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How Microsoft Does Bundling and Why (Comes vs. Microsoft – exhibits PX00980 and PX00928)

  • Subject: How Microsoft Does Bundling and Why (Comes vs. Microsoft – exhibits PX00980 and PX00928)
  • From: Roy Schestowitz <newsgroups@xxxxxxxxxxxxxxx>
  • Date: Sun, 26 Jul 2009 14:06:50 +0000
  • Newsgroups: comp.os.linux.advocacy
  • User-agent: KNode/0.10.9
Hash: SHA1

Comes vs. Microsoft – exhibit PX00928

    Comes v. Microsoft

    File : c:\bradsi\mailbox.tld
    Messages :

    From: joachimk Mon Sep 30 10:53:23 1991
    To: bradsi
    Subject: Re: Compaq Windows status
    Date: Mon Sep 30 10:30:02 PDT 1991

    Do not see this as a price issue. They will pay. Remember IBM did not pay
for DOS, but see what happened?
    See the strategic value: It will have lots of followers-OS1 can’t compete
for now. IBM can only pitch OS/2 against it, but who wants this. The industry
will rally even more around it and use it in every account against IBM.
    Money: for six month thereafter no or very low impact. Next year we plan
for it. Whereby WIN becomes over time -may be earlier than expected -a 90% OEM
    Count Your profit, not the revenue.

    >From: bradsi Sat Sep 28 10:56:44 1991
    To: joachimk peterbre steveb
    Cc: alean jeffl janre markbu richardb richardf ronh teresach
    Subject: Re: Compaq Windows status

    Date: Mon Sep 30 10:30:02 PDT 1991

    you’re saying that when someone buys compaq dos for $99, they also get
windows for free. but if you want windows alone, it cost you $150.

    and compaq wants windows for free.

    am I missing something why this is good for us?

    don’t forget that today, retail is still 61% of windows revenue.

    5671 C:\DN1LD2.MAI Thu Oct 03 08:50:14 1991


    MS-PCA 1179288

    A. No. 2:96CV645B

Comes vs. Microsoft – exhibit PX00980

    Depo. Ex. 184
    Comes v. Microsoft

    MS-PCA 1179286

    MS 5004035

    PLAINTIFF’S Exhibit
    CA. No. 2:96CV645B

    From peterbra Sat Sep 28 10:42:54 1991
    To: bradsi joachimk steveb
    Cc: alexn jeffl jonro markbu richab richardf ronb teresach
    Subject: Compaq Windows status
    Date: Sat Sep 28 10:42:26 PDT 1991

    On 9/25 Mark and I met with Clark and Alan. Among other issues that Mike
brought up, he came up with an alternative way for Compaq to bundle Windows.
On 9/26 we had a meeting with their Windows team.

    Mike’s alternative way of bundling Windows would be that Compaq bundles
Windows with MS-DOS. There would not be a seperate DOS SKU; there would not be
any choice. When somebody buys the Compaq DOS product he gets Windows with it.
This is significantly different from there last try at a Windows SKU. It is
the only proactive Windows Compaq has come up with since Stimac started
thinking of their key disk approach.

    The idea came from Jim Odon as a result of the number and quality of
Windows questions that other oems asked at the OEM Briefing. This causes Jim
to realize that Compaq’s Windows knowledge is slipping versus other oems. He
feels the only way to regain this is to license Windows. In addition Odon sees
this as a way to reduce his developement time and support of system utilities
by having a Windows interface to them.

    This Windows/DOS bundle has not been discussed internally at Compaq so it
still unclear what the rest of their management thinks of it.

    Although initially against this idea I think it does have some merits and
should be looked at closely. For Compaq, it removes/reduces many of their
objectives/problems with a Windows bundle. For MS, it makes a very strong
Compaq statement for Windows and pushes forward DOS and Windows being one OS
when we have some DRI problems.

    Compaq issues with bundle/preinstall that are addressed

    1. The manufacturing preinstall problem
    2. The updating of Windows when it is on the hard disk
    3. Allows the end user the choice of installing Windows and allowing custom
configuration of Windows according to specific requirements.
    4. Simplify their localization issues.
    5. Reduce cost – will not lose dos revenue with a preinstall and offset the
cost of Windows by charging for it.
    6. Still allowing the end user the choice to buy other operating systems
for his system; not burden the end user with either the implicit cost of
Windows or having to deinstall Windows and DOS.
    7. It provides Compaq with a perceived leadership position with Windows by
being the first oem to combine Windows and DOS.

    For MS it does the following:

    1. Compaq leadership position with Windows.
    2. With slick technology, Windows/DOS can be installed quickly w/p much of
the pain installing Windows today. Although it is not a pre-install, it will
be much easier to get Compaq to preinstall in the future if they combine
Windows/DOS now.
    3. Gets many more Windows sockets out there. We believe that our attach
rate today with Windows on Compaq 386 systems is between 25% and 35% based on
their registration information. their current attach rate for DOS is 86%.
    4. It raises the bar for other oems and makes it more difficult for DRI to
    5. Will increase our revenue from Compaq, depending on what we can get for
the Windows royalty.

    Issues that need to be addressed to make this happen.

    1. Length of time for Compaq to make a decision. How do we make this happen
quickly so they can announce with Windows 3.1
    2. Diminished value of Windows in the retail channel. Compaq would need to
make sure that their SKU would not run on any other hardware. We might want
them to charge some additional delta over and above their current price of $99
for DOS.
    3. Lost retail Windows revenue – How much retail revenue will we lose
against the gain of Compaq royalties.
    4. What we will settle for for in a Windows royalty (of course Mike doesn’t
want to pay anything additional for Windows).
    5. Other customer issues if we do this

    oem exclusivity slick technology for Compaq????
    others that I can’t think of

    I would appreciate any and all comments.

    The following day Alex, Jon, Mark and I met with the Compaq Windows team to
review and discredit their Windows preinstall focus group studies. In addtion
we proposed a one SKU bundle/preinstall in conjunction with a MS/CPQ Windows
3.1 comarketing program commencing with the Windows 3.1 announcement.

    Our attempts to discredit their focus group research back fired. We spent
much of our time arguing over points in the focus groups with Andrea Morgan,
their marketing research manager. because of her strong position, she is
attributed for the timing success of the LTE line, Compaq management will
continue to listen to her. The focus groups are much too subjective to refute
the Compaq findings so Andrea is important to win over and not run over.

    Compaq liked the idea of comarketing programs, but they did not see the
need to license Windows to make this happen. They do feel that they are
missing a very important message, Windows being optimized for Compaq systems.
Their approach to this is a JIA Lan Man approach to it, however. They might
even include a Windows optimization disk with their processors. In other words
we did not get any closer to trying a one SKU approach.

    With the upcoming exec review, I would like to move quickly on this
Windows/DOS bundle. Is it viable for us and under what conditions.


    MS 5004036

    MS-PCA 1179287
Version: GnuPG v1.4.9 (GNU/Linux)


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