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http://www.usdoj.gov/atr/cases/exhibits/61.pdf
From: Joachim Kempin
Sent: Thursday, December 18, 1997 7:10AM
To: Bill Gates
Cc: Steve Ballmer, Paul Maritz, Jim Allchin (Exchange), Nathan Myhrvold
Subject: RE As promissed OEM pricing thoughts
â-Original Messageâ-
From: Bill Gates
Sent: Wednesday, December 17, 1997 5:10PM
To: Joachim Kempin
Cc: Steve Ballmer, Paul Maritz, Jim Allchin (Exchange), Nathan Myhrvold
Subject: RE As promissed OEM pricing thoughts
This is a very thoughtful document. I have added Jim and Nathan to the
discussion since I think they will have valuable input
The document basically points out that move to NT and volume increase are
our ONLY upsides for the near future. Windows will be somewhat less than $50
and NT will be somewhat less than $100 in fact the public will probably figure
out those numbers over time. (Are the DSP prices under these?) [Joachim
Kempin] DSP is currently at $80 for win 95 and $150 for NTW and as long as we
gain share we should not lower [Joachim Kempin] . WE have some lower prices in
some development countries.
I agree that for the next 2-3 years this is the best plan If we avoid the
JAVA threat changing the world I think we will have some upside in the future
taking some of the OS and sending it retail/internet Getting this to be high
volume is tricky but possible with a strong position I still hesitate on the
leasing model but the popularity of the Net and some technical work we are
doing will make that a possible approach.
One classic threat has been cloning of Windows APIs I wonder if there isnât
more going on here than we know about. I know Noorda was funding 2 different
efforts to clone Windows I guess the WABI code has gone into disuse There
would be a lot of work and potentially patent problems for someone attacking
us [Joachim Kempin]
[Joachim Kempin] This is hard to do and hard to maintain- most customers
will want the original and any price delta is too small to worry about
The biggest threat is absolutely the JAVA phenomena and the ISV excitement
that has grown up around that. We have to come in every day knowing that we
have NOT solved this problem and in many ways we get weaker every day [Joachim
Kempin] If we show the world a pass to easier programming then Java- the cross
system issue might go away. I thought we had a project going on this?
One key point that is not discussed here is nonPC form factors.
[Joachim Kempin] I left this out intentionally. I have been talking to a
lot of people so has Steve and I share most of the below. The key missing
piece is compatibility in my believe CE does not run win 32 apps, not even all
16 bit apps. Developers wnat a seamless environment and a great programming
tool and Java sells well here mostly on promisses- but it is convincing.
Pricing we should just do as we did when selling DOS- get the biz and think
about more $$ per units later.
After my latest trip to Japan I came away with a huge concern about non-PC
devices. With great progress in screens, digital audio, digital video, speech,
handwriting and the Internet there is a HUGE risk that we will not be called
to provide the OS for these devices On the other hand there is upside. We have
not been looking at this market properly Craig is way too optimistic.
Companies are viewing JAVA as something they can adopt across a large range of
devices and have it as a standard. We do not package our offering properly
today. We need to get going on speech and handwriting. we need to get more
flexible with various pieces. We are building a new VM to compete with the SUN
VM. Our pricing for these devices will have to be low. We may find a way to
make money on these devices by asking them to connect back to our âMegaserverâ
services.
GOVERNMENT EXHIBIT 61
MS7 007548
CONFIDENTIAL
We have not thought about how we win ISVs for these devices in a way that
JAVA will not We have not thought about what the benefit of PC affinity would
be
The high price of Windows for $500 machines does make these nonPC devices
more attractive I need some piece of WindowsCE that is super cheap. I think we
want to get a lot of money from devices where people create and edit documents
and we will get very little money from devices where people just read
documents. The boundry here is very unclear. I need to brainstorm with people
more on this A low price could screw us and a high price could lose us all
these design wins. We need a clever solution.
Another âthreatâ that combines somewhat with the JAVA threat is low cost
UNIX systems LUNIX in particular.
We need a much better strategy to undermine JAVA momentum than we have
today. We will have to have some dramatic things and we will have to have
rolling thunder SUN will have to show where SUN is going to try and make money
on the JAVA phenomena. We need to have our clone work against them to be cheap
but go beyond what they do
â-Original Messageâ-
From: Joachim Kempin
Sent: Tuesday, December 16, 1997 5:37PM
To: Bill Gates
Cc: Steve Ballmer, Paul Maritz, Joachim Kempin
Subject: As promissed OEM pricing thoughts
<< File.draft OEM DT OS PRICING doc >> feedback appreciated
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