The day Bill Gates screamed IBM's house down

MS on Trial Bill Gates went so ballistic in a phone call to a fellow IBM exec that Garry Norris could hear the screaming from across the room, the DoJ witness told the court yesterday. The awesome sound of Gates screaming about SmartSuite and OS/2 is regrettably lost to posterity, but Norris, who kept a diary of IBM's negotiations with Microsoft was able to record the subject matter. "He was complaining about SmartSuite, the audit and competing with OS/2," said Norris, and the date of the call, July 24 1995, was important. IBM had bought Lotus the previous month, and a week before had said it would make SmartSuite its standard productivity software. Prior to the purchase of Lotus IBM had been shipping SmartSuite, and had been coming under severe pressure from Microsoft to desist. SmartSuite and OS/2 were regarded as competing software by Microsoft, and according to Norris IBM was being charged more for Microsoft licences because it was shipping competing software. IBM was also undergoing an audit to determine how much it owed Microsoft because of under-reporting of Windows sales, and all three of these matters were linked into the main event, the arguments over the terms of the deal IBM would get for shipping Windows 95 later that year. The timing, the volume and the subject of Gates' phone call make it clear that he was inextricably bound up in the whole matter. He'd mailed his OEM sales chief Joachim Kempin in March 95 asking if SmartSuite "should become an issue in our global relationship with IBM," and Kempin had responded: "I am willing to do whatever it takes to kick them out." This is the sort of email exchange that makes Bill so forgetful when he's on-camera. He's clearly suggesting the possibility of global linkage, screwing IBM in other areas until it dropped SmartSuite, but isn't actually saying 'go do it.' Kempin's understanding of his meaning does however seem firm, and he says he'll use the PC relationship (the part of the MS-IBM relationship he owned and owns) to apply pressure. Norris says Kempin suggested IBM drop SmartSuite for six months in exchange for settlement of the audit. An August email from Norris' boss, Tony Santelli, confirms this: "Joachim offered to accept a single payment and close all outstanding audits." He suggested IBM not bundle Lotus SmartSuite on our system for a minimum of six months to one year." That didn't happen, and Microsoft ran IBM's negotiations over a Win95 licence right up until the product launch. According to Norris, this inflicted massive damage on IBM, and the company realised it would have to deal. As a Microsoft exec told Norris, Windows was "the only game in town." ® Complete Register trial coverage