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Re: Forbes: OEM's Suffer from Microsoft's 'Scare Tactics'

  • Subject: Re: Forbes: OEM's Suffer from Microsoft's 'Scare Tactics'
  • From: "Rex Ballard" <rex.ballard@xxxxxxxxx>
  • Date: 4 Sep 2006 08:07:44 -0700
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Erik Funkenbusch wrote:
> On 4 Sep 2006 02:12:57 -0700, Rex Ballard wrote:
>
> >> By that time it was pretty clear to everyone, I think, that OS/2 was never
> >> going to be much of a success. It had already been out for about 7 years,
> >> and still was only a niche player. The introduction of Dimdows 95 was final
> >> proof, if any was needed, that OS/2 was irrelevant.
> >
> > Actually, that wasn't all that clear in early 1995.  Windows 3.1 was
> > very long in the tooth, crashed or hung 3-5 times per day, and could
> > barely support a 9600 baud modem even though 56kb modems were available
> > and functional.  Windows NT 3.x was a dismal flop, selling less than
> > 10% of expected sales, prompting Microsoft to repackage it as a server.
>
> No, Rex.  The first 56Kb modem was released in 1997.  The USR X2 and
> Rockwell K56Flex.  Stop making shit up.
>
> http://ittimes.ucdavis.edu/v6n5feb98/cait.html

You are correct.  Windows 3.1 supported 9600 baud maximum speed.

However
http://www2.rad.com/networks/2005/modems/history.htm

As years passed, dial-up modems' technology improved and the data rates
were increased. In 1980 data rates reached 14.4 Kbps, and in 1994 it
was doubled to 28.8 Kbps. In 1996 a new technology emerged, enabling
data rate of 56 Kbps, which is still the fastest speed that exists
today for dial-up modems.

While Windows 95 was released in August of 1995, it took almost 3 years
for corporations and individuals to make the transition from Windows
3.1 to Windows 95.  Many even held out for Windows 98.

> You keep repeating that lie about NT.  NT was released as both a
> workstation *AND* a server at the exact same time.  Both were released on
> July 27, 1993.  Stop making shit up.
>
> time.http://en.wikipedia.org/wiki/Windows_NT
True, but Microsoft expected the PRIMARY source of revenue from NT to
be from workstations.  They were hoping to sell about 10 million of
them in the six months.  Instead, they sold about 300,000

http://72.14.235.104/search?q=cache:IGi9KcylLW4J:www.pegasus3d.com/windowshistory.html+Windows+NT+3.1+first+quarter+sales&hl=en&gl=in&ct=clnk&cd=2
1993
<quote>
August: Windows NT 3.1 - the first version of NT - is released. Lines
of code: 6 million.
October: Service Pack 1 for Windows NT 3.1 released.
December: Microsoft announces that it has shipped 300,000 copies of NT
in 1993.
</quote>
Mind you, they only shipped the licenses.  Far fewer of those licenses
were actually deployed.

> > Microsoft had completely hyped Windows NT, so by the time the OEMs were
>
> While NT was hyped, it was never expected to be a big seller at first.
> Microsoft knew it would be a 5+ year struggle, in part because NT was
> designed for hardware requirements that didn't yet exist in an affordable
> manner, and in part because it would take a great deal of time for 32 bit
> apps to be rolled out into the marketplace.

But that's NOT how they promoted it during 1993.  They made it sound,
to corporate CIOs, and to OEMs, like Windows NT was going to be a huge
moneymaker, that they shouldn't even think about anything other than
Windows NT, and that once NT hit the market, it would be a "better UNIX
than UNIX".   It was vaporware.

Bill was trying to keep the industry from going to OS/2 or UNIX.  IBM
had a strong OS/2 platform, and Sun had Solaris on Sparc and Intel.
Slackware Linux was being circulated, Caldera had been formed, and Red
Hat was offering quantity discounts to OEMs.

> > looking at "Chicago", and after nearly 18 months of delays and missing
> > 3 critical market windows, they were seriously considering
> > alternatives.  OS/2 2.0 wasn't that great, but Warp 4.0 was very stable
> > and had some great new features, including very robust support for the
> > Internet.  Novell had shut down their UnixWare workstation division,
> > but those people formed Caldera with Ray Noorda's financing, and were
> > loaded for bear.  Bob Young was willing to offer Red Hat Linux to any
> > OEM or VAR for as little as $2/copy in quantities of 1,000 or more.
>
> Yet none of that happened.

Right Erik.  If you can't find it in Google, it never happened.

Google didn't archive content until 1995, and most of the content
wasn't archived by the publishers for more than a year.

You could go to a library, and read the articles in the microforms.
But that would be way too much trouble wouldn't it?

I got the word about how Microsoft strong-armed the board into
scuttling the Workstation project while Noorda was in China, from a
Novell Board member who was there in the meeting the day Microsoft made
the offer.  He sent me an e-mail.  It might even be in my archive
somewhere.

> > Competition is when you offer a selection of products and your buyer
> > selects those products which it actually desires.  The Vendor provides
> > only those products and make no restrictions on those products.  For
> > example, if the OEMs decided that they could, and wanted to, put Linux
> > and Windows on the same hard drive, and let the end user choose which
> > system would be started at boot-up, that would be competition.
>
> No, that would not be competition.  "Competition" is the act of competing.
> It has nothing to do with whether or not any of the participants even
> finish the "race", much less whether they make it to the customers
> doorstep.

Would you consider breaking a boxer's arm before putting him in the
ring to be "competition'?

Would you consider breaking a runner's leg seconds before the starting
gun was fired to be competition?

Would you consider drugging a contestant with fast acting sedatives or
opiates just before the event to be competition?

Microsoft "rigged the game".  That's not competition.  That's
extortion.

> > When a supplier "Makes you an offer you can't refuse" and demands that
> > you stop doing business with other competitors, and stop making
> > announcements that are "upsetting to the boss", and threatens dire but
> > unspecified consequences if you do not cooperate completely with the
> > wishes of "the boss", that's called extortion!
>
> You really need to look up the meanings of these words you use.  They don't
> mean what you think they do.  You use the word "ironically" wrong all the
> time, you don't seem to know what competition means, and you claim that a
> company that freely agrees to a licensing agreement is being "extorted"
> because they can't break the terms of the license they agreed to.

If an agreement is entered under duress, it's extortion.
>From the Wiki:
http://en.wikipedia.org/wiki/Extortion
Extortion is a criminal offense, which occurs when a person either
obtains money or property from another through coercion or intimidation
[...]
Making a threat of violence or a lawsuit which refers to a requirement
of a payment of money or property to halt future violence or lawsuit is
sufficient to commit the offense. The simple four words "pay up or
else" are sufficient to commit the crime of extortion.

Microsoft obtained something of extremely great value - exclusive
access to the OEM channel, through a carefully structured series of
threats coupled with offers.

MITS - "Pay me $150,000 or I'll port BASIC to SWTP"

Compaq - "Remove my competitor's product or I'll revoke your licenses".

IBM - "Remove OS/2 from the market or we'll audit you and publish how
many licenses you have stolen from us".

IBM - "Remove OS/2 from the market or we'll melt your CPUs".

WinXP - "Give us exclusive control of the hardware and don't disclose
to Linux, or we will tell your customers that your drivers are
viruses".

Vista - "Give us exclusive control of your hardware or your drivers
won't be installed".

Microsoft then used these concessions to gain $40 billion per year at
85% profit margins, while OEMs like Gateway lost money, Dell had to cut
distribution costs to the bone to survive, HP had to subsidize the PC
market with Printer revenue, and IBM had to subsidize the PC market
with consulting revenue.

In fact, this is the first year in many years that the OEMs are making
any profit, and most of that profit seems to be coming from "Linux
Ready" AMD-64 and Intel DUO machines featuring OpenGL optimized video
cards.

When you openly admit to sabotage, and then get off with a toothless
settlement and sealed court records that grant you immunity from future
prosecution, that is a threat.  It tells the OEMs, "If you don't give
me exactly what I want, I can destroy your business with the next
service pack or security update".


> > This is EXACTLY what Microsoft did in Microsoft vs Caldera, in which it
> > became clear that Microsoft threatened the OEMs with malfunctioning
> > machines if they were to ship machines with DR-DOS instead of MS-DOS
> > with Windows.
>
> Hey, there's another word you don't know the meaning of.  EXACTLY doesn't
> mean "kind of, sort of" or "vaguely similar" or anything else you might try
> to apply.  Unless you can prove that Microsoft actually threatened any OEM,
> and such threats could be legally considered to be extortion, then it's
> hardly "exactly".

In the court reports, Microsoft executives admitted that they sabotaged
DR-DOS, putting code in to detect DR-DOS and causing Windows to
malfunction when this was detected.

The Judge ruled against Microsoft who argued a technicality.

Microsoft immediately offered a settlement which resulted in the
sealing of all records, immunity from further lawsuits, and immunity
from prosecution for all Microsoft executives involved with the
decision.

After a few years, even the records were destroyed.  It seems that it
was not possible to get them or store them in electronic form, and
Caldera couldn't afford to store them in a u-haul locker anymore.

> > This is EXACTLY what Microsoft did to Compaq in the contempt of the
> > 1993 order case, where Microsoft notified Compaq that since they had
> > not obtained Microsoft's prior written approval for the reconfiguration
> > of the desktop, placing the Netscape Icon in place of the IE Icon, that
> > all of their Windows licenses for their best selling line would be
> > revoked in 30 days, virtually assuring bankruptcy of Compaq within 12
> > months.
>
> Once again, Rex.  Caldera had agreed to, and signed a legally binding
> contract that stipulated the terms upon which they were licensed the OS.
> Compaq violated those terms.  That's not 'extortion'.  That's simple breach
> of contract.

Under what terms did Compaq sign the contract.
The point is that making this a matter of public record, was a threat
to the OTHER OEMs.

When Microsoft lets itself be prosecuted, it's to demonstrate their
ability to circumvent the law.  "We can do it to them, we can do it to
you."

Do you honestly think that the OEMs cheerfully sign contracts that
force them into a commodity business with 3-5% margins, or even losses,
while giving Microsoft an 85% profit margin?  I know for a fact that
Sam Palmisano has voiced his resentment of this little business
practice - in his addresses to the employees.  Lou Gerstner wasn't too
happy with it either.

Michael Dell has been playing "cat and mouse" (as the mouse), with
Microsoft for about 10 years now.  Dell announces that they support
Linux, and Microsoft beats them up.  Dell announces that they support
Linux, and Microsoft beats them up...

Every time it looks like Dell is about to break loose, something
happens, and they are back in the corner like a whipped puppy again.
Over the years, Dell has tried to offer SCO Unix, Interactive UNIX, Red
Hat Linux, Caldera Linux, and SUSE Linux.  I think they even tried to
offer OS/2.  Each offer is withdrawn or modified, usually within 48
hours, to a much more limited offer, under very limited terms.

Dell probably does this to let customers know that certain models will
run more than Windows, even though they will only be sold with Windows.

HP and Lenoovo both make "Linux Ready" machines, but Microsoft won't
let them sell those machines as anything but "commodity" machines.
When running XP, they are no better or worse than any other XP machine.
 It's only when running Linux that they really get to shine.

> > This is EXACTLY what Microsoft did to IBM when, because they did not
> > stop selling OS/2 completely, Microsoft released a patch which caused
> > thousands of machines to malfunction permanently, requiring replacement
> > of their Cyrix processor chips.  Microsoft openly admitted to the
> > sabotage, and offered a toothless settlement and an immediate release
> > of SP3.  But it was a well published warning to the other OEMs that
> > Microsoft could and would destroy the equipment of any OEM who failed
> > to cooperate fully with all of Microsoft's demands.
>
> No, Rex.  NT4 SP2 was a bad service pack all around.  It had serious bugs
> in the NTFS code, among other things, that caused all kinds of problems for
> everyone, not just IBM.  It hadn't been tested well enough and it prompted
> major changes in the way Microsoft handled service packs after that.

But in the preliminary hearings of the IBM vs Microsoft lawsuit
(1996?), IBM identified the exact lines of code which tested for the
Cyrix chip, and called the F00F bug.  Microsoft even admitted to the
sabotage, but moved for total suppression based on the premise that IBM
had violated their license by "reverse engineering" that code.  The
Judge ruled that Microsoft could not use their license agreement to
obstruct justice.  Microsoft offered a settlement the following day,
including SP3, which they had been holding back.

It's worth noting that Service Pack 4 had a defect in the TCP/IP stack
which caused race conditions and BSOD when users ran Netscape and Lotus
notes concurrently.  This was fixed with SP5.  It seems that Microsoft
had removed the mutex controls for the entry points used by these
applications  (and several other 3rd party applications).

> However, I haven't missed that you're trying to peddle that old Cyrix
> lawsuit lie again, especially after you were so bitch slapped about it the
> last few times you did.  No such lawsuit happened.  There is no evidence of
> it existing.  Stop making shit up.

http://www.plex86.org/linux/Microsoft-fumes-about-security-bounty.html
<quote>
I think one of the reasons I remember this so well is that I had 3 or 4
Cyrix machines that litereally melted after I installed SP2. It was
quite spectacular - you'd install the new upgrade - the PC wouldn't
boot, and when you tried to reboot again, you couldn't even boot the
ROM. I replaced the Cyrix chips with AMD chips and things worked better
again. A bit later, I saw the article - it wasn't front page news -
more like the middle of one of those weekly magazines like e-week or
InfoWorld.
</quote>


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