Microsoft Interoffice Memorandum

Date:

Snippet
To: Debbie Dean, Stewart Kanzen, Gordon kanzan, Gordon Letwin, Scott McGregor, Leo Nikora, Leo Nikora, Steve Rowe, John Sabol, Tandy Trower, Greg Whitten

FROM: Steve Ballmer

DATE: December 10, 1994

SUBJECT: Systems Retreat Summary

cc: Paul Allen, Bill Gates, Jon Shirley

Attached for your information is a summary of our retreat held on December 1st and 2nd. Direct any questions you may have to me.

dgh

also: Scott Oki Jim Hams Adrian King Steve Snyder Chris Larson DOS and GWB

Per System Money = units x $/unit - old advances + new advances

..

How do we make more per system money?

- More $/machine - More/copy revenue (extensions) - Home market - More units - More from IBM - Dumb Terminals

..

DRI Strong in special deals, IBM Austin, Motorola, Atari, AT&T $53MM in sales (larger than MS?) Business MS_DOS		MS wins XENIX		MS wins Languages	MS wins Windows		- Multitasking	DRI Ahead 8 bit Net

We make money by selling one redirector/net card Goal: $2MM per year.

..

Key Businesses

BASIC and DOS non-IBM

BASIC and DOS IBM

Windows (problems keyboard, Topview, VDI, standalone?)

XENIX

MSX

Retail Languages

Goal

Deliver $55M in sales for next two years 60% pre-tax

..

IMPORTANT MARKET TRENDS '85


 * COMPATIBILITY WITH IBM

- H.P., T.I., DEC, SPERRY, TANDY, OTHERS - NOT WANG, WHO ELSE?


 * RETAIL DISTRIBUTION OPPURTUNITY GONE

- DEC, T.I., COLUMBIA DATA, ITT, ATT(?), MOST CLONES - NO NEW PLAYERS WILL GET IN

+ SPERRY, NCR, ITT, BURROUGHS, HONEYWELL, ATT(?), DG(?) - CDC, PRIME, DG(?), COMPAQ(?) - SEEQA, CORONA, COLUMBIA DATA, MOST MICRO CLONES CLONES


 * OS "EXTENSIONS" BATTLE

- NETWORK VS. A CAST OF THOUSANDS - WINDOWS VS. TOPVIEW VS. GEM VS. ?

- NET AND XENIX/UNIX
 * MULTIUSER SYSTEMS


 * DOS SHAKEOUT WILL CONTINUE AND GET WORSE

- COLUMBIA DATA, SEEQUA, CORONA(?), TELEVIDEO(?), NS, VECTOR, GRAPHIC, ETC

(Lose Sperry only, lose Phillips bus)

- SURVIVORS WILL MAKE MUCH SMALLER COMMITMENTS

IMPORTANT MARKET TRENDS (MORE)


 * XENIX STARTUPS WILL GROW FOR 286 AND 386

- SPECTRA, ETC


 * VAR CHANNEL WILL GROW IN IMPORTANCE

- MULTIUSER APPS - NETWORK APPS


 * WILL THERE BE ANY NON-EMBEDDED APPLICATIONS FOR NON-INTEL CHIPS? WHAT WILL HAPPEN TO ZILOG AND NATIONAL

..

MS-DOS

WINNERS IN '85

COMPAQ	15,000 u/mo. Retail Only	Solid (if anybody) T.I			Retail/Direct	Solid H.P			Direct		Solid DEC			Direct		Solid (?) WANG (?)		Direct		(?) ZENITH			Direct		Solid TANDY			Direct		Solid DATA GENERAL		Direct/Retail	Solid SPERRY			Direct		Solid AT&T			Retail/Direct	Solid BURROUGHS		Direct		Solid NCR			Direct		Solid 40,000 u/mo. BIll at 50,000 units/month total

LOSERS IN '85

TELEVIDEO	(What will they do?) COLUMBIA DATA	(Going nowhere) KAYPRO		(Management) HONYWELL	(DOA) DATAPOINT	( PRIME (DOA) SEEQUA XEROX MANY NO-NAMES

MS-DOS ISSUES


 * BATTLE IS OVER FOR OS - WE WON

- WINDOWS VS. GEM - WE HAVE NOT WON

- ISV PROGRAM IS KEY


 * MULTITASKING DOS

- SOLID SCHEDULE COMMITMENT NOW


 * NETWORKS

- XENIX IS BEST LEVERAGE

xenix key to DOS | compat our only value-added at key to Net


 * BUNDLING IS BEST LEVERAGE


 * BUNDLING/PRICING

- CHARGE MUCH MORE FOR DOS - 2, 3.X - LESS FOR BASIC

- BUNDLE DOS/BASIC/WINDOWS/NET (?)

- STOP FAMILY PRICING, GET SEPERATE COMMITMENTS PER PRODUCT

- ACCELERATE 1ST YEAR QUATERELY PAYMENTS OR 1 YEAR UP-FRONT


 * MAYBE WE SHOULD SKIP MT-DOS AND GO FOR DOS 5.0 (Multitasking in Windows)

- SCHEDULE IMPACT

- GREAT PRICING OPPURTUNITY!! DOS, WIN


 * ROLL OVER FLAT FEES, WATCH INSTALLED BASE

XENIX

WINNERS/LOSERS IN '85


 * TOO SOON TO CALL - LET'S PICK FROM ATTACHED LIST
 * 150,000 UNITS IN '85
 * KEY PAYERS

- ALTOS		(+) 16,000 - AT&T		(+) - SPERRY	(+) - SPECTRA	(?) - DURANGO	(-) - NCR		(+) - TANDY		(+)

SEE ATACHED LIST

XENIX ISSUES


 * IF THIS IS A KEY REVENUE FOR MS, WHY ARE WE WORKING WITH AT&T

- OMFs


 * LANGUAGES ARE CRITICAL and late

- basic and cobol

- DEBUGGING TOOLS (SOURCE LEVEL)


 * RETARGETABLE COMPILERS WILL HELP KILL OTHER PORTS OF UNIX


 * CHARACTER WINDOWS PRODUCTS MAY BE BETTER THAN MS-WIN STRATEGY:

TECHNOLOGY NOT THERE, 386 BETTER TIMING (IF I WAS DRI I WOULD ATTACK MS HERE!)

- CHARACTER MODE BETTER SHORT TERM ('95 - '86) ?
 * GRAPHICS MODE APPS MARKET UNCLEAR


 * XENIX NET IS KEY TO STANDARD FOR DOS TOO.

- SEL ALL PACKAGED GOODS
 * VERY FEW NON-COMPATBLE WILL EMERGE


 * TRAINING, TRAINING, TRAINING

.. PLANNED 80286 MACHINES

OEM	Model	Announce	Account	Mode	MS-DOS	XENIX

Full Exhibit
http://boycottnovell.com/wp-content/uploads/2009/02/px05002.pdf