Feeds

IBM exec outlines MS plan to throttle OS/2, Lotus

Ship the wrong stuff and you got 'IBM prices' - apparently

  • alert
  • submit to reddit

Beginner's guide to SSL certificates

MS on Trial IBM exec Garry Norris yesterday detailed a Microsoft campaign to throttle OS/2 in the run-up to the launch of Windows 95. IBM and other PC companies, including Compaq, were threatened with higher prices if they shipped rival products as well as Windows. Norris, program director for software strategies with the IBM PC Co, was involved in extensive negotiations over IBM's Windows licensing deals from early 1995 until 95's launch that August. Microsoft was obviously playing hardball, as Norris claims that that IBM didn't get its final deal until 15 minutes before the launch. An $8 price reduction, he said, was secured for "exclusion of OS2 and expedited shipments of Windows 95." Other manufacturers, including Compaq, agreed not to sell OS/2 after Microsoft threats, said Norris. This is not of course strictly correct, as OS/2 was available from various PC companies, Compaq included. But it wasn't always that easy to obtain, so Norris may be right in some senses. Norris achieved instant fame earlier this week (Earlier story) when it was revealed that he'd kept a detailed diary of two years' negotiations with Microsoft, and his testimony seems to be providing the clearest picture yet of how Microsoft used its muscle against PC manufacturers, via a mixture of threats, inducements and hard cash. He came up with some useful numbers, saying that IBM had been paying $9 a copy for Windows 3.1, but that initially with Windows 95 Microsoft wanted $46. The 3.1 fee was probably the lowest price paid by any OEM, while the $46 was higher than rivals. "Microsoft told us repeatedly, `Because you compete with us, you're going to get unfavorable terms and conditions,'" he said, backing it up by saying payments to Microsoft had risen from $40 million in 1995 to $220 million in 1996. Compaq's higher discounts are justified by Microsoft as being because of greater volumes, but this can't have been the case in earlier years, before Compaq shipments passed IBM's. He also provided evidence of linkage by Microsoft between operating system and application sales, claiming that IBM would get better prices if it didn't ship Netscape Navigator and Lotus SmartSuite. For Microsoft Office bundles he was charged "IBM's price" of $250 per copy, considerably higher than the Compaq or HP price. Microsoft might have some justification for claiming volume discounts here, if IBM was shipping fewer copies of Office. "Microsoft repeatedly told us that as long as we were shipping competitive products, such as Smart Suite and OS2, we would not be treated the same as Compaq and others," he said. ® Complete Register trial coverage

Choosing a cloud hosting partner with confidence

More from The Register

next story
MI6 oversight report on Lee Rigby murder: US web giants offer 'safe haven for TERRORISM'
PM urged to 'prioritise issue' after Facebook hindsight find
Assange™ slumps back on Ecuador's sofa after detention appeal binned
Swedish court rules there's 'great risk' WikiLeaker will dodge prosecution
NSA mass spying reform KILLED by US Senators
Democrats needed just TWO more votes to keep alive bill reining in some surveillance
'Internet Freedom Panel' to keep web overlord ICANN out of Russian hands – new proposal
Come back with our internet! cries Republican drawing up bill
What a Mesa: Apple vows to re-use titsup GT sapphire glass plant
Commits to American manufacturing ... of secret tech
prev story

Whitepapers

Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Getting started with customer-focused identity management
Learn why identity is a fundamental requirement to digital growth, and how without it there is no way to identify and engage customers in a meaningful way.
Go beyond APM with real-time IT operations analytics
How IT operations teams can harness the wealth of wire data already flowing through their environment for real-time operational intelligence.
Why CIOs should rethink endpoint data protection in the age of mobility
Assessing trends in data protection, specifically with respect to mobile devices, BYOD, and remote employees.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?