A filing unsealed in the Vista Capable case Thursday appears to bolster plaintiffs' claims that Microsoft loosened the requirements needed for a PC to get a 'Vista Capable' sticker in order to help Intel sell its chipsets.
Other filings in the case already suggested that Intel was a factor in Microsoft's decision, but the new filing appears to provide much more documentation. Read the filing here (PDF).
As the Vista Capable program was initially drafted, computers with Intel's 915 chipset would not qualify for a 'Vista Capable' sticker because the chipset did not work with Vista's most advanced graphics.
When Microsoft said it would start the Vista Capable program three months earlier than anticipated, Intel executives complained because they would not be able to sell as many 915 chipsets.
"While I do not want to discuss volume and $$ on email, it is material to our business, and we do not understand Microsoft's motivation to change the previously agreed upon date," worte Intel executive Renee James in an e-mail.
Later, Microsoft's Bob Aoki wrote to a colleague that "Intel told me this afternoon the revenue impact is 3X billions and has already been raised to Paul O [Intel CEO Paul Otellini] who is awaiting our response."
James later wrote that Intel's Otellini "doesn't understand why the date changed and we don't accept it is just 'labels on boxes.'"
Internally, Microsoft's Rajesh Srinivasan calculated how much money Intel could lose:
Assuming April and May [2006] represent 33% each of the quarter, Intel 915 based motherboard volume for these months is 3M
Motherboard pricing: $100 (we don't know this, Bob may know)
CPU price: $100
So, Intel's exposure is 3M x 200 = $600M for April and May ...
Intel will continue to see loss in market share due to this decision.
Here is how their potential costs could get into billions.
Eventually, Microsoft dropped requirements so that Intel's chip would qualify, according to plaintiffs.
The filing unsealed today shows that Intel executives were ecstatic when Microsoft made the change, with Otellini sending a note to Microsoft CEO Steve Ballmer "thanking him for listening and making these changes."
Other exchanges in the filing show that some Microsoft executives, including Jim Allchin, then Microsoft's co-president of platform products and services, balked at lowering the requirements. Here's an e-mail from Allchin:
I believe we are going to be misleading customers with the Capable program. OEMs will say a machine is Capable and customers will believe that it will run all the core Vista features...
... I know we don't want to hurt the OEMs, but end-customers must be the top priority. We must avoid confusion. It is wrong for customers...
In a statement, Microsoft Spokesman David Bowermaster said, "The emails highlighted by the plaintiffs reflect the normal back-and-forth discussion about an internal decision Microsoft made in January 2006, long before it began communicating about the Windows Vista Capable program to consumers in May 2006.
Ultimately, we provided choices to consumers, giving different options for Windows Vista Capable PCs at various price-points to meet their needs. We conducted a comprehensive education campaign through retailers, PC manufacturers, the press, and our own Web site that gave consumers the information they needed to choose an affordable computer that would run the edition of Windows Vista that best fit their needs or lifestyle."
Source: Seattle PI's Microsoft Blog
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