Microsoft e-mails show 'Vista Capable' changes helped Intel

Former exec feared move would be 'misleading to customers'

Pressured by Intel Corp., Microsoft Corp. relaxed the rules for a crucial Windows Vista marketing program -- a move that let the chip maker sell older graphics chip sets that were incapable of meeting the original requirements, internal e-mails show.

The move angered some Microsoft executives, including the then-head of Windows development, who said it would mislead customers.

In a motion unsealed Thursday in the ongoing "Windows Vista Capable" class-action lawsuit, the plaintiffs used an exchange of messages between Microsoft and Intel to back their claim that the former deceived customers who later bought machines equipped with the latter's older chip sets.

The Intel 915 chip sets -- on-the-motherboard integrated graphics that provided less-powerful graphics support than a separate graphics card -- were unable to run Aero, Vista's flashy new graphics interface. According to the e-mails, PCs using the Intel 915 chip sets initially did not qualify as Vista Capable because they could not meet the requirements of the Windows Device Driver Model (WDDM), the revamped driver architecture that debuted in Vista.

When Intel found out that Microsoft wanted to jump-start the Vista Capable campaign on April 1, 2006, three months earlier than expected, it complained to Microsoft, saying that it wouldn't have enough higher-end chip sets available to sell to computer makers.

"An April 1st date in retail means a significant change in terms of our ability to meet demand with Vista-ready parts and in short will cost us significant business," said Renee James, the Intel executive who was the primary liaison between the two firms, in a message quoted in the plaintiffs' motion. "While I do not want to discuss volume and $$ on e-mail, it is material to our business, and we do not understand Microsoft's motivation to change the previously agreed upon date."

Four days later, James dropped the name of Intel CEO Paul Otellini in another message to Will Poole, who at the time was responsible for the client version of Windows. "[Paul] doesn't understand why the date changed, and we don't accept it as just 'labels on boxes,' as the implication is these machines will be made to work someday and nobody has done any test or validation, and we do not think the potential liability of a consumer claim is a good idea."

In a filing last month, Microsoft argued that its CEO, Steve Ballmer, should not have to testify in the class-action case. However, the company acknowledged that the firms' chief executives had talked about the issue. The motion filed yesterday noted that Otellini had sent a thank-you note to Ballmer. Microsoft has denied that Ballmer had any direct involvement in the relaxing of Vista Capable requirements, saying that it was the decision of his subordinates, including Poole.

Rather than push the launch of the Vista Capable program back to its original June 1, 2006, date -- as Intel wanted -- Microsoft instead dropped the requirement that all machines be capable of handling WDDM. With that decision, PCs equipped with the Intel 915 chip set qualified for the Vista Capable sticker.

Just three days after James' last message, Poole changed the rules. "915 systems absolutely WILL be able to run Windows Vista," he wrote. "They will not run Glass [Microsoft's then-name for the Aero interface -- Ed.]. They will not get some other benefits that come with WDDM drivers that cannot be ported to them."

James was puzzled, according to the e-mail quoted in the plaintiffs' motion. "We are seriously confused. We believed that 915 is NOT Vista-ready, as it will never have WDDM drivers. We believed your Vista Ready [an earlier name for the Vista Capable program -- Ed.] requirements doc said it had to be WDDN drivers to quality for the program sticker. Are you saying that these parts quality for Vista Ready logo?"

Poole assured her that they did. "We need to separate what the 'Vista Capable' logo requirements are from the concept of being able to run Vista," Poole said in a follow-up e-mail. "Lots (many tens of millions) of systems that will NOT have WDDN, absolutely WILL be able to run Windows Vista. The POR [plan of record] is that although the 915 is upgradeable to Vista, it would not qualify for a Vista Capable logo, nor for a basic 'designed for Windows Visa' [sic] logo once we launch."

In fact, the plaintiffs charged in their motion, as soon as Microsoft launched Vista, it reinstituted the WDDM requirement for the Vista Capable logo.

Some Microsoft executives reacted intensely to the decision to drop WDDM from Vista Capable's must-have list. "This kind of shit drives me crazy, Chris," said Mike Ybarra, a director of product management, in a message to a co-worker. "We have pushed the UI in Vista so hard in the last 18 months, and we get our OEMs to go with higher end chip sets 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 chip sets a back door into the programs."

Jim Allchin, then the co-president of the company's platform products and services -- effectively the head of Windows -- was even blunter in his criticism. "I believe we are going to be misleading customers with the Capable program," Allchin said in an e-mail undated in the motion. "OEMs will say a machine is Capable, and customers will believe 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."

He argued that customers, not the computer makers or Intel, should be the priority. "End-customers must be the top priority. We must avoid confusion. It is wrong for customers."

Allchin resigned from Microsoft the day after Vista shipped in January 2007.

Yesterday's filing asks U.S. District Court Judge Marsha Pechman to rule that Microsoft's changing the Vista Capable requirements meets the definition of an "unfair or deceptive act or practice" under Washington state law.

"The reasons for lowering the bar on WDDN were to clear out a huge inventory of both existing computers and Intel 915 chip sets and to increase the number of PCs that would qualify for the Vista Capable program," argued the plaintiffs' lawyers in the conclusion to the motion. "Immediately after the launch of Windows Vista, WDDM was again required. If it had been generally known that the 'Vista Capable' PCs were not truly 'Vista Capable,' demand for the in-channel computers, the 915 chip sets, and the XP licenses associated with these PCs would have been 'Osborned," they added, using a term derived from a computer executive, Adam Osborne, who in the 1980s talked up the next version of his company's hardware before it was ready, only to see sales of the current systems plummet.

"Microsoft chose to withhold from the public all information about the fact that WDDM was removed as a requirement in order to increase the demand for PCs that were, if truth had been told, soon to be obsolete," they said.

A month ago, Microsoft countered, saying that the decision was a purely internal one and that it had told customers later during 2006 that WDDM was necessary to run Aero and that the plaintiffs' motion was "generally irrelevant" and "has no merit."

Today, company spokesman David Bowermaster said, "The e-mails highlighted by the plaintiffs reflect the normal back-and-forth discussion about an internal decision Microsoft made in January 2006, long before it began communicating about the Windows Vista Capable program to consumers in May 2006. Ultimately, we provided choices to consumers, giving different options for Windows Vista Capable PCs at various price-points to meet their needs."

The lawsuit, which began nearly a year and a half ago, was granted class-action status last February.

The case is currently set to go to trial in April 2009.

Although the filing is not yet available from the federal court system's database, two Seattle newspapers, The Seattle Times and the Seattle Post-Intelligencer, obtained a copy and posted it to the Web.

Copyright © 2008 IDG Communications, Inc.

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