VARs Vindicated By Microsoft Vista E-mails

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Internal Microsoft e-mails unsealed Wednesday by a federal judge in Washington state have given considerable weight to VAR and system builder allegations that Microsoft "lowered the bar" in labeling "Windows Vista Capable" certain Intel chipsets that did not meet performance standards for the operating system after its launch last year.

The e-mails, available here and here seem to confirm the suspicions of solution providers who told ChannelWeb in mid-February they were "leery" of Microsoft's Vista Capable campaign from the outset. One high level executive at a computer builder that participated in the marketing campaign even correctly identified Intel's 945 chipset as a culprit in Microsoft's lowering of its "Vista Capable" spec.

A Feb. 18, 2007 e-mail from Steven Sinofsky, then newly named as head of Microsoft's Windows and Windows Live Engineering Group, to CEO Steve Ballmer and other executives stressed problems with Intel's 915 and 945 chipsets:

The Vista Ready logo program required drivers available on 1/30. I think we had had reasonable coverage, but quality was uneven as I experienced.

Intel has the biggest challenge. Their "945" chipset which is the baseline Vista set "barely" works right now and is very broadly used. The "915" chipset which is not Aero capable is in a huge number of laptops and was tagged as "Vista Capable" but not Vista Premium. I don't know if this was a good call. But these function but will never be great. Even a 945 set has new builds of drivers coming out constantly but hopes are on the next chipset rather than this one.

Portions of the e-mails unsealed Wednesday had been read aloud earlier in U.S. District Court, where Judge Marsha Pechman last Friday gave the go-ahead to plaintiffs to bring a class-action lawsuit against Redmond, Wash.-based Microsoft over the Vista Capable marketing campaign.

Microsoft, which confirms the authenticity of the e-mails, denies it did anything wrong with the campaign, saying in a statement: "The emails reflect part of an active discussion about how best to implement the Windows Vista Capable program. Ultimately, we provided choices to consumers, giving different options at various price-points to meet their needs."

One e-mail receiving a great deal of media attention is a Feb. 26., 2007 message from Microsoft GM John Kalkman to system builder channel chief Scott DiValerio. In that e-mail, Kalkman wrote:

It was a mistake on our part to change the original graphics requirements. ... In the end, we lowered the requirement to help Intel make their quarterly earnings so they could continue to sell motherboards with the 915 graphics embedded.

But Intel legal affairs spokesman Chuck Molloy took particular exception to Kalkman's commentary on the Santa Clara, Calif.-based chip giant's financial situation.

"My reaction to that statement is that John Kalkman has zero visibility into Intel's financials, financial forecasting or any financial situation as it relates to Intel's motherboards or any other product we sell," Molloy said Friday.

Intel and Microsoft have both been in the spotlight over legal issues in recent weeks. European Commission regulators earlier this month raided Intel's Germany offices as part of the EC's ongoing investigation of the chipmaker for anti-competitive practices. Intel faces a closed-door hearing on those proceedings in Brussels on March 11 and 12.

The European Consumers' Organization (BEUC) is interested in the discovery unsealed Wednesday in the U.S. class action suit, said Cornelia Kutterer, senior legal advisor at the Brussels-based consumer watchdog.

"In such a high-profile case, where a dominant firm squeezes out a competitor, it has significant effect on price competition, innovation and consumer choice," said Kutterer.

Intel also faces several anti-trust lawsuits in the United States, including a case brought against the chipmaker by its chief rival in the x86 microprocessor market, Advanced Micro Devices. Depositions by major witnesses in the AMD suit, including Michael Dell, are scheduled for mid-March, according to legal sources.

Microsoft, for its part, was slapped with a record $1.35 billion fine by European regulators Wednesday for failing to comply with orders issued in the landmark 2004 anti-trust ruling against the software giant.

Sunnyvale, Calif.-based AMD would not comment on rival Intel's role in the unsealed Microsoft e-mails, instead stressing its own products' readiness for Vista.

"AMD was a key partner to Microsoft in the development of Vista, and our platforms offered generally trouble-free experiences out of the box, in part due to our emphasis on graphics even in integrated platforms, as well as our strength in graphics driver development," an AMD spokesperson said in an e-mail to ChannelWeb.

"We have a critical mainstream chipset launch upcoming that will serve to extend our advantage over Intel in the mainstream PC market. And the vast majority of PCs sold are IGP systems."

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