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MS OEM boss shocked by Compaq-Netscape deal – allegedly

Joachim Kempin expresses improbable surprise and ignorance on various occasions

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MS on Trial Just what could have been in the movie that Joachim Kempin, Microsoft's penultimate witness and longtime OEM sales vp, did not play to the court? The one that was played was only made on 11 February 1999, and Kempin was there throughout the day. Microsoft decided to cut some of the video demonstrations, and therein lies a separate tale. The parts of Kempin II that Microsoft decided to leave out were of course those that were less favourable to Microsoft's case. The clue to there being Kempin I and II was in Kempin's sworn-to-be-true direct testimony, signed on 6 January 1999, which referred to what must have been a previous video, Kempin I. It was clear that Microsoft had had second thoughts about the contents, in view of the blunders with previous videos, and had remade it. Boies elicited this from Kempin, who at first was not averse to producing it. The hapless Steve Holley, who was Kempin's legal minder, was less sure. Judge Jackson said he would return to this, but alas it was overlooked in the rush to finish the business. The point of Kempin II, it was said, was to show just how easily Windows 98 could be customised if OEMs wanted to do this. That may have been the idea, but it did not work that way. Even Kempin II was marred: Microsoft bought two of each PC to use, and one was used the previous day to check that everything was as Microsoft would wish for the demos, so there were no surprises the next day. We reported earlier that Compaq had had a change of heart about including a Netscape icon on the desktop, and when a Presario was booted, there it was. Bizarrely, Kempin said he was "totally surprised". As it's generally held that very little moves in Microsoft's OEM business, at least at top customer level, his surprise was surprising. Later, Boies asked Kempin about the addition of Netscape to Compaq PCs from January 1999: How much did Netscape have to pay? [That's an interesting thought.] How long was the commitment? Kempin only said: "I just know they put it on; that's the only thing I'm saying." Whether he was being tight-lipped because he was annoyed at what had happened, or whether he knew more than he said, is hard to determine. It did seem as though Kempin might have known about Compaq and the Netscape icon all along. So far as terminating Compaq's Windows licence was concerned, this was little short of being an act of blackmail, since it was very clear that Compaq had no option but to cave in. Judge Jackson became very short with Kempin when he noted that Kempin had been very reluctant to estimate numbers when he claimed he had no data, but suddenly was not averse to using anecdotal evidence. A bench conference discussed Kempin's manner of giving evidence. Boies said he was reluctant to allow Kempin's direct testimony to remain on the record unchallenged. There was considerable cross-examination by Boies about OEMs that had been granted special concessions to modify the boot-up sequence, with Microsoft exhibiting a particularly nasty kind of favouritism by only hinting to selected OEMs that any modification was allowed ("We have sent a letter to some PC manufacturers ..."). It was revealed that only Compaq has a licence that allows it to customise the Windows start-up. It was also confirmed that Compaq gets the best prices from Microsoft. "A handful or more OEMs have a source licence" from Microsoft, but Kempin could only think of Compaq, HP and IBM. The source code must be kept in escrow and the sacred tablets only examined when there is a need -- so let's hope all that handling does not wear down the tablets. Even so, the tablet keepers cannot modify the sacred carving: only Microsoft can do this if it so desires. Kempin tied himself in knots trying to defend Microsoft's reluctance to allow OEMs to interfere with the start screen process. It was not surprising that the greatest desire was to keep Netscape off the desktop, by covert means rather than overt ones. Some of the reasons for this paranoia probably include making it difficult to substitute components from rival software developers; and protecting against illegal software development. Kempin used as an excuse for Netscape not being allowed to be added during a boot-up sequence that it was not an ISP. Gateway was allowed to let users have a choice if browser. In addition, the persistence of IE4 for certain tasks (like browsing HELP) makes it almost impossible for users to use an alternative browser without IE4 popping up all the time. Boies taxed Kempin with the finding that response is very slow if Netscape and IE are both on the PC. The ignorance - or maybe feigned ignorance - that Kempin displayed was laughable: Boies: Is IE4 uninstallable from Windows 95? Kempin: I don't know. I have never tried it. I just don't know. It was not therefore a surprise that Kempin said he had never used a browser other than IE. Boies suggested that Microsoft paid money to OEMs to preserve the standard Windows interface. Kempin denied it, but the difference between a sack of fivers and a Microsoft marketing development agreement is pretty slim. Boies -- and the DoJ team --has been doing a very good job of coming up with documents to contradict a statement made by a Microsoft witness. A particular gem was an email from Microsoft vp Brad Silverberg, now dubbed a consultant and who went walk-about when he was passed over for promotion in favour of Jim Allchin. Silverberg said in an email to Gates on 15 December 1995 that "[IE3] is a standalone browser that runs on Windows 95". This is damning for Microsoft's case. In Gates' response, he said "I think it is a little strange to ship IE3 for free ...". In the OEM stakes, Kempin admitted that Compaq was first, Dell second, and Gateway third so far as licensing fees are concerned. IBM was not in the same league, because as Gates noted in a 30 October 1997 email, IBM had software ambitions. Gates continued in his mature, leadership style: "I can deal with this just fine if IBM wasn't such rabid Java backers [sic]." Some OEMs still with per processor licences have a five per cent exclusion, although Compaq apparently has three per cent. An interesting claim: Kempin had emailed Gates at the end of 1997 suggesting "even lower prices". An ironic situation arose when Judge Jackson asked about the licensing terms defined by the consent decree that he had signed after the folk-hero Judge Sporkin was elbowed aside by the appeals court. Kempin did not do a good job for Microsoft: he was a semantic games player with a selective memory that miraculously recovered from time to time when David Boies for the DoJ tempted him with a question into giving some detail when only minutes earlier he could not remember the most general details. Holley's redirect examination was unexceptional, but managed to bring out Kempin's deep ignorance of the marketplace: he thought that there were "maybe 30 to 40 people in the world" creating Linux, and what's worse from his perspective, they "hardly do any marketing for it". Prompted by the fear of overrunning The Register's timetable, Judge Jackson steamed out of court on Friday afternoon exactly on schedule. His court did sit longer hours towards the end, and five days last week. The judge did not specify the length of the recess, but current estimates are six weeks while he and David Boies are busy with other cases, and other trial lawyers work on their refutations and closing arguments. ® Complete Register trial coverage

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