2.1 Packaged Product; Academic Edition Word, 4.0, 5.X Packaged Product. "Minimum order quantity 100 Units, order multiple 50. Product once shipped, not returnable." Then License or Addendum Summary Sheet. OEM Company Zenith Data Systems. Similar terms. Handwritten note: "Joachim, Jon, These two amendments are intended to help 'burn up' Zeniths pre-paids ($4m)." Attached is Amendment dated Sept. 1, 1987, between Microsoft and Zenith.
0090 Handwritten notes "Microsoft - all day meeting" Bill G - Jeff Hanlon, Summer '88 re GO.
0091 Handwritten notes "Issues to talk thru w/ Lloyd" re GO. "Obj-O Basic"
0092 Agenda: Initial Microsoft - GO Joint Project Meeting, May 3, 1989
0093 Handwritten notes. "Sister Applications" ideas. GO. Drawings.
0094 Email dated May 3, 1989, to Larry Coconnor, cc FKing et al, Subject: VCPI & MSFT "Lotus and Microsoft Confidential" Reports on phone calls to Microsoft employees. "I had gotten earlier this year the spec for 'protected mode' back doors in Windows, under our CDA with Microsoft, along with working prototype code. I also have a promise to receive an update from them 'in April' (of Beta Windows 3 software, and interface specs for the 'back door'). This update has not come, and now that it is May I have been calling Phil and Russ to check on it. I spoke to Phil yesterday (a very chilly phone call), and he said we were 'probably on the Windows 3 SDK list, and that is in Mfg.' He did not want to discuss the subject of our earlier discussions about the 'back door', which they called the 'protected mode virtual machine' capability."
0097A Email from nathan to billg et al, May 8, 1989, Subject DOS and OS/2. How to sell IBM on the idea of a DOS/Windows bundling, with some features removed for OS/2. "Windows is a practical near term thing, but OS/2 certainly is the future."
0100 Email from rcarr to jk, May 10, 1989. "Lloyd Frink will come down next Mon & Tues to do the technical learning of what programming for our environment will be." Asks for thoughts on guidelines.
0101 Memo from jkaplan to rc, May 10, 1989. "My thinking is that while he is here, we should cooperate fully with him.... I think we should request that he not remove (or copy) documents from the offices for the time being, and explain that this is not a personal criticism but reflects the early state and relative lack of definition of our relationship with MSFT at this time."
0103 May 15, 1989 email from Marianne Allison/The Waggener Group and Kathryn Hinsch, Microsoft to Rich Abel, et al at Microsoft. Subject: DOS and Windows Montly Summary: April 1989. "Focus this month was on planning for FY 90 and resolving OS/2 positioning issues. Consensus after various meetings and inputs from Bill Gates and others was to aggressively sell Windows as a Microsoft GUI and a Windows sale as a Microsoft win.... PCWeek ran a story on DR DOS apparently at one-year anniversary of DR DOS announcement. Because it indicated DRI is making inroads and the product is excellent, this wasn't good news for MS-DOS... We do recommend pulling together a strong set of facts about DR DOS and educating press about possible incompatibilities and other product shortcomings. Mark Chestnut is working with Ray Duncan to do a technical analysis. (Initial consensus from DOS program management is that DRI has a product which competes very favorably against MS-DOS.)"
0104 Email thread, May 12 to May 15, 1989, between bobgu, philba, davidw, mikedr, markwa. Subject alternate startup code. Wanting to add to the SDK some sample code, but "this will effectively document a few things that have previously been hidden: the APIs, Inittask, Initapp, and Waitevent. Any objections? "... don't explain in detail what any of those things do." Caveats that "these are version specific entry points and are guaranteed to change." mikedr: "No, they should remain UNdocumented." Decision to release only as an OBJ (no source) to "avoid disclosing the APIs."
0109 Microsoft Memo from Mark Chestnut to Russ Werner, Subject: Status Report for April, 1989, dated May 22, 1989 - ("The first MS product with the non-tested DOS warning code, Quick Pascal, was released....I am also planning to hire an Independent DOS guru to to an in-depth analysis of MS vs. DR DOS, with the idea of somehow making these results available to the press.") [Same as Gordon 0109]
0110 Microsoft Memo to Steve Ballmer et al from Mark Chestnut, date 5/26/89, Subject: ROM DOS Business Plan, which is attached.
0111 Email thread (3) on Windows 3 pricing and new policy on run time, "we have been trying to be hardcore about the run-time remaining real mode only, since we finally have a way to give away a free run time, but still provide a tremendous reason for run-time users to buy the full retail product (i.e. you get pMode).... In general we want to get rid of the run time after a transition period of 6 months or so, post 3.0.... Bill supported this strategy. Our largest isv is balking however, since they are concerned about the performance of their large apps in the real mode environment." Participants include billg, russw, richab, steveb. Dates Oct. 20, 1989, Aug. 26, 1989, May 30, 1989.
0116 Robert Carr, Agenda 6/9/89
0119 Letter from Bill Gates to IBM's Joe M. Guglielmi, VP and President, Applications Systems Division, dated June 23, 1989. "...I am concerned about press reports of IBM's plans to market 1-2-3/G. We took part in the OfficeVision announcement with the assurance that Excel would receive equal billing. We strictly respected your pre-announcement embargo on press contact, while Lotus executives were briefing editors on your plans. I am unhappy at the way this ended up positioning Lotus' role in Office. I know that you have a contract with Lotus, but also understand that you have some flexibility. I urge you not to market 1-2-3/G because it would change our relationship and send mixed messages about the openness of OfficeVision."

Transcript:

[ on microsoft letterhead ]

June 23, 1989

Mr. Joe M. Guglielmi
IBM Vice-President and President, Applications System Division
IBM Milford
Internal Zip E01
472 Wheeler's Farm Road
Milford, CT 0640

Dear Joe:

I haven't seen you in quite awhile so I thought I would summarize in letter form a
few things that are on my mind. I would like to follow up on them in person in the
very near future.

First, congratulations on the Office Vision announcement. We appreciated the
opportunity to participate. The demonstration of OS/2 Excel and Mail Highlighted
the potential for third-party applications to snap into Office Vision and reminded me
of the opportunities we have to work together. I would like to establish a richer
dialogue on such areas as data exchange, how Lan Server can work better with
Office Vision, improving Office Vision's size and speed, and understanding
how applications will fit in.

At the same time, I am concerned about press reports of IBM's plans to market 1-2-
3/G. We took part in the Office Vision announcement with the assurance that Excel
would receive equal billing. We strictly respected your pre-announcement embargo
on press contact, while Lotus executives were briefing editors on your plans. I am
unhappy at the way this ended up positioning Lotus' role in Office.

I know that you have a contract with Lotus, but also understand that you have some
flexibility. I urge you to not market 1-2-3/G because it would change our
relationship and send mixed messages about the openness of Office Vision. If IBM
markets 1-2-3/G, Microsoft and IBM we be competitors in the spreadsheet
business, and Microsoft will be, at least indirectly, a competitor to Office Vision. I
I want to avoid this because, again, we have a lot to gain by working together.

The openness of Office Vision to third-party applications is key to it's success. A
decision by IBM to market 1-2-3/G would suggest that Office Vision is not open.
On the contrary, it would suggest a closed, proprietary environment requiring
special versions of off-the-shelf software. Of your three options -- (1) Marketing 1-
2-3/G; (2) Remaining "spreadsheet neutral"; or (3) Marketing Excel -- we have a
strong preference for the latter two. Since the spreadsheet business isn't Microsoft's
only business, we can be very flexible. I am very motivated to find a way to work
together.

Microsoft Excel is the leading graphical spreadsheet today and will be the first
graphical OS/2 spreadsheet by a number of months. We are working aggressively
to provide an Extended Edition connectivity solution for OS/2 Excel. We have
already made great strides marketing Excel in partnership with IBM. The ACIS
group is the best customer of Windows Excel, and we have some exciting plans to
market OS/@ Excel with ISD and several of your European Subsidiaries.

I would like to develop this partnership even further with the first and future
versions of OS/2 Excel, perhaps including IBM Executive participation in the Excel
announcement, as well as the other applications we are developing for OS/2.

In closing, I am concerned with what I am hearing about 1-2-3/G and Office Vision
and how such a relationship would put our objectives at odds with each other. I
would like to do whatever I can to avoid this outcome. Let's meet to discuss my
concerns soon.

Best Regards,

s/Bill Gates

William H. Gates, III
Chairman and CEO
Microsoft Corporation

0135 Bill Gates memo to steveb, RE OS Strategy, Aug. 6, 1989 - (*I am afraid of a structure with IBM where we are in partnership for the following reasons: a) server businesses arent enough of a gold mine to be a huge part of our goal. With IBMs cost structure I would like you to explain to me how a server business can even break even.....d) once os.2 takes over I see our profit per machine actually dropping and never increasing again...")
0138 Memo to "list", including Bill Gates, from T1 Task Force, Aug. 10, 1989, RE T1 1990 Situation Analysis. Promotional ideas re Windows 3, etc., to create a "high level of noise", product info, and info about competitors. 29 pages. "Each of the shipping Mac products (except the Office) is facing a significant competitive threat, in some cases for the first time. Word 5 (as well as Word for Windows) could face a serious threat from WordPerfect 5.1 and WordPerfect/PM (rumored to ship in the T1/T2 timeframe).... It is critical to launch our new applications well. Although many of the apps will be new, all will face stiff competition from the market leaders in the character-based world -- expecially Lotus and WordPerfect -- who will almost certainly be releasing new versions during this time period....Specifically, WordPerfect 5.1 is expected to ship this fall with a new interface (drop-down menus), mouse support, and spreadsheet link, which will significantly erode PC Word 5.0's current feature advantages. At this point WordPerfect may be shipping as much as 70K units a month and is the leading competitor for all our word processing products; an OS/2 PM version of PC WordPerfect is also expected for first quarter of 1990, and a Windows version is expected possibly by mid-year. In addition, Word for Windows will face Ami Professional -- a souped up version of their original entry-level product -- which is expected also during this same period....Until WordPerfect 5.1 ships, PC Word needs to be consistently evaluated head-to-head against WordPerfect, where Word can often win." [P. 27, WordPerfect analysis, including financials. 1988: revenues $179M; for 1989 projecting $300 M. "WordPerfect across all platforms accounts for 85% of sales, over $90 million....8.8% of VARs carry WordPerfect products, as opposed to 3% for Lotus, Microsoft, and Ashton-Tate. This translates to $74,000 in sales for WordPerfect, $19,000, $14,000, and $10,500 for Lotus, Microsoft, and Ashton Tate." On the market for 10 months.]
0139 Memo from Joachim Kempin to Billg, Russw, Steveb, Jeremybu, dated August 15, 1989, subject: OEMs and Windows 3.0. "In summary, despite some danger signs, our per system DOS distribution strategy is still working well despite DRI's constant threat, HW-OS price pressures and certain distribution conflicts."
0140 Two emails, July 27 and Sept. 7, 1989, between billg, russw, steveb et al, subject: feedback on pulling the run-time
0141 >we are currently working out the details of this new policy. You will receive information about this in the near future.
Roxanna

From markwa Tue Aug 29 17:03:20 1989
To: davidw
Cc: jonm
Subject: DefineHandleTable
Date: Thu Nov 07 16:40:01 PDT 1991

David, it sounds like you're the guy to answer the question below.

>From jonm Tue Aug 29 17:03:22 1989
To: markwa
Subject: DefineHandleTable
Date: Tue Aug 19 17:00:30 1989

Hi . . . could I ask another question about Windows? This question is indirectly related to the SDK, but if you think someone else would be more appropriate to ask, please pass it on...

The question is: do you think it is feasible to document "DefineHandleTable" for ISV programmers to use?

"DefineHandleTable" is an undocumented Windows call which is used by the Apps Division. It allows great speedups when using moveable memory, because it permits the program to find the current address of a moveable segment (or detect it it's paged out in EMM) without having to make a Windows call.

I am designing features in Microsoft C which will allow the Apps Division to use our standard retail tools, while increasing the level of support for ISV Windows programming. One of the options I am evaluating is to make a system using "DefineHandeTable" available to ISV's. (There are other good options as well.)

I am not sure about this since Microsoft's public position has been that Apps Division programmers do not have special hooks into Windows, when, in fact, they do. Therefore, it might be embarrassing to document "DefineHandleTable" at this late stage, as part of a system for ISV's to use. Could you give me some feedback on whether this is an option?

Thanks,

Jonathan

CONFIDENTIAL

From markwa Wed Aug 30 08:20:48 1989
To: davidl
Subject: Re: Floating Point Exception App
Date: Thu Nov 07 16:40:01 PDT 1991

WinMail 1.21 brucen Thu Nov 07 16:36:32 1991Page: 31

[Ed: This is an exhibit from Gordon v. Microsoft, Exhibit 141.] [Same as Gordon 0141.]

0143 Report titled "Management Discussion and Analysis; Results of Operations; Fiscal Year Ending August 31, 1989"
0144 Email from Manfred Schindler; "MS-GmbH OEM Report - September '89"
0146 Email from ronh to faliparo jeffl makon yhjeon, Sept. 13, 1989, Subject: Win 3 Per System Campaign:"The campaign has several important objectives....3. Create OEM and user demand for the DOS/Win bundle prior to IBM's intro."
0147 Microsoft Interoffice Memo, dated Sept. 14, 1989, To Applications Product Marketing, Bill Gates, et al, from Jeff Sanderson, RE: Windows Line FY '90 Marketing Plan.
0149 Email from billg to chrism et al, date Sep 19, 1989. Subject: Stan Shih (acer dr dos). "Stan called me at 7:15 this morning to discuss the fax. He said that a subsidiary called 3rd wave had decided to use DR DOS because: 1) We said ROM DOS wouldn't be available until october and they needed it right away; 2) Price; 3) Turbo basic included. I said #1 was wrong and #3 was wrong....I said we would consider a special quote for a very low priced machine with DOS in ROM.... I said all we are asking for is a chance to quote to these people and avoid acer becoming the first real company to license DRDOS. He said fine he would make sure that happened."
0150 Email from jeffl to billg, Sept. 19, 1989, Subject: Acer/ROM DOS. "My gut feel is if we match DRI's price then everything else goes away, but at the same time I don't see how Acer can afford to risk tarnishing their image by offering an inferior product. Thus, I have always opposed lowering the price just to match DRI."
0151 Microsoft employee email to Leonard Liu, President, Acer, about DRI. (copy not clear) "I'm sure that Alan Sugar would not mind me telling you about his decision for Amstrad. He decided to stay with MS-DOS (they use the disk version). In 1985 when he first came out with his low end 512k machine, he shipped both DRI's product and MS-DOS; his market research showed that virtually all users chose to use the Microsoft product, rather than risk the compatibility questions that DRI's operating system products raise."
0157 Email ["confidential IBM"] dated Oct. 6, 1989, to LDBVAX:: FKING, Subject VCPI Support in Windows 3. "On September 28th Ben Williams and I met with members of the Microsoft Windows 3 development team to discuss the issues surrounding the support of VCPI in the 386 version of Windows 3. [Describes the technical problem that prevented applications such as 1-2-3 from running properly and solution suggested.] Perhaps more relevantly, we can always recommend that our users use Desq/View/386; I understand Bill goes non-linear when he hears about Quarterdeck."
0160 Email dated Oct. 17, 1989 to jeffl from malvinh, Subject Sun Moon Star. "SMS has been in 'bed' w/DRI since DRI-DOS began. I asked what % of their entire product would MS be on. Donald said 50% first year and less in future. I then asked why, he said because DRI will do ANYTHING SMS needs and that is why they (SMS) will give majority of business to DRI.
0164 Oct. 30, 1989, Confidential, to John V. Kalb, Jr., IBM, from GO Corporation's President and CEO S. Jerrold Kaplan. "I think it would be a shame if we are not able to work together. GO has technology, and IBM has market presence and credibility. The combination will allow us to establish a major market for notebook computers.
0169 Email marked "highly confidential" from jeffl to joachimk, RE: Acer/ROMDOS, Nov. 2, 1989.[Discusses why Acer won't be interested in the "UPB strategy" for ROMDOS. "Reason: they already pay us over $1.6M per quarter and about 1/2 of that goes into UPB. Since they would be paying us the same amount of money anyway since their romdos machines won't help them exceed the qrtrly minimum commitment payment.
0170 Email thread from v-wmaria to richab, Nov. 2, 1989, Subject FYI. Also from richab to kathrynh. "It seems that the Windows group should have been talking to gartner some time ago.... The purpose of this call is to talk with them regarding OS/2 -vs - Windows from the applications developers perspective." Response: [recommends Ballmer; "Also Maples does a great job. Maples says -- my job is to sell applications. I look at the possible platforms out there. I say to myself -- how can I sell apps. I pick Windows. I pick PM. I don't pick PM because I work for Bill Gates. I pick PM because I can sell apps. My group contributes more than 50% of the revenues of this company. I make business decisions, etc., etc. I don't this this supports the being in bed together thesis. Now one could say, gee what do you expect Maples to say. But he delivers this very credibly. He also says stuff like, hey if Next sells enough machines next year, maybe i'll develop for it..."
0173 Letter to Intel's Dave House, Nov. 6, 1989 from Bill Gates. "Recent activities by Intel are forcing us to reexamine our strategy of focusing solely on Intel microprocessors for our systems software. To avoid frustration we plan to focus the same percentage of our chip-specific work on Intel processors as Intel devotes software work to Microsoft operation systems. The Intel UNIX announcement last week crystallizes our concerns, but this is only one in a pattern of activities by Intel that are inimical to a strong PC industry based on Intel microprocessors and Microsoft system software. Intel is making substantial investments in UNIX.... The press is calling and asking why Intel is promoting UNIX instead of OS/2.... Microsoft and SCO have given the Intel architecture the strongest position in the UNIX world. Despite all of our concerns about UNIX, which we have communicated to Intel very clearly, the only outcome has been to agree not to publicly criticize SCO's UNIX product. Intel is undermining both OS/2 and SCO UNIX."
0175 Lotus letterhead, letter dated Nov. 7, 1989. To Russell Werner, General Manager of DOS/Windows, Microsoft. Re: Lotus 1-2-3 3.0 and Windows 386 Enhanced Mode. From David P. Reed, VP, Chief Scientist/ Spreadsheets, Lotus. CC Bill Gates, et al. Attached memo "Making 1-2-3 3.0 and Windows 386 Enhanced Mode Coexist." [Discusses Microsoft version of problems in a technical paper.] "This section makes a great deal of the need to re-program the PIC on every protect to real mode switch; since 1-2-3 neither reprograms the PIC nor has any dependency on its contents, we see no need to do this....Finally, it is sated that it will be impossible to hot key from 1-2-3 to Windows, and that the only way to switch away from the application will be to exit. Based on the fact that 1-2-3 does not interfered with keyboard interrupts in any way, we see no reason that this should be true."
0176 Confidential Fax from J. A. Connavino to Bill Gates and John Sabol, re OS/2 project. November 10, 1989, "TRUE COMMITMENT TO IBM/MICROSOFT PARTNERSHIP". [Terms agreed upon and those outstanding.]
0179 IBM and Microsoft Software Newsletter, Statement of Direction. [OS/2 Windows Positioning.]
0181 FAX dated November 17, 1989 of a message the previous day from Bob Frankston to jmanzi, fkind, dreed and forwarded to fingari, ebelove, bjohnston, Subject: Update on Microsoft's view of the world. ("Gates summary of the IBM announcement is that 75% of the 286/386 machines shipping have 2 MB or less and are thus Windows machine and that all they did was to cede a part of the remaining 25%. It wasn't an appropriate place for me to challenge him or accuse of changing the story.") [Same as Gordon 0181.]
0182A Email dated Nov. 27, 1989 10:34 EST. The To is "xenix uunet!microsoft!gregl." and the Subject is "Re: beta agreement". The email is apparently from David Reed. It begins by generally praising Microsoft's development tools, e.g. based on considerations of performance, reliability, debugging. It then goes on to remind Microsoft that Lotus also considers WATCOM and Metaware products. However, it notes that these companies really serve other markets. The email then lists several complaints/bugs/feature requests, such as deficiencies in debugging and C++ integration, and poor optimization.
0184 Email dated Nov. 29, 1989. It is to Steve Ballmer, Russ Werner, Phil Barrett, Mike Dryfoos, and Gordon Letwin, from Bill Gates. The subject is "Future versions of DOS". Gates notes that DOS is important and profitable to Microsoft, but that they have not advanced it very much technically. He then notes recent efforts to change this, by making real technical strides (e.g. creating a new DOS team, replacing the shell). He describes a "widespread belief that DOS 4 offers no real benefits, might have bugs, takes more memory and breaks things like redirectors" and says this has both contributed to copyright infringement and hurt sales. He notes that DR DOS compares well, especially on price. He says Microsoft should come out with new DOS that is "smaller", "faster", "sexier", and "more powerful", and this will require rewriting code. This includes undoing DOS 4's changes. Next, he notes that no one really has worked on core DOS, but that Gordon (presumably Letwin) will. He suggests places for improvement, such as caching and allocation. He says utilities can be bought from third parties. Next, he thinks about how to work on core code, noting the compatibility concerns. Finally, he reiterates the email and sets an interim release date of three-six months. This release would undo DOS 4 and have "the nice things we have been planning" THen in January 1991, there would be another release with major rewrites and third party code. Gordon Letwin will work mostly on this second release. He says the team (incl. Letwin) should focus on long term improvements.
0185 Letter/fax dated Dec. 1, 1989. To James Cannavino (?), Vice President and General Manager of Personal Systems, IBM, from Bill Gates. Gates says MS and IBM have an opportunity to move to "single site development." Gates notes 3.3 and 4.0 are out, and 4.0 is buggy and bulky. Gates says IBM is planning a CSD (?) release of 4 in early 1990 for hardware support. IBM and MS are jointly planning for DOS 5.0, and MS is planning a incremental 4.0 release. Gates says the IBM/MS collaboration on DOS has been frustrating because the joint management is lacking. Gates notes that DOS is important to both companies, and DR DOS is competing. He reiterates that they can work more efficiently by having both companies' engineers work at Redmond. Gates says he has 14 people, incl. "one of my best technical talents" (possibly Gordon Letwin, see 184). Gates says James has "50 people on DOS today who could move to (?) other things." The letter is marked as CCed to steveb, russw, johnsa.
0188 Dec. 7, 1989 email from Lee R. Reiswig, ESD Director Software Strategy, to steveb, petern, subject "Computerworld 11/27". "I think the "OS/2 lite" article in Computerworld doesn't help either of our caueses. I also hope it wasn't intentional." Reiswig gives examples to show he's serious about working with MS. He notes that he doesn't answer public questions about their agreement. He reiterates that he's worried about MS's commitment. CCed to Dick Hanrahan, Marty Voss, Tom Steele, Harry Sundberg, Susan Farity.
0193 Dec. 15, 1989 memo from Lloyd Frink to Jeff Raikes, subject "November 1989 Monthly Report". "After six months of trying to find a complete, or nearly complete, hardwriting package to buy, Infa is the only company that took the right approach ... should purchase" IBM is doing "very good research and development" Want to work with IBM on this, but Boca branch is blowing them off. Notes prototype Win 3 app doing basic handwriting recognition (elastic matching). Notes areas for work in hardwriting recognition, including buying Infa HWX.
0194 December 15,1989 Attendance list (including a representative from Novell) and 182 slides from a Microsoft Systems Design Review. [Ed: The attendance list is a who's who of software in 1989. The presentation divides time from 1982-1989 the "DOS" decade and 1990-2000 in which Microsoft represented their challenges as including popularizing the graphical user interface.] There is a section on OS/2 and on Windows. There are many slides mentioning APIs and writing apps for both Windows and OS/2. It is of course impossible to know what was said about the APIs. There is no mention on the slides of IShellBrowser, iShellView, iPersistFolder, and iCommDlgBrowser. There are slides showing "shell" as the top layer of a programing stack. Technologies featured include OS/2 Porthole to Win APIs, Portable OS/2, Dynamic Data Exchange and Object Oriented Systems Technology.
0200 Win Word FY '91 Marketing Plan, dated Dec. 25, 1989. Have 6-9 months to make Word for Windows dominant. Win 3.0 shipped in May, "WordPerfect will not ship a Windows product until Q4 FY 91 at the earliest, and Windows 3.0 shipped in May". Describes details of sales and distribution, such as "WordPerfect is carried in 90% of the top indirect outlets. WinWord is carried in about 55%." Talks about release of WiniWord 1.1, and its improvements (such as installation guide). Other improvements "will not come until ver 2.0." Biggest problems are: 1. "WinWord has a low penetration of the Windows (3.0) installed base"; 2. "WinWord does not have a clear image as a leader in important audiences: influential and users, the press, resellers, and business users"; 3. "Word for Windows doesn't have high penetration in large corporate accounts, both in terms of breadth across the F1000 and also depth within individual accounts"; 4. "WinWord is priced much higher than WordPerfect 5.1 in the retail channel. People do not view WinWord as a good value"; 5. "WordPerfect will promote their Windows version over the next 6-9 months"; 6. "Samna will promote Ami Professional as easier to learn friendlier, and more powerful during the next 6-9 months".

Microsoft says their overall objective for next 6-9 months is to "gain market share." Discusses various ways to do so, including cross-selling with Windows, getting power users, retailers to push, selling to Fortune 500 companies. Mentions distributing evaluation copies, direct sales, lowering price, offering support. Describes marketiing messages and ads. In public relations section, want to "Reposition WordPerfect as the one-dimensional company struggling to keep up with the latest technology" and "Reposition Ami Professional as the easy-to-learn, poor man's publishing tool". Mentions importance of reviewers, and ways to influence them. Reiterates possibility of dropping price. Describes direct mail campaign offering trials. Important to support corporate customers, offer WinWord seminars, consulting, visit user groups. Want to develop sales tools showing benefits of WinWord over competitors. Phil Gilberts has given good PR to WinWord, want to replicate this. Want to research customers. Offer samples to OEMs. Create a program that offers rewards to experts in WinWord (Microsoft MVP). Leverage the Kelly Program (?). Discuss end user training conferences, "Class-in-a-box". Gaining market share among law firms through direct mail, demos, PR work. Successful in "educational channel." Unmentioned plan to "counter" WordPerfect at COMDEX.

0204 March Status Report: European OEM Division", but Jeff Lum. "Revenue for the month was $15.3M versus budget of $7.5M", largely due to Siemens license. "Finished the quarter at $16.9M in revenues vs. budget of $15.1M". List of new business, and pending new business. Various news about promotions, company changes. Issues includes, "Philips continues to delay the signing of their Windows 3.0 amendment, in spite of the fact that they have bene shipping since January. We many need to get nasty if we don't see it by the end of April." "As of this writing 23 signed DOS 5.0 licenses." 9 major OEMs outstanding. List breaking out "Packaged DOS" sells. Details about each division's DOS sales, more news. "GmbH picked up some intelligence that DRI plans to announce/ship DR DOS 6.0 12 weeks after we announce DOS 5.0. DRI being real aggressive in Italy wiith an OEM called Staver. Offering DRDOS between $8-12. Andreab and Maurb fighting real hard to keep Staver away from DRI." "Sandyd arranged a productive meeting between Joachim and Malcolm Miller. Joachim was able to squash any more random ideas about DRI on the 8086s for at least another year.

They signed their DOS 5.0 amendment as well as an agreement to bundle German Works on selected machines." "Mark continues to get good account penetration into Philips and Magnavox via the Multimedia Issues. That's the good news. The bad news is that we uncovered some agreements they have been working on with Geoworks and Lotus on some of the machines on the consumer electronics side. Mark and donnag are putting together a plan to unseat these competitors on the current platform if not the next generation of products." "Met with Schneider and Rusniok at CeBIT and agreed to license the Shell on non-Windows machines for $1." "Joachim met with Theo Leven reached agreement on the outstanding license. We get Windows or Works on every PC, plus DOS 5.0 when they start shipping the German version. Vobis is one of DRI's largest OEMs worldwide (largest in Europe). This was a great win for us. This is just the beginning, however. We need to stay close to this company as we know DRI is very close and they will do all they can to win these guys back (we we do have them locked up for another 1.5 years!)." Detailed revenue and sales spreadsheets, then an organizational chart.

0205 Chain of three emails, all dated Jan. 10, 1990. Original from markche to billg, subject "Alien DOS Check", cc billp, markche, philba, russw, steveb. "implemented in the following ms produts". List: QP, QASM, Fortran, BASIC PDS, Works 2.0, Flight Sim 4.0. "The alien DOS check does not detect the most recent version of DR DOS (3.41); it does detect version prior to this." Reply, from russw to tomle, subject "what can we do about this?", body "i.e. to change the detection mechanism" (obviously to detect newest version of DR DOS). Reply to that, from tomle to billg, russw, cc markche, subject "Re: what can we do about this?": "We had to really stretch to get this mechanism to work at all [...] It will be very easy to break our own apps [...] I think it's a bad idea, and with Gordon looking at drastically altering the kernel the chance of breaking ourselves is even higher [...] I think we'll only hurt ourselves".
0213 Jan. 21, 1990 letter from Jerry Kaplan, subject Hamilton Trip/Status Report, marked GO Corporation confidential. "Met with Mike Quinlan and several of his reports [...] has been assigned as the new negotiator with us. Mike is a VP and corporate officer reporting to Jim Cannavino at ESD [...] on a special 6-month assignemnt to develop the multi-media end of their business" Mike is "sharp, and well prepared, but not necessarily that astute or experienced about new technology at its introduction to the market" Mike's goals are: "Show that Ham (?) can work effectively with young, aggressive, talented small companies like us", "Shorten the development cycle and time to market for them [...] part of this is that our design will let them get their own HWX research into the field quicker.", "Send a message to Microsoft that although they are a valued business partner, they are not the only partners" "They will provide us with the capital we need. We will stand up together - soon - and try to create a standard environment." "we talked about the competition, particularly Microsoft. We compared notes. Mike made it clear that they didn't want to work with Microsoft on this, particularly because we are the "right" choice, and part to send them (and the world) a message." "Mike wanted to go public as soon as possible, like before our announcement. This took me by surprise, and I discouraged him. I thought that back room disclosure was adequate at this time. He thinks that Cannavino plans to tell Bill Gates about this at a meeting taking place around 2/15. I cautioned Mike on Bill's reaction." "We reviewed poritions of their ESD's product plans [...] ESD Boca will tolerate an agreement with us only if (a) they believe we will ultimately migrate to OS/2 and (b) we aren't planning to build any "high end" versions of our product that will compete with theirs."
0219 Email from v-wclail to adriank, billg, jons, martyta, paulma, petern, russw, steveb, Cc: v-wclail, v-wmaria, v-wpamed, date 2 Feb 1990 17:34:42 and later forwarded to richab, date 5 Feb 1990 09:09:06. Subject: PC Week article on "repositioning of Windows and OS/2". Other people mentioned in document: Gina Smith, Rob Garretson, Sam Whitmore, Dale Lewallan (Ed: All at PC Week?). Implies that MS/IBM internal discussions are at variance with MS public position on Windows and OS/2. Discusses handling of PC Week reporters and editors. Concluding sentence: "We may in the face of this, need to reconsider.
0220 Multiply forwarded email. All the headers:

From billg Wed Feb 7 19:24:14 1990
To: nathanm
Subject: funny calls
Date: Wed Feb 7 19:21:10 1990

From mikemap Wed Feb 7 09:58:44 1990
To: billg steveb
Subject: Re: Message
Date: Wed Feb 07 09:53:56 1990

From steveb Tue Jan 30 17:15:08 1990
To: billg mikemap
Subject : Message
Date: Tue Jan 30 17:15:06 1990

From markw-a Tue Jan 30 17:12:37 1990
To: brianmac chrism chrisp leno steveb tomru
Cc: bobga bobgu chasst jeffr jodys mikemaD peteh philba vijayv
Subject: Resolution of undocumented windows calls
Date: Tue Jan 30 17:43:14 1990

Lists undocumented APIs used in Microsoft applications and recommendations from the Windows group whether to document them or discontinue their use. A few were listed as not requiring documentation or already documented.

APIs listed: AllocSelector, BeginDeferWindowPos DeferWindowPos
DefineHandleTable EndDeferWindowPos EndMenu ExitWindows
FillWindow FreeSelector Get80x87SaveSize GetCodeInfo
GetControlBrush GetCurPID GetCurrentPDB GetPhysicalFontHandle
GetRgnBox GlobalDiscard InitApp InitTask KillSystemTimer
LoadCursorIconHandler LongPtrAdd MenuWndProc MulDiv
PatchCodeHandle SetSystemTimer ToAscii WaitEvent __AHINCR

0222 Memo on Microsoft letterhead, marked Highly Confidential; poor quality copy, very difficult to read.

To: Jeremy Butler, Chris Smith, Bernard Vergnes
From: Joachim Kemp
Date: February 9, 1990
Subject: OEM Sales in the 90's
Cc: Bill Gates, Jon Shirley, Richard Fade(sp?), Ron Hosogi(sp?), Bob O'Rear

Discusses sales forecasts, DOS pricing, royalty forecasts, OEM marketing and sales strategies, organization of sales groups, weaknesses of sales efforts.

0223 Fax under Digital Research cover sheet.
To: Dick Williams DRI-UK
From: R.O. Olson
Subject: Feb Status

Handwritten message on cover sheet is nearly illegible. 4 additional pages of DR-DOS 5.0 marketing materials.

0224 Memorandum to long list of Microsoft folks

To: List
From: Russ Werner
Subject: Windows Push 1 and 2 Recommendations/Decisions
Date: 2/14/90

This is about marketing for the introduction of Windows 3.0.

0226 Multiply forwarded email. Headers:

From dalech Tue Feb 20 09:36:59 1990
To: richardf
Subject: Re: Urgent/Win Word and WinExcel IBM bundle
Date: Tue Feb 20 09:33:19 1990

>From mikemap Fri Feb 16 15:49:39 1990
To: jeffr peteh robg
Cc: cathyw chrisga dalech johnsa robg susanb
Subject: Re: Urgent/Win Word and WinExcel IBM bundle
Date: Fri Feb 16 15:44:47 1990

>From robg Fri Feb 16 14:31:45 1990
To: jeffr mikemap peteh
Subject: Urgent/Win Word and WinExcel IBM bundle
Cc: cathyw chrisga dalech johnsa robg susanb
Date: Fri Feb 16 14:31:43 1990

Discusses pricing and strategy for negotiating with IBM for a Word/Excel bundle to be included with a new consumer-oriented IBM system.

0227 Memo to long list of Microsoft folks.

To: List
From: Jonathan Roberts
Re: Win 3.0 Update Plan
Date: February 21, 1990

Discusses marketing plans to get existing customers to update/upgrade to Windows 3.0.

0231 TO: Steve Ballmer
FROM: Peter Neupert
SUBJECT: Systems Retreat Summary
DATE: February 28, 1990
CC: Ballmer, Steve
Butler, Jeremy
Cole, David
Fade, Richard
Gates, Bill
Gray, Fred
Kempin, Joachim
King, Adrian
Lazarus, Jon
Maritz, Paul
Murray, Mike
Myhrvold, Cameron
Myhrvold, Nathan
Neupert, Peter
Rubin, Darryl
Sabol, John
Shalman, Steve
Shrley, Jon
Taucher, Marty
TWG
Werner, Russ

"The goal of the retreat was to clarify/develop our operating systems product strategy for the desktop. We clarified a number of issues with regard to the relative positioning of Windows and OS/2. We also determined that our JDA relationship with IBM is at a necessary crossroads."

43 pages. Pages 1-3 are typed, the rest are handwritten presentation foils, presumably from the subject retreat.

Windows is to be the primary focus in the short term. OS/2 to be high-end add-on to Windows/DOS systems, primarily for enterprise use.

Discussion of short-term strategies with Windows and OS/2, longer term strategies for 32-bit, RISC, and NT. A 'Radical Plan' to dump IBM and OS/2. Customers, competitors, UNIX, ISV's, corporate IS/IT. Royalties, standard retail prices.

0232 MS-GmbH OEM Report - March 1990

To: Joachim Kempin
Jochen Haink
From: Manfred Shindler
cc: Christian Wedell
Ralf Klocke
Hans Apel
Thomas Koll
Roland Rock
Karl-Heinz Breitenbach
Peter Prikryl
Borbl(sp?) Brockman
Jorgen Weidenhausen
Jorgen Strangh-ner (sic)

Discussion of sales, marketing, DRI/DR-DOS marketing inroads into customers.

0233 Memo on Microsoft letterhead to a long distribution list.

From: Mike Negrin, Michael Rhamy
Re: Results of T-3 1989 Internal Market Share Rebate Program and
Preliminary T-1
1990 Data

Internal Market Share (IMS) Rebate Program

From the first slide:
" - Reward resellers for increasing or maintaining their Microsoft IMS in specific categories (awareness and focus)
- Avoid field negotiation process over the establishmento of individual goals
- Base goals on Microsoft sell-through vs. competition sell-through - not stocking level or buy-in commitments"

0234 From peterbra Tue Mar 6 09:38:34 1990
To: richab
Cc: Michaik peterbra ronh
Subject: RE: Tochiba Windows deal
Date: Sat Feb 17 22:25:35 1990

Discussion of the value of a deal to put Windows on Toshiba 3100SX laptops.

0236 Windows Product Marketing Quarterly Objectives Review. March 7. 1990

Revenue figures for first half of fiscal year. Objectives for Win 3.0 rollout, including getting Win 3.0 clean apps for rollout and details of advertising and "push funds"

0239 From jonre Mon Mar 12 22:06:06 1990
To: richab
Subject: Palantir
Cc: jeffr richmac russw scotto
Date: Mon Mar 12 22:03:58 1990

>From scotto Mon Mar 12 21:55:32 1990
To: jonre richmac
Subject: Palintir
Cc: johnfi Johnpa rgms sherryr
Date: Mon Mar 12 21:52:56 1990

The Win 3.0 beta included copies of WinWord and Excel. An offer was extended to other ISVs to mail to the same beta testers. The Scotto reply includes this line: "We should not allow Win ISVs to do this. I understand the church and state issues. But one has to draw the line somewhere."

0240 From johnfi Mon Mar 12 22:30:20 1990
To: richab
Subject: Palintir
Date: Mon Mar 12 22:09~23 1990

>From richmac Mort Mar 12 17:05:24 1990
To: Jonre
SubJect: Palintir
Cc: johnfi johnpa rgms scotto sherryr
Date: Mon Mar 12 17:02:49 1990

>From jonre Sun Mar 11 21:10:05 1990
To: johnpa richmac sherryr
Subject: Palintir
Cc: Johnfl
Date: Sun Mar 11 21:08:00 1990

>From sherryr Fri Mar 9 11:15:29 1990
Your Honor, if we could look at Exhibit 299. Now, keep in mind what the excuses have been so far: No gaps, no pages missing. Well, this is pretty easy. This is a PowerPoint presentation, Your Honor, and you see at the top there it says, "page 39"? The next page is 41, and the next page is 43. Now, up to this point, pages 1 through 38 are all there, but pages 40 and 42 are not there. But it seems -- really, I thought this was easy. Now, if you look down, Your Honor, at the bottom, the Bates numbers, the Bates numbers go in order, 63, 64, 65, and when I say pages missing between Bates stamp, that's what I mean. They stamped these pages consecutively, but, in fact, page 40 is missing, page 41 is missing. So, you know, I really did think this was pretty easy, but -- "just give me these missing pages." But, "No, no," they said, "there are no missing pages." Well, that doesn't work out very well for this, I got to say. This seems 52 so clear. So now what they say to me is, "Well, this is not a very important document, Roxanne. This is not" -- "we don't think you really need these pages because we don't think this document is important." Well, it was important enough for it to be offered as an exhibit in two other states. So, you know, I want all the pages. I just want all of the pages. To: johnpa jonre richmac
Cc: Johnfi sherryr
Subject: Palintir
Date: Wed Mar 07 11:12:03 1990

Another thread (like Exhibit 239) about the idea of letting competing applications have access to the Win 3.0 beta testers list. Includes the quote from jonre "I’m all for treating Windows ISV’s fairly and equally, but I think if we knew this was going to happen, we might have limited the Win 3 preview quite a bit more."

0241 From johnfi Mon Mar 12 22:32:24 1990
To: richab
Subject: Palintir
Date: Mon Mar 12 22:11:52 1990

>From Johnfi Mon Mar 12 08:23:16 1990
To: johnpa jonre
Subject: Palintir
Date: Mon Mar 12 08:23:14 1990

More discussion of sending MS apps to Win 3.0 beta testers. Some duplication of Exhibit 240. Includes: "This type of mailing is, unfortunately, the price we have to pay for not considering the ISV issues when mailing out copies of our apps to the Win3 list. These ISVs are extremely pissed and going public about our unfair advantages: 1 sales force, "secret" calls in the OS, inside competitive info on other apps, etc, etc. While we know that we play relatively fair, the truth is that we don’t. Having spent three years in Apps, I’m very familiar with the consideration we don’t give to this Church/State issue."
0242 To: O & M
Fr: Hank Vigil, Dawn Trudeau, Rich Tong
Re: FY91 Planning
DT 3/13/90
cc: Pete Higgins, Vijay Vashee

FY91 COMMUNICATIONS PLANNING - PC EXCEL

Analysis of revenue, competition for Excel. Roadmap for future versions and market research needs. Handwritten notes on priorities, problems, opportunities.
0243 Letter to IBM VP and General Manager Jim Cannavino from Microsoft's Bill Gates, dated March 9, 1990, re OS/2 ("I am disappointed that we did not meet before IBM made a font decision. IBM has now defined SAA to require font technology that Microsoft does not have JDA rights to. The JDA has been the one guiding light of our work together, and is the foundation of Microsoft's business. We make commitments to customers based on the JDA; for example, the commitment to provide them with source code for OS/2. I was hoping that my letter on this topic would convince you to reconcile the JDA with your font decision before you made a public commitment to ATM. I was hoping to see an announced commitment to put OS/2 on the Power 6000. This would have avoided the perception that AIX gives the broadest coverage and compatibility... GO is competing with us for software developers including new companies like SLATE. ... I was disappointed to see that the AIX networking strategy conflicts with the PC networking strategy.... I was surprised to read that a group in IBM is implementing Novell protocols on the mainframe.... Microsoft is planning to announce Windows 3.0 on May 22. The proposal we have received to license Windows for all of your 286 machines might give us an opportunnity [sic] to reinforce our work together at the announcement. ... The only way I think that OS/2 will take off quickly is to get it bundled with 386 hardware.... It is important to decide soon if you agree with this since it will have a huge effect on our OS/2 marketing plans. If you are willing to bundle then we should keep our marketing activities going full force. If not, Microsoft may have to back off...." [Same as Gordon 0243.]Your Honor, if we could look at Exhibit 299. Now, keep in mind what the excuses have been so far: No gaps, no pages missing. Well, this is pretty easy. This is a PowerPoint presentation, Your Honor, and you see at the top there it says, "page 39"? The next page is 41, and the next page is 43. Now, up to this point, pages 1 through 38 are all there, but pages 40 and 42 are not there. But it seems -- really, I thought this was easy. Now, if you look down, Your Honor, at the bottom, the Bates numbers, the Bates numbers go in order, 63, 64, 65, and when I say pages missing between Bates stamp, that's what I mean. They stamped these pages consecutively, but, in fact, page 40 is missing, page 41 is missing. So, you know, I really did think this was pretty easy, but -- "just give me these missing pages." But, "No, no," they said, "there are no missing pages." Well, that doesn't work out very well for this, I got to say. This seems 52 so clear. So now what they say to me is, "Well, this is not a very important document, Roxanne. This is not" -- "we don't think you really need these pages because we don't think this document is important." Well, it was important enough for it to be offered as an exhibit in two other states. So, you know, I want all the pages. I just want all of the pages.
0245 From richardf Fri Mar 16 22:02:49 1990
To: paulma
Subject: Compaq Presentation ....
Cc: jeffl joachimk
Date: Fri Mar 16 22:02:47 1990 >From paulma Fri Mar 16 08:57:39 1990 To: richardf Subject: Compaq Presentation .... Cc : steveb Date: Fri Mar 16 08:56:18 1990

From richardf Thu Mar 15 13:53:52 1990
To: joachimk pauline russw steveb
Subject: Compaq Presentation ....
Cc: bjornh jeffl
Date: Thu Mar 15 13:51:36 1990

Discussion of presentation to Compaq and the confusion of wether Microsoft should be encouraging Compaq to bundle hardware with Windows 3.0 or OS/2 given the upcoming big rollout of Win 3.0 and the later release of OS/2 v2.0. The first message in the thread reports that Compaq is getting pressure from ISVs to go with OS/2.
0249 From: REISWEG -- RWQVMO8
TO: CLAUSON --SCRVMPC1
03/26/90 13:50:51
TO: MSMAIL --BCRVMPC1 MICROSOFT MAIL
FROM THE DESK OF: L. R. REISWIG. JR.
ESD VICE PRESIDENT PROGRAMING
SUBJECT: (IC) NOTES FOR BILL GATES - DAVE MCKINlEY MEETING PART 2

REISWIG AT RHQVHOB, 826-3320
6F1/44 SOMERS, NY
*** FORWARDING NOTE FROM SCHULMAN--NINVMJ 22:O3.90 19:08 ***
TO: KALESF --EHQPROFB FRANK KALES
FROM: _SY SCHULMAN 731-8143 SCHULMAN AT WINVHJ
SUBJECT: NOTES FOR BILL GATES - DAVE MCKINNEY MEETING - PART 2

Discussion of IBM and Microsoft's preferred timetables for Windows and OS/2. MS wanting to push the next OS/2 release to the end of the year with the big Windows 3.0 release in mid year.

0252 To: Gary Ericson
David Greenfied
Nick Holt
Barry MacKichan
John Morey
Rob Shurtleff
Allen Wells
Jeff Weems
Chris Zimmerman
CC (cover letter only): Richard Bowen
Eric Candell
Bob Matthews
FROM: Bruce Burger
SUBJECT: Laser Visions
DATE: March 26, 1990

Four white papers on how to build a mail/personal information/groupware system. Several proposals include using new features in the shell. Others suggest how the work could be divided up between the Windows (OS) Group and the Applications Group. One proposal suggests: "This approach represents a one-two punch at our existing email competition. By giving away a simple client that works either with SFS or spitfire, we erode heavily into their low-end customer base. By significantly changing the rules on what it means to be part of the "office environment" we force them to adapt (at significant development cost) or look like anachronisms. We are creating millions of potential sockets for advanced services, where we will have both a time and a name-brand edge over the competition."
0255 From paulma Tue Mar 27 09:02:17 1990
To: billg jeremybu joachiak mikemap patern richardf sbdirect steveb
Subject: MS SYSTEMS SW FOCUS -- LONG MAIL -- paper copy too
Date: Tue Mar 27 08:59:58 1990

Six page strategy document. It is partly cut off on right side. Expresses concern that MS cannot win in all the areas that it has taken on. Proposes 'some ways that I think we could better focus ourselves and have industry thank us, instead of view us as "across the board enemies".' The main proposal is to create an "information socket" on the desktop that other software could plug into. The specification for this socket would be under the "nominal control" of a "neutral entity".

0258 From nathanm Sun Apr 01 13:41:02 1990
To: billg jeremybu joachiak karenh mikemap paulma patern richardf sbdirect steveb
Subject: re: MS SYSTEMS SW FOCUS
Date: Thu Mar 10 11:24:00 PDT 1992

A response to Exhibit 255. Supportive of the proposal. Talks about the challenges of the MS operating systems with changing hardware. [ed - I do not understand the 2 year discrepancy of the two dates in the header. The 1992 date is printed on footers so it may be that this copy was printed out in 1992, but the times on the footer and header are 10 minutes different]

0259 Memo dates April 9, 1990, from redacted, "Business Development Executive, Business Development, IBM, U.S." [but signed R. Seymour] to R.H. DaFoo et al, Subject: Microsoft, outlining "key points for JAC to discuss with WHG on April 11" ("...the principal tasks ahead of us in negotiating a complete 'partnership' with Microsoft.... 1990 Cruiser Product Plan - ... MS has changed plan w/o IBM agreement, must have groundrule for mutual agreement.... We're not speaking with a common voice. Microsoft has publicly re-positioned OS/2 for developers and for LAN servers rather than the desktop. They are telling our European marketing groups that OS/2 2.0 will never be viable in 4 megabytes.... Microsoft has unilaterally embarked on major changes to the agreed OS/2 2.0 plan.... The diversion of effort from the agreed Cruiser plan to Hydroplan without IBM agreement indicates that Microsoft is implementing a new managment process before we have agreement on what that process should be. At COMDEX we discussed a long term partnership that provided for wach company to have access to the other's technoogy in core software. ... Microsoft also does not agree to provide the derivative rights that IBM requires for a product that is so important to our strategy. In order to successfully conclude these negotiations, we need Microsoft's agreement to these fundamental principles of partnership.... IBM has put $500 million into the development of OS/2, done all the System Testing and most of the marketing. Microsoft's expressed desire is to get to general OEM pricing of approximately $20 on a per-system basis. At Microsoft's current $21/9 offer, IBM would be paying the same price as any other OEM after having made these major investments.") [Same as Gordon 0259.]
0260 April 9, 1990

Mr. William Gates
Microsoft Corporation
[address]

Dear Bill,

Needless to say, I am reminding youi of the grave concerns that we have at Borland about having Brad Silverberg join you in a position where he could directly or indirectly make use of Borland trade secrets. I will leave this discussion aside from this message.

You have stated to me that despite the "Brad Silverberg" incident you would like to see the relationship between our companies improve. Here's our opportunity to get started on better footing.

As you well know, we are currently looking at the possiobility of moving our Turbo languages and tools to Windows 3.0 and Presentation Manager. Having the Turbo products on these platforms would greatly stimulate the market and accelerate the availability of a large number of applications. We hope to work with Microsoft to gain access to some components necessary to allow us to develop these products cost effectively. This letter outlines the relevant business and technical issues, and summarizes the status to date on these issues.

Business Issues:

Documentation is an important area that we hope to cooperate on. It is unreasonable to expect a Turbo Pascal for Windows user to purchase the SDK and read through C-oriented documentation in order to program. We propose that you license us the SDk documentation and provide it to us in soft copy format so we can modify it to support Pascal programmers. We would like to receive any modifications that you make to the documentation on an ongoing basis. We are willing to provide you with any modifications that we make as part of the agreement.

We would like to license the SDK. In particular, some header files such as windows.h, some utilities such as the spy, and the debug kernel are critical. Again, we are willing to share any modifications that we might make. We would also like our users to be able to utilize the Windows Help engine to build help into their applications.

________

Mr William Gates
Microsoft Corporation
April 9, 1990
Page Two

Steve Ballmer and Cameron Myhrvold had previously proposed to license to us the OS/2 SDK for an annual fee of $100K per year. A royalty per copy sold is not acceptable. Note that Apple provides similar functionality to its ISVs for a one time fee of $50. What we propose for the Windows SDK is an annual fee of $10K per year.

Technical Issues:

Cameron has committed to supplying source code for WUNDEBUG.DLL to us (for internal use only) in order to document the RegisterPtrace interface and to allow us to develop an equivalent DLL which is not Codeview specific. In return, we've agreed to supply Microsoft with documentation we develop for RegisterPtrace and to provide a version of the derivative debugging DLL. We may need your help to expedite this commitment.

We also need documentation on the real-mode interfaces used for debugging WINDEBUG and RegisterPtrace only help is with the problem of debugging protect-mode apps.

The next topic is the debug kernel. Users cannot safely develop applications without the debugging kernel available in the SDK. You should eiter provide this as part of the retail kernel or make it available to vendors for pass-through. The following list of files constitute this kernel:

GDLEXE
KERNEL.EXE
KRNL286.EXE
KRNL386.EXE
SKERNEL.EXE
USER.EXE

We also need a clear license to use the following list of header files (maintaining Microsoft's copyright) as well as the ability to transcribe them for use as Pascal interface specifications:

WINDOWS.H
DDE.H
CUSTCNTL.H
ASSERT.H
WINDOWS.INC

Further, we have asked for the resource format and help format. In the first case, we need this to properly deal with resources in our language products. We need the help format to provide utilities that allow cominging user and Borland help and other kinds of customization.

___________

Mr. William Gates
Microsoft Corporation
April 9, 1990
Pagre Three

Status To Date:

To date, we have had discussions between Gene Wang (General Manager, Languages), Rick Schell (Director of R&D, Languages), Eric Swenson (staff engineer) who visited Microsoft, and Russel Werner, Cameron Myhrvold, and Mark Walson on these topics. Evidently, Brad Silverberg has also been thinking about Windows. Eric Swenson's visit to Microsoft was not fully productive, because Microsoft's thinking on how to cooperate with Borland was not worked out, and Windows 3 was not built with Windows-oriented debugging in mind. In general, we have felt a lack of urgency on the part of Microsoft in getting back to us with concrete answers. Often, we've scheduled meetings only to be told that certain issues haven't been resolved yet and the meeting needs to be rescheduled.

More recently, Cameron has been very helpful in assuing us that Microsoft will support Borland in our efforts to create world-class Turbo languages and tools for these platforms. We have discussed Borland's participation in the design of Windows 3.1 in order to support debugging, for example. These sentiments need to be turned into actions as soon as possible.

Summary

Borland is the leading supplier of languages and tools on PCs in units sold. Turbo products for Windows/PM would greatly accelerate Windows/PM software development and lead to more rapid adoption and greater success for these platforms. I hope that we can quickly come to agreement on the issues raised above. Could you please respond to this letter with a firm proposal within the week? Thank you for your prompt attention.

Here's our intention to make it all work, Bill. I'm looking forward to your reply.

Sincerely,

Phillipe Kahn

PK:emf
cc: Steve Ballmer
John Shirley

0261 To: Duncan Baldwin et al
From: Mike Skelton
Date: 12th April 1990
RE: PRESS RELEASE WITH NOVELL

Please find attached my first pass at an information sheet for DR DOS and NOVELL NETWARE working together.

0264 From carls Fri Apr 20 1990
To: joachimk richardf
Cc: markche russw
Subject: Re: Chax Haba - Austin Bell Computers
Date: Fri Apr 20 1990

Well, this guy has just called me back for the third time and tells me that no one has tried to call him yet. [Ed: Intel's Gordon Moore told him to call Bill Gates. Company was shipping DR DOS, and Moore "thought we would want to try to convert the business to MS-DOS or even Win3.0."]

0267 [Ed: follow up to 264. "doris" says "I'll give Chaz the following quote - DOS 4/Shell and Win 3 @ $45 per system... one year license term VERY LOW due on signing (even waive it, if necessary)"
0270 Windows 3.0 PR Activities Status email thread. From Marianne Allison/The Waggener Group to Bill Gates and various Microsoft employees, April 27, 1990.
0274 Email from Karen Hurlbut to Jeff Lum, Richard Fade, Mark Chestnut, Tom Lennon, April 30, 1990. RE: Tandon Meeting Report. Handwritten note: "DRI being aggressive!" Report on visit to Tandon, to present MS DOS and find out about DRI DOS activity in Tandon. Tandon said MS DOS was not yet competitive with DR DOS in CPU management, memory management, compatibility with existing applications compared to Windows/386. Nevertheless, Tandon's notebook would not run DR DOS.
0275 Microsoft Memo to Rich MacIntosh, et al cc to Bill Gates, Steve Ballmer et al, dated April 30, 1990, RE: FY91 USSMD Strategic Planning ("FY90 was the year of profitable attainment of revenue....There is now constant awareness of the need to maintain gross margins of no less than 74% of net revenues.... FY91 is the year of GUI. Not just any GUI. The real strategic opportunity is market possession of those sockets with our Windows applications. This is the single largest opportunity for the company to exploit in FY91. Timing is critical. Currently, the category is absent our traditional competitors in the key product market segments. This will not be the situation for long. Lotus, WordPerfect, Aldus, Ashton Tate, et al will all have Windows based applications available within the next year. It is a key strategic imperative to coalesce around and marshall our sales and marketing resources to fully exploit this once in a lifetime opportunity.... We will continue to develop the brand Microsoft asset. In an industry where product life cycles are short and technological advantages brief, brand Microsoft will provide one of the few sustainable marketing advantages." [Same as Gordon 0275.]
0277A Memo, not on letterhead, marked GO Corporation Confidential

To: Mike Quinlan, IBM
From: Jerry Kaplan, GO
Subject: Possible call to Intel
Date: May 7, 1990

Intel considering investment in GO. Paul Otellini may call Mike as part of due diligence; Jerry is giving Mike permission to discuss GO.

0278 [Ed:The main portion of this exhibit is a USENET post by Gordon Lettwin. There are some email/Usenet headers at the beginning:] Date: 8 May 1990 8:10 est
Via: vax
To: fking, fingari
Subject: Microsoft views on systems support

This ramble gives you some idea of how others at MS think about their role as systems vendors.

You will note that Letwin's argument (reproduced below from comments to a usenet forum) about VCPI can be paraphrased as:

we will not support VCPI because 1-2-3 needs it, and we wouldn't want to break important applications such as 1-2-3.

---------------------------------
Forwarded message

via: mailbox vax, dreed on VAX at Lotus (LDC) ** Message Received OK
From: BFRANKSTON "Bob Frankston"
Date: 7-MAY-1990 17:17:33.01
To: LDBVAX::dreed
Subject: FYI/Gordon Lettwin on Migration
Source-date: 7 May 1990 17:12 est
(Ed: it looks like one or more lines were blanked out here)

---------------------------------
Forwarded message
via: mailbox news, newsxfer on VAX at Lotus (LDC) ** Message Received OK
From UNIXML::"news"
Date: 6-MAY-1990 18:18:55.18
Received: by Dnimail (v2.0); Sun May 6 18:18:05 1990 EDT
From news Sun May 6 18: 18:03 1990
Received: by lotus.com (4.1/SMI-4.1)
id AA15348; Sun, 6 May 90 18: 18:03 EDT
Path: louts!uunet!microsoft!gordonl
From: microsoft!gordonl (Gordon LETWIN)
Newsgroups: comp.os.os2
Subject: Re: What Is Microsoft's Migration Strategy From DOS to OS/2?
(LONG)
Summary: the realities of OS support
Message-ID: 54472@microsoft.UUCP
Source-date: 5 May 90 20:00:58 GMT
References: 29439@cup.portal.com
Organization: Microsoft Corp., Redmond WA
Lines: 190
Apparently-To: newsxfer@ldbvax.lotus.com

[Ed: The body of the Usenet post follows. It relates to the question of why OS/2 will not support VCPI (whatever that is), which Lotus apparently needs. Mr Letwin defends this by noting that removing support for any feature can cause problems for users, who want their existing programs to continue to work on the new version of the operating system.]

0279 Date: May 9, 1990
Notes for call with Mike:
Subject : announcement and manufacturing contract

The writer is concerned that things aren't going well. Plans for an announcement that IBM doesn't seem to be supporting. Names mentioned: Mike, Sue King, Cannavino, Jim.
0280 Slides from Microsoft Executive Staff Retreat
15 slides address Microsoft-IBM relationship
12 slides address winning server market.
Oracle, Novell, and Unix regarded as competition. Discussion of strategies to win server market.
0281 Microsoft Memo, 3 pages

To: Bill Gates, Mike Hallman, Jon Shirley
From: Mike Maples
Cc: Brad Chase, Lewis Levin, Scott Oki, Apps BUMs, Apps Group Product Managers
Date: May 10, 1990

Re: Request and justification for incremental FY 91 Marketing $

Asks for additional marketing money for applications. Discusses details of current spending by business unit and product. Considers introduction of Windows an opportunity to gain market share for applications.

0282 Slides from Executive Retreat, dated 5/11/90.

First slide: Apple Study Group
Ballmer
MacIntosh
Maples
Marquardt
Yee

17 slides, slides numbered 1-15 and 17-18.

Discusses Microsoft Mac application business, Apple's problems, Apple's hardware plans, possible responses to Windows 3 introduction.

0285 Brochure, "Windows/OS/2 Positioning" [Same as Gordon 0285.]
0286 Memo dated May 16, 1990 from russw to billg and steveb, Subject: I have asked philba to spend a lot of time making dos 5 happen fast ("I believe that their ems and load-hi modes are incompatible with Win 3.0.") [Same as Gordon 0286.]
0288 [Ed: This 3-page document discusses the plans for and challenges in marketing Excel.]

Microsoft Memorandum:
To: Hank Vigil
From: Susanna Foels
Date: May 18, 1990
Re: Microsoft Excel Product Marketing Challenges in Next 6 Months

[Ed: excerpt from pg. 1]: "Develop a plan and execute with strength and momentum. We should create hype and anticipation for our product - and leverage the fact that on the Windows platform we will have 2nd generation GUI. Let's take full advantage of this competitive advantage and thereby regain technology leadership. To the extent we are able, we should stall the sales of Lotus because people are waiting for/evaluating Excel and Microsoft's Windows products as a strategic choice. This is not advocating preannouncing, but I do advocate building anticipation where possible."

[Excerpt from pg. 2]: "- Seed top channel accounts with free or nearly-free software."

[Excerpt from pg. 3, regarding "Apple Computer Relationship"]: "Our objective is to increase Excel sales by increasing our involvement in Apple's marketing promotions. The key issue is that while Microsoft is the largest and most-experienced Macintosh software developer, we receive little marketing cooperation from Apple."

Complete transcript:

T

To: Hank Vigil
From: Susanna Foels
Date: May 18, 1990
Re: Microsoft Excel Product Marketing Challenges in Next 6 Months

A. Regain Technology Leadership

we need to identify and market our competitive advantages by communicating aggressively with the press and directly with influencers corporate accounts via MSTC.

  • Take advantage of being a true Windows app
  • Leverage MS Windows family of Apps
  • For Mac Excel, leverage the case of use, design & reliability advantages
  • Comarket with 3rd parties that provide tools we are lacking in our current product

B. Leverage MS Sales Force and Windows Emphasis

We need to empower our Microsoft sales force. They need our help - tools and communication to combat the current Lotus momentum. All of us need to be in closer contact with this group to get them knowledgeable and excited to sell against Lotus.

To take advantage of Windows 3.0 - specifically, produce a WinExcel, Windows 3.0 and Winword bundle at a very reasonable price.

C. Remain active in Excel 3.0 Product Development

The way to win in the long run is to deliver the product our customers need. We need to work more closely with program management and development to make sure that we are satisfied with the tradeoffs which are being made for Excel 3.0 in terms of implementation of features. Specifically, some decisions will need to be made regarding System 7.0 support and we need to make sure the right tradeoffs are made, since System 7 and Apple support are critical to Excel's success.

D. Plan for Excel 3.0 Launch

Develop a plan and execute with strength and momentum. We should create hype and anticipation for our product - and leverage the fact that on the Windows platform we willhave 2nd generation GUI. Let's take full advantage of this competitive advantage and thereby regain technology leadership. To the extent we are able, we should stall the sales of Lotus because people are waiting for/evaluating Excel and Microsoft's Windows products as a strategic choice. This is not advocating preannouncing, but I do advocate building anticipation where possible.

Retail Channel

Our objective is to sustain Excel's leadership position through the slow period after DataAccess (CL/1 support) is old news and before Excel 3.0 is launched. With the introduction of Excel 3.0 our emphasis will change to educating Microsoft reps and RSPs on new features, promoting our new position vis a vis the competition, and assuring our continuing sales as the Macintosh spreadsheet leader. A strong effort in the retail channel early in FY '91 will help to create a barrier to prospective entrants (such as Lotus) expected later in the fiscal year.

While Excel dominates the existing Macintosh market, the retail channel is changing, and we must take advantage of these changes in order to maintain and solidify our market dominance. We will strive to achieve our objective by addressing three major changes:

  1. Resellers have targeted small and medium businesses because margins are better than those in the corporate account market. By providing resellers with solutions-oriented programs and materials we can convince resellers to recommend Excel to their small and medium business customers.
  2. Resellers are focusing increasingly on outbound sales. According to our ASR Advisory Council, "80% of our resellers prioritize outbound selling as a selling practice and only 20% engage in 'pushing boxes'". To take advantage of this we must deliver reseller materials that are tailored for resellers' outbound focus.
  3. Wingz seems to be gaining momentum and credibility, particularly in retail storefronts. RSP's steer customers to Excel and Wingz, but recommend Wingz if the customer will be charting and/or giving presentations; this costs Excel many sales. We need to succinctly communicate the advantages of Excel to RSPs.

Specific programs planned to address these areas are:

  • Develop and promote vertical market reseller seminars (i.e. "Excel in a real estate firm") to take advantage of reseller focus on small and medium businesses. (Trial program first; full-scale if successful.)
  • Include in Excel 3.0 Intro Kit materials relevant to outbound and solutions selling.
  • Develop and distribute "Why Excel?" piece outlining advantages of selling and supporting Excel rather than Wingz.
  • Seed top channel accounts with free or nearly-free software.

Apple Computer Relationship

Our objective is to increase Excel sales by increasing our involvement in Apple's marketing promotions. The key issue is that while Microsoft is the largest and most-experienced Macintosh software developer, we receive little marketing cooperation from Apple.

Our plan to improve the relationship is straightforward: we will spend lots of time at Apple. develop contacts with key marketing people, and attempt to fit into some of Apple's promotions. This will require trips to Apple corporate in Cupertino approximately twice a month. The first step is to meet with the Product Marketing, Large Business/Government Marketing, Small Business/Productivity Marketing, and Channel Marketing groups. Then we will attempt to fit into Apple's marketing promotions by focusing on areas where we can add real value to Apple (ie. save them time, differentiate the Mac, sell to businesses, etc.) and where we already have plans to do something. Preliminary research suggests such opportunities may exist with: Apple's Market Development Program (providing training and materials to resellers on vertical-market solutions); Apple's General Productivity Competitive Advantage forums (reseller seminars to take place in the calendar third and fourth quarters of 1990); and Apple's renewed emphasis on small and medium businesses (under the guidance of Tom Virden).

We will also explore the feasibility of working directly with Apple's five regional field organizations. It is possible that a working relationship can be more easily established with the regional organizations than with Apple corporate.

0289 From bobo Mon May 21 15:32:31 1990
To: doem ioem
Subject: DR DOS 5.0 vs MS DOS 5.0
Date: Thu May 24 09:01:26 1990

From bobo Mon May 21 15:29:39 1990 DR DOS 5.0 Competitive Analysis

Marketing Overview

DRI announced the next version of DR DOS, version 5.0, on 4/26 in the U.K. for mid-June, 1990 delivery to OEMs. This is a very significant release. It addresses many of the compatibility problems that plagued earlier DR DOS releases while also introducing several important new features. [ED: Compares where DR DOS is weaker and where it is stronger. "Password Protection. This was a standard feature of previous DR DOS releases as well.So far there has not been any widespread OEM or end user enthusiasm for this feature." PR: "In addition to all of the above, we have for the past several weeks been implementing a competitive response plan... to get the MS-DOS 5.0 message out quickly to OEMs worldwide and to resellers in the U.S. ]

Complete transcript:

From: bobo Mon May 21 15:32:31 1990
To: doem ioem

[Ed: recipient names are indistinct in the original PDF]

Subject: DR DOS 5.0 vs MS DOS 5.0
Date: Thu May 24 09:01:26 1990

DR DOS Competitive Analysis

Marketing Overview

DRI announced the next version of DR DOS, version 5.0, on 4/26 in the U.K. for mid-June, 1990 delivery to OEMs. This is a very significant release. It addresses many of the compatibility problems that plagued earlier DR DOS releases while also introducing several important new features. Based on input from OEMs who have been briefed by DRI, DRI is particularly focusing on the laptop/notebook OEM market with this release. They will be positioning DR DOS 5.0 against the current Microsoft offerings, and will be attempting to exploit their 2-3 month time to market advantage over MS DOS 5.0. They are telling OEMs that Microsoft has no on-going commitment to MS-DOS, and are hoping to get some quick OEM design wins before MS-DOS 5.0 becomes generally available.

DRI has also indicated that they have plans to market in the U.S. a packaged version of DR DOS 5.0 through retailers as a general purpose DOS upgrade product. However, at this point they have discussed this product with only a couple of large resellers in the U.S., and have given no indication to resellers that such a product will be available soon. So the retail upgrade market appears to be of lesser importance to DRI.

Product Overview

The following are the major features of DR DOS 5.0:

Compatibility. DRI claims that they have solved the compatibility problems that they had with earlier DR DOS releases. They are now claiming compatibility with MS Net and LAN Manager based redirectors (3 COM, IBM PC LAN, etc.), MS CD ROM Extensions and Windows/386 v2.03 and v2.11. DRI is also assuring OEMs that DR DOS 5.0 works find with Windows 3.0.

Memory Management. DR DOS 5.0 provides the capability to run the DR DOS kernel and BIOS from either the High Memory Area (HMA) or expanded memory, which reduces the resident size of DR DOS in low memory to 20K. DR DOS 5.0 also includes an expanded memory manager with the ability to load drivers and TSR's high for 386/486 machines, and for 286 systems which use the Chips & Technologies NEAT chip set (which supports LIM 4.0 in hardware).

Shell. DR DOS 5.0 now includes a graphical, CUA compliant shell ("Navigator"). Navigator appears to provide the same level of functionality as the MS-DOS 4.0 shell, with some additional desktop applications like clock and calculator included as well. Navigator has a file view capability, equivalent to what we provide in the MS-DOS 4.0 shell. Navigator does not support "native view" (the ability to view a file as it appears when running the application, a la Lotus Magellan and Norton Commander).

Utilities. Like the previous version of DR DOS (3.41), DR DOS 5.0 includes a command line edit and recall utility, and a full screen text editor. DR DOS 5.0 also now includes built-in help screens for all commands (whereas 3.41 included help text for only a few commands). Another major new utility introduced in this release is a file transfer program ("FileLink"). FileLink provides basic file transfer capability between two PCs (typically a laptop and a desktop) at speeds up to 115k baud using a serial connection. The only other new utility in DR DOS 5.0 is file find, which provides the ability to recursively search all directories and subdirectories for files that match user-supplied search criteria.

ROM Execution. The kernel and DOS BIOS modules of DR DOS 5.0 are both ROM executable. command.com and the DR DOS utilities are not ROM executable, but can be stored in ROM for execution in RAM. The total ROM space occupied by the DR DOS 5.0 kernel, BIOS and command.com is about 96K (the same as DR DOS 3.41). With the DR DOS kernel and BIOS executing from ROM, total low memory used by DR DOS is about 20K.

Power Management. DR DOS 5.0 includes a power management utility known as "BatteryMAX". BatteryMAX is an external utility that appears to monitor DOS idles and includes an algorithm for determining when the system is actually idle. This seems to be the only functionality that BatteryMAX provides. DRI provides BatteryMAX in source form, and it is up to the OEM to provide the additional pieces (ROM BIOS, device drivers and the necessary interfaces) that would complement BatteryMAX to reduce overall system power consumption.

Localization. DRI claims to offer the following localized versions of DR DOS 5.0: French, German, Spanish, Italian, Swedish, Portugese, Japanese "and many other language versions".

Availability. June, 1990.

MS-DOS 5.0 vs. DR DOS 5.0

Assuming that all of DRI's claims about DR DOS 5.0 are true, it appears that the two releases are fairly comparable, but on balance MS-DOS 5.0 is a little stronger. For the laptop/notebook OEMs (DRI's primary target), MS offers a more complete power management implementation, and a smaller DOS in both ROM and RAM space required. The only edge that DR DOS 5.0 currently has for these OEMs is the file transfer utility, which we hope to be able to address with a late addition to the DOS 5.0 product. A complete feature comparison of MS-DOS 5.0 is attached.

The major areas in which MS-DOS 5.0 seems to be better than DR DOS 5.0 are:

Power Management. MS-DOS 5.0 takes a broader, system-wide approach to power management than does DR DOS 5.0. We provide a system "power monitor" that provides similar functionality to DRI's BatteryMAX, but we also go well beyond that. The MS-DOS power monitor will have the capability of haling or even slowing down the CPU, in a way that is compatible with power saving chip sets such as Intel's unannounced 386SX chipset code-named "Genesis". MS-DOS 5.0 will also define a device driver interface that would allow the MS-DOS power monitor to shut down system peripherals via power-aware device drivers. It will also define an API for applications that wish to become power aware to take advantage of, and explicit user commands for suspend and shutdown.

Microsoft's system-wide approach to power management is superior to DRI's, and we should emphasize this as a key differentiator to laptop/notebook OEMs. Our approach better reduces the total OEM effort required to implement system-wide power management, and best insures that the OEM can take full advantage of future hardware platforms such as Intel Genesis.

ROM Economy. The MS-DOS 5.0 ROM implementation occupies about 70K of ROM space - 26K less than DR DOS 5.0 in ROM. This is a cost of goods issue for the OEM. Some OEMs may find that, with MS-DOS (assuming they may have applications, utilities,, etc in ROM as well as DOS and the ROM BIOS), the 26K ROM space savings allows them to fit everything into two 64 K ROM chips - whereas with DR DOS they might have to ship a third 64K ROM. For price sensitive laptop/notebook OEMs, which appears to be DRI's primary target, this could be a real issue.

RAM Economy. Both ROM and disk-based implementations of MS-DOS 5.0 take up less low memory than the equivalent DR DOS 5.0 implementations. Because MS-DOS allows command.com to execute from the High Memory Area (disk based) or ROM (ROM based), it takes up about 5 K less of low memory than DR DOS.

QuickBASIC Interpreter (QBI). Microsoft will bundle the QBI with MS-DOS 5.0, while DRI offers no BASIC at all. QBI is essentially the Microsoft QuickBASIC product that retails for $99 U.S., minus the compiler. It provides a modern, structured programming environment and will be perceived by many users as significant value added to DOS.

Media Support. MS-DOS 5.0 supports disk partitions up to 2 GB, while DR DOS supports a maximum partition size of 512 MB. MS-DOS 5.0 will also include support for 2.88 MB 3.5 inch media, while DR DOS 5.0 will not.

Localization. We plan to localize MS-DOS 5.0 in more languages: Chinese, Korean, Dutch and Swedish, in addition to the languages that DR DOS 5.0 supports.

DR DOS 5.0 appears to be stronger than MS-DOS 5.0 in these areas:

Implementation Flexibility. Disk-based DR DOS 5.0 can be implemented in either the High Memory Area or expanded memory, while MS-DOS 5.0 cannot be implemented in expanded memory. DR DOS is also more modular than MS-DOS, in that the OEM can load the kernel only high, while keeping the DOS BIOS low (true for both the disk and ROM implementations).

"Load High". The ability to load TSRs, device drivers, etc. high provides a nice benefit. DRI claims that the entire Novell redirector, for example, can be loaded high, which in combination with running DR DOS in the HMA or EMS can significantly increase the amount of low memory available to applications. However, this is mainly useful to those OEMs who offer 386 based systems, and even for these OEMs there are issues which reduce its appeal. For many 386 systems, particularly EISA or MCA machines, much of the area between 640K and 1 MB (which is where the load high feature relocates TSRs and drivers) is already being used, and so there may not be available space to load something like the Novell redirector into.

File Transfer Utility. This is a nice value-added feature for laptop PC users. It is not clear how functional this utility is, however. If it provides comparable functionality to Traveling Software's LapLink, then it will have strong appeal to laptop/notebook OEMs (as many of these OEMs today license LapLink, or something comparable).

Password Protection. This was a standard feature of previous DR DOS releases as well. So far there has not been any widespread OEM or end user enthusiasm for this feature.

Competitive Response to DR DOS 5.0

On the PR side, we have begun an "aggressive leak" campaign for MS-DOS 5.0. The goal is to build anticipation for MS-DOS 5.0, and diffuse potential excitement/momentum from the DR DOS 5.0 announcement. At this point, we are telling the press that a major new release from Microsoft is coming this year which will provide significant memory relief and other important features. This was picked up by the major weeklies in the U.S. and was the page 1 story in PC Week on 4/30 (see attached articles).

On the product side, we are looking at adding to additional utilities to MS-DOS 5.0: a file transfer program, and an undelete utility. We are looking at acquiring a file transfer, and we have already done some work on the undelete which could possibly still be included in MS-DOS 5.0. The file transfer utility is important in that it would eliminate the only real advantage that DRI might have for laptop/notebook OEMs. Undelete would be an important addition, as it would give us a significant new utility that DRI does not offer. We will make a final decision on whether or not to include these utilities in DOS 5.0 within 2 weeks.

In addition to all of the above, we have for the past several weeks been implementing a competitive response plan (which was put into effect when we first learned of DRI's plans for this new release). The purpose of the plan was to get the MS-DOS 5.0 message out quickly to OEMs worldwide, and to resellers in the U.S. Attached is a summary of this plan and its current status.

0294 [ed: EXHIBIT 294 is 7 pages. It contains a "revised Windows Computing plan"]

[excerpt from pg 2]"Background: Microsoft's decision to aggressively promote the Windows platform is based on the logic that the sooner the DOS world moves to Windows and Windows applications, the better off we will be(1). History has proven that gaining market share from entrenched competitors is a slow and expensive proposition. Conversely, the resilience of our Macintosh applications proves that being first is the best way to garner and retain market share. Since only Microsoft has a full family of Windows applications, now is the time to proliferate both Windows and Windows applications. It will never be cheaper to win market share(2). [footnote](2) Lotus and WordPerfect are expected to ship "real" Windows versions of their dominant products in Q2 or Q3 of CY'91."[end excerpt from pg 2]

[excerpt from pg 5...cont. on page 6] "Competition: Resistance to change, the inertia behind established or dominant character DOS applications, and the fact that nothing is easier than what a user already knows are the primary competitors to Windows. The anxiety and fear of change only make things worse. Many users would rather continue to use Lotus 1-2-3 than switch to Excel. Ditto for WordPerfect users and Word for Windows. The scondary competitors are personal computers and workstations not using the DOS environment - Sun, Next (both Unix), Macintosh, and HP's New Wave."[end excerpt from pg 5]

____________ PLAINTIFF'S EXHIBIT 294 Confidential - Comes v. Microsoft

To: Peteh, Russw, Lewisl, Ruthannl, Bradc, Hankv, Karenab, Nancybi, Richab, Sharonde
Fr: Mark Kroese
Re: Windows Computing/Marketing/communications plan, draft 2
Dt: Tue, May 29, 1990
Cc: Valerie Houtchens, Nancy Gullick, Barry Briggs, Coleman Barney, Jean Thompson, Kathryn Yates, Sarahch, Martyta, Anneh, Davidv, Gary Gigot, Mike Delman
"This is the revised Windows Computing plan. Please review and respond by end of this week. Goal: get client approval of this document this week, then follow next steps as outlined. P1ease mail or call with questions." [ed: There are also handwritten notes below the email]

CONFIDENTIAL


Purpose
This document is written to provide an overview of key components of the Windows Computing marketing campaign, and define the campaign's objectives, strategies and tactics.

It is intended to be an "umbrella" document that ties the individual marketing programs together, with an emphasis on the communications programs. The positioning of Windows Computing should influence the communications elements of all Windows Computing programs.

Client review of this document will lead to agreement on the scope, objectives, strategies and tactics of the Windows Computing campaign. Once closure has been reached, the plans for each component of this program begin to be implemented. At this level of approval, the client is defined as Peth/Russw. More clients emerge as the individual programs develop.

Document outline
Purpose.....................................1
Background..................................1
Critical Insights...........................1
Campaign Objectives.........................2
Windows Computing Defined...................2
Relationships to other Microsoft campaigns..3
Marketing strategy..........................3
Target audiences and markets................3
Competition.................................4
Positioning.................................5
Next steps..................................5

Background
Microsoft's decision to aggressively promote the Windows platform is based on the logic that the sooner the DOS world moves to Windows and Windows applications, the better off we will be(1). History has proven that gaining market share from entrenched competitors is a slow and expensive proposition. Conversely, the resilience of our Macintosh applications proves that being first is the best way to garner and retain market share. Since only Microsoft has a full family of Windows applications, now is the time to proliferate both Windows and Windows applications. It will never be cheaper to win market share(2).

Winning market share is a two step process: both inextricably linked. First, we must make the Windows platform mainstream (get "sockets"). Second, we must fill the sockets with our applications, recognizing that Lotus and WordPerfect will attept to stall the market and convince their customers to stay with them until they ship Windows versions of their applications.

Done right, the Windows Computing campaign will accomplish the first step and position the Applications Division to accomplish the second step. Windows computing is not a Microsoft applications-specific campaign.

Critical Insights
-- Co-existence is a saleable message, radical displacement is not. As the world moves towards the Windows platform, co-existence and compatibility become very important issues. Individuals, workgroups and influentials all must understand that radical displacement is not necessary in order to enter the Windows world. To quote billg - "Windows is better DOS than DOS"; meaning that there are no bad choices. The transition to Windows is the natural evolution of DOS.

_________________________
(1) Defined as a $1 billion dollar opportunity by 1991.
(2) Lotus and WordPerfect are expected to ship "real" Windows versions of their dominant products in Q2 or Q3 of CY'91.

Windows Computing marketing communications plan 1 5/29/90 CONFIDENTIAL


-- There are quantifiable benefits for those who move to a GUI environment. The TBS study (CUI vs. GUI) has concluded that there are very compelling benefits for those who move to a GUI computing environment. The results of this study should be used to support our message (separate attachment).

-- Migration is as big an issue as functionality. We need to tell prospects not about only about the benefits of graphical computing, but how to get there, the role of OS/2, etc. Case studies (both collateral and advertising) can play an important role here.

-- GUI does not necessarily mean easy. For new users, GUI makes more sense. But millions of DOS users claim "Nothing is easier than what I already know". Research has proven that the initial experience with GUI feels more complex to the user since the screen represents an entire desktop instead of just a single application. Many also find the use of the mouse cumbersome and unnatural. This supports the need to show (vs. tell) people about GUI.

-- We can't be too simple with the Windows message. In the complex and dynamic world of personal computing, we often talk to ourselves in our advertising. The market is yearning for straightforward, informative and educational communication from Microsoft. Even words like "graphical" or "character based" can confuse people.

-- Windows must be seen as both an integrating technology and an open environment. Common user access and the ability to use multiple applications simultaneously are seen as the big benefits to Windows. However, "vendor-lock" remains a concern with companies. Customers must understand that Windows is an open environment that the Microsoft applications company happens to be very commited to.

The success of the Windows platform does not guarantee the success of Microsoft Windows applications. The marketing efforts for Microsoft applications must be developed in conjunction with the Windows Computing campaign; however we should not attempt to turn the Windows Computing campaign into a Microsoft applications campaign.

Campaign Objectives
The Windows Computing campaign will be measured against the following objectives:

-- Create an instant awareness that Windows Computing signals an important change in how you use your 286/386 PC(1) (establish Windows Computing positioning concept).

-- To create a sense of urgency about moving to the Windows environment.

-- To facilitate experience with Windows Computing (specific estimates for each experience level will come later; included will be autodemos, working models, literature and seminars).

-- To quickly convert the experience into product sales.

Windows Computing Defined
Windows computing is a marketing campaign designed to accelerate the platform change among PC users from current character based software to Windows 3.0 and related applications software(2) to the Windows environment.

>From a communications standpoint Windows Computing is primarily a market building campaign. From a marketing standpoint, it is a market building and a market share campaign.

_______________
(1) I am not aware of any primary research that measures attitudes and awareness of Windows and its benefits. We should conduct a pre and post campaign measurement to gauge the effectiveness of the campaign.
(2) "Related applications software" refers to Microsoft Windows applications and third party Windows applications, such as Aldus PageMaker, Corel Draw, etc.

Windows Computing marketing communications plan 2 5/29/90 CONFIDENTIAL


This is because the Working Model component of the campaign will include both environment (Win 3.0) and applications (Word, Excel, PP, Project) working models. Windows computing is Microsoft's central marketing campaign for the September - December '90 timeframe. The campaign has several key components:

1. National advertising ($3,000.000, funded by the FY'91 Brand budget)
2. Telemarketing (-$750,000, funded by the $4 million in incremental funds)
3. Working Model and supporting collateral (-$3,250,000, also funded by the $4 million incremental funds)
4. Existing framework marketing programs: (funded by traditional means)
- In store merchandising - RSP training - MRSS seminars - Autodemos - Outbound sales tools - PST seminars

Relationship to other Microsoft campaigns
The Windows Computing marketing strategy is to accelerate the platform shift to Windows and Windows applications by employing a three step marketing approach that will include both push and pull related programs:

1. Create awareness, interest and understanding of Windows Computing through communications programs that expand the reach and frequency of our message to the best prospects (as defined in target audience section).

2. Fulfill the interest by offering prospects a range of ways to experience our products. This includes a range of programs from collateral to working models to reseller demonstrations to seminars.

3. Convert the interest and experience to sales by utilizing telemarketing to push prospects through the purchase process.

See the attached schematic for the inter-relationship between the various marketing programs. The data from the TBS study will be used liberally at all phases of this campaign in order to push prospects down the sales cycle.

Target audiences and markets
Since the Windows Computing concept is usage driven, the communications programs will be targeted at users. This includes influential end users (IEUs) and general business users (GBUs) that are "Windows ready". Prospects must fit the following description:

- Owns or uses a 286/386 PC capable of running Windows and Windows applications
- Works in a professional, executive, managerial, administrative, clerical, sales or technical occupation.

Windows Computing marketing communications plan 3 5/29/90 CONFIDENTIAL


- Are found in a size businesses where PCs are found, with an emphasis on corporate environments where PCs are the dominant platform
- Uses his/her PC regularly as a business tool. May feel some frustration or limitation with their current level of utilization. The prospect should have some predisposition to change (improvement).
- Is a proficient user of at least one application, primarily a word processor or a spreadsheet. This person is described as the "one app" in the O&M creative brief dated 4/6/90.

Current MRI data shows that there are just over 3 million IEUs and over 18 million GBUs(1). The Windows Computing advertising is intended to reach all IEUs and the best GBU prospects. Not all 18 million GBUs are "Windows ready", but a significant percentage are. The Windows Computing advertising must be targeted at the least sophisticated IEUs and the most sophisticated GBUs. This is a combination of the IEUs we are currently not reaching with the enthusiast press and the GBUs that are most ready to move to the Windows platform. The following diagram shows the WC target.

[ed: inserted on this page is a diagram that measures "The Windows Computing audience segmentation."]

Business press will be recommended based on its cost effective ability to extend our reach of IEUs and reach the best GBU prospects. For example, the unduplicated reach of IEUs by all the computer related publications we advertise in is less than 1.5 million. Hence, there are at least 1.5 million IEUs that we can not reach through the enthusiast press.

Competition
Resistance to change, the inertia behind established or dominant character DOS applications, and the fact that nothing is easier than what a user already knows are the primary competitors to Windows. The anxiety and fear of change only make things worse. Many users would rather continue to use Lotus 1-2-3 than switch to Excel. Ditto for WordPerfect users and Word for Windows.

________________
(1) MRIs IEU definition: Respondent was directly involved in the past year in evaluating, initiating, recommending, ordering or approving the purchase of PC software for his or her firm. The GBU definition is similar to that of the IEU. It requires the same job function but factors out the formal or informal influence. It does, however, require that the respondent be a regular user of a personal computer.

Windows Computing marketing communications plan 4 5/29/90 CONFIDENTIAL


The secondary competitors are personal computers and workstations not using the DOS environment - Sun, Next (both Unix), Macintosh, and HP's New Wave.

Positioning
The Windows Computing consumer positioning will be aimed at the target market defined above. This positioning will talk to the mainstream computing issues such as ease of use and the ability to do more with your PC. In short, we are selling the benefits of the environment and using applications (not just Microsoft applications) as the support for our position.

Windows Computing consumer positioning:
Windows Computing instantly transforms how easily and effectively you can now use your PC to its full potential. Windows Computing... speaks to the new/better way to compute. There is Macintosh computing, DOS computing, UNIX computing and OS/2 computing. People need to be made aware of this alternative. Windows computing always equals Windows 3.0 plus Windows applications.

...instantly transforms... addresses the significance of the change. It does not require a major hardware investment. This $149 product (+ apps) will promptly change forever how you use your PC. We use the term transformation because it signals the positive nature of the move versus just a technology shift for the sake of change.

...how easily and effectively... covers two key issues for our target. "Easily" addresses those people who have a PC but seldom use it. The notion of taking something they are underutilizing and making it more effective is the major focus of the effort. The more sophisticated segments of the target have never been able to do multiple tasks (e.g. WP and SS at the same time). The term "effectively" is descriptive of how they can get much more benefit from their PC.

...you can use your PC to its full potential... This portion of the positioning encourages users to get the most out of their PC hardware investment. This plays to the guilt of not and the possibilities of maximizing one's potential.

Next steps
- Agreement on the strategic direction that this document provides (w/o 5/29)
- Individual creative briefs for the advertising portion of the campaign (w/o 5/29)
- Agreement on approval process. The client for the advertising/collateral portion of this program is Peteh (for apps), Russw (for Systems) and Scotto/Valerieh (for USSMD).
- Completion of the supporting plans for all individual programs (Working Model, USM programs, telemarketing programs, revised creative brief, etc)

Windows Computing marketing communications plan 4 5/29/90 CONFIDENTIAL


[ed: The last page is titled "Windows Computing, PUSH II, April 30, 1990" and contains a diagram of the "Windows Computing - National Advertising and PR" campaign]

0295 To: Peteh, Russw, Rictmb, Hankv, Lewisl, et al
Fr: Mark Kroese
Re: Windows Computing, REV 3
Dt: Wed, May 30, 1990
CC: Scotto et al....

Microsoft's decision to aggressively promote the Windows platform is based on the logic that the sooner the DOS world moves to Windows and Windows applications, the better off we will be. History has proven that gaining market share from entrenched competitors is a slow and expensive proposition. Conversely, the resilience of our Macintosh applications proves that being first is the best way to garner and retain market share. Since only Microsoft has a full family of Windows applications, now is the time to proliferate both Windows and Windows applications. It will never be cheaper to win market share.

Winning market share is a two step process: both inextricably linked. First, we must make the Windows platform mainstream (get "sockets"). Second, we must fill the sockets with our applications, recognizing that Lotus and WordPerfect will attempt to stall the market and convince their customers to stay with them until they ship Windows versions of their applications.

Done right, the Windows Computing campaign will accomplish the first step and position the Applications Division to accomplish the second step. Windows computing is not a Microsoft applications-specific campaign.

[Ed: rest of document stresses how to convince users to switch to a graphical environment.]

0296 IBM Confidential-Restricted memorandum to M&S Area Managers/NDD Area Managers. May 31, 1990, US Marketing & Services, M&S Director, Desktop Systems. Subject: Microsoft Windows Announcement. [Ed: Microsoft had announced Windows 3.0. IBM's position: "Windows 3.0 is an entry-level graphical interface. OS/2 however is a full-function, graphical operating system offering users many advanced features..."
0299 A PowerPoint presentation titled "Excel Push Objective" on how to "Grow PC Excel market share from 10% to 30% by June 1990", also regarding Excel Push Study, results from ads, which media pulled customers, and a "CUI/GUI" study coming out. Page 40 is about results from the field on the GUI, and positive comments, but adds: "Results are less compelling for SS users than WP users." Pages 42 and 45 show the popularity of WordPerfect vs. Word at the time. The transcript of argument on a motion to compel about Exhibit 299 and other discovery matters is apparently about this very PowerPoint presentation, which is now complete. Plaintiffs' lawyer Roxanne Conlin argued for Comes:
Conlin: Your Honor, if we could look at Exhibit 299. Now, keep in mind what the excuses have been so far: No gaps, no pages missing. Well, this is pretty easy. This is a PowerPoint presentation, Your Honor, and you see at the top there it says, "page 39"? The next page is 41, and the next page is 43.

Now, up to this point, pages 1 through 38 are all there, but pages 40 and 42 are not there. But it seems -- really, I thought this was easy. Now, if you look down, Your Honor, at the bottom, the Bates numbers, the Bates numbers go in order, 63, 64, 65, and when I say pages missing between Bates stamp, that's what I mean. They stamped these pages consecutively, but, in fact, page 40 is missing, page 41 is missing. So, you know, I really did think this was pretty easy, but -- "just give me these missing pages." But, "No, no," they said, "there are no missing pages." Well, that doesn't work out very well for this, I got to say. This seems so clear. So now what they say to me is, "Well, this is not a very important document, Roxanne. This is not" -- "we don't think you really need these pages because we don't think this document is important." Well, it was important enough for it to be offered as an exhibit in two other states. So, you know, I want all the pages. I just want all of the pages.

0303 Microsot Internal OEM Price Guideline. Draft. Effective June 12, 1990.
0307 date: 6/14/90
To: Bobmu, Markz, Steveb, Nathanm, Johnsa
Fm: Paul Maritz
What should we do about PM vs. Windows?

In an effort to get myself to think more clearly, and to get us to a decision more quickly, I have tried to set down what I see as the key issues and possibilities. I think the PM vs. Windows decision is actually orthogonal to a lot of the other issues we have been dicussing (how many packages, ete), and is a decision which we need to make quickly.

Please keep this memo limited in its distribution.

PM and Windows:

I agree with the premise that we can have only one long term window manager asset. Thus (no surprise), I believe that there are two basic paths we can be on:

(i) A "PM" path which is:
- move PM as the native display manager to RISC/NT, and use Porthole as a migration tool.
- use the establishment of PM on RISC as the signal to the world that PM is our long term asset and we expect the world to make a transition.
- restrict the evolution of Windows on x86 to be "limited" (ie. do not do major functional enhancements to Win API) as another signal that PM is our long term asset.

The message to the respective PM, Windows developers is then:
PM developers: "You have smooth waters ahead of you, you lack a low end platform today, but within 2 years hardware advanced will have taken care of you - ie. 386/4MB will be low-end."
Windows developers: "You have turbulence ahead of you, you will be able to sell on large segment of market for next 2-3 years, but there is major market segment of the future (RISC) which you need to convert to PM api’s for. We will give you a porting layer (Porthole), but for new function you need to make the switch."

Another way of looking at this is:


Mainline ISV’s: "You have to maintain 2 source bases for foreseeable future - Windows and PM. And you should get ready for time when PM will offer something important that Windows will not - ie. RISC".
Corporate Developers: "Develope for OS/2. Things may look little bleak now, but we will fix the software problems and the hardware cost problems will fix themselves - just like Windows few years ago."

(ii) A "Windows" path which is:
- move the Windows API to RISC/NT via 2 paths:
a. one which allows 16:16 Windows apps written in C to be very easily moved in source compatible way to RISC (this path may be handled entirely by "smart" compiler tools).
b. one which allows Windows apps to bve converted first to 0:32 C code, and then moved in source compatible way to RISC/RT (on to the "merged API" - see below).
- release OS/2 2.0 and position it as a good deployment platform for those who have PM Apps - ie. it:
- will not disadvantage end-users because it is "Windows Plus" (for Windows 3.x apps) - and it runs the PM Apps.
- announce that MS is going to move long term to a "merged 32bit API" for display management, that this merged API will be called Windows 4, and that it will be:
- available on all ~ 386 and RISC platforms,
- That both existing Window and PM Apps will require modification to use it, but that it will be highly compatible with Windows 3.x, while obtaining the advantages in the PM "technology* (ie. a PM app will not "lose" functionality).

The message to the PM/Windows developers then becomes:

Windows developers: "You have smooth waters ahead of you. We will have a new 32bit "merged" API that you convert to in order to get new function (beziers, paths, areas, OO libraries, etc), but the porting path is straight forward."

PM developers: "You have turbulent waters ahead. We will give you a good deployment platform in 0S/2 2.0, but beyond that you have a major conversion effort to get to the new merged API. You will need to convert because there is a new important platform (RISC) which you don’t get to otherwise. Likewise there are functions (00 libs) that you will not get without converting".

Or from the ISV/Corporate developer view:

ISV’s: "Write like mad for Windows, be prepared for the merged API Win-32 which has new functions. You can decide whether to incorporate the new functions before or after you go to RISC (by virtue of our 2 paths), but eventually you should move to the new merged API to get the new function (which is after all relatively painless). We will run your Windows apps on OS/2 2.0".

Corporate Developers:
"Sorry, we told you to write for PM and now you have a conversion effort ahead. But this is better than having your API not be that which is mainstream asset."

2. Background Data:

In choosing which of the above paths, the following factors are pertinent:

(i) Do we have to choose only one path - could we not offer both the Windows and the PM path?

We cannot - because there will be tremendous pressure to use the set that gains majority market share as an "asset" and keep that asset competitive. This will ensure that the other API set suffers - from an evangelical point view, from an investment point of view, from a management point of view.

Can we keep one around as a "sop" (ie. have it be available, but sitting on disk most of the time). We could do this but it would be rightly preceived as just that "a sop’, or at best a migration aid. New function will make their way into the "asset" first and the other will become increasingly incompatible. If we can keep the other API set around at little cost we should, but we should not perform unnatural technical acts to do so.

(ii) What is effect of competition?

If it were not for the fact that I fear greatly Sun/SPARC, either strategy would in fact be workable. We have no credible competition on the x86 - both SCO ODT and UNIX Lite are either in their infancy or vaporware, and are resource hogs - so it will be several (2-3) years before they are threats. By then we could have established either Windows or PM as our asset.

So Sun/SPARC is the competition. [Paradoxically, it is the very weakness/fragmentation in the UNIX camp that is giving Sun/SPARC their franchise. When will Scott McNealy realize that OSF is the best thing that ever happened to him, and cease offering it technology?] So how best to counter Sun/SPARC is a key determinant of which path to pick.

I will look to the technical people to provide a definitive technical answer but I think it is true that the Windows path (as I have defined it, ie. both 16:16 and 0:32 route) provides a smoother path.

Perhaps more important though is the positioning/message at this point. We need to be locking ISVs tightly into our asset, and DISCOURAGING THEM FROM BEING PLATFORM INDEPENDENT. The PM path, of necessity, is a multi platform message. It encourages ISVs to become platform independent and spend cycles on that, rather than setting up the vision of something that will have 80% market share and hence they should be as early and competitive on the 80% share platform. Having a single, credible API set to sell is the key issue.

Single is addressed by picking one of the above paths. What makes an API set credible?

Technical considerations:
PM is more advanced/cleaner than Windows, but not dramatically so.

32bit - 32bit is important in long term, though surprisingly unimportant in the near term as I believe that people will use "extender techniques" to get most of what they want. Either strategy yields 32bits.

Provides access to key hardware platforms - RISC is the key, either strategy can yield it with time. The Windows path does so quicker (but not dramatically so).

Marketing considerations:
Present Market Share: Windows has it.

Future Market Share: We say PM will have it, but credibility (because of Windows present market share) is not high.

Message: The Windows path offers a single "message"(ie. write for Windows), the PM path is "do this now, this later" - it is more complex and hence less credible.

(iii) Is getting a RISC PC out the most effective way to combat SPARC then?

Would not getting Win API’s on NT/386 be the most effective means?

No (at least I believe not. SPARC is getting its beach heads by viture of:
a. getting into certain accounts because the accounts are hiring "rocket scientists" who are numerically sophisticated folks who want the large address space and horse power of a Sun Workstation, b. the increasing cheapness/power of the Sun offerings.

While we can position 386/486 to address a., Sun’s increasing lead in b. will keep them growing in these accounts.

Thus I agree that getting a RISC based PC is a necessary and time critical goal.

(iv) What is the effect of IBM?

IBM would readily buy into the PM path - no problems there.

If we pick the Windows path, then there is the risk that they might feel morally obliged to pick the PM path anyway. This would create competing platforms, and would likely have the effect of keeping ISV’s in a platform neutral stance for longer (they would be lobbying ISVs as well).

(v) MS credibility?

With ISV's:
ISV’s have to be mercenaries and will follow the path of greatest market share. If NeXT suddenly got hot, they (including MS Apps) would swing round and write for NEXT, if NeXT got cold, they would abandon it (vide Aldus), etc.

Some ISV’s (esp. Lotus) will team up with Sun to have an orgy of MS bashing, but the net effect will be that they will write for whatever API set looks credible in its claim to significant market share. They will prioritize which market segments based on probably size and level of investment required.

So the conclusion is that don’t be constrained on this account.

With Corporations and "Corporate ISV’s" (who sell MIS type solutions):
These are the guys who will feel most abused by a switch away from PM.

On the other hand, our current stance of selling Windows like crazy with one hand, while promising PM with the other is not very credible either. One can argue that "coming clean" would be viewed as more credible.

3. Implications of choosing the "Windows Path’.

The net position of all this, is that we should choose the "Windows Path" (by this is meant the set of steps laid out in 1. above).

What then are the implications of this, and when do we have to take the steps involved (privately and publicly)?

Implications and Steps:

(i) 0S/2 2.0 must be able to run Windows apps well. Otherwise it is not Windows Plus and not a good deployment platform.

(ii) Do we release 0S/2 2.0?

a. Release it all?

Yes, otherwise you cut those how have invested in PM at the knees. It will also provide the OS/2 base API’s in 16 and 32bit form (which is something we do wish to preserve).

b. With a 32bit PM API?

Yes, there is nothing much to be gained by not doing it, so we should probably release it.

(iii) Getting Windows onto RISC.

This must be done quickly and in a manner that present Windows apps can follow just as quickly. We should then re-focus our resources onto:

a. getting Windows ported to NT/RISC asap (refocus current Portable PM team),
b. defined the technology that allows a 16:16 C Windows app to be recompiled for RISC (this is key).

(iv) What do I do with ancilliary OS/2 investment?

- OS/2 1.2 & 2.0 Disk Drive" work (WAMIC) - continue it.
- OS/2 1.2 & 2.0 Generic Printer driver work and other driver acquisition work? Look it we can leverage Windows drivers, failing that continue the investment.

(v) Internal Morale:

This is containable.if we act quickly and have a strategy that makes sense to people.

Right now, unrest is building because people:
- are no longer confident that they are working on things that make sense,
- they are worried about our relation to IBM (after having being told for so long to bend over backwards for IBM, people are worried when they see us and IBM vaguely threatening each other),
- the marketing folk worry that they are selling a phony story.

It is containable at this point, but it is going to get worse fairly quickly.

(vi) IBM:

We have need to alert them to what we are doing. This will probably cause an upheaval, but I think that at this point that would help.

(v) Public announcement:

I think we should articulate this as a complete strategy fairly soon as well probably in the fourth quarter. I would not even wait to have complete spec’s on the "merged API". IT would throw an enormous bucket of cold water on OS/2 development, and cause a lot of MS questioning. This is best catered by having an even stronger Windows story to keep even those who are most pissed off loyal. We could thus also announce the RISC strategy with some hooplah (it really would be great to have Compaq publicly signed up).

(vi) Base consistency:

In all this, we have assumed that when Win Apps get moved to RISC they (i) use MS-DOS style INT 21 services for base functions (it is fairly trivial to emulate these on top of 0S/2 base services), (ii) they would use a new set (0S/2 API’s) when running in "new 32bit mode".

Because of this (and other issues like device driver models), there are a set of questions that need to get addressed at looking what could be our "three" possible platforms (steady state):

286 + 386: DOS 6 + Windows
386: NT + Windows
RISC: NT + Windows

0309 Microsoft Confidential - Marketing Plan. Email from Rich Tong to Brad Silvergerg, on "Thoughts on DOS Marketing" for FY 1990. [Ed: Under heading "The Right Strategy," suggest broad beta test and preview, and handwritten note says "And it will stop DR DOS too."]
0309A Windows Release Plans for August 1990 - May 1992. June 18, 1990. Handwritten note: "Note: This need to be revised. This is FYI"
0313 Email thread dated from Jun-Oct 1990: Derailing Windows on (Sun) SPARC PC.
From richardf to carls, nathanm, fteam, joachimk.
Cc: jeremybu, cameronm, ralfm, davec, jbal, ralfha, bryanwy, riscpc.

cameronm: "Windows apps are notoriously dirty in terms of undocumented calls and poor app design that is going to make running these suckers very hard." (on SPARC PC).

0315 Report on Acer's shortfall on High Volume Sales Contract Jun 26 1990. Agreements on DOS, Windows, OS2. Analysis, forecasts and remedial plans, with sales numbers, revenues and royalties per unit. Unspecified authors and recipients.
0319 Letter from Bill Gates to Intel president Andrew Grove, June 28 1990.
RE: Do not invest in GO Corporation.

GO was developing an OS for handhelds and PDAs and Intel was eager to enter that new market. MS was late, starting to develop Windows-H for such devices. Gates tries to lure Grove away from Go, and better stick to the wintel environment for mutual benefit.

0320 Email June 29 1990: DEC undercutting MS. Limits to what OEMs can discount.
From joakimk to jons, richardf; CC to billg, jeremybu, mikehal, mikemap, richmac, scotto.

DEC snatches a sale to Aetna by offering a 50% discount. joakimk: "I thought that we had full agreement that the lowest discount an OEM would offer is equal to our distributor discount".

0322 MS Internal OEM Price Guideline. July 2 1990.
Bulk prices for software and hardware products, 11 pages.
0327 From nathanm Thu Jul 12 17:26:55 1990
To: billg bradsi mikemyr paulma russw steveb
Subject: Win & OS/2 naming & positioning
Date: Thu Jul 12 17:23:14 1990

This message discusses the marketing messages for Windows in the context of competition with Sun's SPARC platform and how to handle the distinction between Windows and OS/2. The following two paragraphs, the second and third in the message, set the foundation for the discussion:

"There is a classic marketing decision in establishing a position for a new product - do you position it as a new version of a (sic) old thing or a new thing altogether? The question of whether you follow product line extention (sic) or establish a new brand can be crucial in many industries.

The heart of the issue is how and whether you win a clear position in the mind of you customers. With add due respect to the people who buy our products, this a notoriously small place - there isn't room for long complicated messages. Furthermore, the communication channel that you use to get the message there is noisy and unreliable. Finally, once you do get a message in it is very hard to change. This can be the payoff if the message is right, or it can be a very difficult barrier to overcome if you want to change it."

0328 Email message, printout marked 'HIGHLY CONFIDENTIAL'

From joachimk Fri Jul 13 10:02:22 1990
To: teresach
Cc: jeffl richardf
Subject: RE: APPS sales to OEMS
Date: Fri Jul 13 09:48:16 1990

OK

>From teresach Tue Jul 10 17:12:50 1990
To: joachimk
Cc: jeffl richardf
Subject: RE: APPS sales to OEMS
Date: Tue Jul 10 17:12:44 1990

(Ed: discussion of terms and conditions for Win 3.0 sales to NCR and request for permission to keep negotiating.)

>From joachimk Thu Jul 5 10:30:18 1990
To: doem (sp?)
Cc: jeremybu mikemap
Subject: APPS sales to OEMS
Date: Thu Jul 05 10:16:26 1990

(Ed: joachim's approval required for all quotes on apps sales)

0330 July 13, 1990

Mr. Philippe Kahn
Borland International
1800 Green Hills Road
Scotts Valley, CA 95066-0001

Dear Philippe:

Microsoft has made some decisions that will enable Borland to produce and market Windows development environments. This letter outlines the intent of Microsoft; the exact terms and conditions of licensing arrangements will need to be neotiated.

In the immediate time-frame, we will do the following to facilitate Borland's entry into the Windows development environments market:

- provide permission to use the Windows header files in Borland language products;
- provide permission to redistribute the symbol files for the non-debuging version of Windows;
- provide soft copy of the Windows SDK Reference (API) documentation, with permission to redistribute this in soft or hard copy form with a Borland language product;
- license the resource compiler, with termination six months after Microsoft makes available the final version of the resource management dynamic link library; and
- provide documentation on the Windows 3.0 internal resource formats.

The resource management library will enable third parties to develop resource editors that do not rely on Windows' internal resource formats, which are likely to change in the future.

Our intent is to include this library in a release of Windows in the first half of 1991. Borland should understand that Microsoft will not provide documentation on future versions of the Windows internal resource formats, once we provide the resource management library.

We also intend to include the debugging version of Windows, the symbol files for the debugging and non-debugging versions of Windows, and the help compiler in a release of Windows in the first half of 1991. This release of Windows will also support "debugging in a window" as previously discussed between Microsoft and your developers. We'll make this version of Windows available to existing Windows users and new users for a reasonable cost.

Microsoft does not intend to license the debugging version of Windows or the help compiler. These will be made available only in the above-mentioned Windows product, as well as the Windows SDK.

We are excited about the possibility of having Windows development environments from Borland. This promises to increase the popularity of Windows among programmers. Microsoft hopes that the above decisions will enable Borland to create such environments.

Sincerely,

s/Brad Silverberg
Brad Silverberg

cc: Mr. Bill Gates
Mr. Steven Ballmer

0331 From nathanm Mon Jul 16 21:18:55 1990
To: billg bradsi mikemur paulma riscpc russw steveb
Subject: What to do about PM
Date: Mon Jul 16 21:16:24 1990

This is a long (4 full pages) message about how to handle Windows being the long-term OS and OS/2 going away (PM is the GUI for OS/2). Some relevant snippets:

"Windows 4 (on RISC and x86) is the strategic 32 bit API for the future"

"The high end of Windows 4 will have the NT OS/2 kernel and be able to run OS/2 server apps."

"Our IBM strategy must be a masterful job of brinksmanship. We should not declare war, but on the other hand we should start taking them down the road to realizing that Win 4 is the future..."

"Our positioning for Windows is as the cornerstone of a single architecture family stretching from handhelds to RISC" "The way that I look at the PM problem is to break it down into how PM appears to several different observers - ISVs, end users, IBM, and finallay what I think our own point of view should be."

0332 Five printed pages, mostly from four apparently unrelated email chains. The latest message in each is from mikemap. Dates range from Jul 10, 1990 to Jul 20, 1990, with the latest message in each chain from Jul 16 to 20.

Subject for the first is Meeting with Paul Grayson, Micrografx
Subject for the second is Font Editor for Windows
Subject for the third is IBM Promo Update
Subject for the fourth is style guide

All email addresses: mikemap, t-benton, darrellb, lewisl, cathyw, bobga, hankv, jeffr, richt, debem, susannef, dennisad, cameronm, davidcol, stevesh, bobj, melindaf, susanb, mikes, jonl, rickg, darrylr, craigwi, billg, davidpr, dawntr

There are also three single emails, also all from mikemap in the same date range.

0333 3 handwritten pages (there may be some misreadings here)

OEM Meeting 7/17/90

1. Forecast system update.

Need: Acer/OEMs ability to track so that high UPB's can be attributed to reasons such as OS/2 overcommit, high machine forecast (over estimate), etc.

2. FY 90 OEM Rev. Performance

$156 Mill / (can't read)
$151 Mill / DOEM
----------------------
$307 Mill + $10.5 mill

$118.3 (end Q4)

Q4 was expensive but we (OEM) delivered

7/24

3. Q1 - get OS/2 1.21 shipping from OEMs

4. $10.5 million OPB reserve in Q1-Q4
(FY91)

- Tap into non revenue bearing quarter
- $12 mill in bankrupcy reserves
($40 mill in International reserve)
Collection (or Attention?) Watch for Koda (delinquency) (ed: encircled)

5. $5 mill + $2 mill => Deposits
future min commit

(Deposit accts report for Auth(sp?))
ask TimB (up arrow) (check mark) NealH & I will go over

(ed: last two lines in a box, then 'NealH & I ...' in box inside box)

6. Q1 Revenue Booster (sp?)

Sign up more OEMs for Win 3
(Dos 5 will be late by a couple of months)

7. DOS 5 licensing policies

- Same as Win 3 policy change
- only want system licenses
- Sith(sp?): go to per processor licenses vs per-model/machine licenses 15% more (ed: in box with arrow pointing to 'model' on previous line)
- If the OEM is no on price list (ed: or but?) level(sp?) this will allow us to get up the proper level! Yank prices up if the current rates are low.
- Threats
. DRI is out there w/ 5.0
. Don't lose because of being hard core or too hard core (bend if needed)

0334 From billg Tue Jul 17 12:34:16 1990
To: nathanm paulma
Subject "V" PM
Cc: bradsi russw steveb
Date: Tue Jul 17 12:31:59 1990

First paragraph:

"Nathans recent mail about Windows being the winner is basicly (sic) correct. I think it understates the problems we will have if we are too abrupt in abandoning PM. Its not just ISVs -- there are also people like LOTUS and Autodesk and DEscribe. A lot of corporations have written to the PM apis. Corporations are starting to think that Microsoft could be a strategic partner like IBM but we will destory (sic) that if we are too abrupt. Remember centrally in these companies IBM and DEC are the people they trust to make things happen and it is incredible we are even being considered for that."

The following paragraphs discuss promoting 32-bit capabilities and the possibility of including multiple window systems.

Concluding paragraph:

"I think we should meet soon. Rome is burning."

0335 From markche Wed Jul 18 10:54:51 1990
To: bobo
Cc: bernardv hansa jeffl joachimk johnj markche richardf ronh
Subject: MS-DOS 5.0 / DR DOS 5.0 Update
Date: Wed Jul 18 10:50:18 1990

Discusses new features in MS-DOS 5.0 and points to make when comparing MS-DOS 5.0 to DR-DOS 5.0

Concluding paragraph:

"MS-DOS 5.0 is much more compatible with Windows 3.0. Early testing of DR DOS 5.0 indicates several compatibility problems with Windows 3.0. There are also reports of DR DOS 5.0 compatibility problems with Desqview, and many problems with their 386 memory management in general (more details to be provided soon).

0336 From jeffl Wed Jul 18 12:49:14 1990
To: Markche
Cc: fteam
Subject: DOS 5 vs DRI 5.0

Date: Wed Jul 18 12:47:53 1990

Mark, it would also be appropriate to mention what some of the ADVANTAGES of DRI 5.0 over DOS 5.0 so we understand what DRI is selling on , and also so that we don;t get caught flat footed when the customer says, "Oh yes, but DRI 5.0 has this great feature called --------, which DOS 5 does not, what do you think about that Mr. Account Manager?"

Let us know when you complete the technical study. Compatibility issues can be agreat (sic) weapon for us.

Message 87:
From tombru Thu May 24 13:56:26 1990
To: richardf
Subject: ROM D
Date: Thu May 24 13:56:24 1990

The following came from Sergio...

From sergiop Thu May 24 08:49:45 1990
To: tombru
Subject: ROM DOS update
Date: Thu May 24 08:49:19 1990

Tom,
The strongest candidates for ROM DOS include:

Chips and Technologies (US)
Packard Instruments (US)
Ziatech (US)

Existing ROM DOS licensees include:
Acbel Technologies (US)

0337 Letter on Okna Corporation letterhead; it appears to have been faxed from Okna to Microsoft, then faxed further inside Microsoft.

Handwritten notes on letter:

Copy bradsi davidcol johnfi sherryr markwz

david: please respond to me and I will talk to OKNA. Thx Richard

The letter itself:

July 20, 1990

Mr. Richard Able
Microsoft Corp.
One Microsoft Way
Redmond, WA 98073

Dear Rich,

I recently came across two undocumented messages in Windows 3.0 Both have to do with moving files from File Manager to Program Manager. They are respectively: WM_QUERYDROPOBJECT and WM_DRAGMOVE. There are no references to these messages neither in the pre-release documentation nor in the header files.

I would like to implement similar functionality for opening and linking files across all of The DeskTop Set programs. Although it would be relatively easy to determine the messaging scheme, the reception of WM_DRAGMOVE message is determined by an undocumented extended Windows style that I cannot figure out on my own.

I am very dissappointed that from time to time I am discovering undocumented functions. It seriously impede my competitiveness vs. current and former Microsoft developers who have an access to such information. It also, for example, provides hDC corp (reputedly with access) the ability to release a program (memory viewer) that cannot be designed by Okna or anyone else.

I hope that you will be able to assist me in resolving this matter immediately and that 100% "openness" will become a rule.

Sincerely,

Konstantin Monastyrsky

0338 Memo on Microsoft letterhead

Date: July 23, 1990
To: I-Team
From: Jeff Lum
Subject July 23rd Staff Meeting Notes

Royalty reports are due next week! Please prompt your customers for their timely submittal. Status Reports will be due Friday August 3rd at 5:00pm.

All DOS 5.0 Amendments need to be finalized. Push for "all processors: if you don't have it for DOS today, or else add 15% for "per machine" basis.

Peter Miller needs PR contact and phone number for PR release in early August! Please see that you take care of this.

OS/2 BAKs where (sic) shipped Friday instead of Wednesday due to a delay. All domestic orders will go out Today if they weren't shipped on Friday.

Handwriting Recognition Tablets - check into your accounts to see what they are doing in these areas.

BACKUP! USE IT OR LOSE IT! Use the new batch file to back up your files to the net regularly!

NOTE: DOS 5.0 may slip to November.

We will NOT have a Staff meeting the week of August 6th.

The week of August 13th we will meet on Tuesday 8/14 from 9:00 am - 12:00 pm.

0339A Email message chain; 9 printed pages. Part of the first page and the third page and all of the last 6 pages are redacted.

Subject: GO threat
Dates are July 31, 1990 and August 1, 1990
The primary senders are gregw and darrylr
Others on the To: and Cc: lines are billg, jeffr, mikemap, bradsi, jabeb, lloydfr, tonyw

The discussion is mainly about object oriented frameworks, linking and embedding (L&E), indexing, querying, printing and rendering, in standalone and networked environments.

The final three paragraphs are the only ones that directly address GO:

(from gregw:)
| GO (or any new platform) is going to have a hard time addressing these 3 issues. | They are completely dependent on making the hardware platform compelling | soon after the initial introductions.

(from darrylr:)
I've read that they are backing away from selling hardware and are instead trying to license their software to hardware oems. If this is true they are becoming another systems software company. That makes the threat a lot more real.

I think the response we need to the Go threat is to make sure we have a response in our software to anything that people will like about theirs. The stuff about hyperlinks and sorting will need to be addressed. Could tony spend some time understanding what Go has done and, in conjunction with bill's earlier feedback on l&e, prepare a list of recommendations for l&e.

0340 [Memo titled Sun Moon Star, by Richard Fade, July 24, 1990. License proposal. Stamped "Depo. Ex. 323." Handwritten notes all over the page.]

Sun Moon Star
7-24-90 Points of interest:
Ed Oppenhiemer, no longer with company. Received phone calls from Elliott Dahan and Deon Lisle telling me Ed's contract expired with no renewal.

Current License
Effective Date: January 1, 1990
Expiration Date: December 31, 1991
Minimums: $825K/annually
Per Processor all systems

Proposal:
385, 456
Royalties:
$33.00 (existing)
[illegible] $22.00 (proposed)
DOS Win promo %X$50.00 (proposed) 6 months to 1 year
Motherboard $10.00 (existing)
HD $10.00 (proposed by Donald for all drives distributed)

1. Worldwide license Per Processor DOS
2. DOS/Win promo on 286 or 386x
3. Phase out DRI internationally by January 1, 1990
4. Windows per system (US only) for 386/486 class at $25.00

Current situation:
HD royalty acceptance by MS. Donald indicated he would phase out SRI from SMS by Jan. 1, 1990 if MS would forward a royalty of $10.00. The royalty would be for 100% penetration of RB's.

SMS has agreed to the following:
1. No DRI distribution in US immediately (already implemented)
2. Worldwide per processor DOS agreement
3. DOS/Win on US distribution of 386/486 systems.
4. Phase out of DRI internationally by Jan 1, 1990 if HD royalty is $10.00.
5. Fixed royalties.
6. Promotion 286/386 x system for Win3.0
7. Commitment for a 3 to 4 years terms.

Break out of Project Units: (3 months from now) FYI

Unit Projections
Processor ProductPer Month
386/486DOS/Win 200 to 400
286/386xx DOS 12K
HD DOS 5K
MB DOS 3K

Plaintiff's Exhibit 149, C.A. No. 2:96CV6451
X 518708
CONFIDENTIAL
MS-PCA 1176379
CONFIDENTIAL

0341 16 page memo to a long list of Microsoft people, plus Marianne Allison (The Waggener Group) and Mike Dalman (Ogilvy & Mather).

'Steve Ballmer' is handwritten in the upper right-hand corner (partially cut off). Also handwritten on the right side:
Bradsi
Markche
Looks pretty good. A few comments. Steveb

To: List
From: Mark Chestnut
Date: 7/24/90
Subject: MS-DOS Upgrade Marketing Plan

The last page of the memo discusses competition for the MS-DOS 5.0 upgrade from IBM's PC-DOS and DRI's DR DOS.

0342 Two page letter on Borland letterhead. The 4 page PDF file contains two copies of the letter. Also see Comes exhibits 260 and 330 for context.

July 24, 1990

To Brad Silverberg
From Philippe Kahn
Cc Bill Gates, Steve Ballmer, Eugene Wang, Rick Schell

Philippe is complaining that Microsoft's response to Borland's request for access or licenses to various Windows programs and specifications is inadequate.

0343 Memo on Microsoft letterhead

To: John Parkey
From: Jon Reingold
Subject: Win Word Strategy
Date: July 24, 1990

The memo mostly discusses what criticisms to level against WordPerfect and make Word look good in comparison.

0346 One page memo, no letterhead. Marked Highly Confidential. Portions redacted.

To: File
From: Paul Sribhibhadh
Date: July 26, 1990
Re: MS-DOS license for Technology Research Company Ltd.

Discusses reasons and terms for license with TRC. TRC was associated with the government of China (PRC), which Microsoft wanted to have good relations with. Final price for MS-DOS was $27 per system.

0349 [Ed: email. This is a more complete version of one of the emails in Comes exhibit 339A.]

From gregw Tue Jul 31 23:56:40 1990
To: billg darrylr jeffr mikemap
Cc: bradsi jabeb lloydfr tonyw
Subject: Re: GO Threat
Date: Tue Jul 31 23:42:48 1990

The author regards GO's object oriented framework as the real competitive threat to Microsoft in GO's product.

"Could tony spend some time understanding what Go has done and, in conjunction with bill’s earlier feedback on ????, prepare a list of recommendatlons for bill"

0350 From: debbiefl Wed Aug 1 16:01:22 1990
To: joachink markche richardf
Cc: debbiefl tedha
Subject: DRI in commodore

Discussion about DOS pricing and the difference between DOS and DRI. "Financial sence" to go with DRI and that CBM? was extremely price sensitive.

0355 Microsoft Memo

To: billg, darrylr, jeffr, mikemap, bradsi, et al
Subject: GO Corp. Info
From: Lloydfr [handwritten on document - Lloyd Frink]
Date: 8/1/90

Attached is a packet of information I have collected on GO. There are some of GO's very preliminary specs, a slide show of theirs, two of my trip reports on GO, and some press information.

Essentially, GO has been going out and telling the world that you need a whole new OS and apps for portable, pen based computers. People seem to bite on this, especially when they see that IBM is a strong backer of the GO OS (GOODE). They use their notebook shell and OO framework combined with gestures and handwriting recognition to show everyone that their platform is indeed very different from the standard Windows/Mac world. They say you can't "hack this into an existing OS."

Well, we know this isn't so, and the best way to prove them wrong is to do our own "notebook" app. The big constraint is that we get it done in a year. SO this won't be the most beautiful thing, but it should serve as a stopgap measure until we do our Win 4 shell and have all of our OO stuff in place.

GO Notebook Shell

When you turn on a GO computer, the user sees something that looks like a notebook. You can write directly on the page, probably do pictures as well. On a page you can open many document windows of any type. THey use an object oriented approach to their OS, so opening up a document is just creating an instance of that class type. When I was down at GO, Carr talked a a lot about embedded documents, but the screen shots we have don't actually show that. These guys are smart, so I'll bet they will make it possible. When you leave a page, and later return to it, all of the documents will be in the same state as when you left (i.e. open/iconic, position). At the top of the screen is a menu bar with system-wide and generic document commands. If you want to create a new, blank document, you use the Create menu and choose the document type. Inside of each document are menus that correspond to that class.

Besides the many benefits of being OO, the thing which sets the GO notebook apart is the ease of navigation. On the side of each page are a set of "tabs" which correspond to folders, just a page in the notebook. Touch the tab and instantly you will go to a predefined workspace (similar to excel, but multiple document/object types). It is not clear if they are going to have only one level of folders, a "show all tabs" command, or some sort of hierarchy. The really nice thing about these tabs is that they are always visible, and never get obscured by other windows. There are prev, next, and back buttons as well (the upper right hand corner). I suggested they add the ability push and pop of pages (hypercard). At the beginning of the notebook is a Table of Contents, which is a listing of the folder and page titles. At the end of the notebook is an Index of keywords the user has marked. Clicking on an item in either the TOC or index sends the user to that page. The user can also search for information in all documents and can create "goto" links (not really clear how they have implemented the latter). There are probably several other standard methods which can be applied to all objects.

This metaphor does have a few drawbacks. If they number every page by sequence, and you keep inserting pages, then your page numbers are always changing and lose some meaning. Since they seem to be avoiding very many levels of a hierarchy, what happens when you get tons of info? Does something like a piece of email belong on a page by itself, or with other email? What about rolodex cards? You kind of have next, prev, back navigational type issues within a window on a single page of a notebook. The notion of having a multiple page document, or a multiple record table in a window on a single page of a notebook might seem confusing.

But this metaphor has a lot of appeal, especially compared to our program/file manager combination. I think we can whip something up in a year that embodies some of these ideas. I'll think about this in more detail and write it down in the next few weeks. [Attached are drawings showing what the system looked like.]

0356 This document consists of 14 PPT slides, titled "Word for Windows Marketing Plan for FY '91."

Slide 1, is the title page and has a graphic of two prize fighters, also several handwritten notes. "Word for Windows Strategy Presentation, August, 1990," and the name, "John Parkey," is at the bottom of the slide.

Slide 2, is titled "Agenda," with bullet points: "Current Situation/Implications" - "Objectives for FY 91"
- "Strategies and Tactics"

Slide 3, Title "Current Situation" with bullet points:
- 6-9 month window of opportunity to capture market share and dominate the GUI word processing market before WordPerfect for Windows ships.
- Win 3 sales are way up (150,000/mo.), WinWord sales have only doubled (to 11,000 units/mo.)
- Many Windows owners are using CUI word processors rather than switching to WinWord
- Many customers think WinWord has few clear advantages over CUI products, but many have not seen or tried WinWord
- Our most significant competitive advantage over Windows WordPerfect and Ami Pro is our customization/integration capability

Slide 4, is titled: "Our Strategy," with bullet points:
- Gain market share quickly by emphasizing trial programs (focus on Windows owners)
- Evangelize and support users who will exploit our customization/integration capabilities.
- Position WinWord as the clear GUI WP leader, which must continue after Windows WordPerfect ships

Slide 5, titled "Fit with Applications Division Strategies."

Slide 6, titled "Business Objectives," with main bullet points:
1) Aggressively build market share
2) Win 90% of all evaluations in our top 300 named corp accounts...
3) Establish WinWord as the preferred product for EIUs and business professionals...
Slide 7, titled "Increasing Market Share: Trial"

Slide 8, titled "Pushing Customization/Integration"

Slide 9, titled "Third Party Support Program"

Slide 10, titled "Becoming #1 in Perception"

Slide 11, titled "Help Corp Accounts Switch"

Slide 12, titled "Shift to GUI Word Processing"

Slide 13, titled "Market Share Projection"

Slide 14, titled "Q&A" is otherwise blank.

0358 [Email snip included prior to exhibit itself beginning.]
From paulma Wed Aug 8 16:02:04 1990
To: bobmu bradsi darrylr davec loup markz martind mikemur nthanm ralfha
Cc: steveb
Subject: OS directions and goals
Date: Wed Aug 08 16:00:49 1990

Mail-Flags: 0000

Date: Wed Aug 08 16:00:49 1990

A number of folk have asked questions or written mail to effect of how we are going to emerge from the present period of turmoil wrt OS/2 (both 2.0 and NT), so I wanted to let you know of the series of steps that I envisage and who is doing what.

First "facts":

1. We have thrown the switch on moving to a "Windows centric" strategy, ie. the API that we will take forward and put our energies behind is Windows.

2. This means that for:
NT OS/2 - we will no longer port PM, but port Windows. We will also no longer do an "NT Shell" - this resource will be xferred to Bradsi.

OS/2 2.0 - it minimally means that the BCL became a critical component.

This still leaves a lot of questions to be answered.

1. What will 32bit Windows look like -- will it just be a "stretch" of 16bit Windows, or will we also address shortcomings in 16bit API (like pre-emption, input model, possibly security)? To what extent will we make allowance for a future possible "Holeport". Ie. Will it just be "Win32" or will it be "Advanced Windows 32".

3. How do we get started on addressing cross platform issues like data storage, NLS, metafiling, printing, etc. which also have impact on above decisions.

4. What does above mean in terms of focussing each individual project? Eg. what are priorities for NT - RISC, x86, x86MP? In case of OS/2 2.0 is BCL complete enought? etc.

To address this, we have booked 2 days of offsite time with billg/steveb (this will happen 8/20, 21) + few key others to take an inventory of above issues and make high-level decisions. Building up to this the following work is happening:

1. Windows 32/Advanced Windows:

A team of Scottlu, Davidw, Paulb, Chuckwh is thinking this thru. Scottlu will be pulling the issues and data together and presenting it on 8/20.

2. Bobmu is pulling the data together and articulating the questions. I have asked Ralfha to also be involved so that "RISC PC" task force views ("Power PC") can be represented. The first step is to develope a matrix of possible function and possible platforms, and then assess a "cost" (memory/performance) that will indicate how the matrix can be filled out. Other key data is size (units) and characteristics of the new machines and installed base, now and in 1992/93.

3. Cross platform issues - principal ones are Data Storage, NLS, and Printing (including metafiling). Markz is pulling these views together. He has been working with selected folk in each of the areas. Notable by its absence is Shell/Application Integration - this will not be addressed by 8/20.

4. Specific projects. It is likely that there maybe even be some further re-organization as a result of above decisions, but for now the responsibility of ensuring that the following projects are well focuessed falls to the relevant program mangers:

OS/2 2.0 - Bobmu
"NT OS/2 and NT Windows" - Ralfha

This means that Bob and Ralf are responsible for (i) articulating the basic goals, (ii) documenting the open issue, (iii) getting closure.

I do not expect to get final and complete closure on all issues by 8/20, 21, but I do expect to have the issues and costs of various trade-offs well enough articulated that billg can help make basic decisions of direction - so that we can articulate to our groups what their goals are.

From paulma Wed Aug 8 09:56:53 1990
To: nathanm
Subject: Power PC comments
Date: Wed Aug 8 10:00:09 1990

Mail-Flags: 0000

Date: Wed Aug 8 09:55:30 1990

You should really use a smaller "to" list for this kind of mail -

0359 From lloydfr Thu Aug 9 15 35 22 1990
To mikemap
Subject GO Info
Cc cathyw
Date Thu Aug 9 15 35 21 1990

I sent a memo to you last week which had a bunch of info on GO corp. Turns out some of it was confidential and I was not supposed to make copies. Could you please return all of it to me so that I can destroy it?

Thanks - Lloyd

0365 MICROSOFT MEMORANDUM

TO: Tony Audino, Steve Ballmer, Jeremy Butler, Dave Cutler, Richard Fade, Bill Gates, Rob Glaser, et al

From: Paul Maritz and Pat Bellamah

DATE: August 14, 1990

MICROSOFT CONFIDENTIAL

* Do not forward or copy

* We do not want press speculation on the contents of this memo

* Send all questions to PaulMa and PatBe

Directives to systems marketing: our strategy for Windows and OS/2.

We have decided to use Windows, instead of PM, as the native WIN API on NT OS/2. To that end, we have begun to spec a 32-bit Windows API.

This change raises questions about what our strategy is for Windows, OS/2 and NT OS/2. Moreover, there may be some confusion about what the implications of the strategy are, both within the product groups and in terms of what we say publicly about our objectives.

In light of our ongoing discussions with IBM, many factors are subject to change. The following points are not public, and all of our comments to ISVs, OEMs, the press, etc., should not communicate any change to strategy for Windows or OS/2. In other wordsw, we should avoid comment on these issues except where we have already made public commitments, such as the Binary Compatibility Layer (BCL).

On the other hand, we cannot be immobilized for the duration of our discussions with IBM and we are resolved to move ahead on the following points:

1. Our long-term product strategy is Windows on DOS and Windows on OS/2. OS/2 2.0 with the BCL is the first manifestation of this strategy. (The BCL allows Win 3.0 applications to run natively on OS/2 2.0.)

Our goal is to simplify our message to ISVs and focus all of our development and marketing energy behind the Windows API. We are evolving our OS/2, Windows and NT OS/2 development efforts away from the redundant process we have today towards a single-API, scalable desktop operating system. Future Windows will span user requirements from low-end DOS systems to high-end OS/2 systems.

____

P. 2

2. Our portable NT OS/2 work has been refocused on Windows. Note that this is the only development project that has been changed. Since our greatest strength on the desktop is the large and growing base of Windows applications, we want to leverage that asset going forward by providing a clean migration path to 32-bit for Windows apps.

3. Without announcing a change in strategy, we are telling ISVs to write for Windows. With the exception of non-graphical server applications, all developers will continue to be encouraged to support OS/2 via the SMK.

We will sustain 16-bit PM compatibility over selected future generations of our desktop product to protect the corporate investment in OS/2. But our goal is to simplify our message to ISVs and corporate customers by focusing on the Windows APIs as the key platform moving forward.

[Ed: Two more pages follow with Q&A "On Changes to MS NT OS/2 Development Strategy." One example: Q: Does IBM buy into 'dead-ending' PM? A: No, that is why we should be careful what we say in public, to ISVs and OEMs.]

0366 Letter to Jeff Schwartz, VP, Commodore Business Machines, dates Aug. 17, 1990 from Deborah K. Flynn, OEM Account Manager at Microsoft. She tries to help him decide not to use DR DOS by passing along such anecdotes as one from a "source" in Germany, who tells her that DR DOS is "losing market acceptance", that it's expensive to support two operating systems, that DR DOS takes more space than DOS, that bugs in their code could cause the system to hang or force a reboot, etc.
0369 It is a 20-page report from the "Microsoft RISC PC Taskforce" entitled "Responses to the Compaq SPARC Threat". A quote:

This is another way of saying that Microsoft is not much like Compaq - it is difficult to work up enthusiam for buying into sombody else's game and their rules and still beating them through superior execution. Compaq only has experience in succeeding at this strategy against IBM, which is a very slow moving company that does not know how to execute all that well, and does not even understand how to press their advantage. With a couple of minor changes in strategy, IBM could have eliminated Compaq's big claims to fame - for example if IBM had wanted to do the 386 first, Intel would have put the fix in for them and the Deskpro 386 never would have ben. With the right licensing terms and up front negotiations, IBM could have had Compaq and the rest of the industry locked into the MCA bus and there wouldn't have been an EISA. IBM is not ruthless, innovative or even all that ambitious, and Compaq may discover that they need new tactics against an opponent like Sun which is all of these.

[NOTE: First page of exhibit is largely blacked out. There is a vertical "RISC Strategy" on the upper right hand side. There is a stamp PLAINTIFF'S EXHIBIT 369 Comes v. Microsoft with the 369 being handwritten. Near the bottom on the right there is a x 555173 CONFIDENTIAL and the rest of the exhibit is also numbered the same way through 555195. The second page of the exhibit has a handwritten notation "Strategy RISC" in the upper right corner. The third page of the exhibit is numbered "Page 2" in the bottom right hand corner and subsequent pages are similarly numbered through "Page 22" Centered at the bottom of these pages is "Microsoft Configential" and in the lower left corner is "8/27/90 1:23 AM". The upper left corner of these pages have the major section name (e.g. Introduction) in the upper left and the minor section name (e.g. "Sun's Strategy") in the upper right. The third page of the exhibit (numbered "page 2") is the table of contents and is omitted below.]

MICROSOFT RISC PC TASK FORCE REPORT

Responses to the Compaq SPARC Thread

NOTE: This memo is very confidnetial and discretion should be used copying or distributing it - even within the company.

Advanced Technology and Business Development

1. INTRODUCTION

We have recently learned that Compaq is seriously considering a project to enter the workstation business with a SPARC and UNIX based machine. This memo covers some initial thinking on what this means to Microsoft, and how we should respond.

Obviously the best thing would be to have them change their minds. The question of how to cause this to happen will be covered elsewhere. This memo assumes that we will immediately begin a dialog with Compaq to try convince them to do something else (nearly anything else would be an improvement), but in parallel we must start to plan, and act, on a response which assumes the worst. It is fairly safe to assume that Compaq will wind up in one of a couple of modes:

- Rapidly reach a formal decision in favor of SPARC. Once their consensus driven process locks in on a decision it is hard to change, and we can assume that it will be months before we could turn them around. Even then, we will need dramatic new data to change their minds, and there is only a small chance that we could win even then. A further complication is that to do SPARC they are likely to enter into some commitments early on which are tough to reverse - it is not just engineering work.

- Return to confusion on the RISC issue. This is the state that they were in for the last several months (although some of that was cover for their SPARC investigation), and it is possible that we could get them back into that mode of operation. They could wind up right back in the SPARC camp, or do something else random.

- Run down multiple paths. They could start working on the SPARC plan without a formal decision, just as they worked on the MCA bus machines while thinking about EISA. This would still be a very dangerous situation, but it would increase the likelihood that we could get them to turn around later. The problem with this is that the likely scenario for their SPARC project involves building or buying a sales force and other activities which can't easily be cancelled late in the game.

Another way to put this is that we will either lose very fast, or we will be in a long holding pattern from which we could still lose. In either event we must proceed at once with our response - there is no point at all in waiting for Compaq to turn around, or in hoping that they will quickly come to their senses and join our present RISC plan.

Finally, I should note that the ideas below are the result of conversations with many people.

1.1. Sun's Strategy

Our present understanding of Sun's overall strategy is as follows:

- Stay the course with direct sales and the conventional UNIX workstation market. They will rely on their present approach as the mainstream core of their business for the next two years. The growth rate is large, and they can comfortably use this to finance their assault on other markets, and give them enough time to get the pieces in place. The key niche markets that they will exploit are technical workstations and software development within corporations. This will broaden to cover an increasingly large set of customers.

- Experiment with other channels. This will occur through limited test cases such as their deal with Micro Age, and through SPARC clone companies such as Northgate, Compuadd and others who are expendable missionaries in new markets.

- Build an arsenal of ISV support. They do not have a sufficient set of desktop productivity applications to really threaten PCs or control of mainstream office computing, but they get more support every day. Their present growth rate even without having such apps will take them to 300K - 500K units/year run rate within the next year to 18 months. This starts to get a

- Once they are ready, make a major push on the PC market. Within the next two years they will be in an excellent position to directly assail PCs with widespread retail distribution of both machines and binary software packages. In early 1992 they will be selling at the 300K - 500K machines per year run rate, will have a critical mass set of major applications, and they will have a commanding price/performance lead on the x86.

This all assumes their present level of industry support. Even though Compaq is not likely to ship any appreciable volume in SPARC until late 1992, their endorsement will clearly help.

Note that the strategy above is NOT aimed at bringing RISC into the PC market - rather it is trying to grow the workstation market to the same volume levels, and the same distribution methods as PCs. This is a critical distinction. Sun is creating a parallel world to the PC industry, in much the same way as the Macintosh is a parallel world to IBM compatible PCs. It is not a high end PC, but rather a new beast which has some key differentiating features:

- RISC. This means three direct benefits over the x86 - 32 bits, better price/performance, and higher absolute levels of performance. Indirectly, the open processor model will ensure that SPARCs lead over the x86 and closed processors will increase over time.

- UNIX. This is a mixed blessing, but their positioning is to try milk as much as possible out of "open systems", and the supposed technical quality of UNIX.

- Networking and connectivity. Nobody would accuse UNIX of having an elegant or even very good networking story, but since it has been put into place over a number of years it does work, is mature, and has been ported to all manner of machines and networks.

- The perception of being high tech. Sun and other workstations have the cachet of being sophisticated, powerful state of the art machines, and this aura helps set them apart from the PC industry.

Despite the enormous momentum behind Windows 3, as long as Sun can position themselves in a significantly different market, they are largely immune from assault and can continue on the strategy above. An analogy that we've used in the past is the case or the Macintosh, which was introduced at a point of unprecedented strength for the character mode IBM PC. This did not eliminate the Mac, and in fact it is hard to imagine that any amount of increased volume in character mode PCs would have stopped it. The Mac used GUI to put itself in a class by itself, and thus have the breathing space to grow, and as long as the SPARC world uniquely enjoys the features above it will have the same kind of chance.

Our strategy has been to deny key points of differentiation to SPARC by broadening the Windows work to include to include them. The most dramatic and most important is RISC, and that has been the item which has been discussed the most. The high tech image is addressed by the Power PC features. Networking is also being addressed. Although not unique to RISC, it is a key part of our long term systems strategy.

1.2. Probable Compaq Plan

Our present understanding of the Compaq strategy is as follows:

- Enter the UNIX workstation market with a SPARC based machine. This will probably be of their own design rather than a SPARCstation clone. This would be positioned very clearly at workstations, and at Sun's present and near future market. They have an explicit goal to keep it very separate from the x86 PC market to avoid any negative impact on their current systems, and they think that this separation is pretty easy to achieve.

- Use a Compaq direct sales force to distribute the machine. This choice is determined by three factors - their desire to compete head to head with Sun in the traditional workstation market, the need to keep this activity separate from their present distribution channel and finally they have a long term goal to build a real direct sales force, and this project provides a convenient opportunity. There are hints that they may acquire a mini or workstation company such as DG or Wang to get an established sales force in a hurry, but they may just build one from scratch.

- Create a limited consortium. Compaq will attempt to balance the necessity of having industry support to attain critical mass with their large desire to have a proprietary advantage. They do not be vulnerable to cheap SPARCstation clone kits (although exactly how is not clear to us yet). The data to date suggest a group of 3-4 companies with sales > $2 billion, and with little enough clout that Compaq gets "51% of the votes" (in Gary Stimac's words).

- Rely on the Compaq name and prestige. They do not seem to mind us doing something else for RISC which does not involve them, because they do not feel that it will amount to much. They think that the Compaq name and support is critical to the success of any such machine, so other efforts will be just so much noise.

- Out execute Sun and the SPARC clones. In attempting this strategy they are dearly counting on superior execution to win them a good slot in the SPARC pantheon - i.e. that there is room for two major players (themselves and Sun).

The time frame for this is uncertain, but Stimac said that they could have sample machines within 9 months, and ship within 12 months. This would be consistent with building a machine from scratch (you can manufacture an existing design such as the LSI Logic SPARCkit in much less time - say 3 months).

The Compaq strategy outlined above is much more of a pure workstation approach than the one that Sun is on. This is because Compaq has a huge PC business to protect. Ironically, by endorsing SPARC they are giving Sun and others a powerful means to attack the PC business even if Compaq itself achieves a way to isolate their own workstation business from PCs.

This is a very key distinction between what they are planning to do and the IBM RS/6000 strategy which they admire so much. In IBM's case the RS/6000 has no life of its own - IBM controls it completely and also benefits completely if it is successfuL

In Compaq's case, SPARC does have a life of its own, and Compaq is far from being the sole beneficiary if SPARC wins. Sun and others can directly attack the PC industry, and in doing so compel Compaq to either follow suit and cannibalize their PC business, or resist the trend and lose in the SPARC market. For example, if Sun continues to up the ante in aggressive pricing, marketing aimed at PC end users, ISV evangelism and other anti PC activities, Compaq will have to match Sun to remain competitive in the SPARC market.

1.3. Compaq's Motivation

One view of Compaq's interest in SPARC is that it is simply an extension of their desire to ape IBM, and more generally to be a quality implementor of other peoples strategies (i.e. superb knock-off artists). They need to copy any strategy that IBM has, ergo they need to have an answer to the RS/6000. Given that there are some nearly insurmountable barriers to directly cloning the RIOS chip set, they looked around to see who is the next biggest player (Sun) and set off to copy them and win through superior execution. Compaq has recently taken the same approach in the printer business.

Stepping back, there are several likely factors which are motivating Compaq:

- Cloning the strategy of moving into workstations. This was discussed above.

- Obtaining incremental revenue and market share. The workstation market has a faster growth rate than the PC business, and they perceive that they have sufficient skills to beat the present competition.

- Get involved with RISC without jeopardizing their PC business. They understand that RISC will be important long term, but they remain terrified of anything which introduces RISC in a fashion which might in any way reflect on the PC market.

- Get involved with UNIX. They are getting a much more favorable view of UNIX than in the past and this gives them a way to hedge their bets. I do not believe that they have an explicit goal to get out of the Microsoft dominated world, but having a strategic hedge is sensible.

- Build a direct sales force without disrupting their present channel. The workstation business gives them an opportunity to do this without upsetting their dealers.

One interesting question is the degree to which we have accelerated Compaq's concerns in these areas, or done things to cause them to move to SPARC. It is likely that our efforts to involve them in the RISC PC, and our emphasis of the Sun threat has highlighted the importance of this area, but in general I think that at most we got them thinking about this six months sooner than they might have otherwise.

During the meeting with Stimac there were a number of comments that indicated that they were none too pleased with Microsoft's power in the industry. One concern that we had during the meeting, was that Compaq was upset with Microsoft taking an active role in trying to define a hardware platform and pushing them and the rest of the industry to RISC. After thinking about it, and considering their SPARC strategy in more detail, it appears to me that anti-MS feelings, including fear about our hardware prototyping efforts and the role we have intended to play in RISC PC have essentially nothing to do directly with their basic strategy.

They appear to be doing exactly what one would expect from Compaq if we had never told them a thing about RISC, and instead they had discovered it on their own. Their natural tendency is to clone the winner rather than to innovate with a bold new approach. They would never undertake an initiative like setting a new RISC PC standard by themselves - there are too many unknowns for them. If you set aside the notion of doing their own standard, what else could they do except clone an existing one? Sun is their choice over our RISC PC because they are more established whereas our plans are still on paper, and there is less perceived risk to their existing business.

Certain individuals at Compaq probably do hate us, or are uncomfortable with our power, and we should never get lulled into thinking that they are not just as envious and jealous as the rest of the industry. Probably the biggest sin that we have committed in their eyes is that we ship products before they are ready - this offends their perfectionist sensibilities, and in the case of RISC they are worried that our haphazard approach could hurt them very badly by impacting their present market. These personal factors help grease the wheels for any plan that shifts power away from us, or reduces Compaq's reliance on Microsoft, but there is no evidence to support the contention that they are on an anti-Microsoft jihad as a matter of company strategy. Nevertheless we should not be fooled into thinking that they like us, or will cut us a break in any way - if the long term effect of the strategy is to put us in our place, so much the better although it is not an explicit goal.

1.4. Impact on Microsoft

Sun's clear goal is to be the system software provider and the leading hardware company in the SPARC market, and have that market become the key high volume segment of the computer industry. From a technology standpoint they have a fundamental advantage over the x86 based world, and there is every reason to believe that in the long term RISC based machines will completely replace the x86 for all desktop personal computers. If Sun succeeds, our systems business will die along with the x86.

That is the big picture view, and it shows why we need to be excited - billions of dollars, and Microsoft's identity as a company that is important in systems software - hang in the balance. Narrowing down our focus a bit, it is interesting to project the near term impact of a Compaq SPARC project on our part of the world.

1.4.1. PC Industry OEMs

One can argue whether Compaq is just following a done strategy, or has some deeper plan, but when it comes to the rest of our OEM customers, there is little doubt, especially among those who are focussed primarily on the PC market. They are not so ambitious as to think that they need to emulate IBM in every way, but by the time Compaq is doing it too, it will get their attention. The rush of interest in MP and server machines following the SystemPro introduction is ample testimony to this fact - despite the fact that nobody (even Compaq) is burning up the sales charts in this market. The minute that Compaq announces a RISC strategy, every other OEM is going to give it some serious thought Some will wait, some will rush in, but they will all think about it

The reaction to a Compaq SPARC announcement will group OEMs in three basic categories:

- Pure PC companies. This includes big ones like Zenith and Tandy, as well as the second and third tier people. SPARC will be the leading contender for most of the them, because it is the simplest thing to do - just copy Compaq. The only thing to consider is whether their distribution channel can handle it, but many of them will invert this problem into a perceived opportunity - i.e. that their advantage is that they're in a different channel than Compaq with the same kind of machine.

- PC companies which are already in the workstation and mini business. These guys will be caught in a tough position, because Sun is their nemesis, and they will be loathe to support them. The canonical example here is HP - they are the second largest workstation company, and also have a PC business.

- Workstation and minicomputer companies. People without a substantial PC business include companies such as DEC, Silicon Graphics etc. These people would not normally care at all about what Compaq does (or at any rate it is a second order phenomena for them), and are unrelenting in their opposition to Sun. They will see an incredible boost of momentum for Sun and will be very interested in doing nearly anything else as a matter of survival.

The last two categories of companies are the simplest ones to predict - they are directly threatened by SPARC (even more than we are) and they will react sharply in the opposite direction. Ultimately they may give up and make SPARC clones, but they will almost certainly make one last attempt to beat them first. The motivation is pride, inertia and the fact that Compaq (at number two) will have taken last really desirable spot in the SPARC line up (not to mention Compaq's little consortium). This gives them nothing to lose and everything to gain by going in any direction other than SPARC. The primary distinction between the two is that workstation companies in the PC industry will naturally look to Microsoft for a solution to this problem, whereas those who are not big customers of ours wouldn't normally think of that. In either case, they are very approachable for a counter SPARC strategy.

The pure PC people are another matter entirely. They will have a much more direct reason to just sign up with SPARC. They are especially vulnerable to the same pitch that Compaq itself is falling for - enter the workstation market as a way get incremental revenue without effecting your PC business. The keys to convincing these people not to go with SPARC are to play on three things:

- It will hurt your PC business. SPARC is the natural enemy of PCs, and it is too late to side with SPARC in this fight because all of the good seats are already taken.

- You can adopt a RISC strategy which actually benefits your PC business. This is the Power PC message. Since most pure PC companies do not understand the UNIX market, they would be much better off with a way to address RISC which leverages the thing they do understand, and their present users and distribution channel.

- It's time to turn the tables on Compaq. This only works for the larger PC companies, but it can be effective. These guys are clearly in third place behind IBM and Compaq in the PC world, and they would still be third place (or worse yet) in the SPARC world. If they are offered a chance to move up in the hierarchy, and still have the comfort of having major forces in the industry supporting them, they will see this as an opportunity.

This covers the near term reaction to a Compaq SPARC. The long term consequences depend on the course that we follow. In the absence of any MS lead RISC project, I expect that we will see over half of the PC only crowd offering SPARC machines within a year of Compaq actually shipping. The only reason that I do not say all of them is that the SPARC market can only absorb a certain amount of growth until mass market binary applications start to appear.

1.4.2. PC Industry ISVs

The effect of a Compaq SPARC announcement on PC industry ISVs will depend a lot on our strategy and how it relates to Windows. It will also depend a great deal on how active Compaq is getting ISV support. If they are really hard core about the notion of separating the UNIX and Dos parts of their world, then they will not embark on a big ISV program unique to the machine and will instead let Sun's existing efforts handle it. On the other hand, if Compaq has some differentiating feature over Sun (for example they decide to push Motif rather than OpenLook) then they will have to go to ISVs.

If we do not have a compelling way to tie RISC into Windows, and execute on it very well, then we will see a lot of PC industry ISVs look at SPARC as being enormously more interesting after Compaq than before.

1.4.3. Networking Business

One of the primary attractions to UNIX from Compaq's point of view is that it has mature networking. We can expect that their direct sales force will be pushing this very strongly as part of selling the machines. This suggests that networks will become one of the first areas where we will conflict develop between the x86 and SPARC sides of Compaq's business - which machines get pushed as the departmental network? What is the server OS? If you buy one kind of Compaq machine the sales rep will help you out, but the other kind you have to call this dealer.

This has a lot of potential to negatively impact our network business, and any attempts to establish OS/2 as a server OS. A natural separation for Compaq to make is to say that simple file and print services belong on x86 PC based servers up to the SystemPro, since the issue is mainly one of I/O throughput rather than processor speed. The dominant software here would be Novell. When you need to do database operations, or any other kind of compute intensive server task, it will be hard for them to avoid selling the SPARC machine.

2. LIVING IN A SPARC WORLD

One way to view this development is that we should learn very fast how to live in a SPARC dominated world, because that is going to be a reality. There are several degrees of emphasis that you can place on this. At the very least, Sun and SPARC will continue to be a viable system for a number of years, and we could view this as an incremental revenue situation (much like Compaq). At the other extreme we could just admit that SPARC is likely to take over from the x86 within the next five years and we should jump on board as hard and fast as we can. In any event, the sections below describe some of the opportunities that we could approach assuming that SPARC is going to be important.

There are three different approaches for distribution that we could take in working with SPARC - one would be to deal directly with Sun, the other would be to work with Compaq and the third is to try retail. In the discussion below we will assume that Compaq will have the same system software base that Sun has, and this means that for all intents and purposes we have to work with Sun. Retail is a poor choice for the present SPARC market because it is all done by direct sales. By the time that retail is effective, it will be too late for most of the approaches below (except applications).

2.1. Windows layer for SunOS

The idea here is to take the portable version of Windows being developed for NT, and make it work on top of SunOS instead of the NT kernel. There is considerable precedent for such a project - we negotiated a deal just like this with Sun several years ago, but it fell through at the last moment when they were feeling their oats and thought they didn't need us (that was right at the moment when they first signed up with AT&T to control UNIX).

If there wasn't an existing window manager and look and feel for UNIX this would be straightforward - it would be to UNIX like Windows is to Dos. The proposed deal we had with Sun would have had a portable version of PM be the only GUI interface with SunOS, and be bundled with every copy. Now that there is OpenLook in the default position, a number of problems arise:

- Sun won't bundle it. Obviously we can try to get this, but it is hard to see why they would want to at this stage. They can sell at the rate of 200K+ machines per year without this today, and there is no present sign of their growth slowing down. They are getting a slow but steady series of defections from the PC ISVs, and with Compaq on board they have a good shot at the rest. As a company, they are a lot less enamored with the "big deal syndrome" than we are and they are likely to just go out and compete with their product There is also the strategic cost of letting us get into a strong position in their system software business.

- System utilities and UNIX apps will follow OpenLook. They are too far down the road to pull back now. The fact that there would be two different looks, and two different APIs is a pain to both end users and developers. Over time people would tend to view one of the approaches as being a second class citizen - if that stigma fell on Windows (and Sun would have every reason to make that so), then ISVs would migrate to OpenLook and we would be eliminated.

- Windows on SunOS could be clumsy. Although the core kernel issues are not difficult, there are a lot of other things that would need to be done to make a slick system. Examples include how you share the screen with OpenLook apps, sharing clipboard formats, whether you can do DDE with OpenLook apps etc. This has much of the flavor of the problems that arise in trying to run Windows and PM at the same time in a nice fashion, but the details are worse because OpenLook differs a lot more from Windows than PM does. It is not so simple to add

- Sun will continue to evolve OpenLook. They will add new features in an attempt to be competitive in general, but this will cause a direct challenge to Windows. Unless there is a high degree of cooperation between us and Sun this will make life difficult.

- Windows will evolve in directions that are hard to support. Our advanced data storage initiative is a good example of something that will be very difficult to implement on top of SunOS, and there are likely to be more of these in the future.

- We would be vulnerable to direct OpenLook ports, or SMK approaches. The primary value of the Windows layer is to make it easy for an ISV to address both SPARC and Windows on x86 with the same source base. To the extent that this is not smooth because of the evolution issues or clumsiness issues above, or that the resulting app looks like a second class citizen in an OpenLook world, ISVs would be motivated to go directly to OpenLook. If SPARC remains a minor phenomena, then they would use our layer, but once it is important they will look hard at other approaches. The most viable alternative is a software migration kit which Sun or third parties could provide, which makes it easier to port from Windows, but yields a more OpenLook-ish app as the final result.

This does not mean that a Windows layer for SunOS is a terrible idea, but it does raise a lot of questions. It is not a simple project and we would have to overcome these issues in order to make it viable.

2.2. NT Windows for SPARC

Another obvious approach is to build essentially the same NT Windows product that we are presently targeting for a MIPS based Power PC, but offer it on SPARC instead as an alterative to SunOS for the native operating system. This raises its own set of challenges:

- Sun's strategy is based on controlling the operating system. The operating system is key to any plan to dominate an instruction set - they need control of the operating system software in order to be able to get an advantage over the SPARC clones. This comes up in a huge variety of areas - multiprocessor machines, new system level instruction set changes, moving to a 64 bit address space, making handheld machines, adding multimedia capabilities - the list goes on and on. The operating system sits at the critical crossroads between the hardware and applications. To first approximation, the only software that is really visible to the hardware, or that is visible to ISVs - is the operating system. Sun understands this, and they are not very likely to give up their system software business, or to let us get any kind of serious position in it.

- We are not well suited for their present market Although we are working on making a compelling state of the art product, NT Windows is not particularly well suited for the traditional workstation market. Given that Sun, and Compaq, are both working the workstation market first and foremost in the initial phase, we are bound to get a fairly small penetration. Our product will shine when it is marketed as a Power PC - not as a weird kind option in the workstation catalog.

- We would have to plug and play with their network strategy. The most direct example of us not being well suited for their present market is that we would need to work on a Sun network. Essentially all of their sales are machines on a network , and our situation would be hopeless unless we could have individual machines running NT plug into a Sun network. This means we would have to support NFS and their entire net strategy (directory, mail, security...). Although it is possible we could do this by licensing software from Sun, it would still be a lot of work, and it would constrain us in doing our own networking vision.

- They control the customer via a direct sales force. It is very difficult for us to come in with a different operating system when Sun has dedicated people on site, and is selling a complete solution rather than a retail machine. This does not give our system any room to grow and build up momentum. This will change at some point when they go retail, but by then it will be too late.

One of the themes that runs through the problems above is that there is already a strong operating system strategy for SPARC, namely SunOS. Furthermore, the marketing environment for SPARC is dominated by SunOS and matched to its natural constituency and feature set. Compaq is not considering doing a RISC PC or Power PC which just happens to have a SPARC CPU inside - they are planning on going into the Sun clone business and going after the same customers. We are ill suited to competing in that environment, and without some room to grow, we would never get critical mass and succeed.

It is interesting to contrast this with the MTPS based Power PC plan that we have had to date. In this case we are being marketed as a high end Windows machine, and the feature set would be attuned to that need. The Power PC is designed to mesh well with a network of Windows machines - it has the same apps (upon recompilation) , the same look and feel, the right network support (LanMan and Novell) etc.

2.3. NT as a base for SunOS

Another idea is to try use NT as the base for building an entire UNIX version, probably by turning SunOS into a subsystem. This is similar to the Mach approach, and from a technical standpoint the NT kernel would be great for that. It is difficult to imagine that Sun would let us do this, or would be interested themselves. They have the capability to do this themselves, and there is little reason to let us into the revenue stream for this reason.

2.4. Applications on SPARC

Finally, our applications group is a way that we could profit on SPARC even if we do not get any systems revenue. The issues here are fairly straightforward - we would simply port our apps to OpenLook. One could imagine using some portable Windows code as an internal porting aid, but that is just an implementation detail.

This case differs substantially from the historical example of our success on the Macintosh:

- Apple never had the potential to kill our systems business. The Mac was destined to be popular, but because it was proprietary, it was a self limiting and could not threaten our systems business. The Mac offered incremental revenue with no strategic consequences. Lending support to SPARC is a different matter entirely.

- SPARC does not offer a unique technology. The Mac gave us a unique chance to do GUI, and thus be the foundation for a long term applications strategy. SPARC has no such offer - RISC is not unique (indeed MIPS has better performance), and the rest of the system definition is boring and not substantially different than today's PCs. Power PC on the other hand does represents an opportunity to raise the bar on the minimum system and take advantage of technological synergy.

- Apple had a much better distribution strategy. The current Sun direct sales force approach is not conducive to selling our applications. We really need to have retail software distribution. SPARC will have that eventually, but until that point it makes the business case of doing SPARC applications much tougher. Although there is a big advantage in being first on a new platform, there is also the phenomena of being "all dressed up with nowhere to go" - it doesn't count if you are so early that you are gaited by having an immature infrastructure such as the distribution channel.

- The present SPARC market is niche oriented. There is an interesting chicken and egg problem - SPARC has a very poor selection of mainstream office productivity applications today - which means that its present set of users clearly do not place these in very high regard. SPARC sells today to people in niche markets (electronic CAD etc) - although they may have an interest in word processing, spreadsheets etc, the per capita demand will be much less than the PC market. This reduces the effective installed base and sales volume that we can look at to project applications revenues.

- Our opportunity cost is higher at present. Our apps group has a historic opportunity to reap the advantages of having bet on GUI, and on Windows.

- SPARC app sales will impact sales on other platforms. In the early days of the Macintosh we had a very small market share in applications, so the Mac represented good incremental revenue. Someone who bought a Mac and our software was almost certainly a customer that we would not be able to reach with other products. This is no longer true, and many business customers that buy SPARC and our apps would be likely to have bought our apps on Macintosh or under Windows. In encouraging the growth of the SPARC market we have to recognize that the customers we attract will not all be incremental additions.

Many of these points apply only to the early stages of SPARC. Obviously if SPARC is destined to succeed and be the high volume office platform, then we should do applications for it. The points above mainly speak to the issue of when we should jump on the SPARC bandwagon. The net result is that the business case for doing SPARC apps is much tougher than it would appear at first because the SPARC market is less lucrative than it appears (niche market, impact on other platforms) and because there is a tradeoff against our systems business.

This would suggest that we should not do SPARC applications until the point where we think that SPARC's success is a foregone conclusion, and the SPARC infrastructure and channel is in place to make our entry meaningful.

2.5. Conclusions

The fundamental problem that we face in looking at SPARC as an opportunity is that they don't need us. The very reason we are discussing SPARC is our fear that Compaq's support lets them achieve critical mass. This naturally limits Sun's interest in doing a special favor for us, yet without some kind of edge or unique advantage it is tough to compete with their own system software which has many built in advantages.

This is another way of saying that Microsoft is not much like Compaq - it is difficult to work up enthusiasm for buying into somebody else's game and their rules and still beating them through superior execution. Compaq only has experience in succeeding at this strategy against IBM, which is a very slow moving company that does not know how to execute all that well, and does not even understand how to press their advantage. With a couple of minor changes in strategy, IBM could have eliminated Compaq's big claims to fame - for example if IBM had wanted to do the 386 first, Intel would have put the fix in for them and the Deskpro 386 never would have been. With the right licensing terms and up front negotiations, IBM could have had Compaq and the rest of the industry locked into the MCA bus and there wouldn't have been an EISA. IBM is not ruthless, innovative or even all that ambitious, and Compaq may discover that they need new tactics against an opponent like Sun which is all of these.

Compaq's view of Sun as a company that can be easily out maneuvered in their home court, on a game that they invented is not one that I share. That goes for their system software as well as for their systems - either one is a very tough nut to crack.

If in fact we have to do this, the key will come through putting enough pressure on them that they need us, getting some initial breaks in this way, and then pressing our advantage with flawless execution. That is utterly different from what we are used to doing.

3. FOSTERING SPARC ALTERNATIVES

Julian Schwinger, a Nobel prize winning physicist, was often at odds with the rest of the physics community. One of his books starts with the quote

If you can't join 'cm, beat 'em!

This inversion of the usual homily is appropriate here - it behooves us to consider how we can beat, or at least impede SPARC, because joining the SPARC movement is going to be very difficult.

Note that this is a good idea even if we think that it is likely that in the long term we will join. There is no reasonable scenario in which it benefits us to sit back and let SPARC momentum continue. Anything which reduces SPARCs power and momentum is positive for us - it is either the opening that we need to compete with them, or it provides the leverage we need to negotiate a graceful entrance into the SPARC business.

Although the specter of Compaq throwing in with Sun is daunting, we should not forget that we have been dealt some very good cards:

- Windows is emerging as the key API for PC ISVs. This gives us the ability, if we are careful about it, to deliver these ISVs, and the attendant momentum of their support to Power PC.

- We have a great deal of influence. Much of the computer industry looks to us for guidance. They do not always like this and they can be resentful, but this doesn't mean that they won't do what we say.

- SPARC has powerful enemies. Many of the world's largest computer companies are committed to fighting SPARC, or die trying. This is a potent resource which we can tap and channel. The one thing that the anti-SPARC forces of the world lack today is leadership and a shared mission. Encouraging them to them is a high leverage role for us to play.

- Compaq will not compete directly with Power PC. They are sincere about avoiding their present channel and overlapping with their present market. Their support of SPARC is a strong endorsement to the industry, but they will not have anything which directly confronts Power PC as far as end users are concerned.

- SPARC is not ready to compete in the PC industry. Although they have their act together in the workstation arena, they do not have sufficient ISV support to mount a credible launch in the PC industry. Unless we mess up in a big way they will not attain this in the time between now and the shipment of Power PC for MIPS. As long as we can get a reasonable number of Windows applications to port, we can easily dominate them in a direct showdown.

If we play our cards right, we can parlay these advantages into a pretty complete victory. This will not be easy by any stretch - but it is possible.

3.1. Uniting the MIPS Community

The only RISC chip that has a hope of beating (or even slowing down) SPARC is MIPS, so the clear thing to do is to strengthen the MIPS camp. Our plan of record has basically ignored the MIPS based workstation market, and we have focussed only on a very elite group of PC manufacturers who build the reference platform primarily for NT Windows.

This strategy does nothing to slow down SPARC in the workstation business, and it gaits the availability of the reference platform to OEMs, chip vendors etc on the availability of our software. In a world where SPARC is getting a powerful edge it suggests that we revise this to give more near term benefit to the MIPS world:

- Cause the MIPS community to unite behind standards. We would use our influence with key OEMs to get every major Sun opponent to endorse a common MIPS based platform standard and a common UNIX standard. The key elements are an R4000 reference platform system (with associated chips) which we can supply from our own effort, and a single version of UNIX which we should cause to be knighted as the standard (and maybe participate in it business wise). We would approach the standard in such a way that some companies (such as DEC) could have incompatible hardware below the OS level (and thus do a lot of porting work) but there must be application level binary standard.

- NT Windows is the carrot, and Sun is the stick. We would tell these companies privately that we will support the MIPS standard with NT Windows and Power PC, and make an appeal against SPARC. We may or may not choose to make our support public early in the game. Our goal is that we get them all to support NT Windows - either as primary or in some cases as the secondary operating system. The key difference between this approach and our current plan in that we do allow/encourage them to go ahead and ship UNIX on our machine design - especially if the hardware is ready before our software.

- Allow a much broader initial group. We would target a much larger number of OEMs - at least for the agreement on the reference platform and the UNIX standard. We might restrict the initial availability of NT Windows to give a smaller set of OEMs an initial time advantage on shipping, or we might not.

- Announce early. We would make sure that the MIPS unification announcements happened as soon as there were enough signatories. We would also consider pre-announcing NT Windows & Power PC early as well. It is important to break the monotonic stream of good news about SPARC.

- Get Windows ISVs to support Power PC/4000. The one key card that we hold is Windows 3 and control of the Windows API. We must use this to ensure that Windows ISVs port their applications to Power PC, and to MIPS.

- Get Power PC/4000 to ship ASAP. The UNIX oriented standard is just a placeholder to slow Sun down and to give Compaq something to worry about in the UNIX market they are so eager to join. The real vehicle for blocking Sun is to get the PC industry to ship MIPS based Windows machines. We have to make NT Windows a priority like none before and get it done.

- Promote the hell out of NT Windows on MIPS. We will have to spend a lot of money and effort in promoting Windows on MIPS, even though it is likely to come installed on the hard disk rather than be a retail product. We would also require the OEMs to push very hard. There are a number of creative things that could be done to help establish the machine.

Once there is a strong unified appearance to the MIPS workstation market. Sun's momentum will lessen. For example, the UNIX ISVs are pretty much all platform neutral today in the sense that their apps are available on more than one machine - where the number 1 platform is SPARC and numbers 2 through N are random with no one platform getting a decisive margin. Once the market consolidates into just two mainstream platforms (plus the RS/6000 as a random wild card), it would be crazy not to support both of them. This helps to deny Sun a lock on the applications and slows the growth rate of SPARC unique applications.

This also helps the industry infrastructure gear up to make systems. Having the architecture spec and ASIC designs go out to chip manufacturers early on will bootstrap the process of getting good support chips, having third parties supply add ons etc.

One big plus is that achieving unification of the MIPS world is relatively cheap in terms of the commitment that we need to make. The primary activity would be flying around the world convincing people. All that Microsoft would really need to commit is that we would in fact make a version of NT Windows for MIPS and offer it for sale - along the lines of what we have to commit in the MIPS contract when we exercise the option. I do not think that we will need to commit to doing this exclusively by any means, so if we later need to try SPARC we will be able to do so. The reason we can get away with this is that the biggest companies, who are most likely to try extract such a promise, already hate SPARC and already want to compete in the UNIX market so much that they will pursue this course independently of whether we ever ship NT Windows.

The companies which are likely to join up include:

Company Market Area MIPS already? Probability

Olivetti Europe No 90%

Siemans/Nixdorf Europe Yes 90%

Bull/Zenith Europe & US Yes 90%

Apricot/Mitsubishi Europe No 70%

Nokia Europe No 70%

NEC Japan Yes 90%

Sony Japan Yes 50%

Acer Taiwan & US No 70%

Daewoo Korea & US Yes 90%

DEC US & World Yes 80%??

HP US & World No 50% (90% long term)

MIPS US Yes! 100%

Misc workstation World Mixed Yes & No 90%
(Silicon Graphics...)

Misc mini & mf World Mainly Yes 90% (will support but few products)
(Amdahl, Tandem...)

Misc 2nd & 3rd tier World No 50% - 90%
PC OEMs (AST,Dell...)

This list omits the more questionable companies, although we might want to give them a try. It also omits companies that would be very nice to have, but whose likelihood of joining is unknown. This category includes companies such as NCR (we should be able to get their Tower & mini division even if the PC side does not do Power PC right away) and Tandy (not normally high end enough for Power PC, but might lend support). AT&T is another random case - they might be worth bringing on and might not.

Europe is dearly the best geographical area - we should get a clean sweep of the major companies, because they are either already signed up for MIPS (Siemans, Bull) or could easily be influenced by us (Olivetti). Japan is also strong if we can get NEC, because they dominate the market so much. The US is actually the worst area for large name brand companies. Zenith comes along with Bull, which helps a lot.

HP and DEC are the most interesting since they have the biggest reputations and would help the image. They could be hard to convince. Each of them would join in an instant if they knew Compaq was going SPARC, but might drag their heels otherwise. One interesting thing about both of them is that their PC businesses are not doing as well as their workstation & mini businesses. We could position Power PC to them as a way to get synergy between their workstations and PCs to help fix this problem.

Note that this is the list for the general support of the strategy including Power PC, the reference platform, and the UNIX standard. We would select a subset of these companies for the Power PC consortium - which is omits the companies from outside the PC industry like Tandem or Amdahl. Their support is important image wise for confronting the SPARC armada.

3.2. Managing PC ISVs

The biggest single asset that we can bring to bear on the problem is our control of the Windows API, and therefore the PC ISVs. This will require careful management, since they basically hate us. On the other hand, they love to hate us - despite the bitching, they do make money and are not stupid enough to hurt their own businesses just to spite us.

The general idea for how we can manage the ISVs onto RISC is to work as hard as humanly possible at getting 32 bit Windows to be a reality on the x86, and make the recompile over to RISC seem like a compelling incremental investment. The basic plan goes as follows:

- Continue to encourage the rush to Windows. This hardly needs to be repeated here, but it is essential to do whatever we can to keep ISVs moving to Windows. Making clear statements about the future of Windows will help.

- Head off platform neutrality. We do NOT want the next priority after an initial Win 3 app to be a move toward platform independence. We obviously cannot stop people from being sensible about organizing their source code, but it is essential that we keep the Windows API moving toward our goal, and give ISVs something meaningful to do that helps our strategy.

- Promote the Win 32 API The first race to pick is taking advantage of the 386 fully with 32 bits - at first via the thunk toolkit, and later with a fully 32 bit system. The large increase in 386 sales due to Windows means that there will be a substantial installed base of Win 3 on 386 so this is a natural and compelling thing for ISVs to do. We should promote this with big seminars like the original OS/2 seminars - held worldwide etc. Depending on timing this might be x86 only, or we might want to promote our RISC strategy as well.

- Provide good tools for 32 bits and for RISC. We have to make this transition as smooth as possible. This is especially true of the move between 32 bit x86 and RISC - it must be very easy to do. In the case of moving from 16 bits to 32 bits on x86 we will have a lot of pull from the 386 installed base to help out, but we still need good tools. Our tool strategy should include evangelizing third party tool vendors as well as doing internal work.

- Evangelize Power PC. The dual nature of the standard makes this a particularly good way to get ISVs involved with RISC. Many horizontal applications will not have to do a great deal of work to support Power PC in an opportunistic way (i.e. they'll be nicer when on it, but not have a dedicated version), but it is still valuable to promote it. We need to get a few exciting high profile apps to show the way.

- Come up with ways to encourage ISVs to support RISC. This includes financial support and a variety of other inducements. Once we have gotten them to do a Win 32 app and made the port to RISC reasonably easy to do, it is only a question of the incremental investment that is necessary to make the release. The OEMs can help position this as an industry wide phenomena rather than something done at the bequest of Microsoft.

Every step is quite solid and independent of the Compaq SPARC issue until you get to the last point. It should be relatively straightforward to get ISVs to support the Win 32 API in one way or another no matter what Compaq does. The tricky point comes when we get the ISV to actually commit to releasing a version for our RISC version - that is the point where Compaq's support, or lack thereof, will make some of them balk, or at the very least take a wait and see attitude. The way to overcome that is primarily through good marketing to the ISVs and good promotion. We must also make sure that there is a solid perception that the machine has sufficient support from OEMs to be successful.

3.3. Wild Ideas

Here are some sample ideas about dramatic (or just crazy) things that could be done to enhance the plan discussed above. Be forewarned that they are not full proposals at this point - just

- Distribute apps (and/or working models) pre-installed on the hard disk. This is one of the ideas that has been discussed already for Power PC. This helps make the case to ISVs because they get very high visibility if their app is pre-installed. Ideally this is done via a machine serial number scheme so that you can buy the app by phoning an 800 number with a credit card and get a key. We can use our own applications to help force the issue - for example we could say that two apps in each category will be included (to be fair), and bootstrap the process with Excel and Win Word. This would put the pressure on Wordperfect and Lotus to either join up or see us get a real leg up.

- Convince someone to bet the farm. There are no end of companies, especially in Japan, that seem to want to spend insane amounts of money to break into the computer business. Some recent examples are Kubota (with Ardent), Matsushita (with Solboume) and Canon (with NeXT) - each has sunk around $100M so far, and don't have much to show for it. We could consider telling another such company that Power PC is enough of a paradigm shift that it is an excellent opportunity for them, especially if Compaq and IBM are sitting this round out. One obvious candidate is NEC - we could get them fired up about using this as their big entree into the international PC market. The total investment is not necessarily as large as the ones mentioned above - the key is to get them to be very active in promoting the machine.

- Attract software (or other) vendors which have a direct sales force or special distribution network. A good example here is Oracle (but Novell may also apply). If they had a very good position on RISC PC, they could be very effective at helping to establish the machine. This does not mean selling the hardware, but there are a variety of ways they could make it appear like a well supported mainstream choice to their customers. This ranges from just having their sales force push it, to offering special service and support services for configurations including the machine.

- Create a large marketing war chest This can be funded through contributions from our OEMs etc.

- Make a great cross development system for x86. One way to get software developers interested in the machine is to make it a very nice, fast environment for their own use. If it is a great platform for developing Windows apps for any machine, and there are cross development features so that you can produce x86 binaries, then you will get a lot of ISVs buying them (with a special discount from the OEMs) for their own purposes. There is nothing like having a fast machine in front of developers to get a lot of midnight projects going.

3.4. Conclusions

There is no silver bullet which we can use to stop SPARC in its tracks. This was true before the possibility of Compaq going with SPARC came up, and it is even more true afterwards. The ideas discussed in this section give us a very good chance of slowing SPARC down, and with good execution we have a solid chance of beating them. "Beat" in this context means to establish RISC in the Windows community in such a way as to prevent SPARC from gaining a foothold in the PC industry and retail channel.

4. RECOMMENDATIONS

The first, and obvious thing to do is to work as hard as possible to try to change Compaq's mind and not do a SPARC machine. In parallel we should:

1. Redouble our efforts to rapidly define and implement NT Windows. This includes both the portable Windows and kernel pieces. This is key technology in any all scenarios, and the quicker we have it the better.

2. Do not start work on any SPARC based software. The time required to port NT is very small, as has been demonstrated with the 386 port. There is no reason to confuse the development team or waste any resource at this time - we could port the system very rapidly at any point if it is required. The situation with our Apps group also does not require any new action - any spare bandwidth that they have should be directed toward moving to 32 bits, which will be required for SPARC as well as for x86 and MIPS.

3. Refine a plan for uniting the MIPS camp. This mainly involves figuring out what position we want with respect to UNIX with MIPS and SCO, and then taking the show on the road. Actual implementation of the plan should begin within the next couple of weeks once we have a chance to review it. There appears to be little downside in taking this approach, and it will benefit us

4. Define Power PC and work out the strategy in more detaiL This is a key part of any plan and we need to get it very solid very soon.

This list will obviously change as things move along, but it is a good place to start.

0370 From jeffr Wed Aug 29 19:41:42 1990
To: debem
Subject: Please print
Date: Wed Aug 29 19:40:13 1990

>From claraj Wed Aug 29 19:32:28 1990
To: jeffr rice
Subject: GO
Date: Wed Aug 29 19:28:50 1990

Information about GO. from Phil Taylor, Dir. of PC Platform at Softview. GO has no compatibility with DOS or Windows.

0371 License agreement dated Sep.1, 1990 between Microsoft and Vobis Computer GMBH in Germany regarding MS-DOS 4.01 and MS Works. Page 20, MS Works: COMPANY agrees to pay MS a royalty ... multiplied by the greater of (i) the number of full or partial Customer System(s) shipped or ... by or for COMPANY, or (ii) the number of full or partial copies of Product ... [Ed: Paying for MS Works whether or not it is shipped? MS-DOS royalty is set per shipped copy, according to page 17.]
0372 From peterbra
Date Sep 1 12.00.44 1990
To billg jeremybu joachimk nathanm paulma steveb
Cc carls jeffl peterbra richardf
Subject Summary of Compaq RISC Meeting - 8/23/90

Bill outlined IBM relationship.
-Discussed SUN's success.
-Discussion about compaq moving to SPARC, proposed alternatives, MIPS.
-Compaq need for unix. ok, for MS as long it wasn't boundled.
-Power PC positioning.
-Control issues.

Sidenote. Bill Gates did not believe in SUN's networking, since it was using TCP/IP. He thinks that the industry is moving to ISO.

0373 Date 1 Sep 1990
License agreement between VOBIS DATA COMPUTER GMBH and MICROSOFT CORPERATION.

Vobis pays MS minumum $3,000,000 in two years
Windows 3.0
DOS 5.0
French, German, Portuguese, Spanish and Swedish Language packs for both products.
It also contains upgrade royalties and additional provisions.

0374 From nathanm
Date Sep 2 23.39.11 1990
To billg bradsi carls jbal jeremybu joachimk karenb mikemur
Subject Competing with SUN

We DO have to prevent them from being effective at competeing with us on our turf - the broad mainstream office computing market.

We have to harden our market in preparation and deny Sun any key points of differentiation that they could use to unseat us.

0375 email chain.

From peterbra Tue Sep 4 12:05:42 1990
To: joachimk
Cc: jeffl richardf
Subject: RE: Competing with Sun
Date: Tue Sep 04 12:05:24 1990

Paulma and I had a call with Mike Clark this morning. Paul and I will meet with Stimac, Perez, Barnes, Clark, and maybe Swavaly (sp?) and Canion either this friday or next friday.

Purpose will be:

1. Position and market current 386SX to 486 products better. Working with Intel, Compaq, and others to better position the 486 against SUN.

2. Review our relationship with SCO and how MS and SCO are goin to work to more closely support OEMs like Compaq.

3. Go thru the RISC stuff. Listen to Compaq, and understand them better rather than try to cram some position down their throats.

>From joachimk Tue Sep 4 11:58:29 1990
To: billg bobmu (sp?) bradsi carls jbal jeremybu karenh mikemur nathanm paulma peterbra ralfha richardf russw steveb
Subject: RE: Competeing with Sun

Date: Tue Sep 04 11:43:38 1990

Why don't we get a task force going to define what needs to be done short term and long term instead of exchanging more lengthy e-mail?
This is getting non productive? comments?
>From carls Mon Sep 3 10:39:18 1990
To: billg bobmu (sp?) bradsi carls jbal jeremybu karenh mikemur nathanm paulma peterbra ralfha richardf russw steveb
Subject: Competeing with Sun

Date: Mon Sep 3 10:38:51 1990

(ed: This longer message is apparently in response to Nathan (Myrhvold?). It seems to regard RISC (processors) and Sun as a major threat to Microsoft's position, but also indicates that Microsoft plans to produce software for RISC machines. )

0376 From peterbra Fri Sep 7 09:05:26 1990
To: joachimk petep
Cc: richardf tedba
Subject: Feedback on Phoenix proposal
Date: Fri Sep 07 09:04:56 1990

Discusses Phoenix's business and their BIOS.

Final paragraph:

"As for as Phoenix going to DRI, I think that will be a threat from Kalman, but I think he knows he can't do this and expect to have any relationship with MS."

Scan of printout of a series of emails between 'phillw' 'bradc' 'ronh' 'guilleme' etc. about Printaform switching from MS DOS to DR DOS during Comdex 1991, where MS lost Printaform to DRI. Good quotes like "I will fly someone anywhere to keep this from happening" from bradc. Printaform apparently had 25% of the PC market in Mexico at the time.

0378 Four pages of apparently unrelated emails. All have in common bradsi in To: or Cc: line.

One message is of note:

From markche Mon Sep 10 13:04:55 1990
To: bobo flcam joachimk richardf ronh
Cc: billmi bradsi hansa markche jomle
Subject: Known Problems with DR DOS 5.0
Date: Mon Sep 10 13:01:57 1990

Bobo, pls distribute to ioem.

The following is a summary of compatibility problems that we have verified with DR DOS 5.0 based on internal testing and results from an outside test lab. This is a technical summary of confirmed problems with DR DOS 5.0 Comparisons between MS-DOS 5.0 and DR DOS 5.0 have been addressed in previous mail and so are not discussed here.

This information is being provide to assist in disproving DRI's claims that DR DOS 5.0 is 100% compatible with MS-DOS. It is, however, very confidential information and should be provided to customers only under non-disclosure.

(Ed: what follows is what the first paragraph says it is).

(one other message indicates that Microsoft folks consider Jerry Pournelle an important person)

0380 3 pages. First page is an email from Lee Reiswig. Second and third pages are a draft of an IBM/Microsoft press release about licensing and development of DOS, Windows, and OS/2.

First page:

From: REISWIG -- RHQVM08
To: CORTHELL--RHQVM08
LINEEN --WEST1VM Ed Lineen
PSGM --WEST1VM Jim Cannavino
RHDAFOE --RHQVM08 Ralph DaFoe
Subject: (A) MS management process

This message is rather pessimistic about IBM's involvement with Windows. He expects to have little influence over development of Windows, and to act only as a Windows reseller.

0381 Memo, not on any letterhead

To: Steve Ballmer, Mark Chestnut, Bill Gates, Scott Oki, Brad Silverberg, Marty Taucher, Russ Werner/Microsoft Corporation

From: Carrine Greason/The Waggener Group
Kathryn Hinsch/Microsoft Corporation

Date: September 11, 1990

Subject: What to Acknowledge About MS-DOS 5.0

This is about how to handle leaks of information about MS-DOS 5.0, which was in beta at the time of this memo.

0382 Same as the noteworthy email of Comes 378, but a poorer quality copy.
0386 Letter on Microsoft letterhead, marked Highly Confidential

Date: September 14, 1990

To: Duane Cowgill, AST Research Inc.

From: Jeff Daniels, OEM Account Manager, Microsoft

This letter explains Microsoft's pricing structure, and quotes prices for AST based on sales of 100,000, 250,000, and 500,000 computers per year.

0389 Four page email

From jeffca Mon Sep 17 20:07:02 1990
To: proj
Cc: billv davema dhach richgl
Subject: FW: IBM Q&A
Date: Mon Sep 17 20:40:40 1990

>From kevinsc Mon Sep 17 18:06:12 1990
To: usmktg
Subject: FW: IBM Q&A

Date: Mon Sep 17 18:04:32 1990

FYI from Systems Division PR agency

>From w-collin Mon Sep 17 12:29:18 1990

RUDE Q & A
IBM/MICROSOFT ANNOUNCEMENT

What follows is 4 pages of questions and answers about the IBM/Microsoft relationship, Windows, and OS/2.

0394 From: debbiefl Thu Sep 20 07:58:58 1990
To: richardf
Cc: debbiefl tedha
Subject: RE: commodores dos price
Date: Thu Sep 20 07:57:23 1990

richard,
I crunched some numbers last night and if you take all of their 8086 machines and half of their 286 machines which are what they are shipping in their consumer channel, it comes out to 73% of the total. so for non consumer machines, they ship at the most 27% of their total or 59,000 total units. I did some playing around with the numbers and plugged in $6 8086 royalty, $11 286 royalty and $15 386 royalty. If they were to ship exactly the same number of units that they did last year, our revenue would be $1,889,942. this compares to our revenue this year with a blanket $11 royalty of $2,408,956. If we were to lose this business to DRI (73% of the total units), keeping the $11 roaylty, our DOS revenue would be $648,956.

What do all these numbers mean? The way the negotiations seem to be going for Amiga Works (and Jeff is nothing if not consistent), I beleive[sic] he will go for a higher price on the higher end. This would be good news for us because if you look at the unit break down between q190 and q490, you see some very interesting things, for examples:
8086 shipments down 43%
286 shipment up 14%
386 shipments up 471%

I happen to know, although jeff certainly didn't tell me, that they are coming out with 7 new machines that are all 286, 386 and 486. So in the short term, it looks like we would lose with a lower 8086 royalty. However, with the trend that i see in their numbers, we could actually do very well at the high end. how does this strategy sound?
debbie

>From richardf Wed Sep 19 17:02:28 1990
To: debbiefl
Subject: commodores dos prices

Date: Wed Sep 19 16:59:17 1990

Tough situation, we cannot allow him say "they are the same, all that matters is the price.." this may be true for some low end users but not all his customers, he needs to admit that to you, ther [sic] will be some % of his cust base that will want the same dos that IBM compaq and the like re shipping..

Do you have any idea of how many customers that is? (ie what % of thier [sic] business is non consumer?)
thanks
richardf

>From debbiefl Wed Sep 19 14:51:01 1990
To: richardf
Cc: debbiefl tedha
Subject: commodores dos price
Date: Wed Sep 19 14:48:17 1990

richard,
tedha asked me to email you to bring you up to date on the commodore dos situation. our relationship has broken down rather badly because of the problems in our delivery of the PC Works stuff and Jeff Scherb doesn't have much patience or faith in us at this point. Based on conversations with both Jeff Frank and Jeff Scherb, I believe that their quote on DOS from DRI is $5. Jeff S. has told me that it is a purely financial decision and if we give him a $5 price that he will tell DRI to go away.

It just so happened that while I was telling Ted all about this, Joachim walked by the office and suggested that we consider working out a 1% of srp deal with them, like had been done with Phillips. we wouldn't go any lower than $5, but that would give us a ballpark. As soon as I get the list from Jeff S-I actually got a page today, I will work up a spreadsheet to figure out the monetary repurcussions and comparisons with normal quote. We have been trying to get in there to see them to make a dos 5 presentation, but Jeff doesn't want to hear all that "crap" and wants a straight price over the phone. He will not see us until we give him a price. He keeps emphasizing the fact that it is strictly a price decision and he will go with the lowest price dos in the consumer channel.

debbie

0395 OEM Sales Status Report, August 1990, by Joachim Kempin, sent to Richard Fade, dated September 20, 1990. [50 pages]
0396 Microsoft Memo from Jeremy Butler to Bill Gates, Brad Silvergerg, Subsidiary General Managers, Region Directors, et al, dated Sept. 20, 1990.

Your Windows Penetration Plans.

Attached are everyone's Plans as you sumbitted them at the CMM. Thanks for the work you put into them. I have reviewed each memo and sent email comments on them to most of you.

If there is a single conclusion I reached after reading our plans to date, it is that we are still not setting high enough goals for selling Windows in the coming six months. Selling lots of Windows sockets for our applications this fiscal year, before WordPerfect and Lotus can get going with their Windows apps, is the biggest revenue opportunity we have had in years. Please make sure you reinforce this message to everyone in your subsidiary company.

Attached to this memo is the current penetration plan for the US. It was received too late to be included in the package. You may want to read through the US and other subs' plans. There are some good marketing ideas there!

The table below is a summary of your current FY91 sales estimates, that I wrote down at the CMM. The data does not include updates. It sure would be nice to do more that one million units of full product/new sockets in FY91!

[table; note that the referenced attachment is not included in the exhibit.]

0401 <summary>[Ed: This group of emails begins and ends with incomplete messages. Here is one quote from the email from "bobt" (between #345 and #346): "To our ISVs, it appears that we indeed are giving preferential treatment to our own apps group, and in this case, I see no reason for us to not level the playing field and give them rights to distribute HIMEM with their apps."

____

This is a continuing problem where I need your assistance in resolving. At the very least, ideally, the AM should be working with their OEM contacts and should be proactive in providing timely feedback as to the resolution. Worst case, if the AM is on the road or unavailable, provide a contact at the OEM so I can follow-up.

The Win3 intro was successful, in part, due to the HCT program that the win/dos team put in place. To make DOS 5 even more successful, then I really need your help in convincing the AM's to be responsive to the requests that are being made.

thx

#######################################################345

From: tomle Tue Sep 25 12:24:18 1990
To: bradsi davidcol philba richab
Subject: Re: HIMEM.SYS
Date: Tue Sep 25 12:22:09 1990

Simple selfishness. The early driver didn't take much of an investment to build so we gave it away as a sample. It was everywhere. Since then we have devoted significant resources to enhancing it.

Super A20 Support
Int15 compatibility extensions
Ability to load high with Dos 5

Tom

>From bradsi Tue Sep 25 12:14:44 1990
To: davidcol philba richab tomle
Subject: Re: HIMEM.SYS
Date: Tue Sep 25 12:15:01 1990

I see no reason not to license it. Do you?

>From bobt Wed Sep 19 18:52:37 1990
To: bradsi
Cc: cameronm markche sherryr
Subject: HIMEM.SYS
Date: Wed Sep 19 18:49:40 1990

Brad, we've been approached by a small, albeit growing number os ISVs that would like to bundle HIMEM.SYS with their applications. These ISVs include SPC, Symmantec, Microrim and ADP.

I'm of the opinion that we need to allow them to ship this with their application because we've done it with Excel.

Secondly, I still do not understand any compelling reason to prevent us from allowing ISVs to ship this, i.e. are there problems with versioning, possible DOS 5 interactions, etc.

Finally, at one time source code to an older version of HIMEM was actually floating around on Compuserve!

To our ISVs, it appears that we indeed are giving preferential treatment to our own apps group, and in this case, I see no reason for us to not level the playing field and give them rights to distribute HIMEM with their apps.

What are your thoughts?

-bob

#######################################################346

>From philba Tue Sep 25 12:40:31 1990
To: bradsi
Subject: Re: Radius and color
Date: tue Sep 25 12:37:54 1990

yes, I know about the visit -- ron gery is attending the meeting.

---

>From bradsi Tue Sep 25 12:06:33 1990
To: philba
Subject: Radius and color
Date Tue Sep 25 12:07:57 1990

More demand for big screen, high res support.

---

>From jeffr Wed Sep 19 18:26:56 1990
To: bradsi davidcol
Subject: Radius and color
Date: Wed Sep 19 18:26:56 1990

Greg Millar, develpment manager of Radius, will be here tomorrow meeting with some Windows people. (McCaffrey?) Radius is the leading vendor of big Mac monitors, and now they sell big PC monitors. (I use their 21", 1280x860 resolution monitor with Win 3.)

Greg was asking about Windows support of 24 bit color and who he should talk to about that. Who is the best person to explain the technical details?

(I know Greg through Infa, the defunct company from which we purchased the handwriting software to start up Win-H. He calls me [no further text is shown]

0402 Note: This appears to be an email from Deborah K. Flynn, OEM Account Manager for Microsoft, to Jeff Scherb, Vice President, Applications and Technical Support, Commodore Business Machines, Inc. It's dated in September of 1990, and outlines DOS 5.0 pricing per unit. "If you choose to take your consumer business to DRI, your unit volume decreases 75% and you no longer have a per processor agreement. Therefore, your new price on all DOS products will jump to $30.00 per copy.

PX00402.PDF - stamped as Plaintiff's Exhibit 402, and "Highly Confidential"
topic: DOS 5.0 Pricing Proposal

September 26, 1990
Mr. Jeff Scherb
Vice President, Applications and Technical Support
Commodore Business Machines, Inc.
1200 Wilson Drive
West Chester, PA 19380

RE: DOS 5.0 PRICING PROPOSAL

Dear Jeff,

Within this letter is the DOS 5.0 pricing proposal that you have requested. As a matter of
principle, I usually prefer to give my proposals in person. It has been my experience that this
fosters a spirit of cooperation, and it makes it much easier to work together towards mutually
beneficial solutions. However, I am aware that you are under pressure to get this issue resolved
quickly. so I will try and accomplish these objectives in spite of the format.

You have indicated to me that you will be making your decision based on a weighted average, and
that this weighted average needs to be significantly below your current $11.00 per unit price. You
also mentioned that your price needs to be very compatible on the low end, as this is where you
see the majority of your margin pressure. In our original conversation, you presented me with two
price scenarios. One, you want a price if you were to take all of your consumer machine business
(75% total units sold) to DRI. Two, you offered me the opportunity to quote such a competitive
price that you will not need to take your business to DRI. You have also mentioned several times
that price is the only factor in this decision. let me address both of these price scenarios.

If you were to take your consumer machines to DRI, this is what would happen. Your DOS
contract would go from a per processor agreement to a per copy agreement, when it expires at the
end of January. A per processor agreement keeps your price low, because we offer a premium
price to those customers who bundle our product with every processor. For those customers who
choose not to bundle our product with every processor, their price is adjusted accordingly. This
price adjustment reflects the decade of work we have invested. In making our DOS product an
industry standard that is compatible with practically every personal computer on the market today.
What does this mean to you? If you choose to take your consumer business to DRI, your unit
volume decreases 75% and you no longer have a per processor agreement. Therefore, your new
price on all DOS products will jump to $30.00 per copy.

However, I do not believe that this scenario is in either of our best interests. Let me elaborate on
the scenario where you would receive a lower average price per unit. Looking at FY90's unit sales,
I noticed that 51% of your sales were 8086 machines. 45% were 286's and 4% were 386's. What I
propose is that we offer you a substantially lower price on 8086 machines (where the majority of

X 221348
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MS-PCA 1176606

PLAINTIFF'S EXHIBIT 181


your business is). and adjust your royalties on the other higher end processors. Specifically, your
pricing under this new agreement would be:

8086 $6
80286 $10
80386 $16
80486 $16

Using the figures from FY90, your weighted average would be $8.22. This is $2.78 less per unit than
your current average price. this pricing means that you would have paid MS $805,310 less in
FY90 than you actually did. To get such a royalty pricing schedule, we would expect to see a
minimum commitment of $660,000 per year, as this would be an entirely new DOD agreement. This
$660,000 is based upon your 8086 royalty multiplied by the number of 8086s shipped last year.
the term would be for 3 years and the effective dates would be February 1, 1991, which is the date
your current DOS license expires.

I believe this pricing should be very close to your expectations. Let me also point out that these
are extremely aggressive prices, especially since you are only shipping 220,000 units a year. you
will be paying 25% less than you currently pay for a superior product, lower support costs
and the ability to localize the product. As this pricing should show you, MS is aware of the
competition you face at the low end and we want to work with you.

I will be calling you very shortly to discuss this proposal.

Sincerely,

Deborah K. Flynn
OEM Account Manager

CC:
Richard Fade
Ted Hannum

[handwritten] What will our mix continue to be - 3 years a problem
adjusted pricing over the years

[the second page of this PDF contains a scanned .xls table titled "Commercial DOS Pricing Strategy"]

0407 Note: Top of first page is stamped with "PLAINTIFF'S EXHIBIT 407 - Comes v. Microsoft"
Bottom of first page is stamped as DEPOSITION EXHIBIT 9 with handwritten note:"Raikes Dep"
Also at the bottom of each page in the PDF is: "Beat WordPerfect Marketing Plan" and "DRAFT"
Oddly, the "page" number on all 15 pages shows as "page 1" - However each page is also numbered
in a series from X 565956 through X 565970

______

Memo

To: Jeff Raikes
From: Jon Reingold
Subject: Beat WordPerfect Marketing Plan
Date: September 29, 1990
cc: Word Processing Marketing
_________________________________

Executive Summary
The purpose of this plan is to lay out a strategic plan for how Microsoft can
gain share against WordPerfect. The primary focus in this plan is on Win
Word versus Win WordPerfect, as Windows is the critical platform we have
targeted for gaining share. However, this plan also discusses the supporting
role the entire family of Word products plays. The aim of the plan is to
provide a framework not only for our marketing, but for other OBU activities
as well.

Windows 3 has shipped and is being well received. WordPerfect has no
Windows word processor, and will not for approximately six months. We
have a successful Windows word processor, we have recently updated our
DOS version and shipped OS/2 version to reinforce our overall PC
platform solution, and our Macintosh version continues to dominate. We
are successfully implementing our product strategy while WordPerfect is on
the defensive.

Although WordPerfect has slowly gained market share from other
companies, we gobbled up most of this market and increased market share
faster. Domestically, we now have xx% share versus xx% for WordPerfect,
and outside the U.S. we have xx% versus their xx%. WorldWide we have
xx% versus their xx%.

The key platform is Windows. This is the most dynamic platform and
represents our only real opportunity to gain significant share. We need to
defend our Mac and DOS businesses, nurture our OS/2 business, and go on
the attack as aggressively as we know how on the Windows platfoem. We
will leverage the fact that our family of roducts share a consistent, visual
interface compared to WordPerfect's family -- which is missing some
members and has inconsistent, keystroke oriented interfaces.

This plan proposes a set of marketing strategies and tactics for doing this.
The major program recommendations are:

Field/Channel Marketing activities:
*Win Word/Win Family seeding/evaluation program through outbound resellers

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* Promotion to hardware resellers to sell Word for Windows with Windows systems.
* RSP Product Usage promotion
* Windows Display Rack for in-store merchandising of Win Word, Windows 3,
and other Windows applications
* We need some yet-to-be-determined distribution enhancement program
focusing on breadth of reach, with depth among the top Win 3 resellers.

Direct Marketing:
* 90 day direct mail/response campaign to Win 3 owners offering Word for Windows at $99.
* Test of direct mail/response at different price points: $495 (SRP), $325
(street), and $150 and $99, to determine price elasticity.
* Defend Mac Word 5 against WordPerfect 2.0 with an installed base
satisfaction campaign, the main tactic being a mailing with product tips
and a special $10? offer for a grammar checker.

Other:
* Aggressive promotion of customization/integration solutions to IEU's via
an aggressive consultant recruitment program, solution videotape, user
groups, Comdex demo, customization contests on CompuServe, and
making WordBASIC/Template courseware a free fulfillment item.
* Refinement of the WordPerfect file converter to the highest possible accuracy.
* Improve intra-Word family file conversion to "seamless" level

Situation Analysis:
The Market
* Windows has quickly penetrated the early adapter segment of the market.
However, sell-through in the channel has stabilized at around 45k
units/month. OEM sales make up another 75k/month. The market
Windows-capable PC's is approximately 500k/month, so we are
penetrating less than 15% of eligible machines.
* Of those people who own Windows, xx% are using the program
* Of those people using Windows, approximately xx% are using Win Word,
xx% are using Word for PC, and xx% are using WordPerfect. The
number one reason cited by Winows users who are using a character-
based word processor is that they are waiting for their current word
processor to be available under Windows. the second most popular
reason is that they see no reason to switch. {Check order here}
{Windows User WP Usage Pie Chart}
* Our penetration of Windows counting all retail, update, and OEM
Windows units is approximately 15% overall, and has been xx% recently.
Competitive Analysis
WordPerfect Strengths
* Reputation for excellent support
* Reputation for responding to customer needs
* Leading PC word processor
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- installed base
- Third parties, trainers, consultants, temps
- Channel relations
* Windows product:
- File, keystroke, printer driver compatibility
- Strong feature set: File manager, columns, tables, equations
- Flashy graphical interface: graphics, icon bar, ruler (columns, tables)
WordPerfect Weaknesses
* One-product company
* New to Windows. Flop on the Macintosh
* Playing catch-up on Windows
* Big, slow Windows product?
* Port of a DOS product
* Burdened with keystroke, menu compatibility with DOS version -- clumsy,
compromise interface
* Limited customization/integration capability: no templates, 1-way DDE,
limited macro language
* DOS WordPerfect and Windows WordPerfect are similar in terms of
keystrokes, but they designed their Windows version to be consistent
with the arcane keystroke-based DOS product, not vice versa. The
Microsoft family of word processors is more consistent, and is designed
around the new graphical word versiosn, not around the old-generation
DOS word processors.

Competitive Summary
There are a few big "strategic" issues which dwarf the technical differences
between Win Word and Win WordPerfect. On it's side, WordPerfect has
great support, great compatibility with the largest installed base of word
processors, and a reputation for extrem customer responsiveness. On our
side, we have momentum as the leading Windows word processor, a
reputation as the leading Windows software company and the creator of
Windows, a broad line of Windows products, and a reputation for technical
prowess and innovation. We need to defuse WordPerfect's key strengths
while positioning the battle between us to emphasize our strengths:
* We need to defuse the "compatibility" issue to the greatest extent
possible. If compatibility becomes seen as reasonably similar between
Win Word and Win WordPerfect, then people will be better able to focus
on which is a better Windows word processor. Without this, we don't
even get seriously considered by the large number of customers who
already have WordPerfect. This means great 2-way conversions -- as
good as Windows WordPerfect. It also means trying to develop templates
which map the most common WordPerfect keystrokes.
* PSS is becoming a bigger and bigger liability for us. It is unlikely that
support will ever become a competitive advantage for us vis a vis
WordPerfect. However, we need to minimize our liability by making PSS
quality acceptable. we have been buffeted unendingly by scarce
resources almost from the moment we shipped, and our support problems
alone are starting to lose us sales in the marketplace.

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* We need to find a way to turn their compatibility with their large installed
base of DOS users to our advantage. We need to position them as
"limited" by porting their DOS version to Windows and making
compromises to maintain compatibility with their DOS version. We need
to be seen as the "true" Windows word processor, while still also
offering a good compatibility story. Their flashy icon bar and graphics
handling present a challenge as we try to position them as not fully
exploiting Windows. But they have reasonably clumsy menus and weak
customization and integration capabilities. And I think they will help us
paint them into this corner, as I explain in the positioning section below.
* We need to leverage our Windows experience, momentum, and leadership
as hard as possible as it is one of our few "strategic" advantages over them.
* Our family story is better than theirs. We can position them as doing
lower-common denominator porting and/or we can point out that they are a
less consistent, compatible solution than the Word family.
Objectives
* FY '91 Domestic Retail Revenue:
Win Word: $80mm
PC Word: $30mm
Mac Word: $43mm
PM Word: $2mm
Total $155mm
* Win Word = 30% Windows penetration = 32k units/month (1
* Unit Mkt Share:
- Win Word: 17% unit share of PC market = 32k units/month
- PC Word: 7% unit share of PC market = 18k units/month
- Mac Word 30% penetration of Mac market = 20k units/month
- PM Word: 30% penetration of OS/2 market = 1.5k units/month
* Distribution:
- Win Word: Regular stocking at outlets representing 60% of Win 3 ACV distribution
- PC Word: Same as Win Word
- Mac Word: Sustain/deepen distribution
- PM Word: 20% higher than PM Excell = 500 outlets
* P/R:
- For Win Word: Number 1 in InfoWorld roundup, Software Digest, PC
Magazine Editor's Choice, PC World Best Buy, PC World World Class award.
- For DOS Word: #1 character word processor in Software Digest
- For Mac word: Number 1 in InfoWorld roundup, Software Digest #1,
MacWorld for World Class award
- Word for OS/2: For magazines that have separate category for OS/2
word processors, be #1.

________________
(1 Counting 25% of OEM Windows units as actual users

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Target Customers

Win Word Target Customer
A customer that has Windows is clearly the best target for Win Word. They
have the right hardware and software. They have in some way already
bought the "Windows message" of GUI and multitasking. As the data
above indicates, many of the people who already own Windows have not
bought Word for Winows, so there is a lot of business still waiting to be
realized among this group.

Within this pool of customers, almost all the people who don’t already own
Word for Windows are WordPerfect owners. There is a small group of users
using PC Word, WordStar, DisplayWrite, MultiMate, and other word processors,
but this is quite small(2. The bulk of these users who switched
to Windows became Win Word users. Our highest priority before
WordPerfect for Windows ships is to convert as much of this pool
as possible to Word for Windows. This is precisely the reasoning behind the
Excel/Word upgrade campaign targeted to Windows owners described below.

After Windows WordPerfect ships, their first priority will be to develop a
critical mass of users by upgrading their 5.1 installed base. The
WordPerfect users most likely to heed this call will be that group which
already owns Windows or is heavily predisposed to purchasing Windows.
After our aggressive upgrade campaign from February-April, mostly
hardcore WordPerfect owners will be left. There is little more we can do to
woo these users. However, we will most likely match their $129 upgrade
offer to remain as competitive as possible among these users.3)

After Win WordPerfect ships, the new segment that we need to be focusing
on is that group most likely to start using Windows in the future. As the
diagram below indicates, there is a subset of the PC market that will be
interested in moving to windows. They will perceive that there are two
main choices - Win Word or Win WordPerfect. Although Lotus Ami Pro is a
good product, it is unlikely to have the significant installed base and
momentum that Win Word and Win WordPerfect will have at that time; we
because of our current momentum and WordPerfect because of it’s ability to
upgrade it’s intalled base.

{Venn Diagram of PC User segments}

_____________________________
2) I will refer to these word processors as "old technology" word processors from here on.
3) One thing we should consider - for those WordPerfect owners who do decide to go with
Win Word, price is probably not a prime consideration. How many incremental WordPerfect
users do we attract by making the $129 offer, versus how much margin we needlessly give
up on those few who would have bought Win Word anyway?

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The people moving to Windows will be both WordPerfect (5.1 and 5.0)
users, as well as the "old technology" word processing users.. The battle
will come down to who can attract these two groups of users most
effectively. Let’s examine the messages that WordPerfect will use to woo
these groups.
WordPerfect’s "easy" positioning point to the WordPerfect users is that this
is essentially the same product they are already using, but now designed to
deliver the advantages of Windows. Breaking this down more carefully, you
have two messages in the following order:

1) This is essentially the same product you already have - your keystrokes,
files, and printer drivers are all transferable.
2) This product delivers all the advantages of Windows

Our positioning will be subtly but importantly different. We will say that we
are the best Windows word processor because we have been designed
specifically for that purpose by the company that best understands
Windows. This should work better than WordPerfect’s "WordPerfect Compatibility"
message for the "old technology" word processing users.
For the WordPerfect 5.0 and 5.1 users, we will also have to make the point
that we too have great WordPerfect compatibility. So, we also have two
messages but in the following order:

1) This product is specifically designed to get the most out of Windows -
the best Windows word processor bar none
2) This product is highly compatible with character-based Word.Perfect (and
other word processors)

Can we really expect our positioning and WordPerfect’s positioning to really
be different as described above? If they were smart, they would realize that
they are going to get most character WordPerfect users anyway, so they
should just position heavily as the best Windows product designed from the
ground up. However, it is unlikely they will do this. They have already
been very open about the fact that Win WordPerfect is just a GUI sitting on
top of 5.1 code. Since upgrading their intalled base will be a key priority at
launch for them, it is likely that the 5.1 compatibility message will a strong
one for them right from the start. In addition, insofar as they have the
largest intalled base and market share, this is a way for them to reinforce
their competitive advantage. Finally, their track record indicates that
whenever they enter a new platform, their positioning is always "the best
word processor in the world now available on {new platform}."

WordPerfect made this mistake when they first entered the Mac
marketplace. Rather than sell their feature set hard (which was actually
quite impressive at their launch time) they positioned themselves as the
number 1 word processor now available on the Mac. This positioning
(which we certainly helped to reinforce) really bombed for them, as they

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were perceived as outsiders bringing a PC port into a much more
sophisticated market, One would think this may have taught them a lesson.
However, their booth at Comdex demonstrated that they have not. They
showed the Windows, Mac, and Next versions all side-by-side as basically
similar and equal GUI products.

So, the first priority customers after Win WordPerfect ships will be people
considering moving to Windows. This is the major dimension we need to
focus on. However, their are specific segments within this category which
will be the most receptive to Word for Windows.

{Customer Segment’Chart from RGM presentation}

* Excel and other MS Win app users. Approximately 30% of Mac Excel
owners use Mac Word. It is not unreasonable that this percentage should
apply as well to Windows Excel owners.
* Professionals (care about document appearance, creating compound
documents, or specific productivity tasks):
- Sales and Marketing
- Legal
- Accounting
- Insurance
- Financial Services
- Engineedng
* Small/Medium business professionals with a need for full-featured word
processing. The rich functionality, ease of use, and great output are
strong hooks for small businesses that need to create and publish their
own documents.
* MIS professionals and IEU’s who are interested in the
customization/integration capabilities of Word for Windows. This is both
a large corporate message, as well as small companies with a reasonably
sophisticated person capable of creating document templates.

DOS Word
Of all our other products, the target market for Word 5.5 is the most
problematic. We do not want to position DOS Word as a low-end product,
as it is indeed a very full-featured, powerful product. At the same time, our
corporate focus is on Windows and we risk abandoning DOS Word
altogether unless we can make it fit within our overall Windows strategy.

The simplest way to separate the Win Word and DOS Word target markets
is to state that they are each targeted to different "platforms." If a user is
interested in Windows, than Win Word is appropriate, and if DOS, then DOS
Word. This is not quite enough, however. We have a strong strategic
imperative that the Windows platform succeed as fast as possible, and
accordingly we must take sides a little bit. We want people to know that if

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you have the hardware to run Windows and Win Word, you are better off
doing this. So we want to make the platform distinction as mentioned
above, but also add that we think overall Windows is a better platform for
most users with appropriate hardware (386, 2 megabytes).

In addition to distinguishing the two products by the platform they run
upon, it is important to recognize the compimentary nature of the two
products. Together, DOS Word and Win Word provide a complete solution
for the range of PC’s at a company. Word 5.5 provides many of the same
interface enhancements as Win Word, but runs even on low-end machines.
A user can easily migrate from DOS Word to Win Word, and
training/support costs two support should be lower than a DOS/Win
WordPerfect combination.

For PC Word 5.5, one of the best target markets is people who are either
using Word for Windows, or companies where Word for Windows is being
purchased. For a Win Word user, Word 5.5 makes the ideal lap-top or
home PC word processor. For companies with Word for Windows users,
Word 5.5 makes the best alternative for machines incapable of running
Word 5.5, or for people who need maximum speed from their word processor.

Word for OS/2
People interested in OS/2|
Mac Word

Positioning
As a family, we have some Important advantages over WordPerfect. We
are more consistent, and we have standardized on a visual interface which
we have perfected on the Windows and Macintosh platforms. In addition,
we have made a strong commitment to Windows, Macintosh, and OS/2
plaforms - GUI platforms, while WordPerfect has pledged support for these
platforms, they are still primary a DOS word processing company and are
perceived that way both Internally and externally.

- Leading graphical word processing company: Although we are
number 2 in U.S. word processing, we are the leading graphical
word processing company. We staked out this leadership with
Word on the Macintosh, and extended it with Word for Windows.
Word for 0S/2 will round out our graphical word processing offering
- Consistent, intuitive interface: We are the only word processing
company with a consistent, intuitive interface across all our
products. WordPerfect is attempting to port the WordPerfect 5.1
keystroke interface to Windows. We have taken the approach of
trying to bring as much as possible of the interface enhancements in

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Word for Windows, Word for the Macintosh, and Word for OS/2
back to DOS in Word 5.5.
- Puts technology to work for you: Only Microsoft has a clear vision
of where technology is and should be going, and how it can best be
harnessed to meet customer needs. We are continually introducing
powerful new solutions for our customers well ahead of the competition.

Word for Windows is the "lead" product in the family, in the sense that it
provides our best opportunity to increase our overall market share. When
reviewing the family members, it makes sense to discuss them in relation to
Word for Windows. Here is the positioning by product:
Win Word
* The leading Windows word processor, making it dramatically easier to
create and distribute virtually any business document.
- Leading: best selling because it really is a major step forward in
word processing.
- Better for creating great looking documents
- WYSIWYG (easier to see formatting, Integrating graphics)
- Ribbon/Ruler great for quick, easy formatting of doc. Very
intuitive and easy to learn
- Better for creating doc’s which mix text, graphics and numerical
data (compound doc’s)
- Clipboard, DDE (for compound doc’s)
- Tables (for compound doc’s, good looking doc’s)
- seamless integration with other office systems (Doc.
Templates, WordBASIC, Customizable interface) make it really
easy to get data into doc’s (e.g. doc. library, scanner, email)
- Creating simple documents
- Ribbon, Ruler = easier to learn and use the basics
- WYSIWYG = better looking documents, use of fonts
- Creating long documents
- Outlining (reorganizing)
- Styles
- Master documents
- Cross-referencing, etc.
- Creating routine documents
- Document Templates
- Macros
- Better for distributing documents
- Customizable interface and WordBASIC provide seamless
integration with other office systems (e.g. FAX, email)
Word 5.5
* The fastest full-featured character-based word processor with the easiest-
to-use interface.
- Provides unparalleled performance on nearly any PC (Laptops,
portables, XT’s, etc.) Doesn’t require Windows or Windows
capable hardware.

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- Runs in "Character-Windows" which emulates Win Word’s graphical
user interface but in character mode.
Word for 0S/2
* Word for OS/2 has the same graphical interface and feature set as Word
for Windows, but it exploits the power of OS/2:
- Long file names, so files can have more mnemonic and informative names.
- Stores extended file attributes in the High Performance File System,
speeding file management and making these attributes visible to
relevant applications.
- Operates well with OfficeVision
Mac Word
* The standard for word processing on the Macintosh. Mac Word’s
graphical interface and feature set are similar to Word for Windows, but
are optimized for the Macintosh.

Strategies
1) Sell Word 5.5 and Word for Windows as complementary solutions
2) Establish Win Word as the default Windows word processor for resellers
3) Reach and close hlgh-potential customers before WordPerfect for Windows ships
4) Attack WordPerfect installed base before Win WordPerfect is available
5) Reposition WordPerfect as the "past leader of character-based word
processing," and unprepared for the new .GUI word processing era.
6) Get momentum behind customization/integration functionality
7) Reduce perceived Product Support disadvantage
O) Focus on improving PSS through external and intarnal means.
1) Sell Word 5.5 and Word for Windows as complementary solutions
In order to increase our overall market share, we need to stake out and hold
a leadership position in the Windows market, but at the same time, we
cannot cede ground in the DOS market. Our market share goals for Word
5.5 are only 5% less than Word for windows, in fact, with the new
interface of Word 5.5, it should be quite synergistic with Word for
Windows. Win Word should help DOS Word reach accounts which have
previously been uninterested. Similarly, a DOS word processor with a
similar interface to Win Word helps overcome the objections of accounts
with large quantities of hardware below Win Word’s minimum system requirements.

Tactics
* Promote awareness of PC Word 5.5 to Win Word user base through an
end-user mailing (perhaps combined with the template mailing).
* Improve file conversion between DOS and Win Word (and other Word
family members)

2) Establish Win Word as the default Windows word processor for resellers
* Promotion to hardware resellers to sell Word for Windows with Windows systems.

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* RSP Product Usage promotion
* Windows Display Rack for in-store merchandising of Win Word, Windows
3, and other Windows applications
* Win Word/Win Family seeding/evaluation program through outbound resellers

3) Reach and close high-potential customers before Win WordPerfect ships.
Given our window of opportunity until Windows WordPerfect ships, this will
be the cheapest time to gain market share. We are already investing heavily
in trial through working models and seminars, which are publicized through
the Windows Computing advertising and our own advertising. However, we
can do even more. In particular:

Tactics:
* Participate in PST seminars
* 90 day direct mail/response campaign to Win 3 owners offering Word for
Windows at $99.
* Test of direct selling to Win 3 and Excel owners, IEU’s, GBU’s at $495
(SRP), $325 (street}, and $150 and $99. Pending successful results of
the direct mail test, we may implement a longer term direct response
campaign targeted at these and broader audiences.

4) Attack WordPerfect installed base before Win WordPerfect is available
One of the biggest threats to Win Word is that WordPerfect will successfully
upgrade a significant percentage of their users to Windows WordPerfect
when it ships. This could easily result in 400k WordPerfect users
upgrading, which would vault them to the leading installed b.ase, position.
Accordingly, we need to get as many as possible of the Windows-oriented
WordPerfect to buy Win Word today, while we are the only product available.

Tactics:
* Direct mail to WordPerfect owners offering Win Word for $125 direct
from Microsoft or through resellers. Alternatively, we can advertise in
WordPerfect magazine.
* Refinement of the WordPerfect file converter to the highest possible accuracy.
* Defend Mac Word 5 against WordPerfect 2.0 with an installed base
satisfaction campaign, the main tactic being a mailing with product tips
and a special $10? offer for a grammar checker.

5)Reposition WordPerfect as the "past leader of character-based word processing," and unprepared for the new GUI word processing era.

There are three key message components to the above repositioning goal:

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Position Word for Window as the leadinq Windows word processor,
reposition WordPerfect as the "past leader" of character-based word
processing.

Since we will have been shipping for over a year before WordPerfect for
Windows ships, we have an opportunity to be perceived as the Windows
word processing standard. The point is to make people think of the
Windows market as a new category, in which the old market leaders will
not necessarily be the new leaders. We need to portray as much
momentum as possible behind Windows and Word for Windows.

Tactics:
* PR: Our PR group is putting together a list of corporations that are
standardizing on or buying large quantities of Word for Windows and our
other Windows products..We will feed these companies to the press to
maintain an image of momentum.
* Advertising: We are trying to put together an ad campaign featuring
testimonials from a users.
* Comdex: We will give out Win Word birthday favors at Comdex,
signifying that Word for Windows has already been out for 1 year, and it #1.
This will really drive home that whatever hoopla WordPerfect
dedicates to Windows WordPerfect is just vaportalk.
* Promote a sense of "what is a good GUI word processor" among the
hard-core Windows enthusiasts - with Word for Windows being the
model, of course. We can do this by pushing the importance of having an
interface consistent with other Windows applications and seamless
integration at user groups, trade shows, and with the press.

Reactive/Confused
We are forcing WordPerfect onto the defensive. We will soon have shipped
three new products with no response from WordPerfect: Word for Windows,
Word 5.5, and Word for OSI2. These introductions reflect a
clear, focused product strategy to dominate graphical word processing.

WordPerfect was taken by surprise over the success of Windows 3 and the
success of Word for Windows. They are now scrambling to come out with
a Windows word processor, but it is unclear how long this will really take,
and what quality the ultimate product will be.

When Word 5.5 ships, we will strike yet another blow against WordPerfect.
They lack our clear strategy of having consistent, "graphical" interfaces
across our products. Accordingly, WordPerfect 5.1's Interface will look
ugly, confused, and antiquated compared to Word 5.5. Furthermore,
customers migrating to the Windows platform should find Word 5.5’s
interface far more appealing.

With WordPerfect for OS/2 shipping shortly thereafter, WordPerfect will
really start to look like a company caught napping. While WordPerfect
wages a war of vaporware and empty promises, we will have a family of

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consistent looking word processors with the latest interface technology
across DOS, Windows, OS/2, and the Macintosh. WordPerfect will still be
scrambling to get their DOS-port Windows product out, with the 0S/2
version somewhere in the future (also a DOS-port).

All this should start to make people wonder if WordPerfect’s reactive
strategy doesn’t put them in a vulnerable position. How long can
WordPerfect keep falling behind without losing market leadership?

Tactics:
* The Word 5.5 and Word for OS/2 press tours and announcements are
ideal opportunities to hammer hbme our clear vision and ability to execute
on this vision.

Unprepared for the new GUI era.
We have the opportunity to position WordPerfect as a simple port of their
DOS word processor to Windows. Superficially, they are a full Windows
application. They support WYSIWYG fonts, multiple documents, and DDE
links. However, their interface will be complex and burdened by the fact
that they have ported a DOS/keystroke interface to Windows. Furthermore,
their underlying architecture is quite different from Word for Windows.
Accordingly, they will be extremely limited in their ability to seamlessly
integrate with other applications.

For example, the following are scenarios which we do not think will be
possible with WordPerfect for Windows:

* A memo template automatically guides users through the addressing of
the memo, even providing a list of distribution aliases which are converted
to the appropriate employee names, and then automatically mails the
memo via the electronic mail system.
* A monthly report template for field personnel which automatically pulls
sales and cost information from the appropriate spreadsheets and
databases located on remote servers
* A template which provides transparent access to a powerful network
document server by remapping the Word for Windows Files Save, File
Open, File Find commands.
* The ability to send a document as a fax simply by choosing File, Send Fax
from the menus
* A legal brief template prompts paralegal for information and automatically
assembles appropriate clauses according to a particular law firm’s
guidelines. Then simply choosing File, Check Lexis from the menus
automatically connects the user to Lexis and allows them to easily paste
appropriate legal citations into the brief.

Even though WordPerfect looks like a full-featured Windows application, it
will not be capable of these types of solution, because it does not have a
fully customizable interface, a powerful document template architecture, or

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a powerful embedded programming language like WordBASIC. We need to
gain widespread awareness for these types of solutions, so that when
WordPerfect for Windows ships, people are unpleasantly surprised that they
not possible.

Tactics:
* Make sure that key industry opinion leaders understand this message.
We will emphasize this during the Word for OS/2 press tour, at Comdex,
user groups, and other similar events. I am revising our Corporate Visit
presentation to drive home this message more clearly.
* A white paper which drives home the messages above.
* In our Word family seminars, we will make this point clear. In addition, it
is important that our Corporate Marketing Reps push this message hard
with their accounts.
* Part of positioning WordPerfect as a failure in the GUI market will be
making sure Mac WordPerfect gains no ground. We will defend Mac Word 5
against WordPerfect 2.0 with an installed base satisfaction campaign,
the main tactic being a mailing with product tips and a special
$10? offer for a grammar checker.

6) Get momentum behind customization/integration functionality
We need to turn the underlying architecture of Word for Windows and OS/2
(and eventually the IC architecture of Word 5 for the Mac) into customer
benefits which a wide audience of users can appreciate. The more widely
recognized how important these capabilities are, the more likely WordPerfect
for Windows will be seen as fundamentally lacking.

Tactics:
* Mailing of a disk of useful Win Word document templates to our installed
base (with a nice thank you letter), as well as to all the major user groups.
* Making the "Wexler" WordBASIC/Template courseware a free fulfillment item.
* Mailing via Authorized Consultant Program for $50 product, consultant kit
* We are working with ITIS to train them on the powerful integration
capabilities of Word for Windows and will work closely with them to
create some showcase customization/integration scenarios.
* Creation of a customization/integration solution videotape, similar to the
Perkins-Cole videotape, but showing a broader range of solutions. We
will use real customer scenarios where possible.
* Presentation of the "dream Win Word office solution" at Comdex
* Promotion of this message at user groups via our videotape presentation
and live presentations.
* Document template contests on CompuServe

7) Reduce perceived Product Support weaknesses
One of WordPerfect°s biggest competitive advantages is their reputation for
free, high quality customer service and product support. We must blunt this

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advantage if we are going to gain significant share. We need to improve
access to our support (reduced busy signals and time waiting on the line).
We need to improve the qualiw of our support. And we need to make sure
that the criteria by which people judge support go beyond just having an
800#, to include access and answer qualiw. In addition, we need to
improve our training infrastructure, which is a key component of overall support.

Tactics:
* We must get dedicated support technicians who we can train and
measure better. The current system makes us vulnerable to demand
overloads from other products (most notably Windows recently) and also
strains Support Tech bandwidth.
* Word User Conference. This is scheduled for the end of October. It was
extremely popular last year and promises to be equally successful this year.
* We should provide training vouchers to our sales force, good for use at
ATC’s which meet certain threshold preparation requirements This
promotion will motivate ATC’s to train on our Word family, and will help
increase awareness of these solutions among our field and customers.

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0409 Depo. Ex. 258 - PLAINTIFF'S EXHIBIT 409 - Comes v. Microsoft

Microsoft Ltd

Systems Report - October, 1990
Sandy Duncan - OEM Sales Manager

Sales Results
[below is the text from a table shown in the original]

$ Dollars

October Billings 8,046
October Budget 108,000

Billings QTD 8,046
Budget QTD 108,000

Billings YTD 3,558,753
Budget YTD 1,740,875

% of Budget YTD 204%

Forecast - November 75,000
Forecast - December 2,000,000
Forecast - January 100,000

October was a quiet month for billings. This is reflected in the budget. Not clear where the $108K comes from as it was under the heading of "Lic Other".

Packaged DOS sales were excellent at 206% of budget this month at 2,582 units. This compares with 974 units for the same month last year. The spread of business throughout our top twenty accounts was encouraging and DOS 4.01 sales were 73% of total sales.

News

Dale Borland is fitting into MS ltd and his new role as ICL account manager quickly. This is beginning to allow me to spend more time with Amstrad and Apricot as well as my other royalty customers.

Amstrad meeting with Jeff Lum was a very positive one. We will be pursuing the Windows, Works and mouse driver opportunities aggressively.

Brother Europe have agreed to extend their DOS license to a 20K unit commitment and add Windows 3.0 per system ! - This is worth an extra $1 Million over the remainder of their contract.

Opus agreement has finally been signed by Redmond. Another prospect bites the dust with a per processor DOS agreement. Opus look good for a Windows license in March/April next year.

Internal rumours suggest that Amstrad are having a tough time financially. Roland Perry has quit as technical consultant.

ICL submitted their Q1 royalty report. They sold a total of 19,970 units in the quarter (very encouraging !!). 486 sales were particularly interesting at 1,665 units ! - this is only for the desktop model. We will monitor this trend closely in the next two quarters as this signifies a substantial shift in buying patterns for ICL customers who have traditionally favoured 8086/286 machines.

HIGHLY CONFIDENTIAL X 561937 CONFIDENTIAL - MS-PCA 1176614 CONFIDENTIAL - PLAINTIFF'S EXHIBIT 184


Principle Objectives October

Successful OEM briefings Done

Exceed FG DOSS budget by > 50% Done (106% !)

Close Windows business at ICL Ongoing

Close Windows business at Brother Done !!

Progress/Close Amstrad PC Progressing well
4000/5000 opportunity

Clear up outstanding license Opus, done
issues with Opus, RML and ICL

Keep up momentum with Ongoing
DOS 5 beta program

Meet with Active Book Company Done

Principle Objectives November

Exceed FG DOS budget by at least 50%

Sign Brother Amendment

Sign Torus Amendment

Continue Dale Borland's induction

Progress ICL/Windows Opportunity

Close Amstrad PC4000/5000 business

Ship DOS 5 Beta III to UK OEMs

Set objectives for next review period

Complete all outstanding account plans.

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0410 13-page OEM Sales/October Status Report, by Joachim Kempis. No year provided, but contextually discernible as early 1990s, likely 1991; poor quality exhibit. Expresses unhappiness with DOS licensing.
0411A, 0411A

PLAINTIFF'S EXHIBIT 411A
Gordon v. Microsoft

From: nathanm Mon Oct 01 11:42:05 1990
To: billg bradsi jeremybu joachimk mike? paulma riscpc steveb
Subject: SPARC, MIPS & Compaq
Date: Tue Oct 02 22:57:14 1990

Recent events show that we are more in danger than ever of losing the key early ground to SPARC which puts our long term systems business in serious doubt. Compaq is considering SPARC, as well as friendlier options, and now Olivetti is too.

At present we are paralysed because Compaq is reluctant to take the kind of role that is required to push our software and combat Sun in a reasonable way. They want to push UNIX (they'll relent to giving us equal billing, but they will expend major effort in making UNIX successful), they are considering SPARC, and they are considering a number of ? non-SPARC responses.

There is considerable sentiment that we should adopt a strategy of appeasement toward Compaq. This means not pushing any other strategy for fear that it will enrage them and push them to SPARC. If we succeed in appeasing them, we'll have their halfhearted support, and if they go with SPARC or a poor non-SPARC strategy then we lose our systems business.

This approach is crazy because there is no recovery plan. It is motivated by our fear that without Compaq we won't have a market - the Big Deal syndrome. I think that the time has come to start pursuing our own strategic direction

There is no point in [Ed: language] Compaq off deliberately, but we should adopt the following plan:

1. Give our hardware design to MIPS. They would license it openly, including licensing the ASICs to the semiconductor partners, and te board designs to OEMs. MIPS would be the official source - we would not have MS copyrights or anything else on the stuff. This is not a deadly secret, it is just that there is no point in being high profile about it. People may assume that we had input because of our software role, but MIPS will be viewed as the source by almost everybody.

Note that our design has a large advantage over things that MIPS has done in the past (or the DEC design) is that it can be built cheaper, and it allows you to trivially add any PC style bus or chips (EISA, MCA etc) because one of our chips mimics the signals of a 486 bus.

2. The slogan for the hardware design will be "The First Open System". Today, the SPARC is open, but the system design is NOT open - you need proprietary LSI logic chips etc. This system will be licensed in a similar fashion to the R4000 - you can buy an Architecture License which gets you the spec and the right to make your own custom implementation, or you can get the full Semiconductor License which lets you manufacture the present ASICs. This is actually a very major point, which would be taken as a big deal in the industry. The announcement of the platform would play up many of the points in the Trends in the Microprocessor Industry memo - that systems vendors must get involved in making high integration "PC on a chip" solutions and the ONLY way for them to do so is to be able to license both the CPU and the rest of the system architecture. This announcement lets them do this for the first time.

3. The MIPS camp, like the UNIX world as a whole, is divided between OSF and AT&T factions. We will not succeed in unifying this as we once thought, and I do not believe that we should even try. If MIPS and/or SCO offer a product - fine, but it is not a big deal to us and we would NOT expend huge effort to ram a MIPS UNIX standard down anybody's throat. Oddly enough it is not a big deal to the UNIX market players themselves either - they will pursue their present fractured strategies quite happily.

4. Concurrent with MIPS pushing this hardware platform to OEMs, we would deliver the following software message to most relevant OEMS (see below for list). The message is:

- We will have an NT Windows binary application standard for R4000 MIPS with our byte ordering. It is our primary RISC strategy, and we will not put it on SPARC.

- The simplest way to get this app level binary standard is that we will have a system software release of NT Windows for the MIPS reference platform - if you buy the standard chip set and board design from the various vendors, there is no adaptation work.

- We may also provide source code to people that want to adapt to another system architecture (but still MIPS & same byte order). This is the message to DEC, or to anybody that balks at the standard platform. We do NOT care what the mix is of DEC designs versus our design any more than we care about ISV versus MCA versus EISA today. It is VERY important that people have at least one easy to build, cheap system that connects to PC busses which is why we are putting our design out, but given competition we don't care long term.

- We are NOT pushing the MIPS hardware platform per se, but we ARE saying that we will push a binary standard which consists of the Win 32 API and the R4000 with correct byte order. The hardware platform is just the easiest way to build one, and the only open design that anybody has asked us to endorse so far.

- Some OEMs will just offer the machine as NT Windows only (PC industry types), and some will offer NT Windows as a side line to their UNIX workstation business. We will not require people to trash UNIX to sign up - we will encourage them to position this as adding a new binary standard to their line up which will give them access to Win 32 applications.
The message above would be delivered to OEMs as early as next week (Olivetti needs to hear this) and we would give it to a fairly long list of OEMs (see below).

5. Our goal is to shoot for an announcement by the end of this year, or early next year. We may want to pull this up in fact. MIPS should announce their hardware reference platform independent of us, but either just before or just after our announcement. Our message would be:

- We would formally announce Win 32, and make sure that a portion of the announcement mentioned x86 as well.

- We would announce the creation of the Win 32/MIPS binary standard discussed in point 4 above. We would publically hit on each of the points mentioned there.

- We would get a list of OEMs to come up on stage and announce their support.

- SDKs would be available in 91 and the product would ship early 92.

- The positioning of the machines is as the world's fastest Windows machines. We would make a big deal about source compatibility between x86 and MIPS for OS/2 2.0 server apps and for Win 32 apps.

- The tone of the MIPS side would be that RISC offers some unique advantages for a specialized part of the Windows market where people need very fast desktop machines. We would NOT be create any expectation that they would take over the earth. We would show our slide that shows 486 fastest for existing apps and this platform great for new apps, but slow on existing apps. It is really a balanced future oriented message.

- A major part of the message is that your investment in Windows is safe - we are going to address 32 bits, and beyond that we will address RISC. You can go ahead and ignore Sun and that crap because Windows has all bases covered.

- We would also talk about the OS/2 3.0 kernel that is underneath NT Windows, how it is an industrial strength kernel for servers etc and it will serve advanced desktops etc.

- Our announcement would not include SCO or push any UNIX standard. We could say that UNIX addresses a present well defined market that has little if any overlap with the mainstream Windows desktop market. It is nice that this specialized system is available on the same hardware as NT Windows, and for customers in that market it may be the right choice. Our simple goal is the realm of Windows Computing. Over the next several years it will expand to include applications that require the performance that the R4000 can deliver, and we are taking the steps to make sure tht this is possible.

The purpose of announcing early like this is to freeze the market at the OEM and ISV level. In this respect it is JUST like the original Windows announcement. This time we have a lot better development team, so the time between announce and ship will be a lot smaller. Nevertheless we need to get our message out there.

One might worry that this will help Sun because we will just have vaporware, that people will stop buying 486 machines, that we will have endorsed RISC but not delivered. After thinking about this, I think that this is emphatically NOT the case:

- We answer the charge of "vaporware" by pointing at Windows, (after all, we are porting it). Windows is shipping a zillion copies an hour and that isn't vapor at all. Every Win 3 sold and every new Windows app is a nail in Sun's coffin. We would go on a PR offensive with exactly that mission. The big news is that now that MIPS will have Windows, and gain all of the momentum that is building - how can Sun survive? So, Scott, do you really think you can fight that avalanche?

- The "Osborne effect" is not relevant here. A long term announcement for MIPS based Windows in 92 will NOT freeze the end user market. It is just an endorsement that Windows has a future - it is too far off to hurt immediate sales, and in fact it will help. The original Windows announcement did not hurt Dos sales because people decided to wait for it. The only time when you get into an Osborne effect is when you annouce something near term that is a viable alternative.

We certainly do need to follow this announcement up with a good demo in 6-8 months when the SDK ships, but preannouncement is going to give Sun a real problem.

6. We would embark on the PR campaign mentioned above to reinforce the notion that Windows was the desktop API for the next 10 years, just as Dos was for the first 10 years. Sun and others that covet the desktop would have to beat Windows - and who can do that? This should be a real push - analysts, ISVs etc. We would really go on the offensive about how strong Windows is, and how irrelevant Sun and others are as would be challengers.

7. One potential sop to IBM would be to announce TWO binary standards for RISC for Win 32 and OS/2 3.0 - MIPS and RIOS. I think that the Austin guys would actually do this, and they would not even be mad about MIPS being the other one because it hurts SPARC so much. If we do this, then we would announce that we will not port to any other architecture for 3 years (obviously non binding) to really rub it in that SPARC is out. The way to position this to them is that we've seen Sun building steam and we need to support the MIPS world as a generic RISC. Ideally we would do this with a short enough lead time that they couldn't mess around too long. All we would do is announce a long term statement of direction that the technology would be available on RIOS - this is safe for them, and it makes Sun look bad, so we could probably make it an easy decision for them.

8. In the past we've talked about Power PC - a next generation PC spec with advanced audio and video for both x86 and MIPS. We would still do this, but it does not have to be part of the announcement or the base level hardware that MIPS would push. We could reserve this as an exclusive club the way that we originally planned RISC PC, or we could go public with it later on. There is no need to make this part of the early announcement. The system design that MIPS would push has a video daughtercard with a connector so we could always add the new stuff to these systems if that was important. Note that machines would not ship in volume until 92 anyway so we would have until this spring to finalize the Power PC hardware.

9. Our stance to Compaq on this is as follows:

- We do not tell them about this until we have had enough initial discussions to confirm that this direction is viable. This means getting the framework of an agreement in place with MIPS on the hardware platform and also getting agreement from at least 5 OEMs. This is NO different than them talking to Sun wihout telling us first. It mainly means that we don't tell them we are going to do something until we know that it is really possible and will play out like we think. This initial activity has to start soon.

- We then tell them that there is enough steam building under the MIPS camp, and enough uncertainty from Sun's progress that we feel compelled to announce an application level binary standard for NT Windows as a future product. This in NO WAY hurts their plans - UNLESS they are really planning to go with SPARC. Since we are not saying that people have to use one system design, they can come out with their "superior" Compaq/DEC design at any time.

- Compaq can either sign up and attend the annoucement, or not as they see fit but we should set a stake in the ground and not move it for them.

- We can present to them why we think that this is harmless to their present business, and will not harm current sales.

- This is not something rude that we should let them make us feel guilty about. They have outlined three alternatives for their actions, two of which are extremely bad for us, and the remaining one is not very attractive, could get [Ed: language] up and at best puts us on an equal footing with UNIX which is a big step down from the present situation. We are just presenting them with something which is highly compatible with one of their options.

- If Compaq really went with SPARC over this plan, then they were heading there anyway. The environment that this plan would create is much more friendly to them than the SPARC environment. We are just helping the MIPS community to come even part way towards where SPARC already is.

10. The OEMs to contact are basically the same ones listed in previous mail about uniting the MIPS world: Olivetti, NEC, HP (a long shot but worth it), DEC, Bull/Zenith, Siemans/Nixdorf, Nokia, Sony, and finally selected people in the pure PC camp - Acer, AST etc. MIPS can throw in a number of big companies which will endorse but not say much (Amdahl, Tandem ...). In the final weeks we could consider adding just about anybody else who had reasonable volume. The idea here is not be be exclusive - it is to get a reasonably large list of reasonably credible companies.


The first comment is likely to be "do you have anything without Compaq and IBM?". There are two answers:

First, the goal is NOT to make this machine sell zillions of copies in 1991 - it probably won't even ship then. What we need to do is announce a long term direction for making high end Windows machines - and freeze Sun out of our OEMs, our ISVs, and from industry perceptions at large. The idea that Microsoft will move Windows to MIPS is a very powerful concept that can be used to put Sun on the defensive. As mentioned above, we need people to view every sale of Windows or a Windows app as a vote (and investment) against Sun. The OEMs listed above are plenty credible to achieve our goals.

Second, I think that we grossly overestimate Compaq's ability in this area. They have a great reputation, but at present their plans are NOT in sync with ours - they are on a mission to clean up in the workstation market - and all signs are showing that if any cleaning is done, Sun will mop the floor up with them. Perhaps they can win competeing against Sun in their own backyard where everybody else has lost, but I doubt it. Even if they do succeed, they are presently off to push UNIX not our stuff.

[PJ: Earlier excerpts transcribed:]
[Admitted on 08-Jan-2007 and 16-Jan-2007, hard to read] 01-Oct-1990 Memo from nathanm to billg, subject: SPARC, MIPS and Compaq.
"Compaq is considering SPARC, as well as friendlier options, and now Olivetti is too."

[excerpt 1]"The purpose of announcing early like this is to freeze the market at the OEM and ISV level, In this respect it is JUST like the original Windows announcement. This time we have a lot better development team, so the time between announce and ship will be a lot smaller. Nevertheless we need to get our message out there."[excerpt 1]

---
[excerpt 2]"One might worry that this will help Sun because we will just have vapourware, that people will stop buying 486 machines, that we will have endorsed RISC but not delivered. After thinking about this, I think that this is emphatically NOT the case:

We would embark on the PR campaign mentioned above to reinforce the notion that Windows was the desktop API for the next 10 years, just as Dos was for the first 10 years. Sun and others that covet the desktop would have to beat Windows - and who can do that? This should be a real push - analysts, ISVs, etc. We would really go on the offensive about how strong Windows is, and how irrelevant Sun and others are as would be challengers."[excerpt 2]

---
[excerpt 3]First, the goal is NOT to make this machine sell zillions of copies in 1991 - it probably won't even ship then. What we need to do is announce a long term direction for making high end Windows machines - and freeze Sun out of our OEMs, our ISVs, and from industry perceptions at large. The idea that Microsoft will move Windows to MIPS is a very powerful concept that can be used to put Sun on the defensive. As mentioned above, we need people to view every sale of Windows or a Windows app as a vote (and investment) against Sun. The OEMs listed above are plenty credible to achieve our goals."[excerpt 3]

-----------------------------
PLAINTIFF'S EXHIBIT 411A Gordon v. Microsoft Depo. Ex. 1304

From: nathanm Mon Oct 01 11:42:05 1990
To: billg, bradsi, jeremybu, joachimk, mikebu, paulma, ????, steveb
Subject: SPARC, MIPS & Compaq
Date: Tue Oct 02 22:57:14 1990
Recent events show that we are in more danger than ever losing the key early ground to SPARC, which Puts our long term systems business in serious doubt. Compaq is considering SPARK, as well as friendlier options, and now Olivetti is too.

At present we are paralysed because Compaq is reluctant to take the kind of role that is required to push our software and combat Sun in a reasonable way. They want to push UNIX (they'll relent to giving us equal billing, but they will expend major effort in making UNIX successful), they are considering SPARC, and they are considering a number of ********* ***-SPARC responses.

There is considerable sentiment that we should adopt a strategy of appeasement toward Compaq. This means not pushing any other strategy for fear that it will enrage them and push them to SPARC. If we succeed in appeasing them, we'll have their half-hearted support, and if they go with SPARC or a poor non-SPARC strategy then we lose our system business.

This approach is crazy because there is no recovery plan. It is motivated by our fear that without Compaq we won't have a market - the Big Deal syndrome. I think that the time has come to start pursuing our own strategic direction

There is no point in pissing Compaq off deliberately, but we should adopt the following plan:

1. Give our hardware design to MIPS. They would license it openly, including licensing the ASICs to the semiconductor partners, and the board design to OEMs. MIPS would be the official source - we would not have MS copyrights or anything else on the stuff. This is not a deadly secret, it is just that there is no point in being high profile about it. Peopel may assume that we had input because of our software role, but MIPS will be viewed as the source by most everybody.

Note that our design has a large advantage over things that MIPS has done in the past (or the DEC design) is that it can be built cheaper, and it allows you to trivially add any PC style bus or chips (EISA, MCA etc) because one of our chips mimics the signals of a 486 bus.

2. The slogan for the hardware design will be "The First Open System". Today, the SPARC is open but the design system is NOT open - you need proprietary LSI logic chips, etc. This system will be licensed in a similar fashion to the R4000 + you can buy an Architecture License which lets you manufacture the present ASICs. This is actually a very major point, which would be seen as a big deal in the industry. The announcement of the platform would play up many of the points in the Trends in the Microprocessor industry news - that systems vendors must get involved in making high integration "PC on a chip" solutions and the ONLY way for them to do so is to be able to license both the CPU and the rest of the system architecture. This announcement lets them do this for the first time.

3. The MIPS camp, like the UNIX world as a whole, is divided between OSF and AT&T factions. We will not succeed in unifying this as we once thought, and I do not believe that we should even try. If MIPS and/or SCO offer a product - fine, but it is not a big deal to us and we would NOT expend huge effort to ram a MIPS UNIX standard down anybody's throat. Oddly enough it is not a big deal to the UNIX market players themselves either - they will pursue their present fractured strategies quite happily.


4. Concurrent with MIPS pushing this hardware platform to OEMs, we would deliver the following software message to most relevant OEMS (see below for list). The message is:

- We will have an NT Windows binary application standard for R4000 MIPS with our byte ordering. It is our primary RISC strategy, and we will not put it on SPARC.

- The simplest way to get this app level binary standard is that we will have a system software release of NT Windows for the MIPS reference platform - if you buy the standard chip set and board design from the various vendors, there is no adaptation work.

- We may also provide source code to people that want to adapt to another system architecture (but still MIPS & same byte order). This is the message to DEC, or to anybody that balks at the standard platform. We do NOT care what the mix is of DEC designs versus our design any more than we care abot ISV versus MCA versus EISA today. It is VERY important that people have at least one easy to build, cheap system that connects to PC busses which is why we are pulling our design out, but given competition we don't care long term.

- We are NOT pushing the MIPS hardware platform per se, but we ARE saying that we will push a binary standard which consists of the Win 32 API and the R4000 with correct byte order. The hardware platform is just the easiest way to build one, and the only open design that anybody has asked us to endorse so far.

- Some OEMs will just offer the machine as NT Windows only (PC industry types), and some will offer NT Windows as a side line to their UNIX workstation business. We will not require people to trash UNIX to sign up - we sill encourage them to position this as adding a new binary standard to their line up which will give them access to Win 32 applications. Te message above would be delivered to OEMs as early as next week (Olivetti needs to hear this) and we would give it to a fairly long list of OEMs (see below).

5. Our goal is to shoot for an announcement by the end of this year, or early next year. We may want to pull this up in fact. MIPS should announce their hardware reference platform independent of us, but either just before or just after our announcement. Our message would be:

- We would formally announce Win 32, and make sure that a portion of the announcement mentioned x86 as well.

- We would announce the creation of the Win 32/MIPS binary standard discussed in point 4 above. We would pubically hit on each of the points mentioned there.

- We would get a list of OEMs to come up on stage and announce their support.

- SDKs would be available in 91 and the product would ship early 92.

- The positioning of the machines is as the world's fastest Windows machines. We would make a big deal about source compatibility between x86 and MIPS for OS/2 2.0 server apps and for Win 32 apps.

- The tone of the MIPS side would be that RISC offers some unique advantages for a specialized part of the Windows market where people need very fast desktop machines. We would NOT be create any expectation that they would take over the earth. We would show our slide that shows 486 fastest for existing apps and this platform great for new apps, but slow on existing apps. It is really a balanced future oriented message.


- A major part of the message is that your investment in Windows is safe - we are going to address 32 bits, and beyond that we will address RISC. You can go ahead and ignore Sun and that crap because Windows has all bases covered.

- We would also talk about the OS/2 3.0 kernal that is underneath NT Windows, how it is an industrial strength kernal for servers etc and it will serve advanced desktops etc.

- Our announcement would not include SCO or push any UNIX standard. We could say that UNIX addresses a present well defined market that has little if any overlap with the mainstream Windows desktop market. It is nice that this specialized system is available on the same hardware as NT Windows, and for customers in that market it may be the right choice. Our simple goal is the realm of Windows Computing. Over the next several years it will expand to include applications that require the performance that the R4000 can deliver, and we are taking the steps to make sure that is possible.

The purpose of announcing early like this is to freeze the market at the OEM and ISV level, In this respect it is JUST like the original Windows announcement. This time we have a lot better development team, so the time between announce and ship will be a lot smaller. Nevertheless we need to get our message out there.

One might worry that this will help Sun because we will just have vapourware, that people will stop buying 486 machines, that we will have endorsed RISC but not delivered. After thinking about this, I think that this is emphatically NOT the case:

- We answer the charges of "vaporware" by pointing at Windows, (after all, we are porting it). Windows is shipping a zillion copies an hour and that isn't vaporware at all. Every Win 3 sold and every new Windows app is a nail in Sun's coffin. We would go on a PR offensive with exactly that mission. The big news is that now that MIPS will have Windows, and gain all of the momentum that is building - how can Sun survive? So, Scott, do you really think you can fight that avalanche?

- The "Osborne effect" is not relevant here. A long term announcement for MIPS based Windows in 92 will NOT freeze the end user market. It is just an endorsement that Windows has a future - it is too far off to hurt immediate sales, and in fact it will help. The original Windows announcement did not hurt Dos sales because people decided to wait for it. The only time when you get into an Osborne effect is when you announce something near term that is a viable alternative.

We certainly do need to follow this announcement with a good demo in 6-8 months when the SDK ships, but preannouncement is going to give Sun a real problem.

6. We would embark on the PR campaign mentioned above to reinforce the notion that Windows was the desktop API for the next 10 years, just as Dos was for the first 10 years. Sun and others that covet the desktop would have to beat Windows - and who can do that? This should be a real push - analysts, ISVs, etc. We would really go on the offensive about how strong Windows is, and how irrelevant Sun and others are as would be challengers.

7. One potential sop to IBM would be to announce TWO binary standards for RISC for Win 32 and OS/2 3.0 - MIPS and RIOS. I think that the Austin guys would actually do this, and they would not even be mad about MIPS being the other one because it hurts SPARC so much. If we do this, then we would announce that we will not port to any othe architecture for 3 years (obviously non-binding) to really rub it in that SPARC is out. The way to position this to them is that we've seen Sun building steam and we need to support the MIPS world as a generic RISC. Ideally we would do this with a short enough lead time that they couldn't mess around too long. All we would do is announce a long term statement of direction that the technology would be available ** RIOS - this is safe for them, and it makes Sun look bad, so we could probably make it an easy decision for them.


8. In the past we've talked about Power PC - a next generation PC spec with advanced audio and video for both x86 and MIPS. We would still do this, but it does not have to be part of the announcement or the base level hardware that MIPS would push. We should reserve this as an exclusive club the way that we originally planned RISC PC, or we could go public with it later on. There is no need to make this part of the early announcement. The system design that MIPS wouod push has a video daughterboard with a connector so we could always add the new stuff to these systems if that was important. Note that machines would not ship in volume until 92 anyway so we would have until this spring to finalize the Power PC hardware.

9. Our stance to Compaq on this is as follows:

- We do not tell thm about this until we have had enough intial discussions to confirm that this direction is viable. This means getting the framework of an agreement in place with MIPS on the hardware platform and also getting the agreement from at least 5 OEMs. This is NO different than them talking to Sun without telling us first. It mainly means that we don't tell them we are going to do something until we know that it is really possible and will play out like we think. This initial activity has to start soon.

- We then tell them that there is enough steam building under the MIPS camp, and uncertainty from Sun's progress that we feel compelled to announce an application level binary standard for NT Windows as a future product. This in No way hurts their plans - UNLESS they are really planning to go with SPARC. Since we are not saying that people have to use our system design, they can come out with their own "superior" Compaq/DEC design at any time

- Compaq can either sign up and attend the announcement, or not as they see fit but we should set a stake in the ground and not move ot for them.

- We can present to them why we think that this is harmless to their present business, and will not harm current sales.

- This is not something rude that we should let them make us feel guilty about. They have outlined these alternatives for their actions, two of which are extremely bad for us, and the remaining one is not very attractive, could get [redacted]ed up and at best puts us on an equal footing with UNIX which is a big step down the from the present situation. We are just presenting them with something which is highly compatible with one of their options.

- If Compaq really went with SPARC over this plan, then they were heading there anyway. The environment that this plan would create is much more friendly to them than the SPARC environment. We are just helping the MIPS community to come even part way towards where SPARC already is.

10. The OEMs to contact are basically the same ones listed in previous mail about uniting the MIPS world: Olivetti, NEC, HP (a long shot but worth it), DEC, Bull/Zenith, Siemans/Nixdorf, Nokia, Sony, and finally selected people in the pure PC camp - Acer, AST etc. MIPS can throw in a number of big companies which will endorse but not say much (Amdahl, Tandem...). In the final weeks we could consider adding just about anybody else who had reasonable volume. the idea here is not be be exclusive - it is to get a reasonably large list of reasonably credible companies.

________

The first comment is likely to be "do you have anything without Compaq and IBM?". There are two answers: First, the goal is NOT to make this machine sell zillions of copies in 1991 - it probably won't even ship then. What we need to do is announce a long term direction for making high end Windows machines -


and freeze Sun out of our OEMs, our ISVs, and from industry perceptions at large. The idea that Microsoft will move Windows to MIPS is a very powerful concept that can be used to put Sun on the defensive. As mentioned above, we need people to view every sale of Windows or a Windows app as a vote (and investment) against Sun. The OEMs listed above are plenty credible to achieve our goals.

Second, I think that we grossly overestimate Compaq's ability in this area. They have a great reputation, but at present their plans are NOT in sync with ours - they are on a mission to clean up in the workstation market - and all signs are showing that if any cleaning is done, Sun will mop the floor up with them. Perhaps they can win competing against Sun in their own backyard where everybody else has lost, but I doubt it. Even if they do succeed, they are presently off to push UNIX not our stuff.

0414 Note: This is a letter from Microsoft's Cameron D. Myhrvold,
to Konstantin Monastyrsky, regarding a question about
two Windows API calls. It is dated October 3, 1990.

___________

Microsoft Corporation Tel 206 882 8080
One Microsoft Way Telex 160520
Redmond, WA 98052-6399 Fax 206 883 8101
October 3, 1990 Microsoft Konstantin Monastyrsky
Okna Corporation
285 Van Buren St.
P.O. Box 522
Lyndhurst, NJ 07071

Dear Mr. Monastyrsky,

I am the manager of the developer relations group for the systems division at Microsoft My
colleague, Rich Abel, forwarded your two letters dated July 20th to me to provide the written response your legal counsel requires.

First, the two Windows API calls you mention, WM_QueryDropObject and WM_DragMove are
indeed not documented in our written WindoWs SDK documentation, nor are they included in the
Windows.h file (the filee that lists all of the messages which are available for applications to use).
These API calls are not documented because they will be changed and applications that rely on
them would break in future releases of Windows. In fact, these APIs already have changed in
the development of Windows 3 and had applications relied upon these API in certain pre-releases
of Windows 3, they would have been broken in the final version of Windows 3. To our knowledge
no applications software make use of these calls. Their current use is restricted to the operating
system itself.

Furthermore, I do not believe that any third party software vendors know about these calls on the
basis of their hiring former Microsoft personnel. I do not know of any former Microsoft personnel
at the Whitewater Group, nor do I know anyone from the Windows 3 team which has left
Microsoft to work at hDC. If hDC is using undocumented calls in thek applications I would guess
they are doing so on the basis of their reverse engineering Windows. Microsoft does not ordain
this type of activity and if they rely on undocumented calls their applications will certainly break
on future releases of Windows.

We are currently planning and working on future versions of W’mdows and would very much like
to understand what you would like to see us implement in the way of API and functionality for
opening and linking files. We are considering changes to our shell and would welcome your
recommendations. Likewise we are working on adding functionality to our LAN Manager product
that would track and return to an application the number of users who were simultaneously
accessing a program over the network. This is another area where we would be happy to share
our views with you and solicit your feedback.

Since these areas are Obviously of great interest to you, would you please take the time to write-
up the specific changes and enhancements you are looking for in our products? This is valuable
information for our product groups to consider in planning future products.

Very truly yours,
[signature is written here]
Cameron D. Myhrvold
Manager, Developer Relations Group

Cc: Russ Werner
Rich Abel

Microsoft is an equal opportunity employer.

X 537963
CONFIDENTIAL

EXH. J5
DATE 11/01/01
WITNESS Abel
SUSAN ZIELIE

0416 Key words: hpfs/long file names, moving target, DOS 6, DOS in ROM
"Bill is clearly more enthusiastic than everyone else about the general idea
of revamping the DOS technology, being a moving target for DEI etc."

_____________

PLAINTIFF’S EXHIBIT 416
Comes v. Microsoft

Eric.

From anthonys Fri Oct 5 11:00:20 1990
To : tomle
Subject: RE: Summary of "the meeting"
Date: Tue Jul 07 10:39:48 PDT 1992

It was kind of random at times, various descussions of tiny little
technical details. However the main conclusions were:

- hpfs/long file names should not be part of the DOS 6 team’s charter.
Bill said he viewed "the next file system" problem as belonging to
my data storage group, and he thought hpfs might be "stopping half
way", ie not the complete solution for win 4.

- bill said we should prioritise features according to the needs of the
following clients in order:

- win on 386
- win on 286
- standalone 386
- standalone 286
- standalone 8086

We didn’t decide in/out for any features other than hpfs. I think this
is going to be your job. It is clear though with these priorities that
end user configurable kernels aren’t very important. Brad also made the
interesting point that most new 8086 machines will have DOS in ROM. Brad
thinks the upgrade market for existing 8086 machines is non-existant.

Bill is clearly more enthusiastic than everyone else about the general idea
of revamping the DOS technology, being a moving target for DEI etc. And he
seemed quite willing to require utilities and extensions to rev if they have
become dependant on undocumented interfaces or data structures.

Gordon is going to read the memo I wrote from your email. He said some of the
things on there were hard. I think your Job is going to be to collect everything
from the current DOS 6 spec, our list and any other ideas then prioritise them
within Bill’ s overall framework.

From davidthi Fri Oct 5 11:10:38 1990
TO: a-chrisr Johnen
Co: dosdev
Subject: Re: Confidential Info for my status report
Date: Tue Jul 07 I0:39:~8 PDT 1992

I agree with what you said totally. Because of the way it was pushed when I
worked at Martin Marietta, I refused to join and made contributions to
individual charities.

My disgust was with the low level (which is actually 36%). However, I didn’t
want to re-broadcast to dwgroup just to state that.

- dave

MSC 008001721
CONFIDENTIAL

WinMail 1.21 brucen Tue Jul 07 10:37:38 1992 Page: 19

0420 I just got the premier issue of this thing, an incredibly impressive magazine from the self-styled National Windows Users Group Network, an independent technical organization that has been around since 1988 and has a section on comuserv under the ms connection.

This thing is great, they are going to reprint the best of ms online; best of mswin forum etc. topics include: configuration forum; worksheet forum; words forum; dtp forum etc. 40% of their membership has experience with win development and they claim lots of f1000 members.

we might want to think about how to use this for our benefit (maybe we could have interviews with key ms folks or something to keep them on the right strategy - i.e. darrlr talking about our objects strategy to kill the new wave enthusiasm).

###############################

>From markche Tue Oct 9 08:26:53 1990
To: bradsi russw w-maria
Cc: kathrynh w-carrin w-maria
Subject: Long Mail RE: dr dos
Date: Tue Oct 09 08:26:26 1990

Attached is a summary of dr dos 5 compatibility issues. The compatibility testing was done by an outside testing lab - I have their formal write-up if you need it. The Windows 3.0 compatibility testing was done internally.

------------------------------

General DR DOS 5.0 Compatibility Issues
_______________________________________

1. Paradox/386

Paradox/386 fails when DR DOS 5.0 is loaded high with default parameters. A "Protection Fault" message is displayed on invocation of Paradox/386.

2. Professional Oracle

Professional Oracle fails when DR DOS is loaded high with default parameters. resulting in the display of the "Protection Error" message on invocation.

X 208033 CONFIDENTIAL


3. SpinRite

SpinRite fails when DR DOS is loaded high with default parameters.

4. Peachtree Complete Accounting

Peachtree Complete Accounting cannot be invoked with the startup command

("Peach") under DR DOS 5.0 whether DR DOS 5.0 is loaded high or low.

5. Other problems in DR DOS 5.0

A) Misc Problems caused by Upper Memory Block Implementation

The automatic linking of UMBs (Upper Memory Blocks) into the DOS arena chain will cause many problems for users. We know from talking to Qualitas and Quarterdeck that there are many applications which hang if the arena chain goes above the 640k limit. Examples of such applications include

If DR DOS 5.0 fails to load high, the HMA (The memory between 1MB and 1MB+64k is not deallocated. Thus no other application can use it. This is be a problem for LAN Manager and Novell environments set up to use the HMA.

B) Problem with the HIDOS driver

If the user loads the HIDOS driver, DR DOS 5.0 will try to move high even if the user specifies HIDOS = OFF. This becomes be very annoying if the user wants to load Novell or LAN Manager into the HMA.

C) Problems with HIMEM drivers

DR DOS 5.0 is not friendly to other HIMEM (or XMS) drivers. For example, the HIMEM.SYS driver shipped with Windows 3.0 DR DOS will refuse to load high under this XMS driver.

D) Problem with loading DR DOS high in certain configurations on machines with 512 Bytes of system memory and extended memory. the HMA exists, and the user will expect to be able to load DR DOS 5.0, but DR DOS 5.0 will refuse to load high in this situation.

Windows 3.0 Compatibility issues

X 208034 CONFIDENTIAL


DR DOS 5.0 provides the ability to be loaded high (to reduce the amount of lower 640k memory occupied by DOS. However, there is no way to run DR DOS 5.0 and run Windows 3.0 at the same time. This is because, to run high DR DOS 5.0 requires the use of their EMM 386.SYS, or thier HIDOS.SYS - either of which causes problems for Windows 3.0.

DRI's EMM386 is used on Intel 386 based computers and it maps Upper Memory Blocks into the DOS arena. This will cause Win 3 to get very upset. It will hang. DDI states in their manual that in order to run Windows 3.0, you will need to remove their EMM386 from the system. This could be very painful as it forces the user to reboot in order to run Windows 3.0. This means that Windows 3.0 users can't get the benefit of a Dos loaded high using DR DOS.

Using their HIDOS.SYS causes Windows 3.0 to issue an unrecognized himem driver message and terminate. DOS critical section handling is broken. DOS has a very sensitive mechanism for signaling when it enters and exits a critical section. Windows uses its knowledge of that critical section behavior to keep DOS from doing blocking I/O. DR DOS 5.0 fails to implement this properly and causes Windows trouble. The behavior will be seen in a Dos VM running a program that calls Dos function 3fh (ReadChar from console). In this scenario the user will experience what they believe is a system hang. Even though they are not actually hung, it will be tricky for the them to figure out how to get out of the situation and they will likely reboot.

The following is a scenario under which problems would arise:

1. Run any communications app in Windows 3.0.

2. Now start a VM and run any of the following:

a. The Compiler
b. 4DOS (a very popular shareware utility)
c. The Micro Assembler
d. Link(which is included with MS-DOS)
e. Copy Con filename commands (which many setup programs use)

Macro Assembler (or a number of other - C Compiler, "4DOS" which is a very popular shareware product, Link, copy con file name commands which many setup programs use - all of these are examples.

What the user sees is a start up banner and nothing else in the VM Window. Further, signs the VM hang is now blocking windows apps from doing anything, all the windows apps freeze up too. The results in this case is loss of data coming in through the communications program.

There are a number of similar scenarios where the user will believe they

X 208035 CONFIDENTIAL


are hung, will then reboot and lose some data as a result. It is generally not a good idea to reboot when Windows 3.0 is FAT clusters and cross linked allocation chains can result.

Password Protection Problems

___________________________________________________________

This feature of DRDOS 5.0 is very poorly implemented. It simply marks the file as hidden. Running MS-DOS 5.0 or OS/2 to look at one of these files completely bypasses any security. Further, any shell program like PC-Shell from Central Point or the Norton shell(or the MS-DOS 5.0 Shell) will ignore the hidden attribute and allow the user to see and open these files. No attempt is made to try to make the files really secure, even from within the DR DOS 5.0 environment.

The result is that users who rely on this feature to provide real security for their data are severely misled, for there is no protection that is anything close to secure. The password protection can be very easily defeated by anyone with MS-DOS 5.0, OS/2 or a common third party shell program.

>From w-maria Mon Oct 8 19:33:02 1990
To: bradsi markche russw
Cc: kathrynh w-carrin w-maria
Subject: dr dos

Date: Mon Oct 8 17:25:55 1990

What can we really say about bonafide compatibility issues with DR DOS. I always hear vague stuff about this that relates to MS products which makes us look very self-serving. If we have a real "user alert" type story to tell about DR DOS compatibility issues, PR should be all over it

I don't think compatibility problems with a future unshipping Microsoft products is a very good story. Then the press could say, "good, if it's not shipping, you save time to fix it..."

FUD about compatibility is our best weapon but we need real stuff. Any input? Marianne

######################################################
162
>From debbieh maryho sharonh
Subject: Re: sys guys

X 208036 CONFIDENTIAL

0425, 0425 [Admitted on 08-Jan-2007 and 16-Jan-2007] Getting the word out about DR DOS.

Date: Mon Oct 15 08:57:11 1990

>we need to meet on this this week. ok?

Ok, but...

What do you want to cover? Is there anything I should do to prepare?

bob

#######

From w-carrin Mon oct 15 12:18:05 1990
To: bradsi
Subject: Getting the word out about DR DOS
Cc: kathrynh russw
Date: Mon Oct 15 12:09:08 1990

Concerns have been raised that DR DOS incompatibilities and flaws are being overlooked by reviewers. Bringing competitors flaws to the press attention is always tricky, especially as Microsoft becomes larger and is seen as domineering over the PC industry. However, we do want reviewers to know about these problems. Below is the approach that Kathryn and I recommend taking:

Over the next couple of months, kathryn and I are going to be in touch with a lot of editors regarding MS-DOS 5.0. We'll basically be covering all of the key editors except for the weeklies and we'll be talking to them about other things.

We recommend that we "informally" plant the bug of FUD in their ears. "have you heard about problems with DR DOS?" " That security feature is a neat idea and, gosh, such a feature would be great, but it's just too easily circumvented." "Gee, it's unfortunate that DR DOS can't be loaded high all of the time. MS-DOS 5.0 can." We'll do this very tactfully.

Here's why we think this approach, rather than a more publicly aggressive approach is best:

  • Our long-lead tours alone should have raised a lot of FUD about DR DOS, as MS-DOS 5.0 has everything DR DOS has plus a little more, and it is from Microsoft at half the price. We saw this in the PC Computing piece.

  • There are two real problems, both features of DR DOS that MS-DOS 4.0 doesn't have - load DOS high and security features. The "load high" makes life annoying as it doesn't work all the time. The security features may lead someone to a false sense of security and someone may break into their payroll.

  • There is a DR-DOS forum on CompuServe that editors can tap into if they want information. If there is a lot of noise from users, it will get into the press.

  • If Digital Research came to Microsoft for help making DR DOS work with Windows, would Microsoft help them? Maybe not?

  • The press is looking for instances of "big, bad Microsoft" tromping on little guys who are trying to make the world a better place - in this case by offering a "better" DOS.

We should absolutely get the word out - in a personal, noninflammatory way.

Thank you for providing the details. It is still possible, no matter how thorough we are, that a random reviewer will not be covered, or that an editor will choose to only present the positive side of DR. DOS's story.

Please let us know if you feel comfortable with this approach. Carrine/Kathryn

0426 This series of emails are dated in October of 1990
and discuss issues of openness (i.e. GDI code sharing)
during the early DOS 5 beta program
and addressing concerns regarding perceptions that they
may be trying to "pre-empt DR DOS 5 sales."
An interview with Paul Sherer is also discussed

This page is stamped at the bottom with
"DEPOSITION EXHIBIT 908"

#####################################

1007
From bob??? Wed Oct 17 15:11:49 1990
To: ?????
Cc: bradsi davec davidw paulma ?????
Subject: RE: Quick Thunks[?]
Date: Wed Oct 17 15:06:49 2990

There is an unresolved issue which makes it difficult to determine when
DOS/Win can ship SDK; that issue is code sharing, particularly GDI
code sharing.

If ?? DOS and NT don't share GDI code, the earliest possible time I could
imagine for a DOS SDK (based on the real stuff, not quick chunks) is April
of 91. However, it could be later than that depending on when all the other
pieces fall into place. We really need a "final" api before we can establish
a good schedule.

If we do share GDI, the timeframe for DOS and NT are roughly equivalent.
i.e. mid next year.

bob

#####################################

1008
From markche Wed Oct 17 15:15:5? 1990
To: w-carrie Cc: bradc bradsi kathrynh lorisi ??????? ?-??????
Subject: RE: Please call Paul Sherer
Date: Wed Oct 17 15:12:22 1990

I'm afraid that this guy is going to write that we are being open
about DOS 5 beta because we are trying to pre-empt DR-DOS 5 sales.
I tried real hard to present a different point of view, but I don't
think he bought it. I mentioned that one of the things that Win 3.0
taught us was that it was better to at least acknowledge publicly that
the product exists so as to ref??? customer confusion (this was outside
the game plan, but I was trying to get the point across that there was
good reason for us to acknowledge that DOS 5 exists as rumors started to
appear in the press).

I' concerned that this article may make us look bad. Can you guys
follow up and see if we need to do some damage control?

This was the toughest interview I've done. I felt like Richard Nixon
giving his "I am not a crook" speech.

X 207961
CONFIDENTIAL

MS-PCA 1149487
CONFIDENTIAL


>From w-carrie Wed Oct 17 13:46:1? 1990
To: markche
Cc: bradsi kathrynh lorisi
Subject: Please call Paul Sherer

Date: Wed Oct 17 13:41:19 1990

Mark wants to talk to you about the beta program and why we
are being somewhat more open about MS-DOS before it ships than we
have been with past products.

Here's what I think he's doing: He's trying to put together a story
suggesting that Microsoft chose to have this large beta program and
is being more open is a deliberate attempt to squash DR DOS. In the
past, I've been able to convince him that there is not a world
conspiracy, when he's come up with these kinds of theories, I think you
can too.

Here are some points you may like to make:

Yes, MS DOS version 5.0 exists in beta.
It is a huge beta program.
We are being somewhat more open because we know it is a huge beta program
and that there are going to be leaks.
We have a huge beta program because MS-DOS is currently running on 50
million personal computers and making sure a product that important is stable
is of utmost importance.
Windows 3.0 was extremely clean and we hope to do as well or better with
MS-DOS version 5.0.
So, as there are going to be leaks, we felt it was appropriate in this
case to confirm some of the information that leaked.

Don't bring up DR-DOS unless he asks. If he asked, you might say you've
heard of some problems loading high and some security issues. But
don't bash it.

And if he still persists in asking why we are being more open, ask him
if he's saying he'd rather we not be.
And that beta testers are under NDA just as they always have.

P.S. It is possible that he has the DOS long-lead presentation, but that
certainly doesn't help his story here.

He'd like to hear from you tonight or early tomorrow. 617/375-4062.

Carrine

Finally, he likes to play with silence, making a person uncomfortable so

X 207961
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MS-PCA 1149488
CONFIDENTIAL


that the person just continues babbling. If he's quiet, you can be
quiet too, waiting for him to talk.

#####################################

1009
From davidw Wed Oct 17 15:22:34 1990
To: bob?? ??????
Subject: RE: Quick Thunks[?]
Cc: bradsi dvec paulma scott??
Date: Wer Oct 17 15:19:14 1990

If we do share GDI then since NT GDI is not even scheduled to
be code complete until june (correct me if i'm wrong dave)
i don't understand how anyone thinks a useful SDK can be
shipped before sept at the earliest

#####################################

1010
From markche Wed Oct 17 15:24:51 1990
To: bradsi
Subject: RE: dos package
Date: Wed Oct 17 15:19:55 1990

could you forward me your mail to scotto again and I'll send it out
under my name? thanks

>From bradsi Wed Oct 17 14:3?:40 1990
To: bradc markche
Subject: RE: dos package

Date: Wed Oct 17 14:40:15 1990

yes, it really does need to be brought to scotto and
valerie's attention. actually, I think it should be
sent by you, Mark. cc me, and then I'll take it from
there. they have to know they cannot change direction
without our agreement.

my primary goal is accomplishing the bu objectives.
good relations perse with ?????? is not a goal; we
could achieve those just by bending over all the time.

i think we can have both - achieve our objectives
and good relations - but it can only come if they
know we're the client and won't accept it any other way.

X 207963
CONFIDENTIAL

MS-PCA 1149489
CONFIDENTIAL

0427 This is a 3 page pdf. The series of emails are dated in October of 1990 and discuss issues of openness (i.e. GDI code sharing) during the early DOS 5 beta program, and addressing concerns regarding perceptions (by the press) that they may be trying to "pre-empt DR DOS 5 sales." An interview being set up with Paul Sherer is also discussed.

The first page is stamped at the bottom with "DEPOSITION EXHIBIT 908"

This series of emails are dated in October of 1990 and discuss issues of openness (i.e. GDI code sharing) during the early DOS 5 beta program and addressing concerns regarding perceptions that they may be trying to "pre-empt DR DOS 5 sales." An interview with Paul Sherer is also discussed

This page is stamped at the bottom with
"DEPOSITION EXHIBIT 908"

#####################################

1007
From bob??? Wed Oct 17 15:11:49 1990
To: ?????
Cc: bradsi davec davidw paulma ?????
Subject: RE: Quick Thunks[?]
Date: Wed Oct 17 15:06:49 2990

There is an unresolved issue which makes it difficult to determine when DOS/Win can ship SDK; that issue is code sharing, particularly GDI code sharing.

If ?? DOS and NT don't share GDI code, the earliest possible time I could imagine for a DOS SDK (based on the real stuff, not quick chunks) is April of 91. However, it could be later than that depending on when all the other pieces fall into place. We really need a "final" api before we can establish a good schedule.

If we do share GDI, the timeframe for DOS and NT are roughly equivalent. i.e. mid next year.

bob

#####################################

1008
From markche Wed Oct 17 15:15:5? 1990
To: w-carrie Cc: bradc bradsi kathrynh lorisi ??????? ?-??????
Subject: RE: Please call Paul Sherer
Date: Wed Oct 17 15:12:22 1990

I'm afraid that this guy is going to write that we are being open about DOS 5 beta because we are trying to pre-empt DR-DOS 5 sales. I tried real hard to present a different point of view, but I don't think he bought it. I mentioned that one of the things that Win 3.0 taught us was that it was better to at least acknowledge publicly that the product exists so as to ref??? customer confusion (this was outside the game plan, but I was trying to get the point across that there was good reason for us to acknowledge that DOS 5 exists as rumors started to appear in the press).

I' concerned that this article may make us look bad. Can you guys follow up and see if we need to do some damage control?

This was the toughest interview I've done. I felt like Richard Nixon giving his "I am not a crook" speech.

X 207961
CONFIDENTIAL

MS-PCA 1149487
CONFIDENTIAL


>From w-carrie Wed Oct 17 13:46:1? 1990
To: markche
Cc: bradsi kathrynh lorisi
Subject: Please call Paul Sherer

Date: Wed Oct 17 13:41:19 1990

Mark wants to talk to you about the beta program and why we are being somewhat more open about MS-DOS before it ships than we have been with past products.

Here's what I think he's doing: He's trying to put together a story suggesting that Microsoft chose to have this large beta program and is being more open is a deliberate attempt to squash DR DOS. In the past, I've been able to convince him that there is not a world conspiracy, when he's come up with these kinds of theories, I think you can too.

Here are some points you may like to make:

Yes, MS DOS version 5.0 exists in beta.
It is a huge beta program.
We are being somewhat more open because we know it is a huge beta program and that there are going to be leaks.
We have a huge beta program because MS-DOS is currently running on 50 million personal computers and making sure a product that important is stable is of utmost importance.
Windows 3.0 was extremely clean and we hope to do as well or better with MS-DOS version 5.0.
So, as there are going to be leaks, we felt it was appropriate in this case to confirm some of the information that leaked.

Don't bring up DR-DOS unless he asks. If he asked, you might say you've heard of some problems loading high and some security issues. But don't bash it.

And if he still persists in asking why we are being more open, ask him if he's saying he'd rather we not be. And that beta testers are under NDA just as they always have.

P.S. It is possible that he has the DOS long-lead presentation, but that certainly doesn't help his story here.

He'd like to hear from you tonight or early tomorrow. 617/375-4062.

Carrine

Finally, he likes to play with silence, making a person uncomfortable so

X 207961
CONFIDENTIAL

MS-PCA 1149488
CONFIDENTIAL


that the person just continues babbling. If he's quiet, you can be quiet too, waiting for him to talk.

#####################################

1009
From davidw Wed Oct 17 15:22:34 1990
To: bob?? ??????
Subject: RE: Quick Thunks[?]
Cc: bradsi dvec paulma scott??
Date: Wer Oct 17 15:19:14 1990

If we do share GDI then since NT GDI is not even scheduled to be code complete until june (correct me if i'm wrong dave) i don't understand how anyone thinks a useful SDK can be shipped before sept at the earliest

#####################################

1010
From markche Wed Oct 17 15:24:51 1990
To: bradsi
Subject: RE: dos package
Date: Wed Oct 17 15:19:55 1990

could you forward me your mail to scotto again and I'll send it out under my name? thanks

>From bradsi Wed Oct 17 14:3?:40 1990
To: bradc markche
Subject: RE: dos package

Date: Wed Oct 17 14:40:15 1990

yes, it really does need to be brought to scotto and valerie's attention. actually, I think it should be sent by you, Mark. cc me, and then I'll take it from there. they have to know they cannot change direction without our agreement.

my primary goal is accomplishing the bu objectives. good relations perse with ?????? is not a goal; we could achieve those just by bending over all the time.

i think we can have both - achieve our objectives and good relations - but it can only come if they know we're the client and won't accept it any other way.

X 207963
CONFIDENTIAL

MS-PCA 1149489
CONFIDENTIAL

0431 "This memo recommends OEM pricing for high end applications and discusses issues for OEM pricing from an Applications perspective." "The price recommendation includes different discounts for "hard" and "soft" bundles. "Hard bundle" means that all of the systems of a given model are sold with software and that the cost of the software to the customer is not stated...that all of these various configurations would come with software. The key test is when the customer asks, "what is the price without any software?" the OEM replies, "You can't get it without the software."
0435 OEM Software License Agreement between Digital Research (California) Inc. ("DRI") and US Integrated Technologies ("Licensee"), dated October 24, 1990. [22 pages; beginning on page 14 is an end user license.]
0437 PLAINTIFF'S EXHIBIT 437
Comes v. Microsoft

From lewisl Wed Oct 24 14:33:33 1990
To: bradsi hankv jonro josephk mikemap peteh richab ruthannl
Subject: Re: Our conversations today regarding Win apps direct programs
Date: Wed Oct 24 13:31:15 1990

Why not skip the test and allow it to be offered
only at SRP? An MS designated fulfillment house
fulfills regardless of ISV. ISV gets 20% of take
for its trouble, but doesn’t have to pay us up front to
buy Windows.

Balance of margin is ours. If we want, we can pay
hush money to dealers (or not). Channel may be mad,
but is really unthreatened because they sell for much
less.

Goal isn’t really to make money. Goal is to make
direct offers possible for Win apps to customers beyond
the small group of the converted.

All that we end up testing is whether $249 "impulse"
offers work. Your guess is as good as mine.

X 566933
CONFIDENTIAL


0438 The subject of this document is: "Applications Integration for Rockport" It compares a variety of desktop publishing applications, and outlines plans of action: "Get approval for additional Rockport resources for
draw-layer add-in. Kickoff marketing advisory board with Comdex Application
Integration activies. Produce plan prior to Comdex for Application Integration
strategy development."

_______________________________________________________________________________

PLAINTIFF’S EXHIBIT 438
Comes v. Microsoft

Memo to: Terry Rogers
From: Alex Morrow
Subject: Applications Integration for Rockport
Date: October 25, 1990

Summary

Windows 3 provides Dynamic Data Exchange (DDE) as a facility for application integration.
Although DDE has some shortcomings, notably its lack of protocol specifications, Rockport
must support DDE to be a full windows product.

Microsoft is positioning its Word/Excel/Powerpoint offerings as a DDE-integrated suite ideal for
Windows 3. It is likely that Informix Wingz would attempt similar positioning through coopera-
tive marketing. It is vital for Lotus to provide superior DDE-based application integration
between Rockport and its other Windows 3 products, in particular Remington and Notes.
Wordperfect looks like it will be late. Rockport marketing should act decisively to select part-
nership products for mutual integration testing and later joint promotion.

We have assembled a technical steering committee for application integration, which has met
once on the topic of Rockport/Remington/Notes integration on Windows 3. We will have a mar-
kering advisory group as well, with an initial meeting before Comdex.

Rockport currently has a very reasonable development plan for DDE support, but does not plan
support of the Impress draw layer. With some additional resource Lotus can provide enough
support for add-ins to permit draw layer support to be developed in parallel with Rockport, gain-
ing a competitive advantage over Excel in graphics integration and Wingz in spreadsheet func-
tion.

We should also identify other opportunities for leadership, such as the use of WK3+ as a prag-
matic standard for compound document exchange, and finding creative solutions for the current
lack of DDE protocol specifications and test suites.

Remington will support Rockport links well through a proprietary protocol It also provides
good support for normal DDE hot links, but no DDE execute support.

The Notes Version 2 plan for DDE seems quite good. Notes will provide for the distribution of
embedded documents through a proprietary convention that depends on server support for stan-
dard DDE hot links and four DDE execute commands.

Immediate plans are for Comdex visits with other Windows 3 DDE vendors to better understand
the issues and look for partnership opportunities.

A detailed discussion of each of these topics follows.

CONFIDENTIAL
IBM 7510255549


Technical Steering Committee for Application Integration

It was very effective in its first meeting on 10/23 in agreeing on Rockport/Remington/Notes
goals and gaining concensus on Microsoft’s probably plans for next year. Its members are:

Marty Roth: Ariel, Dave Reiner, DataLens, Richard Wolf: GUI/Walden, Doug Knowles: Hou-
dini, Pito Salas: Improv, Ray Ozzie." Notes, Dave Love and Ed McNierney: Rockport, John
Booth: Remington, David Reed and me.

Competition

There are two key Rockport competitors on Windows 3, who will have been out a year when
Rockport ships: Microsoft Excel and Informix Wingz.
Microsoft

Microsoft has defined a new market with Windows 3.0

The success of Windows 3.0 has defined a new market, and has given Microsoft (MS) a
new opportunity to sell its desktop applications -- MS Word, Excel, and Powerpoint --
against Lotus on the basis of their integration, rather than on their individual merits.

While the DDE integration of these products is currently far from perfect, MS has a year
development lead on Lotus on native Windows products, and is in a position not only to
fix the application products, but also to adjust Windows if need be.

One possible Microsoft action to achieve Windows market share with Excel by providing
heavily discounted combination packs - probably repackaged and enhanced with addi-
tional applications - of Excel, PowerPoint and Word into appropriately selected submar-
kets, such as college students.

Now: Word and Excel for Windows support paste link

Microsoft Excel and Microsoft Word for Windows have had DDE links since Windows 3
shipped. These links permit Word to act as a desktop publishing front end to Excel.
Curiously, Microsoft PowerPoint does not currently support DDE as either a client (a
document in which another is embedded) or a server (an embeddee), but it does use it for
internal connections between its charting and drawing sections.

The press finds the notion of a DDE-linked desktop suite attractive and superior to an
integrated application. However, they also identify problems with the actual Microsoft
suite, such as its lack of PowerPoint support, Word/Excel format conventions that round
fractions incorrectly, long paste link times and the slowing of printing and response time
when hot links are active.

We should look carefully at the actual products as soon as possible. All Lotus employees
at Comdex should be encouraged to try the suite and report their impressions in their trip
reports. There are clearly some things we could learn from Microsoft’s initial attempts
that would be valuable.

1Q91: Excel adds native data, launch; Draw layer probably later

We expect Excel to add support for native data -- between copies of Excel at least -- and
to be able to launch linked in applications in early 1991. Excel is not expected to have
draw layer support at this time, which probably means it will not be available until 1992.

CONFIDENTIAL
IBM 750255550


2Q91: Word updated, probably will provide embedded document support

The summer release of Word for Windows is expected to be able to launch Excel or other
attached programs, and save copies of the files representing embedded documents. This
support will probably be the first implementation of the currently evolving Microsoft
specification for embedded compound documents entitled Compound Document Protocol
(CDE).

Microsoft will surely make a major announcement of this in early 1991 as the new stan- dard for application integration. 2H91: Powerpoint client

We expect Powerpolnt to be upgraded with external DDE support in the second half of
1991, initially as a DDE client rather than server. The fact that Powerpoint will be late is
expected to give us at least a reasonable chance of having a Remington/Rockport DDE
link superior to that available from Microsoft, if we plan for it now.
Informix Wingz

Wingz differs from Excel in that it has a draw layer. Wingz 1.0 permitted any graphic passed
through the clipboard to be pasted on top of the sheet. With Wingz 1.1, this same facility is
made available via DDE. This means that Wings can be both a DDE client and a server to
most applications. The draw layer and Informix' strong charting and HyperScript support
demo very well, and will look even better as part of an integrated application package.
If Informix is smart, they will attempt to arrange for DDE-based marketing packages
between Wingz and leadership DDE graphics and desktop publishing packages, such as
Micrografx Charisma and Samna Ami Pro and go head-to-head with Microsoft on DDE
application integration.

We should work on our parmership selections aggressively. Rockport Plans

On the basis of several discussions with Ed McNierney, we have agreed on the following action
plan for Rockport DDE.

Wordperfect paste link support

Rockport will continue the DDE support negotiated with Wordperfect for 1-2-3/G. It is felt,
however, that Wordperfect will not be shipping its Windows version any time soon.

Remington client

Rockport provides good server support to Remington. The interface is such that Remington
has both access to the graph settings in Rockport and control over the final rendering of the
graph. The Remington plan is summarized below.

With some additional resource, Rockport can also be a Remington server.

Proprietary Notes embedded document mechanism

Ed McNierney has agreed with Ray Ozzie to provide all necessary services for the propri-
etary Notes embedded document mechanism, and to update the win.ini file with necessary
strings during Rockport install. The primary issue that remains is saving FM3 format files
within WK3+ files so that Notes can have a single file to embed. See File Formats.

CONFIDENTIAL
IBM 7510255551


Cross-testing with Excel, Word

Ed plans to test against the current versions of these products and any early copies he can get
of the forthcoming versions. This will provide some measure of assurance that Rockport will
work with other products that use Excel and Word as test cases for the correct implementa-
tion of DDE.

Marketing making testing arrangements with other vendors

Rockport marketing (Scott xxx) is making plans to contact other Windows DDE vendors to
work out mutually acceptable interoperability testing plans.

File Formats

Pat Stimpson is working on an extension to WK3+ to permit FM3 records, and in general any
add-in’s auxiliary files, to be maintained within WK3+ "dirtbag" records. This will permit
Rockport to provide Notes embedded document support for itself and for other add-ins. Pat
is concerned about the size of the WK3+ and with the potential for going off track in getting
to "clean" WK3+ file formats, but sees no technical obstacles.

Interchange Formats

Rockport will use a subset of WK3+ as its compound document interchange format With
the extensions proposed, it could easily become a defacto standard for compound document
exchange and storage. It would probably be a good idea to encourage this quietly, before the
Excel BIF file supplants WK1 as the spreadsheet interchange format on Windows. General Interprocess Communication and DDE

DDE is not the most robust means of doing interprocess communication. What Ed is plan-
ning is to provide add-ins with the ability to use other mechanisms to do application integra-
tion.

User Interface

Rockport is planning to provide users with access to all combinations of paste link through an
extended options menu in the edit pulldown. Roger Wolf is working with Notes and others
to ensure that Lotus has a standard mechanism for setting up hot links and embedding.

Command language

Users will be able to use the Rockport keyboard equivalent command language to cause links
to be set up. There are currently no plans to provide direct control of DDE facilities, such as
Execute, from the macro language.

Impress draw layer support through Add-ins

Rock-port is taking great pains to ensure that add-ins will be able to participate in DDE
exchanges in which a region of the sheet is designated as the source or target area. Add-ins
will be given access to any unrecognized DDE format types through event calls. They will
be able to use the standard LPI interfaces to interact with the sheet. They will also be able to
interact with the Impress quasi-draw layer, all through events. They will be provided with a
means of saving state information within the "dirtbag" records of WK3+, probably through a
virtual file interface. They will be handed a Windows display context when actual screen
rendering is required.

CONFIDENTIAL
IBM 7510255552


By providing these services, we can start an immediate parallel activity to add draw layer
support to Rockport. Ed estimates this would be 8 to 10 people. This would give us superior
support to Excel in graphics and far superior support to Wingz on spreadsheet basics.

1991 Lotus Windows 3 product plans

Only Notes, Rockport, and Remington are planning to supporting Windows 3 in 1991.
Notes

Will support DDE embedded documents through standard MS formats and private embed-
ding protocol. These documents can be sent over the Notes network and, where appropriate,
will use a Notes private DDE protocol to launch applications for attached documents.

Remington Plans

Remington will support:

Paste link from Rockport or other DDE server, using Windows metaffle (WMF) format.
Paste link of charting data from Rockport or other DDE server, using TEXT
format.

Copy and paste of graph from Rockport, creating a Remington chart object with all data
links to Rockport sheet established. (This is done using WK3 clipboard format.)

Copy and paste of Remington graphics into Rockport using CGM format. Pasting into
Rock-port will be done either by (1) creating a CGM file and passing the filename to
Rockport on the clipboard, or (2) putting CGM dam directly on the elipboard. The Rock-
port team has said they will try to add support for at least the first of these, but they have
not firmly committed to it.

Remington can act as DDE server using Windows metafile (WMF) format. Notes or
other applications can do Paste link of Remington graphics (one slide).

Some things that are not in the schedule:

Remington does NOT have plans currently to support DDE_EXECUTE, which means
that the embedding system that Notes uses will not work. This support could presumably
be added, but it is not in the schedule.

Remington does NOT currently plan to support double-click on a linked object to bring
up that object in the server. They are investigating the possibility, however.

Other Lotus Application Integration Plans

Ariel

Ariel currendy has no firm plans about DDE support, but will be making plans to support it
as their product plan firms up.

Walden

Windjammer is currently not planning to support DDE. We will revisit this as we continue
this work.

Unix does not yet provide Cornerstone with an applications integration model. The X Con-
sortium is taking up preliminaries of this battle, but most of the players I contacted feel that
this work will be driven from one or another of the other standards organizations, since the X

CONFIDENTIAL
IBM 7510255553


interclient communication protocol (ICCCM) is inappropriate for exchanging large amounts
of data. Clearly, Unix has no lack of interprocess communication schemes, and has native
support for multitasking. This is an area Lotus could provide leadership in.
Houdini

Houdini has no plans for application integration, since the required support is not available
until System 7, which is not anticipated until 1991. They feel that while Microsoft may pro-
vide early System 7 support, it is more important for Houdini to be a strong, timely Lotus
product than to support features of an operating system that prudent Macintosh buyers will
take some time to adopt.

lmprov

Improv is still in post-partum mode to some extent, and has not yet decided to move to Win-
dows. They have some limited support in Mach for interclient communication.

Wordperfect

Wordperfect plans to support the Lotus/Wordperfect paste link convention, although there is
some uncertainty about the User Interface that Richard Wolf is investigating. Unfortunately, as
mentioned above, they appear to be far from a leadership Windows product. They are reported
to be producing a videotape for Comdex, rather than a live demonstration of worldng code.
Also, it is reported that consultants who had previews of their current development prototype
were not impressed with their progress. We expect to clear this up at Comdex.

WPMA

It is clear from our participation in the Windows Presentation Manager Association (WPMA), a
group that has been focussing on standardizing some aspects of DDE, that most desktop publish-
ing companies are taking DDE and application integration very seriously.

We must work with these vendors to ensure that our products meet their needs and are integral to
their testing plans. Windows products like Aldus PageMaker with "open" application integration
interfaces based on DDE will probably replace the current monolithic publishing packages, such
as Interleaf because of their greater choice and flexibility.

Partnerships

One of the most important things we can do with DDE immediately is to identify the companies
we want to have testing and promotion partnerships with, and enter into these before our compet-
itors do. Potential partners are listed below. This will be a topic of the marketing meeting next
week.

CONFIDENTIAL
IBM 7510255554


___________________________________________________________________________
Aldus. PageMaker. (Publishing Package)
Access Softek. Dragnet 2.1 (Utility program); Prompt 2.0 (Utility program)
Asymetrix Corp. ToolBook (Program development software)
Corel. DRAW!.
Digital Communications Associates Inc. Crosstalk Communications Div. Crosstalk for Win-
dows 1.1 (Communications software).
Finalsoft Corp. Synchrony (Communications software).
Future Soft Engineering Inc. Dynacomm 3.0 (Communications software).
IBM Desktop Software. Current 1.1 (Personal information management system).
Knowledge Garden Inc. KnowledgePro (Program development software)
Matesys Corp. Object Script (Program development software)
Micrografx Inc. Designer, Charisma (Computer graphics software).
Microsoft Corp. Microsoft Word for Windows (Word processing software).
NBI Inc. Legend 2.01 (Word processing software).
Owl International Inc. Guide 3.0 (Program development software)
Pioneer. Q&E. (Database access software)
Precision Software Inc. Superbase 2 1 ;2 (Data base management system)
Prisma Software Corp. YourWay (Personal information management system)
Publishing Technologies. BatchWorks
Samna Corp. Ami Professional 1.1B (Word processing software).
Softbridge Microsystems Corp. Bridge 2.0 (Program development software).
Viewpoint Systems Inc. I/F Builder 2.1
___________________________________________________________________________

Next Actions

Get approval for additional Rock-port resources for draw-layer add-in.

Kickoff marketing advisory board with Comdex Application Integration activies.

Produce plan prior to Comdex for Application Integration strategy development.

CONFIDENTIAL
IBM 7510255555

0440 This document contains one email repeated twice.
It is from "richmac" to "mikene" and others.
Dated October 1990
"1. no such thing as a soft bundle...no pricing other than distrib pricing."

It is stamped at the end with:
Maples DEPOSITION EXHIBIT 8 10/3/01

Also: EXHIBIT 24
X 190800
CONFIDENTIAL

__________________________________________

PLAINTIFF’S EXHIBIT 440
Comes v. Microsoft

From richmac Mon Oct 29 11:56:23 1990
To: mikene
Cc: jeremybu lewisl marysn mikemap richardf richmac scotto tedha
subject : pricing eqation
Date: Mon Oct 29 13:22:24 1990

Date: Mon Oct 29 11:54:07 1990

Mike as we discussed this AM, could you please summarize the results
of our meeting on establishing a pricing equation that will allo
consistency across the US channels of distribution from reseller
to VAR to OEM to distrib.
I’m seconds away from a flight but here are my summary notes:
1. no such thing as a soft bundle .....no pricing other than distrib
pricing.
2. A Hard bundle with a specific definition of MS product int he box or
on the HD, and with support assumed from MS, could earn a 65% discount
with a $1mil mln commit/year on a specific product. Note here that
the product is MS manufactured.
3. A manufacturer can manufacture MS software and hard bundle, provide
support and could earn in the vicinity of 80% discount.

Both #2 and #3 need re-examination of the profitability equation since
there were several different assumptions as to what the model would be.
If it was a USSMD model ..... #2 would be in the 52% discont range
and #3 would be in the 60% range. Finance and OEM may have a different
model for these and it was your action item along with Lewis and
Richardf to review in detail.

In summary, if a VAR or OEM wants to buy direct from MS and can
meet the min commits they can get standard distrib pricing as an OEM
at 46% and we’d stay witht he standard VAR discount as we have it...
at 44%. This applies to Systems and APps products. Mouse has a different
discount schedule and generally doesn’t apply.

Ted has raised some concerns that need to be answered but his Qs
impact o/s the US and we did not cover that issue...only within the
US.

Action items are for Lewis to drive an understanding of the profitability
of #2 and #3 above and Mary Snapp to delegate to Kevin Harrang a
opinion on the legality of the comparitive discounts with a channel.

X 190800
CONFIDENTIAL

WinMail 1.10 mikene Mon Oct 29 13:22:24 1990 Page: 1


From richmac Mon Oct 29 11:56:23 1990
To: mikcne
CC: jeremybu lewisl marysn mikemap richardf richmac scotto tedha
Subject: Pricing equation
Date: Mon Oct 29 13:22:24 1990

Date: Mon Oct 29 11:54:07 1990

Mike as we discussed this AM, could you please summarize the results
of our meeting on establishing a pricing equation that will allo
consistency across the US channels of distribution from reseller
to VAR to OEM to distrib.
I’m seconds away from a flight but here are my summary notes:
1. no such thing as a soft bundle .....no pricing other than distrib
pricing.
2. A Hard bundle with a specific definition of MS product int he box or
on the HD, and with support assumed from MS, could earn a 65% discount
with a $1mil mln commit/year on a specific product. Note here that
the product is MS manufactured.
3. A manufacturer can manufacture MS software and hard bundle, provide
support and could earn in the vicinity of 80% discount.

Both #2 and #3 need re-examination of the profitability equation since
there were several different assumptions as to what the model would be.
If it was a USSMD model ..... #2 would be in the 52% discont range
and #3 would be in the 60% range. Finance and OEM may have a different
model for these and it was your action item along with Lewis and
Richardf to review in detail.

In summary, if a VAR or OEM wants to buy direct from MS and can
meet the min commits they can get standard distrib pricing as an OEM
at 46% and we’d stay witht he standard VAR discount as we have it...
at 44%. This applies to Systems and APps products. Mouse has a different
discount schedule and generally doesn’t apply.

Ted has raised some concerns that need to be answered but his Qs
impact o/s the US and we did not cover that issue...only within the
US.

Action items are for Lewis to drive an understanding of the profitability
of #2 and #3 above and Mary Snapp to delegate to Kevin Harrang a
opinion on the legality of the comparitive discounts with a channel.

WinMail 1.10 mikene Mon Oct 29 13:22:24 1990 Page: 1

X 190800
CONFIDENTIAL

0441 Title: Summary & Action Items - October 25 Pricing Meeting

"Jeremybu stated that there is a difference between Apps and Systems products and that international
currently has a multi-channel strategy. Also, that hard bundles are important to MS at the right price but
soft bundles are complicated.

OEM sales people are confused about the U.S. multi-channel strategy according to Richardf. They
require a set of policies to increase business through OEMs. The policies initially require internal
development, then agreement, an understanding by sales personnel, and consistent implimentation.

________________________________________________________________

PLAINTIFF'S EXHIBIT 441
Comes v. Microsoft

Microsoft Memo

To: Scotto, Richmac, Jeremybu, Lewisl, Marysn, Mikemap, Richardf, Tedha

Cc: Garygi

Date: October 30, 1990

FROM: Mikene

RE: Summary & Action Items - October 25 Pricing Meeting

_______________________________________________________________

The objective of this memo is to provide a top line meeting summary, decisions made, and action items.
This memo is a follow-up to Richmac’s e-mail dated October 29 to all above discussing the general
guidelines for the pricing equations.

Top Line Situation Summary

The ojective of the meeting was to gain consensus on the policies for Applications products bundles
with OEMs, resellers, VARs, and distributors. Lewisls memo dated October 22, 1990 entitled OEM
Pricing Recommendations for Applications was the basis for the discussion. Richmac stated that we have
defined the channel policies in terms of our current USSMD resellers. Now it is appropriate to define the
rest of the channels that may choose to bundle applications products. The policies must be implemented
consistently with minimum current channels conflicts.

Jeremybu stated that there is a difference between Apps and Systems products and that international
currently has a multi-channel strategy. Also, that hard bundles are important to MS at the right price but
soft bundles are complicated.

OEM sales people are confused about the U.S. multi-channel strategy according to Richardf. They
require a set of policies to increase business through OEMs. The policies initially require internal
development, then agreement, an understanding by sales personnel, and consistent implimentation.

Decisions

1. We would not offer soft bundles.
2. OEMs may purchase packaged products, with minimum commits, at 46% discount and for VARs
44% through a direct relationship. These bundles of packaged products must be sold with
hardware or sold with software solution and cannot be called out on price lists in any fashion. This
policy would apply to Apps and Systems packaged products. This is consistent with the LM/SQL
programs under development for OEMs.
3. We would develop consistent policies for hard bundles through OEMs and resellers as follows:

Hard Bundle Type Customer Mfg. & Supports MS Mfg. & MS Supports
Hardware OEMs Yes Yes Resellers No Yes Maples
DEPOSITION
EXHIBIT 9

X 190798
CONFIDENTIAL


4. A hard bundle is MS packaged product disks and full documentation incorporated in the hardware
SKU by model with 100% penetration. A model is defined as the CPU chassis and
processor. In addition, all the various configurations of the model number would have hard
bundles to meet 100% penetration requirement. The products may or may not be installed on the
hard drives.
5. Minimum dollar commitments will be developed.
6. 100% penetration of hardware model sold will be required. The definition in #4 above seems
workable.
7. Richardf will handle OEMs requiring to sell Apps off a system instead of with hardware as an
exception. An example is AT&T Rhapsody.
8. Jeremybu stated Systems products, Win 3, should be sold on royalty basis and not to focus on the
product during the development of these packaged product hard bundle policies.
9. No AE products may be sold as a hard bundle. 10. PC Works aggressive pricing will remain as an exception to policies developed.
11. Apps hard bundle business from OEMs will not be used to offset Systems commit payments due.
12. Standard auditing procedures will be developed and enforced to ensure compliance.

Action Items

1. Lewisl, Richardf, Marysn, and Mikene will form a task force to develop the policies, pricing for
each hard bundles type in the table above, and consistent minimum commitments. The focus will
be on high end Applications products.
2. Profitability models and recommendations will be prepared and reviewed to incorporate within an
internal memo for sign-off.
3. Marysn will review the Legal rational to offer minimum commit based hard bundle comparative
discount programs to OEMs and resellers.

Within three weeks a memo will be agreed upon and provided to Mikehal for signature of MS policy
regarding hard bundle programs with resellers and OEMs. Should you have any questions or require
additional information please inform me.

X 190799
CONFIDENTIAL

Summary & Action Items
October 25 Pricing Meeting

0443 This is an email dated November 1990, discussing "GO"
"Our primary mission right now is to stop GO. We could do this by either
1) making sure they sign up no OEMs or ISVs, hence have no customers or
2) convert them to Windows. I've been thinking that it might not be
such a bad idea to give #2 a shot again. My reasoning follows."

_________________________________________________________

PLAINTIFF'S EXHIBIT 443
Comes v. Microsoft

From jeffr Thu Nov 1 07:37:40 1990
To: debem
Subject: Please print
Date: Thu Nov 1 07:35:39 1990
< EndOfHeader >
For Go Corp file. Thx. Jeff
---------------
> From lloydfr Wed Oct 31 16:40:34 1990
To: billg gregs jeffr mikemap pradeeps
Subject: Approaching GO
Date: Wed Oct 31 16:39:37 1990

Our primary mission right now is to stop GO. We could do this by either
1) making sure they sign up no OEMs or ISVs, hence have no customers or
2) convert them to Windows. I've been thinking that it might not be
such a bad idea to give #2 a shot again. My reasoning follows.

No matter what GO says, they know they don't need a whole new OS to do
most of the things they are doing. I believe the reason they've gone
into the OS business is mainly to make a lot of money, but also because
they did not want to be burdened with the past. The fact that we've
sold over a million copies of Win 3 and developers are flocking to
Windows might make them see that being "burdened with the past" really
isn’t such a disadvantage. And, we've heard from someone inside of GO
that GO is running into Win 3 everywhere, especially the people Billg
has spoken to; they call it FUD. If we've spoken to the accounts first,
GO has a hard time getting off the ground. And to people GO thought
they had locked up and we talk to them, GO has to visit them again
(Cannon?). The idea is not to get them to convert right away, but to
build a relationship with them so that it is not so distasteful for them
to go that direction at some point in the future. Right now we are the
big bad Goliath, and I don’t think we have much to lose by being very
open with them about what we are doing.and how they could fit into it.

How could GO make money working with Windows? Basically I think they
have a lot of smart people and good ideas. They have three things which
would work well on top of Windows - their HWX, their notebook shell with
applets, and their OO framework. They should see that as well as
portables, there is a huge desktop market that could use this same
technology. And you just have to have a compatible OS to try and reach
the desktop. If they decided to port their stuff to Windows, then they
would essentially be competing with both the handwriting group (HWX and
notebook applets), and AFX, but not the Windows group. We could license
Win 3.1 to OEMs, and then the OEMs could buy GOs stuff on top of that.
I’m not sure how much of a business opportunity this is, but at least it
is something for GO to fall back on if they are unsucessful in the path
they are taking now. Also, do we want to risk losing some of potential
revenue?

If we were to approach GO, I assume we would meet with them, give them
our APi’s now and an SDK when it’s ready. We might want to show them a
demo of the compatiblity layer, but definitely not the notebook. We’d
just try to be more open and friendly and not ask for anything in
return. We’ll say that our apps division will consider writing apps for

X 531274
CONFIDENTIAL


the GO machine, but realistically we wouldn't make that decision until
they have sold a fairly large number of machines.

A last benefit of taking this friendly approach is that we might lessen
the chances of them suing us for some unknown reason right as they are
about to go under.

Just an idea, any comments?

-Lloyd

531275
CONFIDENTIAL

0446 DEPOSITION EXHIBIT 10 - 10/17/01 - "Raikes Dep"

Microsoft Memorandum

To: List
From: Deborah McFarlane
Date: 11/6/90
Re: AMC Minutes

Distribution List
Darrell Boyle - Graphics Business Unit
Susan Boeschen - 6/2
Randy Kahle - 1OS/I
Bob Gaskins - Graphics Business Unit
Lewis Levin - 1OS/2
Pete Higgins - 1ON/2
John Morey - 5/1
Pete Morse - 6/1
Jonathan Reingold - 5/2
Jeff Raikes - 5/2
Vijay Vashee - 10N/2
Mike Maples - 1ON/2
Hank Vigil - 1ON/2
Charles Stevens - 1OS/1
Tom Buttons - IOS/1
Lisa Brummel - 1OS/2
Connie Clark - Graphics Business Unit
Brad Chase - 10S/2
Mike Conte - 10N/2
Bruce Jacobsen - 1/2
Jim Dunnigan -10N/2
Mike: Slade - 4/2
Mary Engstrom - 10N/2
Melinda French - 6/2
Bias Garcia - 5/2
David Primhard - 10N/2
Cathy Harris - Graphics Business Unit
Laura Jennings - 6/2
Mike Johnson - 10/1
Cynthia Kraiger- 10S/2
Leslie Koch - 5/2
Ruthann Lorentzen - 5/2
Don Miller - Graphics Business Unit
Shirish Nadkarni - 5/1
Kathleen Schoenfelder- 5/1
Ron Souza - 5/2
Rich Tong - 10N/2
Liz Welch - 5/2

MICROSOFT X 583899 CONFIDENTIAL


Microsoft Memorandum
Applications Marketing Council Minutes - 10/31

1. Board Meeting/Status of Windows Applications in the US:

Since Windows has shipped, Excel has grown by 80% and WinWord by 60% based on sell through domestic units. Microsoft is selling 55% of all applications for Windows or 3 applications per Windows sale compared to 1.7 applications per Mac sale. The Word character application growth has slowed, but less than the rate that Win Word has grown. Significant competition is expected from WordPerfect and Lotus while Quattro pro has actually gained market share. We need to be aware of this and articulate our Win Apps features. (memo#1)

2. Windows computing:

Windows computing, T3, will end in December. It has consisted of:
- Windows launch
- Win line interoduction
- Two new application announcements
- Win Computing Introduction
- Working models
- PST
- Road show
-T3 in store for Win Apps

New plans for the Win computing are:
-Extension of T3, called T1, Consisting of the continuation of the above promotions as well as, RSP outbound, Windows display station, demo stations, and a mew addition of bundling Windows and Win Apps with hardware.
- New Win line ad, for individual product ads with a line ad added at the end. The ad would let people know we have the best spreadsheet and word processor, then sell the line idea. The current ad concept is: "The process of the work you do every day is easier."
-Winworld, an industry trade show paid for by the industry and sponsored by Microsoft. This has been subsequently approved and will occur as part of Spring Comdex in Atlanta.
- Windows Discovery Days, a mini trade show patterned after the Apple Business Expo. It would focus on small and medium-sized businesses, show in 30 cities, and cost $3.6 million with 1.5 million provided by Microsoft and the balance by ISV's. It would involve the software/hardware ISV's, but it would probably be difficult to have them contribute the needed money.

3. Direct Marketing:

There are three parts to the Direct marketing program that will take place in January:
- Direct Marketing in EBU, this will consist of all their products, except Works. The price will be the standard SRP with a two week minimum delivery. There will be no price conflict across the channel.
- WinWord Test. This will be on a small scale, testing price sensitivity and the value of repeat mailings.
- Price structure focusing on Excel, and partially on Word which will be marketed directly for a lower price. The same price structure will apply to the customer as well as to the reseller, but the Product Manager will decide how many will go to the reseller.

There is concern about the channel. At this time Microsoft does not have the capacity or bandwidth to be the channel if we went direct. We support the channel. If we started selling more direct we can put some of the smaller resellers out of business. That is not our intent. There is also concern about price wars when dealing with direct marketing.

4. OEM Pricing:

The new pricing will effect high end applications (Works is an exception and needs to be tracked by the Product Manager). Everyone must follow the price schedule. Any deviation from this must be approved by the VP. The price schedule has not been set yet, but it would be about 60-65% for finished goods. This may approach 80% during a Windows launch. All OEM pricing will be hard bundle only. This means that when a CPU is sold with the software. A customer can not ask how much less would the computer be without the software, because it will not be available without the software. Both resellers and OEMs can do hard bundles.

MICROSOFT X 583900 CONFIDENTIAL


[Contents: PowerPoint slide image, with "Memo #1" handwritten]

Applications Division - Mike Maples

Board Meeting

Status of Window Applications in the US
October 26, 1990

MICROSOFT X 583901 CONFIDENTIAL


[Contents: PowerPoint slide image]
Applications Division - Mike Maples

Summary

- We are experiencing growth in Windows applications Excel - 1.8, Win Word - 1.6
- We are a significant part of all Windows applications - 55%
- We are selling .3 applications per Windows sale
- Word character application growth has slowed, but not at the rate that Win Word has grown
- Significant competition expected

WORDPERFECT 1Q91
LOTUS 2Q91

MICROSOFT X 583902 CONFIDENTIAL


[Contents: PowerPoint slide image]
Applications Division - Mike Maples

Data Caveats

Shipment data - easily distorted in short term
Sell through data
Depends on Reseller reporting accuracy
Covers 4 of 14 channels that represent 75-85% of the total US business
Not all direct resellers report every month
Windows data
OEM channel volumes
Run times prior to Win 3
Upgrades - double counting, big number
ACIS data - a special situation
Win Word update - 8/90
Excel update - 8/90
MICROSOFT X 583903 CONFIDENTIAL


This page contains a graph showing the "Sell Thru Data" from "Direct Resellers" as well as the percent of "Directs" not reporting.

MICROSOFT X 583904 CONFIDENTIAL


[Contents: PowerPoint slide image]
Windows Application Growth - Sell Thru

Excel
Average

June-Sept 90 13805
June - Sept 89 8143 1.7
June 89 - May 90 7841 1.8
Feb - May 90 7432 1.9

Word June - Sept 90 12447
Jan - May 90 7803 1.6

MICROSOFT X 583905 CONFIDENTIAL


Contents: 2 graph images titled: Windows, "Windows 3 USSMD Shipments" and "Windows 3 Sell-through"

MICROSOFT X 583906 CONFIDENTIAL


Contents: 2 graph images titled: Excel, "Win Excel USSMD Shipments" and "Win Excel Sell-through"

MICROSOFT X 583907 CONFIDENTIAL


Contents: 3 graph images titled: "Word for Windows - USSMD Shipments", "Win Word Sell-through" and PC Word 5 Sell-through

MICROSOFT X 583908 CONFIDENTIAL


This page is titled "PowerPoint for Windows" - with 2 graphs titled "Win PowerPoint USSMD Shipments" and "Win PowerPoint Sell-through"

MICROSOFT X 583909 CONFIDENTIAL


This page is titled "Windows Project" with 2 graphs titled "Win Project USSMD Shipments" and "Win Project Sell-through"

MICROSOFT X 583910 CONFIDENTIAL


2 graphs are titled "Excel USSMD" and "Win Word USSMD"

MICROSOFT X 583911 CONFIDENTIAL


Titled: DOS/Windows Spreadsheet Analysis - Domestic Market Share (US and Canada) - compared to Lotus 1-2-3 and Borland Quattro Pro

MICROSOFT X 583912 CONFIDENTIAL


Titled: Word Processing Market Analysis - Domestic Market Share (US and Canada) - compared to WordPerfect, PC Word, WinWord and others

MICROSOFT X 583913 CONFIDENTIAL


Penetration Calculations, US, from FY88 to FY91 (Post Win3), for Win Word, Win Excel, Win PowerPoint, Win Project

MICROSOFT X 583914 CONFIDENTIAL


[continued] Penetration Calculations, US, from FY88 to FY91 (Post Win3), for Win Word, Win Excel, Win PowerPoint, Win Project

MICROSOFT X 583915 CONFIDENTIAL


[Contents: PowerPoint slide image]
Applications Division - Mike Maples

Word Perfect - Window Word Processor

- Schedule 1Q91

- Advantages
WordPerfect 5.1 keystroke, file compatibility
Nice graphics
Enhanced file manager
Excellent printer support

- Disadvantages
Cluttered, keystroke intensive, interface
12 top level menus, lots of sub menus
Limited customization - no document templates, no macro language

MICROSOFT X 583916 CONFIDENTIAL


[Contents: PowerPoint slide image]
Applications Division - Mike Maples

Lotus 1-2-3 for Windows

- Schedule 1Q91

- Advantages
1-2-3/G interface and features
keystroke/macro compatibility
3D
- Disadvantages
Large
Limited presentation capabilities
No Mac version
First Windows app

MICROSOFT X 583917 CONFIDENTIAL


[Contents: PowerPoint slide image]
Applications Division - Mike Maples

Borland Quattro for Windows

- Schedule 2Q91

- Advantages
Quattro 2.0 - good solid product
Market momentum
Presentation features
- Disadvantages
No Mac version
First Windows app

MICROSOFT X 583918 CONFIDENTIAL


These graphs show both results from a "Corporate User Survey" and a "Registered User - Base User Survey" regarding the use of various brands of word processing software.

MICROSOFT X 583919 CONFIDENTIAL


Continued: Results from a "Corporate User Survey" and a "Registered User: Base User Survey" regarding the use of various brands of spreadsheet software "Pre-Windows" and under Win 3.0.

MICROSOFT X 583920 CONFIDENTIAL


This page shows results of question 7) of the "Corporate User Survey": "Are you planning to purchase Windows-based applications?" - and sub question: "If no, why not?"

MICROSOFT X 583921 CONFIDENTIAL


This page shows results of question 8) of the "Corporate User Survey": "Are you waiting for Windows versions of a particular product to be introduced?" - and sub question: "Which?" MICROSOFT X 583922 CONFIDENTIAL


This page of "Penetration Calculations" shows USA percentages of growth for "Microsoft's Share of Win apps" between fiscal years 1988 and 1991. The apps listed are Win Word, Win Excel, Win PowerPoint and Win Project.

MICROSOFT X 583922 CONFIDENTIAL


This page is a continuation of the previous "Penetration Calculations" page.

MICROSOFT X 583923 CONFIDENTIAL


This page is a continuation of the previous two "Penetration Calculations" pages.

MICROSOFT X 583924 CONFIDENTIAL

0447 GO Corporation Confidential Mar 5, 1994

November 7, 1990
To: Sue King
Cc: Mike Quinlan
From: Jerry Kaplan

Subject: Why we want Jim Cannavino to speak at our announcement

Sue -

Dan’l told me that you inquired about why we are requesting that Cannavino personally appear at the GO announcement in January. I’d like to clarify that briefly.

As you know, we are in a race with Microsoft. Over the past few months, we have lost a lot of momentum with the key constituencies - ISVs, and other potential Penpoint licensees (hardware companies). Many organizations are taking a "wait and see" attitude, or worse, are signing up with Microsoft. There are several reasons for this:

1. The message from IBM is not coming through clearly at this time. What the potential licensees want to hear is that IBM has looked into this area, selected GO over Microsoft, and is not hedging its bets by also working with Microsoft at this time. They also want to see that IBM senior management is committed to the GO program, and that Penpoint hardware will be forthcoming from IBM.

2. Microsoft has been pitching hard, raising a lot of doubts and confusion in people’s minds. Bill Gates has been personally visiting and pitching these companies, and has access to levels of management that are not accessible to GO.

The January event is what we are doing about this. At that time we will:

* Announce the availability of the developer system.
* Show Penpoint publicly for the first time.
* Announce the first Penpoint application from an ISV (Slate).
* Reinforce the IBM messages.

We are also investigating showing a variety of sample applications of other customers, VARs, and ISVs, and are working to get some other licensee to sign up and announce at that time.

Kaplan DEPOSITION EXHIBIT 31 - 4/18/02 CONFIDENTIAL Page 1 KAP04OS


GO Corporation Confidential Mar 5, 1994

Jim’s presence is a necessary counterweight to the personal interest that Bill Gates has taken in this area. Without that, I feel that the IBM messages will not be taken as seriously as we need.

This is the time we need Jim’s personal help! Your support for this would be greatly appreciated.

Thanks,

Jerry

CONFIDENTIAL Page 2

0448 Note: This appears to be an email from Deborah K. Flynn, OEM Account Manager for Microsoft, to Jeff Scherb, Vice President, Applications and Technical Support, Commodore Business Machines, Inc. It's dated in September of 1990, and outlines DOS 5.0 pricing per unit. "If you choose to take your consumer business to DRI, your unit volume decreases 75% and you no longer have a per processor agreement. Therefore, your new price on all DOS products will jump to $30.00 per copy."

PX00402.PDF - stamped as Plaintiff's Exhibit 402, and "Highly Confidential"
topic: DOS 5.0 Pricing Proposal

September 26, 1990
Mr. Jeff Scherb
Vice President, Applications and Technical Support
Commodore Business Machines, Inc.
1200 Wilson Drive
West Chester, PA 19380

RE: DOS 5.0 PRICING PROPOSAL

Dear Jeff,

Within this letter is the DOS 5.0 pricing proposal that you have requested. As a matter of principle, I usually prefer to give my proposals in person. It has been my experience that this fosters a spirit of cooperation, and it makes it much easier to work together towards mutually beneficial solutions. However, I am aware that you are under pressure to get this issue resolved quickly. so I will try and accomplish these objectives in spite of the format.

You have indicated to me that you will be making your decision based on a weighted average, and that this weighted average needs to be significantly below your current $11.00 per unit price. You also mentioned that your price needs to be very compatible on the low end, as this is where you see the majority of your margin pressure. In our original conversation, you presented me with two price scenarios. One, you want a price if you were to take all of your consumer machine business (75% total units sold) to DRI. Two, you offered me the opportunity to quote such a competitive price that you will not need to take your business to DRI. You have also mentioned several times that price is the only factor in this decision. let me address both of these price scenarios.

If you were to take your consumer machines to DRI, this is what would happen. Your DOS contract would go from a per processor agreement to a per copy agreement, when it expires at the end of January. A per processor agreement keeps your price low, because we offer a premium price to those customers who bundle our product with every processor. For those customers who choose not to bundle our product with every processor, their price is adjusted accordingly. This price adjustment reflects the decade of work we have invested. In making our DOS product an industry standard that is compatible with practically every personal computer on the market today. What does this mean to you? If you choose to take your consumer business to DRI, your unit volume decreases 75% and you no longer have a per processor agreement. Therefore, your new price on all DOS products will jump to $30.00 per copy.

However, I do not believe that this scenario is in either of our best interests. Let me elaborate on the scenario where you would receive a lower average price per unit. Looking at FY90's unit sales, I noticed that 51% of your sales were 8086 machines. 45% were 286's and 4% were 386's. What I propose is that we offer you a substantially lower price on 8086 machines (where the majority of your business is). and adjust your royalties on the other higher end processors. Specifically, your pricing under this new agreement would be:

8086 - $6
80286 - $10
80386 - $16
80486 - $16

Using the figures from FY90, your weighted average would be $8.22. This is $2.78 less per unit than your current average price. this pricing means that you would have paid MS $805,310 less in FY90 than you actually did. To get such a royalty pricing schedule, we would expect to see a minimum commitment of $660,000 per year, as this would be an entirely new DOD agreement. This $660,000 is based upon your 8086 royalty multiplied by the number of 8086s shipped last year. the term would be for 3 years and the effective dates would be February 1, 1991, which is the date your current DOS license expires.

I believe this pricing should be very close to your expectations. Let me also point out that these are extremely aggressive prices, especially since you are only shipping 220,000 units a year. You will be paying 25% less than you currently pay for a superior product, lower support costs and the ability to localize the product. As this pricing should show you, MS is aware of the competition you face at the low end and we want to work with you.

I will be calling you very shortly to discuss this proposal.

Sincerely,

Deborah K. Flynn
OEM Account Manager

CC:
Richard Fade
Ted Hannum

[handwritten] What will our mix continue to be - 3 years a problem adjusted pricing over the years

[Ed: the second page of this PDF contains a scanned .xls table titled "Commercial DOS Pricing Strategy"]

0449 since '89 August

First 5.0 licensee; Dolphin Technologies (a portable PC manufacturer)

- MEI has not been mentioned.

__

>From makon Thu Nov 8 15:46:31 1990
To: akihiy akitok hirot kojik mikif pato ryojiw samf shins tetse tomos toshim yoshia
Subject: DR-DOS War
Cc: bobo chrissm ronh Date: Thu Nov 8 15:44:23 1990

According to our friendly press, we found following as for DR-DOS announcement made today.

Speakers are DRI president, DRI VP, DRU-president, DRU VP and Mr. Nighi. Press material contains comparison among DR-DOS and DOS3.X/DOS4.0. They repostitioned the OS as PC OS not like industry ??? OS as it was.

Sam and myself talked and concluded that we will deliver out own comparison chart today to press to ask their fair comparison and make them confuse. Since we have good relation with press, we can get nicer article during the confusion period through individual interview.

Hide, prepare comparison chart with Abitok ? Shin, fax it to major press Toshi/Ryoji, please be prepared to have press interview next week, since Sam and myself will be in Comdex.

Thanks. Mike.

##################################733

>From bobo Thu Nov 8 09:03:02 1990
To: sergiop
Cc: bradsi markche
Subject: FYI: DR-DOS War
Date: Thu Nov 08 08:56:06 1990

>From leise Thu Nov 8 03:27:51 1990
To: akihiy akitok hirot kojik makon mikif pato ryojiw samf shins tetse tomos toshim yoshia
Cc: bobo chrissm hidck ronh
Subject: DR-DOS War

Date: Thu 8 Nov 20:20:23 1990

X 570190 CONFIDENTIAL

According to external resources, DRI mentioned DR DOS sales status at today's conference as below.

Microsystems
Brother for export laptop (for export laptop)
Hitachi Electronics
Japan Business Computer
Komatsu
Amada Metrix (largest FA manufacturer)
Yamashita Systems
Interface
a leading clock maker (no specific name mentioned)
a leading JWP maker (no specific name mentioned)

Accumulated DR DOS sales (excluding 5.0)

Forty-several (embedded 30 companies and PC related several)
2,x00,000 copies (embedded x00,000 copies and PC related 2M copies) since '89 August

*MEI has not been mentioned.

---
>From makon Thu Nov 8 15:46:31 1990
To: akihiy akitok hirot kojik mikif pato ryojiw samf shins tetse tomos toshim yoshia
Subject: DR-DOS War
Cc: bobo chrissm ronh
Date: Thu Nov 8 15:44:23 1990

According to our friendly press, we found following as for DR-DOS announcement made today.

Speakers are DRI president, DRI VP, DRU-president, DRU VP and Mr. Nighi. Press material contains comparison among DR-DOS and DOS3.X/DOS4.0. They repostitioned the OS as PC OS not like industry ??? OS as it was.

Sam and myself talked and concluded that we will deliver out own comparison chart today to press to ask their fair comparison and make them confuse. Since we have good relation with press, we can get nicer article during the confusion period through individual interview.

Hide, prepare comparison chart with Abitok ?
Shin, fax it to major press
Toshi/Ryoji, please be prepared to have press

X 570190 CONFIDENTIAL

Toshi/Ryoji, please be prepared to have press interview next week, since Sam and myself will be in Comdex.

Thanks. Mike.

##################################734

>From richab Thu Nov 8 09:03:03 1990
To: bradsi johncon
Subject: Re: data
Date: Thu Nov 8 09:00:01 1990

2847 units of retail sdk, 5694K 999 sdk updates, $137K

these numbers were included in the aggregate numbers I sent to you earlier.

rich

--

>From bradsi Thu Nov 8 08:28:42 1990
To: johncon richab
Subject: Re: data

thanks. do you also have sdk data?

##################################735

>From o-anion Thu Nov 8 09:05:03 1990
To: bradsi
Subject: pb's
Date: Thu Nov 8 09:01:33 1990

Yo, glad somebody likes those dried dog turds.

Take care of the invoice or Guido will be visiting you.

Did you see the Wall Street Journal, dealing with California real estate? On page B1.

Later...

##################################736

>From bobo Thu Nov 8 09:05:04 1990
To: sergiop
Cc: bradsi markche
Subject: FYI: DR-DOS War
Date: Thu Nov 08 08:56:38 1990

>From makon Wed Nov 7 22:52:52 1990

X 570192 CONFIDENTIAL

0451 PX00451 [This 20-page document consists of a series of power point slides, presented by Bradsi in Nov of 1990, outlining marketing strategies, game plans, budgets and goals for FY '91]:
"Build pre-release excitement
- Overwhelming support from OEMs at launch
- Aggressive marketing programs to support retail upgrade availability
- Newsworthy, dynamic launch"

__________________________________________
(Handwritten at top): Presented by Bradsi at Strategy Meeting on Nov 9, 90

[Slide 1]
Agenda DOS RUP 5.0 Overview

- Mission & Product Overview
- Strategic Summary
- Business & Marketing Overview

[more handwritten names and notes at bottom]


[Slide 2]
Mission DOS RUP 5.0 Overview

DOS 5.0 - The new DOS standard

- The only version of DOS worth owning

- Replacement for 3.3, 4.01


[Slide 3]
Product Objectives DOS RUP 5.0 Overview

Compelling product

- Exploits the 286/386 - more speed, more space for DOS apps
- Safe, No risk
- Easy to purchase and install
- Get more done - A more hassle free DOS
- New Utilities and on-line help

Rock Solid 5000 Beta sites
Polished product, "fit and finish"


[Slide 4]
Schedule DOS RUP 5.0 Overview

(Handwritten at top): Beta 3 release on Nov 19

Beta 3 & Beta OAK November 1990
RTM/OAK Release January 30, 1991
Announce March 1-15, 1991


[Slide 5]
Strategy - The Game Plan DOS RUP 5.0 Overview

Immediate Pervasiveness

- Build pre-release excitement
- Overwhelming support from OEMs at launch
- Aggressive marketing programs to support retail upgrade availability
- Newsworthy, dynamic launch


[Slide 6]
Strategy - The Game Plan DOS RUP 5.0 Overview

Target Influential End Users (includes Power users) and Corporate MIS/DP

Focus on 286/386 and Windows users, particularly those that use memory hungry or multiple DOS applications and networks.

Ensure users have a great experience with the product

Create a exciting short piece on "Getting the most out of DOS 5.0".
It will go in the box and be offered to OEMs.


[Slide 7]
OEM DOS RUP 5.0 Overview

IBM, Compaq, Memorex/Telex, CompuAdd and HP have already signed
Everex, Tandem and Zenith should sign in a week or two
All other significant OEMs are committed


[Slide 8]
Major Accounts DOS RUP 5.0 Overview

Beta Program

Seed 1700 DOS Beta version 3 into 50% of the Fortune 500 and 50 large federal, state and loval government agencies.

Presentations to the key accounts

"DOS days" seminars for our major accounts in every sales office.


[Slide 9]
Business Overview DOS RUP 5.0 Overview
(Handwritten at top): FY 91 US Only

--------Original RUP Plan Revised RUP Plan Absolute Change % increase
_______________________________________________________________

Units - 212,000 - 450,000 - 23,000 - 112%
Revenue - $8.71mm - $25.56mm - $16.85(million) - 193%
Price - $79.95 - $99.95 - $20 - 25%
Marketing* - $1.40mm - $2.78mm - $1.38mm - 99%
PSS - $.42mm - $1.95mm - $1.53mm - 366%
BOI - $2.95mm - $10.06mm - $7.11mm - 241%

*Includes OEM marketing
(slide 9 contains other handwritten notes)


[Slide 10]
Business Objectives DOS RUP 5.0 Overview

Ship 450,000 domestic units of the DOS RUP in FY91 for revenue of over $25mil

315,000 to the reseller channel
15% of this in MLPs
4,500 outlets
15% direct sales through fulfillment
Direct mail, direct response advertising


[Slide 11]
Business Objectives DOS RUP 5.0 Overview

100 key corporate account wins in the first year

Defined as over 500 units installed

Obtain distribution in 4,500 direct outlets in 120 days

3,300 indirect outlets


[Slide 12]
Price DOS RUP 5.0 Overview

Recommended SRP is $99.95

Allows for strong profit contribution
- Net Revenue for FY91 for the DOS RUP of just under $25 million, versus plan of $8.2 million

- DOS business unit BOI increases to $206.8 mil from $199.5 (includes incremental operating expenses/allocations)

Allows for aggressive street price of $69.95. Minimizes conflict with OEM packaged product


[Slide 13]
Product Support DOS RUP 5.0 Overview

Provide 90 days of free support on installation issues only

Charge $2.00 a minute for all other support via 900 phone number

Allocating 6% of DOS RUP revenues to PSS support

Will fund 48 additional support staff
Staffing can be increased if demand warrants
Will support Compuserve forum
(There are also handwritten notes on this slide)


[Slide 14]
Packaging DOS RUP 5.0 Overview

Must make counterfeiting difficult

Considered plastic packaging and variant of standard MS packaging w/hologram, metallic and florescent inks

Moving forward with variant of standard MS packaging
- Holograms have been effective against counterfeiting
- Large upfront costs of plastic packaging

COGS: 5.25 - $9.28, 3.5 - $9.02, MLP - $2.03


[Slide 15]
PR DOS RUP 5.0 Overview

Press tour for long-lead publications done in September. One dynamic event held in NY four around 400 people
- Movie theme - Honey I shrunk the DOS
- Participation from third parties and OEMs
- Consider introducing ROM DOS at this event

- A thorough reviewers guide
- Will try to get beyond the PC press
- User Group tours, including intra-company user groups


[Slide 16]
Adv & Direct Response DOS RUP 5.0 Overview

Work with direct mail consultant and USSMD to determine direct mail strategy

Current Plans for FY91:
- Direct Mail to "power users" twice
- Direct Response advertising
- - One Enthusiast campaign in FY '91


[Slide 17]
Marketing Budget DOS RUP 5.0 Overview

[This slide contains a table comparing the "recommended budget FY'91" and the "current budget" with various categories (sales materials, telemarketing, research, etc.) and totals at the bottom]


[Slide 18]
International DOS RUP 5.0 Overview

US RUO not developed for international markets

The RUP has huge potential internationally

Issue: Learning about product issues unique to international

Proposed Program
A local beta program in each sub
- Needs to be done now to uncover problems before US RUP bleeds into international markets and creates serious support problems.


[Slide 19]
International DOS RUP 5.0 Overview

Major Issue:
International is not experienced in running beta programs and does not have resources allocated

[This slide also includes handwritten numbers and notes]


[Slide 19]
Open Issues DOS RUP 5.0 Overview

Launch Size

Registration Incentive
- Considering an additional 90 days free installation support

Business Press Advertising

- The WSJ pulled well for the Windows Computing ads
[End of slides]

0452 [email conversation between carls, richab, bradc, bradsi, from Nov '90.] "Were you aware of this Intel PCEO laptop and the DR DOS threat?" ____________________________
PLAINTIFF'S EXHIBIT 452 Comes v. Microsoft

########################## 855
>From carls Fri Nov 9 07:55:51 1990
To: richab
Cc: bradc bradsi
Subject: Re: Intel Laptop
Date: Fri Nov 09 07:55:34 1990

Who did this mail originate from? Where is the data coming from?

We can use influence with House[?] and Grove to kill any DR threat provided that we agree to work to meet schedulr and feature needs. They may just be using this to negotiate.

Which group at Intel is this?

>From richab Fri Nov 9 07:07:17 1990
To: bradc bradsi
Subject: Re: Intel Laptop
Cc: carls
Date: Fri Nov 09 07:04:55 1990

Were you aware of this Intel PCEO laptop and the DR DOS threat?
****
INTEL PCEO DISCUSSIONS
This is strictly CONFIDENTIAL information! They will be releasing a new laptop product on 10/21/91 utilizing the Genesis 386 SL component. Initially only 2 OEM's with the remainder going direct. They will simultaneously release in 6 languages including Kanji. Forecast of 30K units for the remainder of '91, 300K-450K units for '92, and 750K-1M units for '93. It will be a Windows integrated product with instant-on capability due to flash file system. ROM DOS and ROM Windows are not of particular value due to the solid state disk. Power management is crucial. A decision will be made by November 26 whether to utilize DR-DOS or MS-DOS. The decision will depend on power management and features. We currently are in the process of gathering bodies for a 11/20 visit to Redmond to make our pitch to them and avoid losing this O/S design win. Also, due to their release dates, our availability schedules are critical. This includes power management features of DOS 5.0 and power management (if exists) features of Windows 3.1. You are welcome to participate in this event.

****

0454 PLAINTIFF'S EXHIBIT 454 Comes v. Microsoft Kaplan DEPOSITION EXHIBIT 32 4/18/02

>From gregs Mon Nov 19 13:32:16 1990
To: tereesach
Subject: NCR & Co
Cc: pradeeps richardf
Date: Mon Nov 19 13:29:20 1990

I am not sure how much you have talked with Pradeep, but based on several discussions with ISVs and others at Comdex (and meetings that NCR stood us up on),it looks very much like NCR is going to sign with Go for their notebook PC. They still claim they are also going to work with us, but they are being evasive. Pradeep is leaving town again so I want to followup. Unless you have a better suggestion, I am going to call Alok Mohan to see what I can find out. We need to figure out how to change their mind (if possible, it may be too late) and if that can't be done, we need to reduce the damage by getting them to also endorse Pen Windows in some fashion as they have already agreed.

By the way, effective any day now (as soon as Jeffr announces it), I am the Pen Win unit manager. Pradeep and Lloyd wil1 report to me.

0455 [Ed: This is an email with a Subject: Dos 5 Schedule, but very hard to read. "This is the first of a weekly update from us on our project schedules. This information is extremely confidential and is not to be communicated outside the company."
0458 Microsoft Memo
To: Ted Hannum
FROM: Debbie Flynn
RE: Commodore Trip Report
Date: November 20, 1990
CC: Richard Fade, Joachim Kempin

Date of Meeting: November 20,1990

Attendees:
Commodore: Medhi Ali, President
Tony Ricci, Director of Finance

Microsoft: Joachim Kempin
Richard Fade
Debbie Flynn

OBJECTIVES
1) Agree on a DOS price
2) Prevent Commodore from making a DRI DOS decision.
[ED: Details about how they got the sale, despite DRI's lower bid before the meeting, and the terms.]

0462 Cc: bradsi genfac janfac
Date: Mon Nov 26 14:48:39 1990

The Facilities Department can be contacted via e-mail on the "genfac" alias. The "facman" alias is no longer in use.

[ED: Responds to request to unclog a urinal in the compound. Then the real email.]

From philba Mon Nov 26 14:53:50 1990
To: bens bradsi
Cc: cameronm davidw paulma richab
Subject: Re: to share or not to share, that is the question
Date: Mon Nov 26 15:50:19 1990

You bring up some valid points however there is one other point that needs to be understood: ISVs that have access to our code often take advantage of internal data-structures, bugs or other quirks of the implementation. This prevents us from changing the code and adds a serious burden of compatibility beyond the API.

I favor simply doing a better job of documenting.

>From bens Mon Nov 26 12:22:46 1990
To: bradsi
Cc: cameronm davidw paulma philba richab
Subject: to share or not to share, that is the question
Date: Mon Nov 26 12:19:34 1990

Issue:
Should MS Apps (and other ISVs) have access to Windows source code?

Complications:
1) If MS Apps have access to the Windows sources, then all ISVs should have access, else we are subject to restraint-of-trade complaints (to say nothing of the morality of the situation).
2) If outside ISVs have access to our sources, then we make it much easier for another company to come along and clone Windows.

I talked to some apps guys on a recent recruiting trip, and they made the following very good point:

Windows if poorly documented.
The state machine that is USER.EXE is barely documented in the SDK. ANy ISV that wants to write a great Windows app ends up looking at the source code (like our Apps group), unassembling the DLLs, or writing experimental code to divine the actual behavior of the system.

Arguments against giving ISVs access to Windows source code usually boil down to:

An ISV will use some undocumented feature of Windows, or directly access internal data, in such a way that future versions of Windows will be forced to support this bad behavior, restricting MS ability to innovate in Windows.
I claim that letting an ISV looking at the source code is the "best" way to avoid this problem:
1) An ISV that unassembles Windows to figure out its behavior is effectively looking at source code, but without the benefits of source comments. This approach is more work for the ISV, and gives MS no opportunity to guide the ISV. With source code, there are generally comments discussing rationale for the behavior of the system.

2) An ISV that writes test apps to divine Windows behavior is really on thin ice. Either the ISV spends a great deal of effort writing the test code to be certain Windows is fully understood, or the ISV may end up making assumptions which are not correct. Since the former approach is a great deal of work, and the ISV is never sure when to stop ("do I really understand how this works now?"), most ISVs will end up in the latter situation. These are the most dangerous apps, since they are most dependant upon the exact behavior of a specific release of Windows.

The key problem is that our documentation does not provide sufficient depth of coverage. The key question is:
How much would it cost to provide sufficient documentation, and is that any different, really, from providing source code?
The key difficulty in writing really great documentation is anticipating all the questions an ISV might have about the behavior of the system. Presumably, there is a level of documentation which is great enough that an ISV would have to perform only a small amount of experimentation.

Solutions:
A. Status Quo
+ Simple
- MS Apps have (unfair) advantage over other ISVs.

B. Make Windows sources available for a fee, with a restrictive licensing agreement (only available to N trusted employees, must be kept on a secure server, no derivative of these sources may be shipped, etc.)
+ All ISVs are equal
- Cloning risk

C. Disallow all ISVs, including MS Apps, from looking at Windows sources (in practice, this would be a very hard thing to do, and certainly runs counter to the spirit of MS).
+ All ISVs are equal
- Difficult to make happen at MS
- Reduces information flow on Windows to ISVs

D. Write great documentation
+ All ISVs are equal
+ Avoids cloning risk

Conclusion
Given that we want to make Windows programming as attractive as possible, I vote for (B) making the sources available. This gives us a little extra incentive to keep enhancing Windows, so that it does not become a stationary target for cloners, but otherwise benefits the Windows ISV community.

--bens

_________________
From cliffw Mon Nov 26 14:57:51 1990
To: bradsi
Subject: XL Bugs
Date: Mon Nov 26 14:55:23 1990

The PREVIEW bugs have been forwarded to the appropriate people.

The Style Combo box display problem is probably a WIN 3 installation bug. I think this is the problem because I just checked the beta version on a 386/25 in the configuration lab, and there were no problems.

If you re-install Win 3 (or I will do it if you wish) the problem should go away. If is doesn't go away, please contact me.

__________
From: korys Mon Nov 26 15:03:58 1990
To: dwgroup
Subject: Printers in 3/2165
Date: Mon Nov 26 15:01:16 1990

0464 Confidential Memo
To: Mike Maples; Scott Oki; Joachim Kempin; Rich Macintosh

From: Mike Hallman
Date: November 27, 1990

Pricing of Applications to OEMS in the United States [Ed: 16 pages on how to price, what to bundle, etc. for OEMs in the US.]

0469 [Ed: This is a very long and extensive email trail concerning MS's OLE plans and implementation, circa 1991, printed by "lynnra" on Wed 29 Apr 1992. Only selected pages are included, between pages 6 and 137.]

2. Maples is really interested in having the Mac presented in a positive light at the conference ( as are we all I think). Can we see a copy of the agenda. I don't think this warrants specific Mac sessions or anything as detailed as that, just some extension of what we discussed today regarding as proposed time frame for implementation. Maples was interested in distributing some sort of document that would "commit" us to doing this on the Mac. Do either of you have an opinion on that? If we can't produce something that is solid in this short time frame, I am in favor of not distributing anything. Random info is clearly not what we need floating around at this point. Please advise on this issue.

Thanks,

Lisa

>From greqw Fri Nov 30 10:59:44 1990
To: anthonys darrylr
Cc: cameronm tonyw
Subject: Re: OLE
Date: Wed Apt 29 16:48:08 PDT 1992

Date: Fri Nov 30 11:42:20 1990

I will talk with Tony again. The bottomline was that we were not completely convinced that the API changes would be sufficient and would not require changes later after the initial release of the libraries. Therefore, we did not change the existing APIs. If TonyW did not let PhilipL know when we made the decision to stay with the existing APIs', then we screwed up.

I am willing to jerk the ISVs around if we can convince ourselves that the link management design will be effective. We do not have much time. I would like to do it before the end of the year. We don't have time to think about it until after the 12/10 because of the ISV workshop.

>From anthonys Fri Nov 30 10:28:40 1990
To: darrylr greqw
Cc: cameronm
Subject: OLE
Date: Fri Nov 30 10:27:57 pdt 1990

As you probably know Philipl in my group worked with Tony a while back to come up with some modifications to the OLE spec so that in future windows releases (3.2 or 4.0) we can automatically provide system tracking of links for these apps without the app changing.

Now I hear that we're going to be distributing the original OLE spec and code examples to ISVs without these changes. I am worried that this and the clock ticking on the win 3.1 schedule will make it much harder to get the changes into Win 3.1.

Please tell me appa is still committed to making the changes we agreed, and ISVs will be revisited and made to update. This may be some short term pain but I think the long term benefit is considerable if we think win 3.1 0LE is going to be widely used.

From darrylr Fri Nov 30 12:10:46 1990
To: anthonys greqw
Cc: cameronm tonyw
Subject: Re: OLE
Date: Wed Apr 29 16:48:15 PDT 1992

Date: Fri Nov 30 12:07:16 PDT 1990

I think this api issue wrt link tracking is very major. We need to get on top of this asap...if we think we may be changing the ole api's for link tracking then we need to call the current api's preliminary at the isv seminar. I would like to see a copy of the link tracking api proposal that was made...I need that today since I leave on my trip sunday. We need a solid decision about whether that proposal is good or bad.

From arts Sun Dec 2 11:42:48 1990
To: mikemap
Cc: alistair cameronm darrylr edwardj greqw tonyw w-connib
Subject: Re: OLE and Apple
Date: Wed Apt 29 16:48:15 PDT 1992
Date: Sun, 2 Dec 90 ii:39:47 PST
Where: Art Schumer, St. Program Mgr, EBU Applicatiuns 6/2045, #68664

This is the positioning we are giveing OLE. The problem is that Apple doesn't beleive it to be a complementary architecture. That is where they are having a problem. I go down again this week to try and sell them further on it. EdwardJ and I are meeting Monday to come up with a more clearcut description ofr OLE vs P&S.

> Randy Batat, VP from Apple called. He wanted to encourage us to keep the Apple / MS debate about OLE low key and not allow it to become a public debate. I agreed with him.

The positioning should be that the extensions that we are implementing are in addition to not in liew of S/7. In fact we use standard S/7 WinMail 1.21 lynnra Wed Apt 29 16:47:44 1992 Page: 7

capabilities (apple events) when we run on a Mac. The capabilities extend S/7 capabilities, much in the same way that Claris extended the MAC capabilities with EXTN and made it generally available to the industry.

--

-Art

>From kevine Mon Dec 3 12:58:03 1990
To: suzettBs
Cc: cameronm viktorg
Subject: An Additional Lists
Date: Wed Apr 29 16:48:23 PDT 1992

Date: Mon Dec 03 12:55:56 PDT 1990

Could you please start call downs on the list below? I tried to send fax invites to all of them on Friday.

Kevin

[Ed: long list of names, their company name, and phone numbers.]

WinMail 1.21 lynnra Wad Apr 29 16:47:44 1992 Page: 8

Microsoft is a registered trademark and Windows and Information At Your Fingertips are tradamarks of Microsoft Corporation.
0S/2 is a registered trademark and Presentation Manager is a trademark licensed to Microsoft Corporation.
Apple and Macintosh are registered trademarks of Apple Computer, Inc.
Quattro, Turbo C and Turbo Pascal are registered trademarks of Borland International, Inc.
Paradox is a registered trademark of Ansa Software, a Borland company.
WordPerfect is a registered trademark of WordPerfect Corporation.

- more -

>From w-erin Fri Dec ? 17:19:17 1990
To: bradsi cameronm darrylr mikemap paulma russw scotto steveb stevewe victorg
Cc: msftpr w-erin
Subject: OLE Q&A
Date: Wed Apr 29 16:49:30 PDT 1992

Date: Fri Dec 7 17:10:49 1990

Rude Q&A
OLE

OLE Q. We heard about OLE from the Microsoft applications WinMail 1.21 lynnra Wed Apr 29 16:47:44 1992 Paqe: 17

group, so isn't this just something that relates to Microsoft applications?

A. No. While the Microsoft applications group was heavily involved in the formation of object linking and embedding, OLE is an open specification that was developed in cooperation with other leading ISVs. OLE is applicable to any graphical application that can create or display information. The Microsoft Systems Division is evangelizing 0LE to benefit Windows, 0S/2 and Macintosh System 7 applications developers.

Q. Microsoft applications got 0LE first; isn't this just another example of the special advantage Microsoft applications has over third-party developers?

A. No. This technology was initiated by the Microsoft Applications Group, but several other major ISVs provided input and contributions to the OLE specification (including, Aldus, WordPerfect, Lotus Micrografx.) We are actively encouraging as many ISVs as possible to support OLE and are holding a technical seminar this month to explain 0LE implementation.

Q. Will all Microsoft Windows applications support OLE?

Yes. We will put 0LE in all our applications, we expect other vendors to do the same. For example, you'll see 0LE technoloqy in a future version of Microsoft Excel.

Q. How does OLE relate to the applications integration work announced by WordPerfect/Lotus last Comdex? Does OLE supersede this?

A. Both WordPerfect and Lotus contributed to the OLE specification and both will support 0LE in their applications.

Q. Isn't OLE the NewWave killer?

A. No.

Q. Hasn't Microsoft just stolen the ideas from NewWave and made it their own?

A. Compound document and object-oriented approaches to applications are not particularly new nor are they the province of a single company. NewWave attempts to solve many of the same problems. We have chosen a different WinMail 1.21 lynnra Wed Apr 29 16:47:44 1992 Page: 18

implementation because we think our customers are better served by an evolutionary approach which maintains compatibility.

Q. So this is just another example of big bad bully Microsoft taking HP's ideas and making them their own?

A. No. Both Microsoft and HP, like other industry players, have drawn from the same body of published research and predecessor products. Microsoft is doing this with protocols open to any vendor.

Q. Will HP support OLE in NewWave?

A. Ask HP.

Q. Who worked with Microsoft on the specification?

A. Lotus, Aldus, WordPerfect Micrografx.

Q. Will OLE be part of Windows 3.0?

A. 0LE is not tied to a specific version of windows. It will work with the current version of Windows 3.0. We are supplying a library that ISVs can use to support Windows.

Q. What does an ISV have to do to support OLE?

A. We are providing a high-level OLE library that makes supporting OLE in an application very easy for developers by simply making API calls to these libraries.

Q. Will OLE be supported in DOS 5.0?

A. No. OLE is a GUI technology.

Q. Can you embed and link DOS applications?

A. No. OLE is intended for graphical applications, since graphics are needed for presenting and manipulating compound information in a meaningful way.

Q. Will OLE only work in Windows with Windows applications?

A. We will support OLE on Windows, OS/2 and the Mac System 7.0. WinMail 1.21 lynnra Wed Apr 29 16:47:44 1992 Page 19

Q. Will Microsoft and IBM support OLE in Presentation Manager?

A. Yes. OLE will be supported on OS/2 Presentation Manager.

Q. Will IBM support OLE in Office Vision?

A. Ask IBM.

Q. Mike Maples said that Microsoft would extend OLE to the Mac System 7. Isn't this encroaching on Apple's control of their operating system?

A. Our implementation of OLE for the Mac relies on Standard System 7 services. OLE is complementary to the functionality in System 7.

Q. Apple has not seemed very enthusiastic about OLE support for System 7. Hasn't Apple already provided these services in System 7?

A. The extensions we are implementing are in addition to, not in lieu of, System 7. In fact we use standard System 7 capabilities (Apple events) when we run on a Mac. The capabilities extend system 7 capabilities, much the same way that Claris extended the Mac capabilities with EXTN and made it generally available to the industry.

Q. How many third-party software developers will support OLE?

A. We expect very widespread support from many ISVS. At this point: Aldus, Borland, Corel, Lotus, Miorografx, and WordPerfect will all support OLE. We are holding our first developers conference on Dec. 10 and expect a substantial number of ISVs to attend.

Q. When can we expect to see applications that support OLE?

A. We expect many applications from Microsoft and third-party ISVs that support OLE to arrive in 1991. (Microsoft PowerPoint supports OE now, not OLE. A future version of Excel will support OLE).

Q. Will users have to update their current Windows applications to be able to take advantage of OLE?

Win.Mail 1.21 lynnra Wed Apr 29 16:47:44 1992 Page: 20

A. Yes, but they will not have to upgrade their operating system. OLE requires a small amount of extra programming support in an application, so ISVs will have to release new versions that support the OLE feature.

>From susana Sun Dec 9 08:29:47 1990
To: jeffhe
Cc: cameronm cynb jayd kevine susana
Subject: Hyatt gig
Date: Wed Apr 29 16:49:58 PDT 1992

Date: Sun Dec 9 08:26:42 1990

>From jeffhe Fri Dec 7 12:13:14 1990
To: susana
Subject: Hyatt qig
Cc: jayd jeffhe
Date: Fri Dec 7 12:11:25 1990

Susan, I can take care of the video taping of the event at the Hyatt this monday for about $3,700. I have the people and the gear on standby. Let me know if you want to do it.

Jeff

This $$ includes 2 people
2 recorders
1 switcher
misc. extra equipment.

Jeff is providing cameras and video stock.

He was not able to help us, because when he first agreed to the job, briansl was still on board..since then Brian has transferred to another dept in MS..so MS-AV is VERY understaffed. That's why the outside people had to be hired. Jeff also mentioned his price includes a 10% contingency, so most likely won't be as high as estimated.

WinMail 1.21 lynnra Wed Apr 29 16:47:44 1992 Page: 21

OLE enables applications to work closely together, even if these applications have been developed by different vendors, employing different data formats, and OLE allows the user to look at information in the context of a single document without needing to manually switch from application to application. The process of deciding what application code to run and how to do that is hidden from the user and fully automated.

How Applications Developers Integrate Linking and Embedding

To take advantage of object linking and embedding technology, applications must be graphical applications written for Microsoft Windows, OS/2 Presentation Manager or Apple Macintosh System 7.0, and must incorporate the OLE specification. At today's conference, application software developers were provided with the specification and a set of preliminary libraries for Windows 3.0. The preliminary materials will allow developers to begin work on applications incorporating OLE. The DLL subroutines are planned to become a standard part of the next windows release, scheduled for mid-1991. OLE library support for Apple Macintosh System 7.0 and OS/2 Presentation Manager is also planned to be available in 1991.

Microsoft Corporation (NASDAQ "MSFT")

develops, markets and supports a wide range of software for business and professional use, including operating systems, network products, languages and application programs, as well as books, hardware and CD-ROM products for the microcomputer marketplace.

Microsoft is a registered trademark and Windows and Imformation At Your Fingertips are trademarks of Microsoft Corporation.
0S/2 is a registered trademark and Presentation Manager is a trademark licensed to Microsoft Corporation.
Apple and Macintosh are registered trademarks of Apple Computer, Inc.
Quattro, Turbo C and Turbo Pascal are registered trademarks of Borland International, Inc.
Paradox is a registered trademark of Ansa Software, a Borland company.
WordPerfect is a registered trademark of WordPerfect Corporation.

>From w-maria Tue Dec 11 21:42:24 1990

WinMsil 1.21 lynnra wed Apr 29 16:47:44 1992 Page: 26

possible. Excel developers conference might be a good place to start with this.

>From russw Wed Dec 12 08:25:35 1990
To: bradsi cameronm johnfi lewisl mikemap viktorg w-maria
Cc: darbyw hankv msftpr paulma peteh robg steveb w-maria
Subject: RE: OLE conference report
Date: Wed Apr 29 16:50:57 PDT 1992

Date: Wed Dec 12 08:24:19 PDT 1990

viktor, can u get back to the press re: wlo and ole ( if the answer is it doesn't work we should discuss this first)
cam, this furthers the need for us to think about expanding the corp presence at these seminars.
marianne, it may be worth having a special meeting to track thru the best way to position ouselves aggressively vs. new wave without sounding like bad people. I don't feel we are doing this well right now.

>From w-maria Tue Dec 11 21:43:15 1990
To: bradsi cameronm johnfi lewis1 mikemap russw viktorg
Co: darbyw hankv msftpr peteh robg w-maria
Subject: OLE conference report

Date: Tue Dec 11 21:33:29 1990

Following are my thoughts on PR issues/implications resulting from the OLE seminar on December 10:

For the most part this seminar was a real positive for Microsoft. It was well attended and the audience was motivated and interested. There were some hard questions but the audience was engaged. One implication of both this and the amazing turnout at the multimedia seminar is that this is proof positive that virtually every ISV has completely accepted Windows as a platform and they are a11 very very hungry for data on how to develop better Windows applications. It is clear that Microsoft will continue to be challenged to get out information to developers fast enough to meet the demand.

Press attendance was kept limited and consisted essentially of three weekly reporters (Stuart Johnston of Infoworld, WinMail 1-21 lynnra Wed Apr 29 16:47:44 1992 Page: 29

no matter what. Probably over exposure? Should we lay low for a while, and can we expect similar treatment from others?

>From tonyw Mon Dec 17 19:08:29 1990
To: kathrynh viktorg w-clairl
Cc: cameronm darrylr msftpr russw
Subject: Re: PC Week article 12/17, pp 13
Date: Wed Apr 29 16:51:34 PDT 1992

Date: Mon Dec 17 19:05:41 1990

Sigh, sorry about the quote. It is something developers need to be aware of, but maybe I gave it too much emphasis.

We ought to point out somewhere that New Wave links are not managed across networks either (as far as I know). They track links on the local disk, and do some good things when sending linked files all together to another place, but I don't think they track remote links. I am not even sure they have remote links.
Tony

>From w-clairl Fri Dec 21 17:07:00 1990
To: bradsi cameronm darrylr mikemap paulma russw steveb viktorg
Cc: msftpr perch richab w-clairl
Subject: OLE press tour report (LONG mail)
Date: Wed Apr 29 16:51:35 PDT 1992

Date: Fri Dec 21 16:58:38 1990

Darryl Rubin and I went on the road Dec. 2-6 to see the industry trade press, business press and industry analysts with the objective of educating them on object linking and embedding. It was a very valuable trip in several ways. We gained early and good visibility for OLE. It also afforded an opportunity to take the pulse of the editorial community. Generally editors thought OLE was slick, easy to understand and of immediate benefit to users. Interestingly, editors more readily understood linking than embedding even though it is actually harder concept. Overall however view of OLE was positive.

The issues that commonly emerged were:

  • Separation of church and state. Apps drove this but its now in systems. What does this mean. It's a Chinese wall.
  • Limitations of OLE--networking support is not there, this is
winMail 1.21 lynnra Wed Apr 29 16:47:44 1992 Page: 34

key.
  • NewWave was brought up but we had relatively fewer hard questions on this that I would have anticipated. (This contrasts with the ISV response at the OLE conference).
  • Great interest in object oriented file system and timeframe for this. Ditto for drag and drop capabilities.
  • Editors will take a "wait and see" attitude toward delivery of OLE applications.
  • Interest among the hard-core PC infrastructure was not as strong as could be expected. I think we will see lots of feet dragging/arm chair quarterbacking as Microsoft moves increasingly toward a new generation of technology. We have a large ongoing education process to do.

Also of note:

We were roundly taken to task by Zachmann, Tarter, Forrester Research, Strom regarding the feasibility of Microsoft really being able to deliver on our strategy. I believe the feeling is based on two factors:

1. Broad criticism of how MS has handled OS/2 and the IBM relationship. There is a view that Microsoft's total focus on Windows is opportunistic. Also there is the opinion that Microsoft has just not been honest, up-front or willing to admit to a change in strategy. (See notes below on Zachmann meeting). In a way, we are being criticized less for the Windows-centric strategy than for how we have handled the move to Windows. Peter Lewis from the New York Times said he has never noticed so much anti-Microsoft feeling. He was recently at Comdex and was amazed at all the people (primarily ISVs) that complained to him about Microsoft, the big bully.

2. View that Information at Your Fingertips is a Microsoft-centered strategy that does not address real user needs today and will benefit Microsoft most in the future. Our tour for OLE was good in that it showed that we are both moving to make IAYF possible and that the techmology is open and will be available to the industry. However, we will have to work very hard to continue to prove that IAYF is an open vision that the industry can participate in.

Individual Meeting Notes:

wiILMail 1.21 lynnra Wed Apt 29 16:47:44 1992 Page: 35

David Strom, Network Computing

This meeting was a last minute addition to the schedule. David had informed us that he is publishing an "open letter" to Bill Gates on the IAYF speech at Comdex, in which David takes Bill to task for not dealing with reality. The letter will run in the next edition. The two main points in the letter are that the mainframe is not going to be replaced by the microprocessor any time soon and that IAYF is nice but doesn't address the real connectivity needs of real companies. Darryl pointed out that IAYF was meant to be a vision of the future, and that of course Microsoft understands and is working on the problems of today. David expressed that IAYF did not dwell sufficiently on networking issues and that this is key in his mind to its success or failure. He also complained that the users scenarios in the speech were not very realistic. David was not very interested in discussing OLE as a technology and did not want a demo.

John Verity, Business Week

John was surprisingly interested in OLE and watched the demo carefully. He could only meet for a short while as he was covering the AT&T/NCR story (we experienced this with all the business press editors during the trip}. John asked how OLE compared to New Wave, and what role Microsoft was playing in the object management group. Darryl explained that we weren't involved in this group but we stay informed about their activities. John asked about drag and drop functionality; Darryl said absolutely it is a goal and would be supported in future Windows versions.

Paul Carroll, Wall Street Journal

Paul was primarily interested in who, what, where. He wanted to know how long it would take to be good (he said, software always gets better in subsequent versions), who was supporting it, who was working on it. He asked if the ISVs had to do a lot of work to support it. Darryl explained that it is a relatively minor enhancement for applications developers. Our meeting was cut short so Paul could return to working on AT&T/NCR story.

Scott Leibs, Information Week

This was a good meeting with Scott. He is a senior feature writer for Information Week. The publication appreciates the attention from Microsoft. Darryl described OLE as a facility to create compound documents and outlined the differences

WinMail 1.21 lynnra Wed Apt 29 16:47:44 1992 Page: 36

between object linking and embedding. Scott. asked how it would be supported and Darryl explained how it would be evangelized to ISVs. Scott asked if Microsoft gets a piece of the action; we said no, it is to be an open interface.

Scott then turned to 0S/2. He asked us to explain what we tell corporate customers about moving to OS/2. Darryl explained that it is when the customer needs networking, the security, multitasking and protection afforded by OS/2. OS/2 is really optimal when server resources such as remote administration, need to be available on all workstations on the net. Darryl said this is possible under DOS/Windows but its more reliable with OS/2.

Scott asked if OLE conflicts with other types of object oriented approaches. Darryl explained that OLE is only one step on the long path toward an OO architecture. We are beginning to introduce object orientation incrementally to the user. Scott also asked how OLE fits into IAYF and what are the next things we will see. Darryl explained that we will implement drag and drop and eliminate the clipboard operation. Scott commented that the downside is that users won't know that they are "messing" with something they shouldn't. Darryl replied that this is essentially a design issue, that the system can provide a dialogue to notify users what they are doing.

Scott asked what the corporate buying trends for 1991 will be. Darryl responded: strong continuation of Windows momentum; an uptick of Windows applications, Lotus, WordPerfect and Borland will ship their Windows applications; shift will cause a new set of applications to be purchased.

Trudy Neuhaus, Charlie Petzold, Jim Gallagher, PC Magazine

As expected, the PC Mag folk asked detailed questions about how OLE operates and what its limitations are. Charlie said that the implementation in NewWave is kludgy and that adding object capabilities needs to happen in Windows itself (funny how this didn't come up at the Technical Excellence awards). Jim is the new head of the PC Magazine labs. He recently joined PC Magazine from Manufacture's Hannover where he was in charge of investigating new leading edge technologies. Jim commented that ultimately these changes to the operating environment will change how users view their work, that the world will no longer be applications centric. Darryl said that is exactly right. Jim wanted to know when we would see a distributed file system. WinMail 1.21 lynnra Wed Apr 29 16:47:44 1992 Page: 37

Action: send charlie the OLE specification.

Jonathan Yarmis, Steve Wendler, Michael Anderson, Gartner Group

Darryl went through the presentation and demo and fielded many questions from this group. The meeting took an ironic tone as per usual (so, this is just more goodness from Microsoft, right?). They were interested in understanding how OLE would be supported across the enterprise network, not just at the LAN level. Darryl noted that we will solve the link tracking problem to make OLE capable over the network. He indicated that the object oriented file system is coming, but that we could not be specific about when it would come. Yarmis wanted to understand how the Mac will play. Darryl noted that Apple will have to address the issue of reliable link management.

They asked how this will impact Saros, since they do a distributed file system. Darryl said that in some ways this will replace what Saros does today, but that the difference is that Saros is doing this now in a good way and by the time that MS has a true distributed file system solution, Seros will be able to be value added.

NewWave came up. Darryl said that the basic problem with NewWave is that it requires the user to import files into a "black box" environment, which is a lot of work. OLE is easy to move to, it is evolutionary.

Gartner was also interested in the relationship between systems and applications--how much of a role does applications play in defining the systems platform.

Action: send specification and handouts from OLE developers conference.

Paul Sherer, Susan Fisher, PC Week

Paul mostly focused on the hard news--when is this delivered, how will it be documented. He asked a lot about file manager improvements that will support OLE concepts. Darryl said that a good guess is that we will see file manager improvements in Windows 3.1. Darryl also covered how link tracking needs to be implemented for network support of OLE. Paul also asked for information on in place editing. Darryl explained that this is a future direction, that it will require work in the user interface. Paul asked about the role applications had in OLE and the implications. Darryl assured him its a good thing to get ideas from apps that are then included in the systems

WinMail 1.21 lynnra Wed Apr 29 16:47:44 1992 Page: 38

software.

Mary Conic Lafredo, Rich Villars, Dave Atlas, IDC

The IDC analysts basically wanted an complete overview. Dave is the email analyst for IDC. He had just been at Lotus, where they talked up 0LE extensively. They stated that OLE is Hypercard like. They asked about relationship to OMG, and also how will be supported on OS/2 PM and the Mac. They were curious about how Apple would view this. We told them it is complimentary, not competitive.

Action: Send them the spec and background materials.

Paul Gillan, Pete Bartolich, Computerworld

Paul is the editor in chief. He came because he said he has not been very up to date on Microsoft lately. He basically is the only one at Compterworld that really cares about PC technology. Pete is the news editor but he doesn't understand our industry. The regular MS editor, Tish Keefe, was on vacation so we missed her. Paul asked about IBM, how this relates to IBM's investment in Metaphor. Darryl explained that IBM has always had many investments in new technologies and there is no conflict.

Action: Paul wants to plan a trip to Microsoft in early 1991. PR to follow up.

John Dodge, Joel Shore, Bob Falerta, CRN

John was working on a story on object oriented technology, so our visit was timely. He was very impressed with OLE, and said he would highlight it as one of the few real object oriented technologies really available now. He was interested in how OLE fits into our future plans, which Darryl explained. He mentioned that while other OO technologies, such as Metaphor's, required a complete overhaul, OLE and our approach is evolutionary. Darryl also said that there are lots of opportunities for software developers to innovate and be successful using the new technologies.

Bill Bluestein, John McCarthy, Mary Modall, Janet Hyland, Stuart Woodring, Forrester Research

This was a lively session. There was great interest in how OLE would work with various network protocols and general network support. Mary asked if we have talked to DEC about OLE. She compared OLE to ODA--Darryl said this solves a different

WinMail 1.21 lynnra Wed Apr 29 16:47:44 1992 Page: 39

problem. Forrester asked why we didn't just support NewWave. They also said in the future scenario with in place editinq and the document as the metaphor, what is the "owning application." Darryl said it is the shell.

Will Zachmann

He was not interested in discussing 0LE. He spent the time lambasting Microsoft for its failure to provide a clear systems strategy and for our lack of understanding of the importance of our IBM relationship. He said:

MS and IBM have to agree on a strategy and communicate it.

OS/2 is perceptually dead. This perception was started back in September with the Infoworld story, but that was backed up by the fact that the two companies were not talking to one another last year. The Fall Comdex 89 announcement was obviously cobbled together.

Microsoft should get behind 0S/2 in a big way, even if it means backing PM for a while longer.

Zachmann said ha understands the strategy to have Win on DOS and OS/2, and he thinks people will understand this.

Windows is not all its reputation leads one to believe. Will reads Compuserve mail, and people are having major problems with Windows, even going so far as to pull it off their systems.

The question is not what is on the desktop today but in 3-5 years. Unix is it for multisystem situations today, in his view. Will thinks who wins the desktop is up for grabs but that companies need secure, multi-tasking multi-threaded applications.

OS/2 has to be successful even if IBM does one interface and MS does another.

He predicts the Unix forces will consolidate around OSF Motif. That Sun will be left as the lone wolf. All the ISVs are doing Motif apps.

Microsoft has to remember what we said in 1987 about 0S/2 and admit that we told the world something that is not true any longer.

Will is doing articles in PC Magazine about the above in WinMail 1.21 lynnra Wed Apr 29 16:47:44 1992 Page: 40

January and February.

Action: PR to set up meeting with Zachmann and Ballmer prior to MS Strategy seminar.

Jeff Tarter, SoftLetter

Jeff is incredibly anti-technology. He is completely skeptical about OLE. He is convinced that DOS is still it for the world. He calls DOS the ultimate open system. He thinks most people are worried about the problems of today, such as moving plain text documents onto email and so forth. He thinks the real problems are things like different imaging models, supporting a "hodgepodge" of hardware platforms, applicatioms, islands of users. His view is that Bill's IAYF speech is all hypothetical and not real world. It is not realistic.

Action: We just need to keep meeting Jeff until one day he either "gets it," or he becomes so tied to "old world" technoloqy that he is obsolete.

John Wilke, Wall Street Journal

This was a very brief meeting with John. He asked Darryl questions about his view of the NCR/ATT merqer. He liked the demo and asked about Excel and if OLE would be supported in the next version. Darryl stressed that it is easy to support and will be in MS apps in 1991.

Action: PR to follow up with backqround material and recontact in context of Excel 3.0 announcement.

Peter Lewis, NYT

Peter was delightful. He thinks OLE is "slick," and he said it would have benefit for his reader (the executive that uses PC technoloqy). As mentioned above, he was sort of appalled at the anti-MS sentiment expressed at Comdex. We need to keep him informed of our strategy to help corporations and ISVs. For a guy that professed to be "not a propeller head" he is incredibly excited about technology. He is interested in artificial reality and what is going on there.

Action: Send Peter additional information on OLE and notify him of apps vendors that are supporting it.

>From darrylr Wed Dec 26 17:48:06 1990
To: cameronm kathrynh tonyw viktorq w-clairl
Cc: alistair russw
WinMail 1.21 lynnra Wed Apr 29 16:47:44 1992 Page: 41

Subject: Re: PC Week article 12/17, pp 13
Date: Wed Apr 29 16:52:26 PDT 1992

Date: Wed Dec 26 17:06:56 PDT 1990

As a further point on net support, my understanding is that in new wave you can't do scenarios where users link to a file on a server where that file is owned by some other user. For example, a sales spreadsheet that multiple people link to and which is periodically updated by someone in the marketing department. You can do such scenarios with ole but not with new wave.

>From w-maria Thu Jan 3 10:50:31 1991
To: russw
Cc: cameronm kathry~h viktorg w-clairl
Subject: xl 3
Date: Wed Apr 29 16:52:33 PDT 1992

Date: Thu Jan 3 10:45:17 1991

as you know this is being announced next week (Wed.) It includes OLE and there may be a few sensitivities about this. We are being consistent about how this was developed (initiated in apps division, input to by other vendors) -- we are also sayinq that other OLE-compliant applications will be able to link and embed with Excel 3 and vice versa (paraphrase).

This is FYI. Billg will highlight it in his talk at the announcement in Boston. Let me know if you have questions. Thanks, Marianne

>From hanifaw Mon Jan 14 03:08:47 1991
To: appspm ledist syspm
Cc: hanifaw
Subject: ADL report for OLE - 1/14
Date: Wed Apr 29 16:52:33 PDT 1992

Date: Mon Jan 14 03:04:34 PDT 1991

PROJECT: Object Linking & Embedding (Compound Document) DLLs
CONTACT: HanifaW
Current Last Change

[Ed: chart showing date of report, spec done by, spec update by, schedule by, previous milestones, bug fix release.]

WinMail 1.21 lynnra Wed Apr 29 16:47:44 1992 Page: 42

Next milestones:
release to win3.1 retail beta I 01/16/91
release to win3.1 SDK beta I 01/30/91
release to Win3.1 retail beta II 03/06/91
release to Win3.1 SDK beta II 03/27/91
OLE workshop 01/17/91

Changes:

Spec. update to include API additions for robustness (e.g. Link Management, Busy Handling, Initiate, DDE rewrite), UI, and consistency updates.

There are 5 upcoming major milestones (see above), the upcoming beta release due this Wed.

Summary:
On Jan 16, we will deliver an OLE release to Windows for win3.1 Retail beta I. We also maintain a set of DLLs, exes, spec, and release note (including bug summary) in \\medusa\apparo\slm\src\ecd\rel\0116.

Sample codes can be found in its correspondinq \ecd\rel_src.
Test plan and test apps can be found in \ecd\test.

Our deliverables include: client - ecd.lib & ecd.dll
server - srvr.lib & srvr.dll
applets- cardfile.exe, pbrush.exe
samples- shapes.exe, cldemo.exe, cltest.exe
spec - cd.doc
release note - readme.txt

OLE implementation in WinWrite is to be scheduled as soon as a contractor is hired (by Jan 18). Planning in progress.

OLE DLLs will be compatible on all Win3.x. Initial port to OS/2 using WLO is successful (not completed yet). Mac OLE is TBD.

OLE bug database has been combined into Winbug database. Please contact HanifaW for any bugs found, or send email to winbug.

We currently have 4 alpha test sites and will have 5-6 beta sites focusing on OLE testing. Feedback will be solicitated actively, and arrangements will be made to collect these ISV's beta software for in-house integration testing.

WinMail 1.21 lynnra Wed Apr 29 16:47:44 1992 Page: 43

There will be OLE workshop on Thurs, Jan 17 at Cascade room. The first session will cover OLE architecture & specification, and the remainder will cover the implementation details, demo, and Q&A. It'll be beneficial for MS program managers, developers, testers, and user eds to attend this workshop, especially when you are planning to implement OLE in the near future.

From experiences from Cirrus & WLO teams, implementinq OLE onto their products took about 10 days to read/understand OLE specifications and about 2 days to code & test (embedding client).

The following is a list of Microsoft products with regard to OLE, For more detail information, please contact HanifaW or the listed contact person.

MS products currently supporting OLE -- L=Linking, E=Embedding

Cirrus - BillB(dav),AdamB(pm) - client:L/E, server:L
EmbedDraw - LauraTi(pm) - server:E
Excel - EdF(dev) - client/server:L/E (DDE)
WinGraph 1.x - RebeccaS(pm) - server:E (DDE)
" 2.0 - " - client:L, server:E
WLO 1.0 - DauidWo(dev) - client/server:L/E

MS products planning to support OLE

Audio Board - TonyGa(pm),BenM(dev) - server
Bullet (win Enail) - JeffW (pm) - client:E
Conversions - KennW(pm) - non-apps
Font Effect - KarenFr(pm) - server:L/E
LAN Man 3.0 - RobP(pm) - OLE interface
Macword 5.0 - MariaSt(pm|,DavidLu(dev) - client/server:L/E
Multimedia Windows - chrisDo (gpm) - server?
Probe (Q+E) - Mikep(pm|,LowellT(pm) - client/server:L/E
Project 2.0 - LoisO(pm) - client/server:L/E
Voodoo - KarenFr(pm) - client:L/E
Win Scheduler (Bandit) - BobM(dev) - TBD
WinWord 2.0 - LarryTs(pm) - client/server:L/E
WinWorks 1.0 (WP) - TimWo(pm) - client:L/E

MS Products with no plan to support OLE

Barney - AaronG(pm)
GUI CBT Tools - IlgaJ(pm)
Help - HeikkiK(pm)
SlapShot - GaryE(pm)
WinMail 1.21 lynnra Wed Apr 29 16:47:44 1992 page: 44

Thunder - AdamR

From hanifaw Sat Feb 2 22:45:36 1991
To: appspm ledist syspm
Subject: ADL status for OLE - 2/4
Date: Wed Apr 29 16:52:55 PDT 1992

Date: Sat Feb 02 22:41:54 PDT 1991

PROJECT: Object Linking & Embedding
CONTACT: Hanifa winarko (HanifaW)

[Ed: More milestones dates, and whether met.] WinMail 1.21 lynnra Wed Apr 29 16:47:44 1991 Page 45

[Ed: more on milestones. Latest vs. of OLE renamed to olespec.doc. Schedule for next 2 OLE releases, bug fixes.]

WinMail 1.21 lynnla Wed Apr 29 16:47:44 1992 Page: 46

OLE workshop was held on Thurs, Jan 17. YoU may obtain a copy of the distributed spec. and slides from the libraury. The library also holds 3 copies of the workshop videotapes.

OLE apps (customers)

Some status concerning OLE customers:
--Cirrus: A few changes requested from Cirrus (eg. metafile in a metafile, keeping the server running in the background).
We will attempt to fix these is rel 1.0010 on 2/18.
--NoteBook (H-Win): Requests for insitu editing, layout negotiation, etc. Planned for OLE 1.1. Spec. in progress.
--WLO is porting OLE DLLs to OS/2. Require minor code changes, will be done in rel 1.0010 On 2/18.
--Conversion, WinWord, WinWorks, MultiMedia are actively inquiring OLE.
.... Lotus Notes2.0: already implemented OLE. We are trying to run some test against it in-house.
--Lotus Word Processor: planning to implement OLE this month.
--Corel Draw, Micrografix, Lotus Corp, and Aldus are also implementing OLE. The plan is to have them as our beta sites.
List of MS OLE apps
The following is a list of Microsoft products with regard to OLE. For more detail information, please contact HanifaW or the listed contact person.
MS Products currently supporting OLE
[Ed: List.]

WinMail 1.21 lynnla Wed Apr 29 16:47:44 1992 Page: 47

[Ed: List continues.]

From kevine Tue Feb 12 19:27:23 1991
To: cameronm viktorg
Subject: OLE video
Date: Wed Apr 29 16:53:18 PDT 1992

Date: Tue Feb 12 19:23:13 PDT 1991

The OLE video tape has been edited for distribution. I would like to begin duplication and production of the OLE Video Workshop. I've checked with legal and it's unlikely they need to review the tapes (thank god:) since the event was public.

If either of you want me to wait on the next step of production until you have reviewed the tapes then let me know. I feel confident that could proceed but would understand if you want a final review. Let me know either way.

Kevin

As it stands now, I am planning to produce 100 units initially. COGs will be around $50 per unit. (5 tapes per unit). Our pricing policy is to be determined, but I am in favor of a price range in the $195-$295 area.

From roberth Tue Feb 19 14:57:29 1991
To: hanifaw
cc: bobt cameronm tonyw
Subject: OLE Betas
Date: Wed Apr 29 16:53:18 PDT 1992

Date: Tue Feb 19 14:53:03 1991

Hanifa,

Here are some names of people from SD'91 that expressed an interest in WinMail 1.21 lynnla Wed Apr 29 16:47:44 1992 Page: 48

being included on any beta testers list that you are compiling:
Arden Rodgers
IBM
[address]

Alexander Ward
Xerox PARC
[address, phone]

Louis J. Cutrona
Xian Corporation
[address, phone]

Timothy Andrews
Ontologic
[address, phone]

David E. Gardner
CPI
[address, phone]

Al Chang Lu
SPSS Inc.
[address, phone]

Also, the OLE Specification Documentation that we printed up didn't get down there until the last day, so we will hopefully have the remainder back here on campus (about 300+ copies} soon. If you want, I'll drop a box off with you. They are nicely printed up with cog binding, and a plastic cover.

-Robert

From viktorg Tue Feb 19 17:35:44 1991
To: dboone dwightm hanifaw isvmkt WinMail 1.21 lynnla Wed Apr 29 16:47:44 1992 Page: 49

Subject: OLE enquiries from developers et. al.
Date: Wed Apr 29 16:53:25 PDT 1992

Date: Tue Feb 19 17:33:27 1991

The good news is that there's lots and lots of interest from people in qetting more information, and material on OLE.

The bad news is that we're not in any way set up to manually accomodate each and every request coming from people, and mail out disks.

It is important to remember that OLE is not a product, but rather a technology that will be part of Windows 3.1. It is not technically dependent on Win 3.1, but the OLE libraries, specs and documentation will be in the Win 3.1 SDK product. There is no spearate product an ISV can order to get OLE. As a courtesy, we've made available the conference materials left over from our Dec 10 workshop, but this stock is coming to an end, and we will not produce additional materials.

Here is what people who wish to get the OLE spec and s/w should do:

We have made both available for downloading through MS OnLine, as well as CompuServe. Anybody wishing to get OLE s/w and specs, should get it through these services. We will not mail out disks, or printed documentation separately, except in special circumstances ("I do not use these services" is not a special circumstance - the answer is that they just have to wait for the 3.1 SDK.)

If the person interested is a press person, they should talk to PR. If the person is internal, they can find the materials on \\medusa\public.

Technical support for OLE is avilable thorugh OnLine, and OnLine only. I am not available to answer technical questions to ISVs or other developers.

Pls forward this mail as necessary. Let me know if there are questions.

thx, vikto

From hanifaw Wed Feb 20 12:40:55 1991
To: viktorg
Cc: bobsail brucep dhoone dwightm hanifaw isvmkt richardb tonyw
Subject: FW: OLE latest spec & software
Date: Wed Apr 29 16:53:32 PDT 1992

Date: Wed Feb 20 12:32:23 PDT 1991

>From hanifaw Tue Feb 19 15:13:O6 1991
To: viktorg WinMail 1.21 lynnla Wed Apr 29 16:47:44 1992 Page: 50

Subject: OLE latest spec & software

The last OLE spec. is [Ed: internal urls.]

From hanifaw Wed Feb 20 13:03:59 1991
To: viktorg
Cc: bobsail brucep dboone dwightm isvmkt richardb tonyw
Subject: RE: OLE enquiries from developers et. al.
Date: Wed Apr 29 16:53:39 PDT 1992

Date: Wed Feb 20 12:56:17 PDT 1991

>From viktorg Wed Feb 20 09:56:21 1991
To: bobsail brucep hanifaw richardb tonyw
Cc: dboone dwightm isvmkt
Subject: RE: OLE enquiries from developers et. al.
Date: Wed Feb 20 09:50:50 1991

As for the internal requests, pls keep in mind that all subs are on corporate net. when people ask you, tell them where to find it. Distribution of tangible material (i.e. that cannot reside on the net,) goes from us to MS Europe, who will then distribute on.

Allright. From my previous smalls, you may see requests for videotapes of the workshop.
As far as distribution to buddy ISVs, we will do this here. Hanifa, you have to tell me where the latest is - i think that \\medusa\public is pretty much out of date.
\\medusa\public is the OLE release server.
Refer to \latest for the latest release
(doc, binaries, samples).
Iris and Lotus needed some updates.
One last thing - if people ask about being part of the beta program, they need to be part of the Windows 3.1 SDK beta. There is no beta program for WinMail 1.21 lynnla Wed Apr 29 16:47:44 1992 Page: 51

OLE itself.
We in Apps Strategy will coordinate a special beta program for OLE in addition to the Win3.1SDK beta program. MarkWa and I both want OLE beta testing to be much more active and focused than the Win3.1SDK beta program provides. And we started with the list that you and Mark compiled.

Thanks.

Hanifa

thx, vikto

From viktorg Thu Feb 21 18o06:29 1991
To: bobsa hanifaw markwa
Cc: cameronm davidcol gregw tonyw
Subject: OLE delivery vehicle
Date: Wed Apr 29 16:53:47 PDT 1992

Date: Thu Feb 21 18:04:11 1991

The slip of Windows 3.1 has thrown a monkey wrench into our ability to deliver the final OLE s/w in a timely fashion. If we waited until the final delivery of win 3.1, it'd be until next year when we see the first OLE apps shipping using the libraries. That's too far out. I think we should get together and assess what alternatives we can pursue in delivering, OLE to ISVs (that is, the final stuff, not just the preliminary stuff we've put on OnLine and Compuserve.) I have some ideas.

We also need to re-assess schedules for final OLE libraries - Hanifa's latest reports indicate that March 31 is not a delivery date any longer. Here again, we will need to find out what the new date is.

Perhaps you guys have already thouqht about this, and have a revised plan, but if not, let's meet next week to make one up.

How's Monday or Tuesday for you? Who else should be there?

thx, vikto

From sherryr Thu Feb 21 18:18:36 1991
To: bobt cameronm viktorg
Subject: Re: Apps supporting OLE
Date: Wed Apr 29 16:53:47 PDT 1992

Date: Thu Feb 21 18:06:29 1991 WinMail 1.21 lynnla Wed Apr 29 16:47:44 1992 Page: 52

My last understanding was that PageMaker would not support OLE until their next release expected late 1991. They are currently evaluating whether to risk delay in shipping Freehand/Persuasion to add these features.

>From cameronm Thu Feb 21 11:16:06 1991
To: bobt sherryr viktorg
Subject: Apps supporting OLE
Date: Thu Feb 21 11:13:57 PDT 1991

Do Borland's new Windows product support OLE?
- ObjectVision?
- Turbo C++?

Does Aldus PageMaker 4.0 for Windows support OLE?

All of these product claim to support "DDE" in their releases, but only Notes and Excel actually said OLE in their releases. We might have to do more to estab1ish OLE as a specific term people need to use. Please let me know, I'm interested.

Thanks,

Cam

From davidcol Fri Feb 22 09:18:51 1991
To: bobsa hanifaw mark~wa viktorg
Cc: cameronm gregw tonyw
Subject: OLE delivery vehicle
Date: Wed Apr 29 16:53:54 PDT 1992

Date: Fri Feb 22 09:17:29 1991

Note that shipping the OLE libraries outside of Win 3.1 means a lot more work for the apps group. Testing, support, shipping, etc. The Windows team is focused on Win 3.1 and can't participate in getting this stuff out on an earlier time line.

>From hanifaw Mon Feb 25 19:15:o0 1991
To: appspm ledist syspm
Subject: ADL status for OLE - 2/25
Date: Wed Apr 29 16:$3:54 PDT 1992 WinMail 1.21 lynnla Wed Apr 29 16:47:44 1992 Page: 53

Date: Mon Feb 25 19:08:30 PDT 1991

PROJECT: Object Linking & Embedding (OLE)
CONTACT: Hanifa Winarko (HanifaW)

[Ed: More milestones lists.] WinMail 1.21 lynnla Wed Apr 29 16:47:44 1992 Page: 54

Future releases
The OLE1.0 releases have been extended due to the late closure in the token design/spec'ing- In the meantime, we had continued to do bug fixes.

1. Re1 1.0.1100 on 3/11 includes:
--All APIs needed for the token function
--name change from Ecd_ to Ole_
--Network API
--bug fixes
--client-server samples for the SDK
--second pass of WinWrite

Changes from previous plan:
1. release date changed from 3/4 to 3/11.
2. name change (includes DLL and all source codes, spec, all documents)
3. for token: only APIs are included, not implementation of viewer/handler. (due to the delay in the closure of its design/spec'ing).

There will be no API changes in the OLE lib after this release.

2. Rel 1.0.1200 on 4/8 includes
--Token functionality in OLE lib
--Object viewer
--Handler enhancement

This release is to include the token function. We do not anticipate any additional features after this release.

3. Rel 1.0.1300 on 4/29 includes
--Extensive testing & bug fixing

This will be the final beta release. This release is ready for both OLE and Windows beta programs.

OLE beta program
On top of the Win3.1 beta programs, we organize a separate beta program for selected numbers of ISVs that actively and extensively implemented OLE. We will work closely with them and actively obtaining feedbacks.

Concurrently, this OLE release will also be ready for win3.1 beta program which is managed by the Windows team.

PSS support
Email to 'olepss' for any design/implementation questions/issues

Winwrite
First pass of OLE implementicn in Winwrite has completed.

WinMail 1.21 lynnla Wed Apr 29 16:47:44 1992 Page: 55

[Ed: More to fill in. The above represents about half, almost, of the exhibit.]
0470 From richab Fri Nov 30 13:31:41 1990
To: bradsi davidcol philba
Subject: DRI and VxD
Date: Fri Nov 30 13:31:40 1990

I think what dang suggests is reasonable. I'm of the opinion that people like dri get this stuff anyway and we need to give equal access to equivalent third parties to this sort of info.

However... I know that I may be in the minority on this.

What think gang?
* * *
>From dang Wed Nov 28 10:38:36 1990
To: richab
Subject:FW: calls for LoadHi VxD support
Date: Wed Nov 28 11:35:12 PDT 1990

Hi Rich,

What do we do with this? I think its reasonable to give them the latest version of this VxD and tell them it is unsupported.

Thanks,
Dan

>From amitc Tue Nov 27 12:47:41 1990
To: danq
Cc: ralphl timm
Subject: FW: calls for LoadHi VxD support

Date: Tue Nov 27 12:44:07 1990

I have been told that I will not need to answer support questions on the VxD anymore. Some people still have my number and they call me. I told them that we now have a different group handling support issues and that Tim is the person to talk to. However, I think it has been decided taht Digital Research will not be supported. Rich Abel should have the list of vendors whom we do not want to support. Quite some time back DRI was sent a very early version of the VxD. I don't know what to tell them. I guess, we must somehow politely let them know that we don't want to support them. I don't feel very comfortable in this situation and would not want to deal with Digital myself.

Thanks,
Amit.

From danq Tue Nov 27 11:20:16 1990
To: amitc
Subject: FW: calls for LoadHi VxD support
Date: Tue Nov 27 12:16:31 1990

Hi Amit,

You forwarded a phone call about the loadhi VxD to Tim from Digital Research. This mail seems to indicate that you do not wish them to have access to this information.

How do you wish us to proceed?

Thanks,
Dan

>From: timm Tue Nov 27 10:58:12 1990
To: danq
Subject: calls for LoadHi VxD support

Date: Tue Nov 27 10:57 10:30:21 1990

A couple of guys had called me for support of this VxD. One of them I think was Digital Research. Please make sure that you don't discuss the VxD with them and others who are not supposed to know about this. Rich Abel is the person to decide on who gets to know and who don't.

Thanks,
Amit

0475 From richab Sat Dec 1 05:24:34 1990
To: dang
Subject: FW: calls for LoadHi VxD support
Date: Sat Dec 1 05:24:34 1990

my management doesn't want to give dri anything. I am going to check with legal to be sure we don't get ourselves into hot water by doin this. Stand by until then.

rich

0477 Distribution Marketing Report Executive Summary October 1990.
0478 Go Corporation Confidential; "Jerry Kaplan notes for meeting with Jim Cannavino" Mar. 5, 1994. "Microsoft is stalling our progress, hoping to starve us out."
0480 Email from bradsi to steveb, Dec 1990, Subject: DRI and VxD. bradsi reports that DRI got VxD before bradsi could stop it. "I later learned of this and had them removed from the list. There is no level playing field for operating system competitors, in my mind."
0481 From a-chrisr Tue Dec 4 22:28:53 1990
To: jimla
Cc: bradsi ericst et al
Subject: Zenith Z-248
Date: Tue Dec 04 22:28:11 pdt 1990

I've tested the Zenith Z-248 (a 286/12 MDz) in 3/2036 under Dos 5.00.408 with no problems. I ran both Paradox 3.5 and Lotus 123 3.0a and both performed flawlessly. Also, dos appears to load successfully into HMA with Himem.sys loaded and dos=high.

Chris ________________
From davidds Wed Oct 31 23:10:46 1990
To: karist
Cc: davidds
Subject: MDI Problems
Date: Wed Oct 31 23:10:35 1990

Our current MDI scheme was designed specifically for the shell. Now that Win3 is out, ISVs have been reporting lots of problems with the current API and forcing us to provide workarounds. Many of their problems simply cannot be worked around. Even our applications group, with access to the source code, has been unable to work around many MDI problems. People will be attempting all sorts of insane hacks which will be hard for us to be compatible with in the future. If MDI is left alone for 3.1, we will simply be encouraging these hacks. We need to spend some time now to give people a satisfactory solution otherwise we will simply end up spending even more time later trying to work around everyone's random bugs.

0482 From keithla Wed Dec 5 09:56:15 1990
To: bradsi davidcol et al
Cc: chrisg davidds
Subject: RE: BallPoint control panel
Date: Wed Dec 05 f0f9f:52:26 PDT 1990

Bob has misquoted me. I informed him that the undocumented call in 3.0, ControlPanelInfo(), would be removed and replaced in 3.1 by SystemParametersInfo(), which *will* be documented. DavidDS and ChrisG can explain why we shouldn't just document ControlPanelInfo() instead of replacing it.

The Windows group has been proactive on these issues. We went to them with the Control Panel hook. We discovered that their tracking would break in 3.1. And it's likely that we didn't actually tell them about the undoc call, but that they discovered it in source code....

0483 Email from darrylr to gregw and tonyw, Dec. 7, 1990, Subject: ole design issues. One concern was "ole api/library robustness", meaning in his context that its simplicity of choices might be unacceptable for mainstream apps.
0484 Email from johnj Dec. 1990 congratulating "John 'DRI Killer' McLauchlan" for getting a company that had used DR DOS to sign up for MS DOS 5 and Windows instead.
0487 Email thread about DRI with bradsi, davidcol, philba, richab, sharonh in the conversation, Dec. 1990. Subject: Re: mem mgr vxd. There was a request from DRI for VxD on a disk. It had been sent out to "20 or so companies" and DRI got one, and while the group is puzzling what to do, richab says legal says better to let them keep with but get an agreement. bradsi: "We should tell them that they need to sign the license before we can send it to them. And we should tighten the license up. I want to make sure that in the future DRI gets nothing from us. No windows betas, no dos betas, no help. We may be stuck giving them the new VxD -- if they sign the license -- because we gave it to them already. I do not want to be in this situation again. We all agree on that, I'm sure."
0488 Word/Excel Upgrade - Upgrade Promotion for Win Excel 3.0 and Word for Windows. To: Bill Gates, Steve Ballmer, et al. "The next six month will be critical for Excel and Word. WordPerfect and Lotus will be poised to announce their Windows versions. Now is the time to get influential end-users to try our Windows applications. An aggressive upgrade offer is a way to do that." [22 pages, 1991]
0490 Email from richab to dang, Dec. 1, 1990. Subject FW: calls for LoadMi VxD support.

my management doesn't want to give dri anything. I am going to check with legal to be sure we don't get ourselves into hot water by doing this. Stand by until then.

rich

0491 To: Joachim Kempin, Distribution
From: Jeff Lum
Date: December 15, 1990
Re: November European OEM Sales Status Report

[31 pages, and the index lists the following: Revenue, New Business Signed, New Business Pending, News, Issues, People, DOS 5.0 Watch, Packaged DOS, Laptop Watch, RISC Watch, Per Copy Sales Activities, Product Marketing Feedback, Miscellaneous, Account Summaries, Attachment A (Revenue Performance Summary by Subsidiary) and Attachment B (DOS 5.0 Watch Table). The document is stamped "Microsoft Secret". On page 11, in the subheading Philips, an underlined section reads, "The Philips networking group has committed that they will drop their relationship with Novell and commit totally to LAN Manager if MS can work out a strategy through our European Subs for Philips to distribute FG LANMAN directly to their customers. On page 16, December's OEM European Sales Status Report begins. Index is Revenue, New Business Signed, News, People, Issues, DOS 5.0 Watch, Packaged DOS, Embedded DOS, Laptop Watch, RISC Watch, Per Copy Sales Activities, Product Marketing Feedback, Account Summaries, Attachment A - Revenue Performance Statistics, Attachment B - DOS 5.0 Watch, Attachment C - OS/2 1.21 Shipment Status, Attachment D - European OEM Sales Organization. On page 19, there is a report of a police raid on a "suspected pirate called TETRATE "leaving" MS-DOS 3.3 on hard disks and then selling them without a license. Raided some firemen who got the machines also, and the action was taken "in order to frighten pirates." This was under the header MS SARL.]

0499 FY91 Windows 3.0 Unit Sales in Europe by Month

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