Microsoft "caved" into Intel in Vista "Junk PC" scheme

A new round of documents out in the Vista "Junk PC" lawsuit shows that Intel bullied Microsoft into saying an Intel chipset could run Vista, when in fact, it couldn't run the most vital parts of the new operating system, such as running Aero. Intel had billions of dollars at stake, and Microsoft, in the words of one exec, "caved" into Intel.

At the heart of Intel's pressure was its 915 chipset, which was incapable of running Vista's Aero interface. Intel had a significant number of those chipsets on hand. Because the chipsets were incapable of running Vista, Intel wouldn't be able to unload them. That's why they pressured Microsoft into putting "Vista Capable" stickers on PCs with 915 chipsets, even though those PCs couldn't run Aero or other parts of Vista.

The latest filings are part of a class-action lawsuit against Microsoft for a marketing scheme in which people claim that Microsoft misled consumers into buying "Windows Vista Capable" PCs, even though the PCs couldn't run the most important features of Vista. The TechFlash site has the actual documents themselves, thanks to the great reporting of Todd Bishop.

Microsoft had determined that the 915 chipset wouldn't qualify for the "Vista Capable" designation because the chipset couldn't run Aero. Intel then told Microsoft that if PCs with the 915 chipsets didn't get the "Vista Capable" designation, Intel could be faced with billions of dollars in revenue losses. On January 24, 2006, Microsoft executive Bob Aoki wrote to Microsoft executive Will Poole that:

Intel told me this afternoon the revenue impact is #X billions and has already been raised to Paul O [Intel CEO Paul Otellini] who is awaiting our resopnse.

Less than a week later, after a great deal of internal bickering going on at Microsoft, Microsoft backed off and acceded to Intel's wishes. Intel CEO Otellini even sent a note personally thanking Ballmer.

Ballmer and Otellini may have been pleased, but the people most responsible for Windows were furious. Microsoft executive Mike Ybarra said:

This kind of [s**t] drives me crazy, Chris. We have pushed UI in Vista so hard in the last 18 months and we get our OEMs to go with higher end chipsets and graphics parts on existing PCs to really drive the experience for consumers and at the last minute we cave to Intel and give 915 and other chipsets a backdoor into the programs.

I hate the idea of a consumer upgrading a PC that we have marked as "Vista Capable" and not getting the great UI experience.

That reaction was mild, compared to Allchin's. The documents quote Ballmer as calling Allchin "apoplectic" over the decision. According to TechFlash, when Allchin heard about the decision, he wrote this in an email:

I'm sorry to say that I think this plan is terrible and it will have to be changed.

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. The fact that aero won't be there EVER for many of these machines is misleading to customers. ...

We need to meet on this. Please set this up ASAP. We need something simpler in my view. 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. And we probably will have to change your current plans.

The plans, though, weren't changed. The scheme went through. Consumers were furious, and ultimately, Microsoft was sued.

I'm still going through the just-released documents, and I'll blog on more as I find it.

Preston Gralla is a contributing editor for Computerworld, and the author of more than 35 books.

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