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Plaintiff's Exhibit
4275
Comes vs Microsoft
September 1992 Status Report
Far East OEM Sales
Jeff Lum, Director
Highlights
FE OEMs suffering export decline as prices in the US drop
dramatically. Taiwan is feeling the heat as OEMs struggle
to stay in business. Korean OEMs complain that the prices
they are seeing in the US are below their cost for similar
configurations. Japanese OEMs are not in any better shape,
and in their own market...
Japanese subsidiaries of US OEMs cutting prices
dramatically. Apple announced an average 20% cut in the
prices of its personal computers and Digital announced an
average 46.5% cut. IBM will interoduce three new models,
starting from $1,700. Compaq announced that it will begin
selling computers in Japan at prices half the prevailing
market levels. The Prolinea line will list for as little as
$1,100. But NEC, with 50+% share, announced it has no
immediate plans to cut prices. I don't believe that
attitude will last long.
MS-DOS 5.0a/V slipped into January as compatibility issues
with IBM DOS/V surface. No plans to support AX anymore,
which makes sense.
Win 3.1/V on an aggressive schedule to ship by March.
Steveb was instrumental in getting NEC to see the light in
not shipping Win 3.1/V until it is ready. All key Japanese
OEMs and US OEMs in Japan have pledged their support to
preinstall (where feasable) Win 3.1/V when it becomes
available.
PCMCIA strategy (or lack of) is a major concern for OEMs.
We have not yet articulated a clear strategy for providing
PCMCIA support in DOS and Windows.
HP printing technology deal getting closer to reality as the
general business terms are agreed upon between Maritz,
Carnahan and Beluzzo. The agreements consists of $1.5M for
the user interface and $8M for RBA royalties. Contract
terms, schedules, prepayments, and royalties being worked
out now.
Strong support for W4W in my Solution Providers group from
HP, NCR, Compaq (all 3 will be at launch), and Unisys (press
announce only). Dell and DEC are holdouts. DEC because
they are slow and have some technical issues, and Dell
because they want to be stubborn (Novell may be pitching
them hard as they are doing with Compaq).
Revenue
[TABLE HERE]
In the FE Japan finished the quarter at $11.1M (116% of
budget). We closed several agreements with considerable
minimum committments which helped get us over budget as
machine shipments in Q4'92 reached 85% of the same quarter
last year. In addition, Karenh's group contributed a lot to
this by helping complete the agreements with Ricoh and
Murata for E-FAX. Korea had a strong quarter finishing at
$10.1M (194% of budget) due largely in part for delayed
minimum committment billings from Hyundai, Goldstar, and
Samsung in the conversion from per processor to per systems
licensing per Korean government requirements. Daewoo
Telecom expected revenue of $1M was delayed to October due
to MS internal processing. Taiwan finished the quarter with
$9.1M (88% of budget). Acer's revenue hit of just over $1M
was for PPB usage, and several accounts worth $.5M have
basically quit business. CS is confident his revenue will
turnaround by Q3 as some pending business comes thru and MED
picks up. Hong Kong finished Q1 with $1.8M (163% of
budget).
Markche's Solution Provider Group had a strong September
finish ($6.9M vs $3.1M, completing Q1 at $26.7M (176% of
budget). Dell's min commit on the Office license plus large
mouse orders accounted for $4M of September revenue. Dell
and Compaq accounted for over $10M of the $11.5M surplus for
Q1.
Tedha's FER Group finished the quarter with $521K (158% of
budget). This accomplished in spite of the restructuring of
our NEC-T Office license which resulted in NEC reaching 12%
of their $139K budget in Q1. We will need to focus on new
opportunities at Hyundai, Sony, VTech, Epson, HP and Compaq
printer groups to exceed budget for FY'93.
**MICROSOFT SECRET**
HIGHLY CONFIDENTIAL MS-PCA 2613476
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[NEW BUSINESS SIGNED TABLE HERE]
Area Summaries
Japan
As our Modular Windows strategy takes shape, we see more
consumer electronic OEMs inteested in what we're doing. We
need an extra strong focus in this area to gain momentum.
Recent organizational changes should help this effort;
ReijiS will be the section lead for Consumer Systems
products, and he will hire 2AMs this year to focus on
consumer electronics accounts.
KK engineers and OEM engineers have started to move to MSHQ
campus for work on NT-J. The total staffing from OEMs will
be Fujitsu (3 people), Hitachi (3), OKI (2), Epson (1), DEC
(1) and Compaq-J (1).
Compaq is forced to purchase IBM's package of Win 3.0 to
ship with their systems in Japan. I am working on a
reasonable proposal to help them absorb some of the extra
costs of purchasing IBM's product.
Korea
Samsung announced new 486 models at the price of their 386DX
models and other OEMs will join this price war in the
domestic market.
Samsung and HP announced their joint project for PA RISC
workstation.
Hyundai will announce new 386SX with sound and speakers for
home and educational markets.
The Electronic Times in Korea headlined Modular Windows as
next Korean OEM's platform.
CH spreading the word on Modular Windows to Consumer
Electronics Companies.
News
Compaq - Compaq expands Retail Channel to include Circuit
City, CompUSA and Office Depot.
Unisys - received a 3-year, $90 mil contract from the Czech
Savings Bank (Ceska Sporitelna). Unisys has also received a
contract from Ferro (Sweden) that could be worth $13 mil.
The contract is expected to last 5 years.
HP - signed a deal with Samsung Electronics Company Ltd.,
that involves HP's PA-RISC hardware platform.
NEC: Announced the Select Solutions program which offers 16
preconfigured systems designed for such areas as desktop
publishing, CAD and general business. Released the
Powermate DX2/66e ($3459) and DX2/66Te ($8049) which are
based on Intel's latest microprocessor.
HP Printer: HP announced that it has signed an agreement
with Colorado Memory Systems (CMS) to acquire the PC tape
backup company.
**MICROSOFT SECRET**
HIGHLY CONFIDENTIAL MS-PCA 2613477
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Canon Printer: Canon and IBM announced the formation of a
joint venture to develop next-generation personal computers
combining PS/2 technology with Canon's bubble-jet printing
technology. First product to be covered will be the "Jet
PC" that Canon developed and showed to us in meetings in
Tokyo and in Redmond.
Acer: Will introduce a low cost MIPS R/4000 desktop system
during Comdex.
Issues
NCR - NT - It appears that we released what was determined
somewhat of a bombshell at the LM Council Meeting. In order
for an NT workstation to be added as a desktop to an
existing network, LM/NT must then become the domain
controller in order to administrate the NT workstation.
This eliminates LM for OS/2 and LM for UNIX as being viable
alternatives for the server OS in a LM environment. In
NCR's mind this breaks the "openness" we have been preaching
about our LM strategy.
Dell - has become increasingly protective of their installed
base and their desire to maintain control over product
offerings. This will have significant impact on new
business that requires Dell to include registration cards
and/or changes the royalty model for upgrade business (MS-
DOS 6.0, WFW, etc.) Dell expresses violent concern over
registration card usage for Anti-virus upgrades in
conjunction with Central Point Software.
HP is very interested in an MS strategy for allowing CIA
based machines to be upgraded to Mobile Windows machines.
Systems has ruled this out for now. At the very least, we
need a "family" strategy for these two products.
Key Account Summaries
Japan
Casio (IchiF)
MSHQ, Intel and VLSI had a presentation on PIA to CASIO-
Personal Communication Division. Hard to know if CASIO is
interested in this project. However, they are interested in
focusing on the very low-end machines. CASIO will give us
their questions in the middle of October. CASIO will reply
to MS after internal discussion is done including the
president in 2 or 3 weeks.
Epson (HideyaU)
Negotiation in progress for royalties for MS-DOS and
Windows. Epson has enjoyed gut low prices ($10) for years.
We are negotiating to get them closer to guideline. We
offered two types of proposal listed below:
a) $10 until 4/1/93. then $15 until 10/1/93, then it goes to
$17.
b) $11 until 4/1/93, then $13 until 10/1/93, then $15 until
4/1/94, then it goes to $17.
Regarding the MS-DOS 6.0 US version royalty (incl util), $18
until 10/1/93, then it goes to $22. Any other localized
version should be added at $2 as a localized version fee.
Fujitsu (KenjiN)
They are developing a middle class laser printer that is
capable of 16ppm. Target sales are 20K units per year,
including OEM. Shipping will start early next year. They
started shipping their new highest-end desktop type of PC,
which utilizes 486DX2 66MHz. However, the price is more
than US$17,000 which is much too expensive compared with one
that is manufactured in US or Taiwan.
Kanematsu (IchiF)
Omron Issue: Kanematsu failed to get Omron deal. Kanematsu
did not understand Omron's needs: i) Interlink, and ii)
Kanji Version support with inexpensive way. Kanematsu asked
48K development fee for FEP (Kana-to-Kanji conversion
software), which Omron cannot afford.
Comparison Sheet: ASCII (DR-DOS)
Kanematsu (MS-DOS ROM V3.22)
1. DOS feature 120 yen
360 yen
2. FEP n/a
300 yen***---> 0 yen
3. NRC / Develop. 40 yen 240
yen ***---> help plan
4. BIOS /KB Driver about the same
about the same
5. ROM /RAM about the same
about the same (80 yen)
Status
1 MS's offer to Kanematsu was:
i) to license MS's FEP for free of charge. and
ii) help in development fee for Kanematsu by giving
commission of WORKS-Kanji offering to Omron together.
**MICROSOFT SECRET**
HIGHLY CONFIDENTIAL MS-PCA 2613478
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2 However Omron just wants an inexpensive solution and
interlink for Kanji version, Works.
3 Omron does not understand why MS is good and valuable.
4 If Omron selects DR, MS cannot guarantee that Works will
work properly. This has to be told to Omron.
Matsushita Electric (MEI) (Kenjin)
They decided to pre-install both MS-DOS 5.0a/V and Windows
3.1J starting next Spring, but the exact date depends on Win
3.1J. Target market is just Japan. We have to think of a
remedy plan for their large remaining PPB. The estimated
PPB at the end of their current agreement is approx. $1.6M,
which originally came from their OS/2 agreement (M/C:
$1.5M). In order to make all of the remaining PPB available
to their new agreement, Mr. Matsuda of MEI has signed an LOI
stating "Matsushita is now shifting its sales power and
software development resources from MS-DOS to Windows
systems. Now planning to preinstall MS-DOS and Windows on
the PCs that utilizes 80386 or 80486. The preinstalled
ratio of current plan is more than 50% of all the PCs
marketed in Japan at the end of 1993". Now, we need to
conclude as soon as possible.
Minolta (IchiF)
Amendment to TrueImage Agreement: Minolta requested to
reduce their royalty down to $10/sys - $15/sys range after
digesting (consuming) 10K units of their commitment $270K.
Advanced M/C payment is also hard for Minolta, they say,
because PostScript Level1 and its clone in the market have
declined. New royalty of $25/sys is offered with M/C of
$75K. Additional option is to reduce the rate from $25/sys
to $15/sys, but keep the M/C at $150K, with 10K unit
commitment needed.
Dumbo Opportunity: Dumbo Plan was presented to Minolta, who
is interested in this project and will have a presentation
to MSKK to prove that they can do mass-production.
Mitsubishi Electric (MELCO) (ToshimiH)
Had a ROM-DOS meeting with JonK after the ROM-DOS Seminar
held on 9/10 and further discussed in more detail ROM-DOS,
FFS and MS-DOS v6.0. Especially for FFS which is licensed,
very aggressive discussion was made for their future
products using it. They have announced 2 types of highend
Apricot series. One is a server model (i486DX2 66MHz/SCSI-2
2GB HDD, 10GB at max/16MB memory, 64MB at max) for more than
50 clients. They expect to sell 2,500 unit/year, starting
in this Nov. The other is DOS/V Apricot Notebook PC
(i386SL/25MHZ/VGA) and they expect to sell 20,000 unit/year,
starting this Dec.
NEC (KiyoO)
NEC visited HQ and Tandy to investigate VIS, Multimedia,
Modular Windows, advanced products and MS' future strategy.
Before the meeting, NEC visited Tandy on 9/8 and learned
about VIS hardware. NEC's impression of the meeting is that
Tandy already announced their new PC ("Sensation") with
multimedia features, at low cost and high function, for the
business market. That's why Tandy is focused on selling VIS
into the home market. Tandy couldn't understand NEC's plan
to launch PC-9800 with VIS into multimedia market by taking
advantage of huge install base of PC-9800, sales and support
power and NEC's brand image. We need to communicate with
nEC and Tandy to launch a sort of VIS into the Japanese
market.
NEC committed to using Modular Windows even though they
don't have a concrete plan yet. We need to sell Modular
Windows to each division that currently manufactures
consumer electronic devices. For Modular Windows, they
think we are too focused on TV-based devices. I think we
can sell Video for Windows, Clockwork that is a product
coming soon. In other words, at least participants seem to
persist in current situation, i.e. they seem to prefer a
standard that is defines by a committee to DeFacto Standard,
they think it's very hard to establish information hierarchy
for digital communication world, they are not sure if end
users can recognize value of digital world or not. As Robg
asked, we need to get their feedback, which means how NEC
executives think about our vision and product plan and we
need to continuously discuss our vision and future products
with NEC. I think this meeting was a good beginning to work
with not only the NEC PC division but, also other divisions.
They went away with a lot of info and had a lot of studying
to do. We need to sell I-FAX and Homer to appropriate
divisions as well.
SamF and MarkAn met with Mr. Mizuno (CEO & VP, responsible
for domestic sales) and others and gave them a demo of VIS
and AVI. He is not directly responsible for their product
plan, but has power to direct NEC's direction. The demos
went pretty well, although it was difficult to gauge his
response. Such activity helps us to persuade PC Div. to use
our products. He was surprised to learn the number of
titles being developed for the VIS and MPC, and wanted to
know which titles and tools were available, and if any
Japanese titles were being developed. He seemed to think
that the VIS was an interesting lowend machine that NEC Home
Electronics should look at. Mr. Mizuno is one of the guys
Apple and IBM have been pitching. He seems most interested
in teleconferencing and not much on consumer technology or
lowerend PC stuff. He said that Japan was currently
installing more teleconferencing systems than any other
country. Since these systems require a lot of dedicated
space and hardware, the idea of being able to teleconference
directly from
**MICROSOFT SECRET**
HIGHLY CONFIDENTIAL MS-PCA 2613479
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your PC is very compelling. He wanted to know if MS was
working in this area, or if we had opinions on the hardware
being developed. Mizuno said they were very interested in
ISDN-based systems. This is going to be a big focus for
NEC. He didn't mention Kaleida, but NEC clearly has a fear
and respect of Apple. He commented that Apple would have a
much larger installed base if they only licensed software
and didn't make hardware. (He asked if MS had any plans to
get into the hardware business.) Impression of MarkAn is
that they don't understand how it relates to their
mainstream business. that's why it's more important than
ever that we keep them up to date on our technology and keep
feeding them advice about where to take their platform.
NTT Data (ShigeruN)
Automobile Registration Project
NTTD revealed their plan to use NT for new project; nation
wide project with government, that is a Car registration
program. They also told us that they officially decided to
adapt Windows NT as official OS of NTTD's corporate
strategy.
Sharp (IchiF)
VIS/Modular Windows: MSKK (MarkAn) and A&A (Tandy-J) had a
presentation regarding VIS and Modular Windows to Sharp-
Corporate Research and Development Group including
Multimedia Systems Research and Development Center. VIS
offered by A&A is one of the good approaches to open up a
new channel between MS and OEM to promote multimedia related
Product.
WinPad: RP has decided to participate in the PIA Project.
Mr. Tsuji, President, sent a letter to Mr. Andy Grove, CEC
of Intel. MS offered Haiku, Rover and WinPad to Sharp, so
we need to develop a clear vision on the OS plan for PIA.
Toshiba (ShigeruN)
Windows Pre Install to HDD/RTR: Held meeting and agreed
with Toshiba's idea to preinstall Windows 3.0A Kanji on HDD
for the Japanese market. Toshiba plans to ship it as soon
as possible. Current plan is as follows:
- - PC with HD ship (RTR)
+ Windows royalty is $22 and regular "MS-DOS" royalties on
the HDD
+ Upgrade from 3.0A to 3.1: will be no royalty from Toshiba
to MS
- - HD units standalone for endusers who bought a PC already
+ in HDD, Windows and MS-DOS will be installed (Toshiba
specific)
+ MS-DOS will be free royalties, because Toshiba already
pays for it for all the systems they ship
+ Windows royalty is $12, and upgrade from 3.0A to 3.1 is
$10
+ Toshiba puts in registration card and will share the
database with MS
+ Toshiba also puts a notice for availability of discount
upgrade for all the registered users
+ Toshiba will upgrade all the registered users, and will
report to MS the number
Korea
Daewoo Telecom (DWT) (SIKim)
Three agreements including a new two year agreement for
system softwares with an annual $3.75M M/C were signed by
DWT and are under MS internal processing. The agreements
includes MS-DOS, Windows, NT, and Works for MS-DOS and
Windows. We got their verbal commitment for WFW from C.M.
Kim of DWT and Steve Eleia of LE. The deal was initiated by
DWT. Leading Edge is considering Windows Sound System and
Video for Windows. DWT plans to develop a new FAX machine
which will connect to PCs on the network. Modular Windows
for FAX was introduced. Their R&D Team completed the
testing of Hangeul DR-DOS 6, but the DR-DOS issue has
disappeared inside DWT with signing of these new agreements.
Goldstar Co. Ltd. (GS) (CHCho)
With our presentation for MS Modular Windows, the staffs of
Planning, R&D, Sales and Marketing departments from Consumer
Products and computer divisions gathered to discuss their
product strategy to adopt Modular Windows. GS especially
showed strong interest in the Tandy VIS system. GS plans to
consider VIS system as their next strategic project. Tandy
will visit GS to discuss this issue in October.
Hyundai Electronics (HEI) DJChoi)
HEI reorganized and the new GM, Moon-Kyung Kim, will take
charge of the computer division. This reorganization will
not affect the overseas business. HEI decided to assign Ed
Thomas of HEA to sign the MS license agreement for HEA's
effective decision making in US market. This assignment
will be effective until '93 and dependent on their overseas
marketing strategy. Hyundai has tried to participate in
consumer electronics products for a long time and we are
persuading them to initiate their product plans with Modular
Windows. They announced two 386SL notebook models
**MICROSOFT SECRET**
HIGHLY CONFIDENTIAL MS-PCA 2613480
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supporting PCMCIA which will be shipped to HEA and domestic
markets. Another 486 machine at competitive prices will be
announced in October.
Samsung Electronics (SEC) (JoonP)
PC business has been decreasing, especially in their
overseas shipment, and their PPB is more than $3M and will
increase. After executing Amendment #2 in October, they
will request another PPB reduction plan. SEC executed an
agreement with IBM to ship 486 machines, MS-DOS and Windows
in ROM, based on IBM's specification. The first shipment is
anticipated in March '93. SEC forecasts 300K in 1993.
Their R&D team has started designing the machines with MS
OAKs. SEC Multimedia TFT drafted the first specification of
Tandy VIS compatible machine. The spec was sent to Redmond
Multimedia group for their reference. For the domestic
market, SEC announced the aggressive price of 486SX models.
W1,7000,000 including VGA color monitor. This announcement
will result in a new price competition and have an overall
impact on the domestic PC market. Samsung and HP officially
announced their joint project PA RISC workstation.
Trigem Computer (TG) (SIKim)
All terms and conditions of Amendment #1 were agreed to, and
the agreement is under MS legal group's review. Trigem
cancelled their 386 Home PC for the domestic market and will
launch new models for the business market. they begin to
ship WinWorks to Computer Technology.
Jin-Koo Seo, Executive Director of R&D Division, was named
to take charge of the licensing issues. He became their new
counterpart for MS agreements. Their Chairman, Y.T. Lee,
will make a presentation for the strategy for Korean PC
industries as a representative of the Korea Information
System Industry Association to Korea President, Noh Tae-Woo,
at the presidential office on October 28th.
Taiwan
Acer (PWong)
We have concluded the 10K/year NT license and 25K/year
Windows for Workgroups license with Acer. we also arrange
for Tim Dunley, Product Manager of Modular Windows, to visit
Acer.
Autocomputer (EddieW)
MED Agreement will be signed within two months, and starts
to ship from Jan 1 1993.
To ensure "standalone sales" are being kept to a minimum
between now and Jan 1st 1993, we have informed AUVA to take
solid actions immediately.
1 Sending a warning letter to all of its channels and
distributors to emphasize that standalone sales seriously
violates the agreement between MS and AVUA.
2 To put warning letter on P.O., Shipping Document and
Documentation.
Copam (RLee)
Copam used to ship the computer system with 90%+ by using
their own brand with Europe as their major market, but now
their strategy is changed, and in order to gain the profit
and lower the cost, they now want to also try OEM business.
At the same time, they feel that taking the motherboard
business is another way to get money.
DTK (RLee)
Starting 10/92, DTK will pre-install Windows into the HDD
with the computer system. They will also include a MS
registration card in the package. Starting with Windows,
they have worked with RR Donnelley to get manuals and
diskettes and we hope this is a good first step. DTK is
happy to work with them, but they suggested more flexibility
provided by RRD would be better, such as setting up a
warehouse in Taipei, etc.
Lyi-Cheng (MaxKang)
We had a final discussion with the Chairman of the Board and
Finance Manager of Lyi-Cheng and they fully understand their
responsibilities to reschedule the payment due to Microsoft
before further action is taken. (Note: We have audited
their books and awaiting final reports).
Personal Computer Upgrade (PCU) (Eddiew)
MED program will be implemented in the near future. they
signed two new OEM customers, which are GEOS Data System
(H.K.) LTD and Hrisak Wolfgang Ges.M.B.H.
Plus & Plus (EddieW)
**MICROSOFT SECRET**
HIGHLY CONFIDENTIAL MS-PCA 2613481
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Plus & Plus (EddieW)
The account has filed chapter 11, and legal proceeding is in
process.
Twinhead (MazKang)
Trying to sell them pc-works for sub-notebook, they also
show great interest in Microsoft Multimedia products and
it's good for both MS and Twinhead for a new business
opportunity.
Hong Kong/PRC (SYang)
Ocean
New customer. Was the largest DRI customer in Hong Kong.
They are planning to ship in late October and we are helping
them gear up all their products so they are a healthy
company with strong sales in the coming year.
UO
New customer. This company was founded by two gentlemen who
were working at Ocean. They were very aggressive in the
European market. we are negotiating a WinWorks contract
with them, and expect to close this deal by the end of
October.
Video Technology (VTC)
They are increasing sales volume worldwide and Bosco Ho
plans to negotiate a new deal in Windows. All future
machines manufactured from VTech will bundle MS-DOS and
Windows. The discussion of Windows for Workgroup is also in
the process. we expect them to sign the contract early next
month. In the meantime, Bosco had planned to travel to the
US to visit JoachimK and JeffL in Redmond to build a strong
relationship for both companies. Their major concern in the
US is trying to push out their multi-processor machines in
the market early next year, but their engineer will need
more technical support on Windows NT. They are also being
aggressive in the PRC market. They are planning to build a
channel in PRC to sell software, which is the Chinese input
method.
US OEMs
AT&T (MarkBu)
Although we were led to believe last month that the Telepen
project was going to General Magic this does not appear to
be the whole truth. It is true that GM will be involved
with Magic Mail but PenPoint does appear to have the design
win here. Karen Hargrove *has not been* very helpful in
providing OEM with details of her meetings with AT&T. The
political nature of the DSP/VCOS business has escalated to
the point of Tom Sarazen being fired over his role in
working with MS. I have asked AT&T to provide me with a
clear statement of direction in how they would like to
continue this relationship with MS. Once reviewed we can
set some more concrete steps with the AT&T MM group.
Compaq (MarkBa)
During the month of September we focused our energies in two
areas. the first was the continued work on the joint
development projects for CIA, Plug and Play and Pen
computing. Secondly, we have been working on repositioning
Compaq as a more strategic business partner, specifically as
it relates to NT and WFW. There has also been a great deal
of effort in the preparation of Compaq'a role in the WFW
Launch Event in New York. Compaq's unit production and
sales continue to increase and they are forecasting
approximately 250,000 systems per month for the rest of the
calendar year.
Dell Computer (CarlG)
Dell continues to reject our WFW proposals on the basis that
our offer is a financial mis-fit with their "Build-to-order"
marketing model and our per copy pricing is too high.
Executive discussion between JoachimK and Joel Kocher
yielded no progress. DELL is fully aware of our
announcement and launch events. Progress was made
developing a high level of interest in FOGHORN. LOI and
signed Amendment expected in early October. DELL revealed
plans to announce a Video System in Q2 CY93. DELL's plans
to offer their OEM Office Bundle to the installed base has
been halted. Microsoft participated in DELL's first release
of DELLWare with two full page advertisements, one from
Excel and one from WinWord. CarlG has prepared a Sr.
Partner Marketing Plan and obtained necessary approvals to
engage DELL in the plan mid-semester. In exchange for Sr.
Partner Funds, MS is negotiating for one guaranteed page per
issue, content for which to be controlled by the MS account
manager. If negotiations are successful, expect to see WFW
and several MM Titles in the Nov-Dec issue and a feature on
Access in the Jan issue.
**MICROSOFT SECRET**
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Digital Equipment Corp (GregAn)
The Open LAN Manager Conference, OEM Briefing and associated
meetings with five Digital visitors the week of September
21st consumed 25% of my time this month. All in a good,
productive week. Other activities for the month included
finally being able to send a WFW pricing proposal to the DEC
PC Group, preparing a Multimedia pricing proposal to for
Bookshelf, MM Works, Word/Bookshelf bundle, MM Windows and
MSCDEX, organized an MS/DEC meeting re wireless issues and
opportunities. Also spent a fair amount of time laying the
groundwork for the next round of executive meetings in
October.
Hewlett Packard (DarcyH)
PPG - Continuing to proceed on defining mutually interesting
patent portfolios for exchange in a cross-patent license.
Defining this with HP/MS Attorneys and HP VP Bob
Frankenberg.
HP Corvallis - Delivered a proposal for Pendragon, and are
coordinating meetings with HP Bristol for the Penlizard
investigation. HP has decided to initially release a
Pendragon and "Small Pendragon" that will provide a lower
end entry into the market. We are discussing this strategy
in a meeting in early October, and are also pushing for the
Mobile Windows design win for this system.
HP Grenoble - HP has signed a license for Sparta! They will
initially commit to 25K/yr at $8 per system. HP will also
increase their Windows commitment to 150K/yr. We had one
meeting on the Pike project which is a desk-slate machine
that will allow users to send and annotate faxes over same
line as their phone. we have a meeting schuled with KarenH
for IFAX and the MOD-Win guys in early October to
investigate best OS for this platform. Grenoble has also
asked for quotes on mice for 100-150K/yr. DarcyH working
with DavePru to provide.
HP Sunnyvale - HP Sunnyvale has absorbed the Network Server
Division. As result, they are still finalizing a re-org,
and have asked to postpone a meeting on NT until mid-
October. The TVA project has been moved from Sunnyvale to
the Personal Software Division (formerly the New Wave
division, under Webb McKinney). DarcyH is working to set up
a meeting with Webb to discuss strategy. In the interim, we
are continuing to work with the TVA project group. HP
claims we have a superior ISV and service provide strategy,
but is still determining if Haiku is best OS strategy. HP
is working to make a decision with TVA by early October.
For licensing, at this time we are very far apart, and are
postponing any further discussions until HP gives clear
signals they want Haiku.
Personal Software Division - We are working on a strategy
for cooperation on HP Openview and Hermes. HP has expressed
an interest in a publicly stated commitment for cooperation.
MS is interested, and DarcyH is working to set up meeting
for business discussions.
HP Colorado Networks Division (CND)/Information Networks
Division (IND)
We are in the final stages of an NT source license. HP has
verbally stated a desire to move towards a more aggressive
commitment to NT on PA. DarcyH is working to set an
executive meeting with PaulMa to discuss terms of such an
agreement.
Insignia (PeteP)
Insignia has now withdrawn their application stating an
intent to use "SoftWindows" as a trademark. This means the
amendment draft to add Windows to their agreement and
license them to deliver a product based on SoftPC with
Windows can be resubmitted in October. I expect that
Insignia will avoid pending price increases and sign this
amendment in October even though their product won't be
available until January, 1993. Insignia was represented at
the OEM briefing by a product marketing manager from the UK.
NCR (MarkBu)
There are two significant events in September with NCR. The
first was the Executive Review on Sept. 16 and the second
was for MS to gain an understanding of NCR's architectural
and systems strategy. Key to gaining corporate commitment
to NT will be the feasibility of porting NT to the high end
loosely coupled systems in NCR's 3600 and 3700 line. We
will be pursuing this opportunity over the next couple of
months. Additional areas of interest were in Object
Management and development of Multimedia capabilities over
the network. With the Windows Amendment now finally signed
NCR has committed to a minimum of 100K Windows units per
year. This increases NCR's committment by 4.4M over the
next two years, the first time NCR has been willing to step
up to additional minimums since the OS/2 problems from a
year ago. The MS-Mail license with StarGroup continues to
be a trouble spot and is still not resolved. The problems
stem from NCR's concern that with the release of the DOS
client in MS-DOS 6 and the Windows Mail client in Windows
for Workgroups, NCR's potential market will be drastically
reduced and they will be unable to meet their minimum
obligations. there is still pressure to complete this
license but it may be for a significantly reduced Minimum
Commitment. A follow-up meeting with the NCR Dundee was
held in Scotland with Bill Anderson, John Hall and David
McBride attending. This was a very productive and
successful meeting with NCR agreeing to show
**MICROSOFT SECRET**
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NT on an ATM and the next big banking show in Europe. Jim
Adamson attended the majority of the meeting and has given
his blessing to move forward with the NT investigation. As
mentioned before Adamson controls the Financial end of NCR's
business and support from him for NT would have dramatic
impact throughout Financial and Retail. We also met with
both Safari and Clemson to discuss Pen opportunities. It
appears all but a high end notepad has been killed in
Clemson due to lack of market acceptance for the 3125. This
puts on hold all smaller form factors. The only thing that
could change this is if there is a large market opportunity
for a small form factor the 3115 could be revived. NCR also
attended the LM Council meeting and was very disturbed at
some of the architectural decisions we have made with NT.
(See issues)
Unisys (PeteP)
An amendment raft will be delivered in October involving
WFW, Windows NT, registration cards in shipments of all MS
products, and other important, housekeeping things. We have
reached tentative agreement that certain network cards will
be shipped on a "per-system" basis with WFW as an element of
the system accessory kit which includes keyboard, mouse,
operating system, etc. They are eager to hear details about
the strategic integrator program which we should be ready to
present later in October. Unisys plans to begin pre-
installing all their systems on a worldwide basis in 4-5
months, to coincide with the release and availability of
their new network ready systems next year. They are also
interested in licensing C7 sources for portation to their
CTOS platform and as the compatibility story between
platforms. This is important because of the nutual work
being done on WOSA specifications for the financial industry
and commitments Unisys has made to support our architecture.
AT&T/NCR Projects (TomDa)
Currently, KarenH of ATDB is acting as the interface with
AT&T on the Telepen Project. This is currently not an
active project for OEM as this project is being driven by
the Strider Group with the direct involvement of BillG.
Billand of USFG met with the NCR ATM group in Dundee
Scotland on 9/15 to discuss the ATM project. The AT&T
Safari group has set out to design and build a convertable
machine. The objective of the Safari Project is to achieve
a Mobile Windows design win. This past month MarkBu and
TomDa met with the Safari group and a group from NCR Clemson
(the NCR 3125 group). We discussed NCR product plans,
Mobile Windows, CIA, etc. TomDa and MarkBu plan a follow on
meeting with the Safari group in Somerset, NJ this month.
NCR is very interested in a protect mode OS for the POS
Project. MS-DOS 7.0 was a candidate for NCR's POS (Point of
Sale) machines but this product has now been delayed.
MarkBu and TomDa are tentatively scheduled to meet with the
NCR POS group in Atlanta later this month to discuss NCR's
POS requirements and to explore alternatives.
Compaq Projects
Convertable Project - Compaq is planning to ship a
convertable machine in the mid '93 timeframe. we are
working with Compaq to get their feedback on Mobile Windows,
however Mobile Windows is not scheduled to ship until
September '93. Compaq has provided some details on their
convertable plans. Compaq has agreed to review the Mobile
Windows spec but a follow on meeting is needed. The
objective of this meeting should be to get Compaq's support
and commitment to Mobile Windows upon the shipment of this
product.
CIA Project - Compaq's plans are very much in the formative
stages. Compaq has requested that we meet to discuss
Intel/VLSI issues. This meeting has not yet been confirmed.
Plug and Play Project - Weekly conference calls have been
ongoing with CarlS, TomLe, TomDa and Compaq to discuss the .
Compaq intends to ship systems in Q293 and would like these
systems to take advantage of the Win 3.1 Plug and Play
enhancements. MS Systems is not clear on Compaq's
requirements for these enhancements. Systems would also
prefer to remain focused on Chicago. Compaq has committed
to provide MS with a letter clearly documenting their
requirements.
HP Projects - This last month we provided a response to HP's
RFP for Pendragon. In this response we specified Mobile
Windows.
Pen Dragon Project - LuisT, DarcyH and TomDa are scheduled
to meet with HP this week to discuss this RFP response. The
object of the meeting is to discuss and resolve any
outstanding issues concerning this response. We will also
discuss the software suite for Mobile Windows, handwriting
recognition, etc.
Pen Lizard Project - ByronB LloydFr, TomDa and DarcyH are
scheduled to meet with HP this week to discuss. The
objective of the meeting is to discuss and influence HP's
PDA plans. A follow on meeting with the CIA group is also
planned with HP in Bristol England. The Bristol R&D group
is currently conducting the investigation of HP's CIA
project.
**MICROSOFT SECRET**
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FER OEMs
Acer America (PeteM)
- - Commit to develop a multimedia player based on Modular
Windows. Acer America completed the cost and feasibility
analysis. The project has been turned over to the Acer,
Inc. in Taiwan.
- - In addition to Intel based high-end multiprocessor servers
that support Windows NT, Acer will also introduce low cost
NT desktop based on MIPS processor.
- - Acer is interested in considering a new software bundle as
a follow-on or replacement for Power-to-Choose application
bundle.
Fujitsu (SteveMc)
Executive Review with Fujitsu J top engineering contacts was
held after OEM Briefing. Sadao Fukatsu, Director of
Software Engineering at FPS, attended. He may become main
OEM contact for Fujitsu in the US regarding the MS Systems
platform evangelization. Near term objective is to
influence FPS to implement the MS DOS 5 and Win 3.1 platform
on their portable (old Poqet brand) PC line.
Hyundai America (TomBru)
Hyundai America is announcing a new line of PCs which will
be RTR Windows machines. TomBru worked with Systems
Marketing to provide a quote from one of MS's Vice
Presidents giving a favorable opinion of Hyundai's decision
to participate in MS's RTR program. JoonP stated that
Hyundai Electronics will sign a letter authorizing Ed Thomas
as the agent for Hyundai to sign agreements between MS and
Hyundai.
NEC Technology (SteveMc)
Due to a late start, and confusion regarding the Select
Solutions program distribution strategy (i.e. first product
delivered to market end of August, catalogs targeted at
direct sales channel yet to go out), it appears that this
effort is in deep trouble already. Process to extend the
Office agreement for an additional six months, including
reduced commitment and higher royalty pricing, is now
underway. New "Ready" line of entry level PCs, targeted for
distribution through mass merchants, started shipping end of
September. NECT's strategy, of offering "high end" easy to
use PCs ro end users through mass merchants, appears to have
little chance of succeeding! To-date they have not
established a wide distribution channel (i.e. only Lechmere
and Brandsmart, regional resellers, have agreed to carry the
product line). Also, it is not clear that end users will
pay the premium price that NECT is offering for an entry
level PC (i.e. "home office" type). Discussions with high
level contacts leads SteveMc to believe that there is a
growing sense of frustration at Boxborough related to their
lack of success to-date in growing their PC business (i.e.
lack of coherent direction, little communication and poor
execution)! Monitor and CD-ROM business remains healthy.
Toshiba America (TomBru)
Tpm Scott, VP of Sales, explained how TAI's sales
organization is set up. Tom Scott committed to get Greg
Cegan, in charge of bids within TAI Sales, in touch with
TomBru to look at the number of Requests for Proposal that
include Windows as a necessary requirement in the proposal.
- From this data, TomBru will be able to quantify the
op[portunities that TAI is missing by not shipping Windows.
This information will be presented to Steve Lair, VP of
Marketing, at TAI in the future. TomBru also worked with
the Windows for Pen Group (Mobile Windows) to help TAI begin
writing their Pen Driver for the upcoming Tablet which will
show at Comdex. This driver should be finished by TAI by
the end of October.
Printer Business (RichAb)
- - HP - We had a successful meeting between Maritz, Carnahan,
and Belluzzo, where they agreed upon the essential business
terms for a printing technology deal. The agreement
consists of two parts: $1.5 million for the user interface
and $8 million for RBA royalties to accrue in 1994. $3
million of the RBA royalty will be non-refundable and
prepaid in 1993. There remains significant work to conclude
a contract covering this arrangement. Key items to be
worked out in early October are the unit royalty schedules
for ink jet and laser printers and the project milestones in
1993 to which the $3 million pre payment will be tied to.
Since exact deliverables cannot be well defined for the RBA
portion of the agreement, a process must be defined by which
both companies work toward closure on specific
implementations.
- - Compaq - productive meeting was held in Houston where we
demonstrated and briefed the Compaq printing marketing and
engineering team on our technology. We had preliminary
business discussions as well. Compaq is giving us every
indication that they will buy our technology for use in both
laser and ink jet products.
**MICROSOFT SECRET**
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[pagebreak]
- - Canon - A meeting was held with Kadokura of Canon to
discus the deadlock we have on NDA. Kadokura agreed to go
to Canon corporate legal with Mr. Adachi of CIS assistance
to get approval on our agreement. the sticking point
continues to be Canon's "...reduced to writing..."
requirement of confidential information.
- - HP - A conference call was held between Doug McChord of HP
- - GHC and Adam Bosworth where HP shared their thoughts on an
"electronic briefcase" personal image database product. HP
wanted to gauge our interest in such an application, one
they see as potentially creating demand for their scanner
products.
**MICROSOFT SECRET**
HIGHLY CONFIDENTIAL MS-PCA 2613486
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