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Comes Antitrust: Microsoft Discusses How to Screw Customers, Sony with DRM

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    From: Sacha Droz
    Sent: Thursday, July 12, 2001 8:19 AM
    To:Dennis Flanagan
    CC: Harish Naidu; Peter Biddle; Stephen Heil; Marcus Peinado; Scott
Fierstein, Brad Brunell; Keith Laepple
    Subject: RE: eHome-SONY points for BillG meeting with Mr Idei

    DRM and SVP are definitely our TOP Priority if we want to be successful in
any Digital Media scenario where copyrighted content is being used, regardless
of its format and usage. eHome is the most interesting customer case as they
need DRM, CA (CA to DRM Trranscription - to get access to current premium
content) and “Local” (Same Box) and “Distributed” Secure Video Path (I see DMR
as a part of this). DTCP, 5C etc are technologies we may and/or have to
consider from a copy protection standpoint. I do believe that DTCP will play a
major role, may be sooner than expected because of the STB, but I also agree
on the fact that we may not necessarily have to sign a license. If you ask me,
I can see a more general adoption of 1394 in the next generation PC. I also
believe in the industry to come out with a real alternative, free of license.

    We will NOT achieve a broad acceptance of our solution if one of these 3
coponents (DRM, CA, SVP) is missing or broken. Content Providers will not
release their content, Conditional Access Vendors will not be interested in
enabling any of our platforms to really collaborate with their solution and
finally, Network Operators will not agree to spend Millions of Dollars to
Extend/Upgrade their broadcasting infrastructure. Also, understanding the
business models of each of these players is very important. CA Vendors have to
fully understand and trust out implentation and believe in the fact we are not
competitn with them but enabling them to sell more lecenses and more smart
cards to the NetOps community. On the other hand, NetOps will ask for to get
the same level on stbility and redundancy support accross multiple sites etc.
And of course Content Provider must tell the other guys they are OK with our
solution and start deliver content.

    We have a great challenge here and we have to clearly identify all of the
scenarios, finalize the overall archetecture and more precisely define each
component’s ownership between the different Groups/Divisions involved. We also
urgently need to align our BizDev and Techinical speech across these teams. I
understand that we all have different requirements but, I do believe in having
ONE and only ONE implentation working for everybody.

    Sacha R.

    — Original Message —
    From: Dennis Flanagan
    Sent: Wednesday, July 11, 2001 7:34 AM
    To: Brad Brunell; Keith Laepple
    CC: Harish Naidu; Peter Biddle; Stephen Heil; Marcus Peinado; Scott
Gierstein; Sacha Droz
    Subject: RE: eHome - SONY points for BillG meeting with Mr Idei

    — Original Message —
    From: Brad Brunell
    Sent: Wednesday, July 11, 2001 12:08 AM
    To: Keither Laepple
    CC: Harish Naidu; Dennis Flanagan; Peter Biddle; Stephen Heil; Marcus
Peinado; Scott Fierstein; Sacha Droz (sachad at microsoft.com)
    Subject: RE: eHome - SONY points for BillG meeting with Mr Idei

    I do not think that DRM is direct correlation to DTCP. We need to
accelerate our efforts on Secure Video Path. We stalemate of beat DTCP over
time via Secure Audio Path, Secure Video Path and DRM combined. The challenge
with the Studios is that they prefer to exercise monolithic control mechanism
an partner with the CE industry who will do monolithic efforts and take the
contractual restraints (threat of lawsuit) that the Studios like. MS is too
much a gorilla in the Studios mind and they do not want to empower us any
further. We will have to execute to win.
    [Dennis Flanagan] We only stalemat of beat DTCP if we get interesting
content delivered in our format to PCs. We only get that to happen if our DRM
extends to secure the video rendering path. We have to interoperate with DTCP
if that is the way all televisions connect in the future and if our platforms
must connect digitally to televisions. I think there is some time before
digital connections to televisions and DTCP is a market imperative. According
to WebTV and others, for STBs that time is now because TV manufacturers are
compelling this. Even if it becomes a market imperative, this does not
necessarily mean that Microsoft has to provide the DTCP implementations or
sign the license. Further, a model we appear to like better than 1394
connection to the monitor/TV. I think SVP with DVI/HDCP support is a much
higher priority for us right now. I also think we should continue to push the
Digital Media Receiver (DMR) concept in which the PC is the server, the DMR is
co-located with the TV, the DMR pulls content off the PC server via an IP
connection, and the DMR renders the content on the TV. In this case the DMR
can support 1394 and 5c if it likes or analog if it doesn’t.

    I think eHome will have to consider supporting DTCP in order to get access
to the content (probably by passing burden to OEMs like we are doing with
MPEG2), probably side by side with Secure Video Path. The problem is that if
DTCP gets to broad of an installed base on PCs, then we may have the
technology jam occur and have another per-unit royalty dilemma (similar to
    [Dennis Flanagan] It’s unclear that DTCP will gain broad platform adoption
on PCs. It is clear that link chp companies want to build DTCP into 1394
links, but it’s also clear that companies who build systems that include such
chips will have to take the appropriate licenses and comply with the
appropriate robustness rules. It is unlikely that the PC Industry is going to
accept those liabilities. Even moreso, without SVP it is unlikely that content
owners would grant such licenses to PCs. Further, if there is going to be mass
integration of 1394 in PCs that support will likely end up in
system-integrated controllers and not have DTCP support.

    I have a 1394 call with Scott Fierstein to give input to this meeting
scheduled on Thursday.

    I’ve added a resonoable representation of the 5c thinking “brain-trust” on
athe cc: line. I will ask TaneCeded to set up a strategy/consideration
meeting. Please feel free to forward that invite to other stakeholders.

    Brad Brunell
    Director - Business Development
    Digital Rights Management and Core A/V Technologies
    Microsoft Corporation
    (425) 703-3750

    — Original Message —
    From: Keith Laepple
    Sent: Tuesday, July 10, 2001 2:06 PM
    To: Brad Brunell
    Subject: RE: eHome - SONY points for BillG meeting with Mr Idei

    Brad, this is interesting stuff. I’ve been trying to figure out what eHome
needs to do re: 5C, as we intend to support 1394 devices, incl. protected
video content. Does DMD thing that eHOme can/should rely on DRM as an
alternative to 5C on 1394? A concern I have is that CE mfgs won’t adopt DRM as
a 5C alternative if it requires Windows in one of the 1394 devices, and
requires an Internet connection. Do we want to have BillG suggest to Idei that
we will promote DRM on 1394 if we cannot resolve technical and business
problems we have identified with 5C?

    Note, there is a 7/23 JimAll review on 1394 strategy where this is likely
to be discussed.

    — Original Message —
    From: Brad Brunell
    Sent: Tuesday, July 10, 2001 1:44 PM
    To: Will Poole
    Cc: Hank Vigil; Jeff Camp; Kurt Buecheler; John Manferdelli; Fran Dorgerty;
Keithe Laepple; Hank Vigil; Jeremy Hinman; Dick Brass; Kevin Eagan
    Subject: RE: eHome - SONY points for BillG meeting with Mr Idei

    Sony is a DRM (security) competitor
    - All Sony devices supporting Memory Stick with OpenMG decrypt capability,
they view security and physical media as a stratigic control point
    o Trying to license to other CE mfg with little success
    o Sony still selling Memory Stick media at a loss
    - Ships their own software Jukebox to manage content (including transcript
from v1.3 Media DRM into OpenMG)
    - With 5C (Hitachi, Intel, MEI, Sony and Toshiba) Digital Transmission
Content Protection (DTCP) specification on the transfer (1394) and display of
video, attempting to legislate and mandate (through media company distribution
contacts) the DTCP conde on top of Windows and into CE devices (DVD, digital
TV) for a per unit yoalty (similar to MPEG2 strategy); several studios are on
board to support (AOLTW, Paramount)

    Microsoft goals:
    - 2 way transcription
    o So far Sony is insisting on 1 way transcription from Microsoft DRM into
    o Interoperabilty of consumers is necessary for digital media to work
    - We want them into ContentGuard with the promise of 2 say transcription
    - Memory Stick as “standard” media vs. proprietary implementation
    o Sony continues with their own proprietary interfaces for Memory stick; we
would like the media exposed as standard storage to Windows OSes
    - If Sony exposes as standard storage, then their security bundling is
weakened and they would likel
    - Optical media wins on cost vrs flash media
    o Sony has embraced 3″ CD fromat (156MB) in some of their digital
camcorders and cameras; what is their strategy with optical media, is there a
new small form factor, multi-GB of storage optical media (that exposes itslef
as standard storage) that we can collaborate on?

    Brad Brunell
    Director - Business Development
    Digital Rights Management and Core A/V Technologies
    Microsoft Corporation
    (425) 703-3750

    — Original Message —
    From: Kevin Egan
    Sent: Tuesday, July 10, 2001 1:27 PM
    To: Will Poole
    Cc: Hank Vigil; Jeff Camp; Kurt Buecheler; John Manfrerdelli; Fran
Dogherty; Keither Laepple; Hank Vigil; Brad Brunell; Jeremy Hinman; Dick Brass
    Subject: eHome - SONY points for BillG meeting with Mr Idei

    Will Here are the top eHome discussion points for BillG’s upcoming meeting
with Mr. Idei.

    - eHome wants to close Sony’s Vaio Desktop Division as a teir one OEM
partner for Windows XP Home Server. We’re early stage discussions of Home
Server PC with Sony.
    o On June 19th Mike Toutonghi, Kevin Eagan and Fran Dougherty, met at Sony
HQ in Tokyo with Yoshihisa (Bob) Ishida, President of VAIO Desktop Computer
Company. This was the first Sony-eHome meeting. Sony seemed very receptive to
eHome’s Home Sever direction. We agreed to do technical and business follow-up
meeting in the next 30 days. Sony Desktop Vaio Division is one of eHome’s top
prospective OEM partners. Sony just released their Digital Studio PC line in
the US with their own “Giga Pocket” PC-based PVR features. eHomes home server
version of Windows XP will provide MS and Sony a great opportunity to create
innovative Home Server PC products for next Christmas with a much improved
customer experience over their first generation Digital PC line.
    o Issues Sony has several competitn media technologies and software apps
bundled with their Digital PC line. Notably their own Media Player software
with their own DRM technology. We also have an unconfirmed suspicion that the
Vaio Desktop Division has a Linux-based home server project underway.
    - eHome is also in separate discussions with Sony’s Display Networking
Company regarding home server product and networked display opportunities.
    o On the evening of June 19th Mike Toutonghi, Kevin Eagan and Fran
Dougherty had dinner meeting with Makoto (Mark) Kogure, President Projector &
Display Systems Company.
    o DNC is interested in MIRA as a tool to sell more displays. They can see a
home server PC as a mdia hub for their LCD and plasma display products.
    o Most concerned fearture of Home Server is Windows Terminal Services and
    o Their focus up to time has been office environment. They plan to start
penetration to home enviornment in 2003.
    o Interest in XML Control of devices, DRM, Identifying a list of things to
work on together, persue a LOI and get alignment in technology areas.

    — Original Message —
    From: Will Poole
    Sent: Monday, July 09, 2001 11:25 AM
    To: Brad Brunell; Jeremy Hinman; Dick Brass; Kevin Eagan
    Cc: Hank Vigil; Jeff Camp; Kurt Buecheler; John Manferdello
    Subject: FW: SONY
    Importance: High

    Brad and Jeremy, could you each pls give me 3-5 bullets to brief billg on
point #1 below.

    Kevin, can you provide 3-5 bullets on discussion w/Sony re eHOme PC server
as it relates to #2.

    Dick, we should brief Bill ong the CG discussions separately - assume you
can drive that?

    Send by EOD tomorrow please.

    —Original Message—
    From: Bill Gates
    Sent: Sunday, July 08, 2001 12:27 PM
    To: Shinichi Ata; Sam Furakawa; Richard Fade; Will Poole; Jim Allchin;
Michael Rawding; Pieter Knook; Ben Waldman; Jon DeVaan; Alan Yates; Alex Loeb
    Cc: Hank Vigil; Eric Rudder; Steve Ballmer; Robert (Robbie) Bach; Christine
Turner; Bob Muglia; Craig Mundie
    Subject: SONY

    I am meeting with Mr. Idei of SONY in Sun Valley on Sunday. There is no
particular agenda.

    Anything people want me to bring up with SONY let me know.

    Possible topics:

    1. Music/DRM/Media formats. I assume this topic will come up and that Will
will make sure I am fully briefed. I don’t know where we stand with SONY and
DRM. Do we want them in the Xerox deal? Is SONY treating us reasonably in this
area? Does SONY have a plan to make HDTV popular by getting 480p transmitted
on cable systems?
    2. PCs We want SONY to continue to make innovative PCs. They have done a
lot of design leadership. Are we working with them on XP the right way? Do we
wnet them do something different relative to the tablet? Richard should make
sure the right OEM person tells me anything I need to know. Jim should make
sure I know what the Windows groups thinks and what we are pushing. Alex
should remind me any tabliet thing I need to know. Is there a message relative
to 1394 or Upnp where we should work more with SONY?
    3. Pocket PC. Sony make Palm devices and is in a JV with Erisson. Ben/Juha
is there any message relative t this that I shoudl be giving to SONY? Do we
want SONY to do PocketPCs just in the phone space or more broadly?
    4. SONY and Cablevision. What is the latest on this Jon/Alan? Is there any
message I should taking ot SONY? SONY has always wanted their sttop box people
to work with us. Is there any UltimateTV message I should be taking to SONY?
    5. Platform stuff. Is there any plan/hope to get SONY excited about our URT
stuff versus Java byte codes?

    I am open to other topics people think would make sense.

    I doubt gaming will come up since we are primarily competitors there. I
doutb SONY as a customer will come up unless someone tells me it needs to.

Version: GnuPG v1.4.9 (GNU/Linux)


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