How Corel relates to our OEM contract with Gateway

Date: February 1999

Snippet
- Original Message - From: Bill Gates Sent: Sunday, February 28, 1999 4:56 PM To: Joachim Kempin Cc: Bob Muglia (Exchange); Bill Neukom (LCA); Steven Sinofsky; Steve Ballmer Subject: Gateway

Attorney client privileged

I an reading about the Gateway adoption of the Corel software. I am interested to understand what this means better and how it relates to any contracts we have with them.

- Original Message - From: Joachim Kempin Sent: Sunday, March 01, 1999 3:59 PM To: Richard Fade Subject: FW: Gateway could you update us on all the details please.

- Original Message - From: Richard Fade Sent: Tuesday, March 02, 1999 4:56 11:35 AM To: Joachim Kempin; Bill Gates; Allen Wilcox (LCA); Steve Ballmer; Steven Sinofsky; Bob Muglia (Exchange); Robert (Robbie); Bach; Ruthann Lorentzen Subject: Gateway

Attorney client privileged

We renegotiated Gateway's application agreement in November. This included Office 2000 on the G-Pro and high end of the G-Series models. It also included renewing their Work Suite license for those G-Series products not shipped with Office SBE. At the time they were planning a new platform which would allow them to offer configurations < $1,000. Gateway prices are for full systems including a monitor. At the time they were unsure of their costs and held back committing to Works Suite on this low end product line.

So these low end systems are not covered by our existing contract. They have now divided G - Series into "Performance" and "Essential" lines, the Corel bundle is on the Essential line. They did this deal with Corel and informed us after the fact.

Gateway represented that their low end buyers ere indifferent about the WP / tools they provided. Price was their decision criteria - we have not been complacent. We believe the Corel offer for WP Suite is $2 - #$3. We had a similar situation in the past 60 days at Dell, where we were able to retain all of our current business.

We are working on recovering this business, I met with Peter Ashkin (now Gateway Sr. VP for Products) last Friday on this and other issues. We have a shot at regaining for this summer.

Full Exhibit
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