-----BEGIN PGP SIGNED MESSAGE-----
Hash: SHA1
- ---- Original Message ----
From: Paul Flessner
Sent: Saturday, November 09, 2002 9:02AM
To: Bill Veghte
Subject: RE: Goldman Sachs Linux Panel
I would go for the $50 pts of margin. You need to think more broadly. All you
say is true but my statement is true as well. It is just fact.
- ---- Original Message ----
From: Bill Veghte
Sent: Saturday, November 09, 2002 8:08AM
To: Paul Flessner; Bob Kelly
Cc: Brian Valentine; Jim Allchin; Rodrigo Costa; Kevin Johnson; Jim Allchin;
Rick Wong; Orlando Ayala; Craig Mundie; Bob Muglia; Gordon Mangione; Andrew
Lees
Subject: RE: Goldman Sachs Linux Panel
Sigh....Yes, I can disagree with your statement that Dell's behavior won't
change. If it won't change, then we should just throw in the towel and settle
for %50 market share at best. We will change Dell's behavior by thinking thru
their motivations and opportunities and being very creative.
Let's start by articulating Dell's perspective relative to the comments Russ
made... Linux is Unix on x86. Dell sees it as the cheapest way to convert
Unix LOB servers to being Dell customers. Dell sees no partnership with us on
databases and partnership with Oracle as a way of pushing further into the
enterprise. Oracle sees partnership with Dell and Linux as a great way at
going after us at the lower end of the database market. Dell sees Linux as
great negotiating leverage in their relationship with us.
All of these things are reality. Given these realities, lets add our
perspective to the picture. If I am Michael Dell, I have to believe that my
#1 competitor long term is IBM. Dell has to decide what their competitive
strategy is going to be against IBM. If they are going to compete with IBM
and it services driven organization, they are a) going to have to build a
strong relationship with our field and service partners, b) they are going to
have to bet on our engineering engine as their primary innovation machine.
That means a close partnership with us. They need to understand that with the
passage of time Linux and IBM become more and more equivalent.
Now, lets interject what I am asking into the picture.... We invest big, big $$
in Dell. We will continue to invest big, big $$ in Dell. I am asking that we
do this investment with our eyes wide open. I do not want to invest $$ in
Dell to fund their Red Hat efforts. I am asking that:
a) we be quite prescriptive in our investments with Dell relative to the
competitive threats we see with Linux
b) we constantly benchmark ourselves against the actions they do with RedHat
4/6/2005
Plaintiff's Exhibit
9280
Comes V Microsoft
MS-CC-RN 000000982974
HIGHLY CONFIDENTIAL
- --------------------------------------------------page
break--------------------------------------------------
This is an engineering statement, this is a marketing statement, this is a
field statement.
- ---- Original Message ----
From: Paul Flessner
Sent: Saturday, November 09, 2002 7:13AM
To: Bill Veghte; Bob Kelly
Cc: Brian Valentine; Jim Allchin; Rodrigo Costa; Kevin Johnson; Jim Allchin;
Rick Wong; Orlando Ayala; Craig Mundie; Bob Muglia; Gordon Mangione; Andrew
Lees
Subject: RE: Goldman Sachs Linux Panel
You can't disagree with my statement. It is fact. It is capitalism, like
gravity.
Now -- there is nothing to disagree with me on around what we should do. We
should whack them, we should make sure they understand our value, we should do
all of the things you and Brian suggest. I totally agree.
In the end, if I were them, I would do all I could to see Linux succeed because
it would put $50/pc(or whatever our OEM license costs) back into my pocket.
Sure Windows has greater value and lower TCO and all of that. I would keep my
relationship with MS and customers and do the dance. But every chance I get I
would invest in Linux and try to make more sales on Linux because I increase
my margin by $50/pc. It is an advangage for Linux.
Where are our advantages? This is a productive discussion.
This is just life. I am not giving up. I don't have a Penguin in my basement.
I LOVE Windows which is why I want us to face this so we can figure it out.
The sooner we recognize it the sooner we can get our heads around it and decide
how to go after it.
- ---- Original Message ----
From: Bill Veghte
Sent: Friday, November 08, 2002 6:44 PM
To: Paul Flessner; Brian Valentine; Rodrigo Costa; Kevin Johnson; Jim Allchin;
Rick Wong; Orlando Ayala; Craig Mundie;
Cc: Bob Muglia; Gordon Mangione; Bob Kelly; Andrew Lees
Subject: RE: Goldman Sachs Linux Panel
Boy do I respectfully disagree with the statement "Dell's behavior is
predictable and won't change...
Dell's behavior is predicated on us not acting in response to their actions. I
want them to understand that every day they lead with Linux over Windows in
Unix migrations they turn our field against them (take the southeast region
mail thread as an example). I want them to think very very carefully about
when and which forums they decide to push Linux very, very hard. Today, they
do not. When they do, you can bet, behavior will evolve.
I think there are two very specific actions:
- ---> alignment in the field pushing Dell on the one that they are going to be
most uncomfortabe with... Unix app migration (Kevin & Joe Marengi)
- ---> Clarity and metrics around Windows Server vs. Redhat in marketing and
technology (product group and OEM group)
To Rick's last email on this thread around actions, I want to be careful we
don't personalize it with Russ because I want to win him back but the key to
that is thru Joe.
4/6/2005
MS-CC-RN 000000982975
HIGHLY CONFIDENTIAL
- --------------------------------------------------page
break--------------------------------------------------
- ---- Original Message ----
From: Paul Flessner
Sent: Friday, November 08, 2002 9:07AM
To: Bill Veghte; Brian Valentine; Rodrigo Costa; Kevin Johnson; Jim Allchin;
Rick Wong; Orlando Ayala; Craig Mundie;
Cc: Bob Muglia; Gordon Mangione; Bob Kelly; Andrew Lees
Subject: RE: Goldman Sachs Linux Panel
The obvious but: Dell is a HW company. They are facing tremendous margin
pressure in a commodity market. If you are Dell you are being forced to
squeeze every dollar out of the business you can to survive. Given that
situation you would be looking hard at that MS OEM payment.
Think back to Jim Cash's talk this week. These guys are living that situation.
I don't have the answer here but Dell's behavior is predictable and it won't
change.
- ---- Original Message ----
From: Bill Veghte
Sent: Friday, November 08, 2002 7:55AM
To: Paul Flessner; Brian Valentine; Rodrigo Costa; Kevin Johnson; Jim Allchin;
Rick Wong; Orlando Ayala; Craig Mundie;
Cc: Bob Muglia; Gordon Mangione; Bob Kelly; Andrew Lees
Subject: RE: Goldman Sachs Linux Panel
I was sitting right across the panel from him. We waved at each other briefly
before the panel started.
He said their basic strategy is around open standard systems of which there are
two; Linux and Windows. He said Windows three times during the whole
discussion (it was a Linux panel tho) and then proceeded to push Linux very
hard, never mentioning Windows. Ironically, the guy on the panel that was
most balanced in their comments was the CTO of the BEA.
Dell is and must continue to be a partner with us but we need to be very
aggressive in comparing our position and their investment in RedHat.
- ---- Original Message ----
From: Brian Valentine
Sent: Thursday, November 07, 2002 10:27PM
To: Bill Veghte; Rodrigo Costa; Kevin Johnson; Paul Flessner; Jim Allchin; Rick
Wong; Orlando Ayala; Craig Mundie;
Cc: Bob Muglia; Gordon Mangione; Bob Kelly; Andrew Lees
Subject: RE: Goldman Sachs Linux Panel
Did Russ Holt know you were there? I can't imagine he would be this blatant
against us if he knew you were there. If he knew and he is really doing this,
then we have some serious thinking to do around this relationship.
- ---- Original Message ----
From: Bill Veghte
Sent: Thursday, November 07, 2002 10:27PM
To: Rodrigo Costa; Kevin Johnson; Paul Flessner; Jim Allchin; Brian Valentine;
Rick Wong; Orlando Ayala; Craig
4/6/2005
MS-CC-RN 000000982976
HIGHLY CONFIDENTIAL
- --------------------------------------------------page
break--------------------------------------------------
Mundie
Cc: Bob Muglia; Gordon Mangione; Bob Kelly; Andrew Lees
Subject: Goldman Sachs Linux Panel
I was down at Goldman SW conference earlier this week doing a keynote and on
the agenda there was a panel discussion on Linux after me so I asked to
participate. The panel consisted of CFO of RedHat, VPs from Oracle, BMG, BEA,
Veritas and Dell. It turned into quite a lively discussion as you can
imagine. Couple quick notes...
Dell & Linux:
Each company's position was quite predictably slamming us but the one that
really got me animated was Dell. Russ Holt (Server VP) was there representing
Dell. He was introduced as the man behind Dell's Linux strategy and the guy
driving the Linux initiative at Dell. He started off by saying, Dell is the
#1 OEM distributor of Linux and they are committed to seeing that position
grow. He said that he believed Linux was ready for the enterprise and as way
of evidence said Dell was a significant customer of RedHat and runs it on key
mission critical environments; specifically their order entry system. He said
he was seeing growth not only in the "traditional" areas of web & f/p but also
web, Unix LOB and HPC. He then talked about how good the Oracle/Linux
solution was and the strong partnership they had with Oracle around Linux.
Later when he was asked about the open source development model he said he saw
significant advantages to it because it enabled much closer interactions and
synergy with RedHat.
I spoke to Rick Wong about today but we need to make darn certain that our
investments with Dell are benchmarked against any investments they make in
RedHat. The majority of their business is on Windows and their marketing,
their website, and their investment should reflect this or we should call them
on it. Same goes for things like sales training or events. When we do
events, field engagement and measure our progress it should be benchmarked
against the results and/or what they are doing with RedHat. Dell is a key
partner for us and one that imho will grow in significance in the coming years
so it is a tricky balance but one that we need to be more aggressive around.
Linux & the enterprise:
This was the focus. RedHat CFO spent his entire time talking about how their
entire focus was Linux in the enterprise and all the things that they were
doing to make it enterprise ready. He then went on and on around the
certification and testing programs that they had put in place and the
partnerships they were building with companies like IBM, Dell, Oracle,
Veritas, BMC, BEA etc.. Every other panelist underscored (a) that Linux was
ready for prime-time in the enterprise, and (b) they were committing
significant resources and product to make it even more so.
Linux Development Model:
Each of the panelists talked about the interaction with RedHat and the
community development model as a real highlight for them. They all talked
about how it made it easier to impact the direction of the platform (including
Dell ironically) and how transparent the whole process was.
4/6/2005
MS-CC-RN 000000982977
HIGHLY CONFIDENTIAL
-----BEGIN PGP SIGNATURE-----
Version: GnuPG v1.4.9 (GNU/Linux)
iEYEARECAAYFAkmA1WIACgkQU4xAY3RXLo4eTQCeKek7kmNlkUD6ghI7QZ7M7qYe
D3IAn3MnLRPx8m7yAi4SFAr7PA/3281w
=s74F
-----END PGP SIGNATURE-----
|
|
