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MS offered IBM Win95 source for ‘neutral’ PC

A neutral PC, friends, is one that only comes with MS software

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MS on Trial In March of 1997 IBM and Microsoft were negotiating a renewed alliance which would boost IBM's use of Microsoft software, and give IBM access to the source code of Windows 95, according to documentation produced at the Microsoft trial yesterday. Microsoft had been trying to bludgeon IBM into co-operation with a mix of carrots and sticks for several years, and yesterday's documents show first, that Microsoft still wanted to take out Lotus SmartSuite, and second, that Bill Gates was still calling the shots. The notes taken at the time by IBM exec Garry Norris make it clear that Microsoft's demands were coming from the top, and show the extraordinary lengths the company was prepared to go to in order to get its way. Teams from the two companies met in IBM's Raleigh facility to discuss what appears to have been a wide-ranging alliance. Lead member for IBM was Ozzie Osbourne of the PC Company, while Bengt Akerlind fronted for Microsoft. Norris' notes of the meeting say "BPC. IBM first chair in exchange for system loaded with Office." The BPC was the Broadcast PC, intended to be a joint development project between IBM and Microsoft. By "first chair" Norris explains his notes as meaning that IBM would get an early-to-market advantage from the co-development. Presumably the arrangement would have been that Microsoft would have the right to offer the technologies developed to other OEMs, but would give IBM a 60 day clear run before it did so. In exchange, IBM would dump SmartSuite and load Office on its machines. Next the notes read: "IE 4.0. In exchange, neutral system and soft dollars. KPC in exchange for neutral system." Asked about this in court yesterday Norris said: "Microsoft defined the neutral system that contained Microsoft [operating?] software, application software, and no IBM or competing software." This means IBM would preload IE 4.0 without Netscape ("Bengt was very specific. He said, 'No Netscape."), and in exchange would get Microsoft cash via joint promotions, advertising or reduced licence fees. And KPC? The Kirkland Programming Center in Redmond was an operation run by IBM, and this would become a self-certification laboratory, or Windows Hardware Qualification Laboratory (WHQL). IBM would have the NT source code on-site (it already had this) and "we would get new access to the Windows 95 and BackOffice source code." That's a pretty massive carrot, but what about the stick? That's the self-certification bit. Said Norris: "Oftentimes when we would send systems to Microsoft to get them certified and placed on the compatibility list, we would send them and somehow they got lost." Oops. "It would take 60 to 90 days to get systems certified on their compatibility list. Competitors were taking one to two weeks. We'd send systems in May and they'd come back in August finally on the list." Akerlind elaborated on what constituted a "neutral" system, according to Norris' notes: "Bengt. SmartSuite, World Book [a competitor to MS Encarta], Notes. Remove objectionable apps and make the systems neutral." But the carrot itself receded. At a later meeting Microsoft's Ted Hannum came up with the interesting concept of "horizontal restraint," and the notes read: "Horizontal restraint. Lowering the value of the system to end user" and "CDT. No ship with NTW and SmartSuite. Then KPC. No SS or CDT shipping with NTW. QPQ access to source, NT and BackOffice and 95. T1 line. Better support." This means Hannum was demanding that IBM commercial desktop brand PCs running NT Workstation shouldn't ship with SmartSuite. Quid Pro Quo (QPQ) would be the source, a T1 line at KPC and better support. We can only speculate about what "horizontal restraint" meant - Norris doesn't seem to have done much of a job explaining it yesterday, but to be fair, he confesses he didn't understand it at the time. Reducing functionality by ripping out Lotus apps? Whatever, the Broadcast PC was abandoned, the reborn Microsoft-IBM alliance didn't happen either, and here we all are in court. ® Complete Register trial coverage

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