MS kept OEMs on short leash

As the old saying goes, what you don't know won't hurt you. But what Microsoft Corp. doesn't want OEMs to know -- that some of their competitors have been able to cut special deals to alter their Windows desktops - could wind up hurting them.

Microsoft attempted earlier this week to strike details of its Windows license agreements from the public record. The details were elements of testimony given in the Department of Justice's antitrust case about how it arranges Windows license agreements with OEMs and how it may grant exceptions to certain requirements in those agreements.

But the company subsequently gave up on trying to edit testimony by Packard Bell/NEC executives Mal Ransom and John Kies as well as Walt Disney executive Steve Wadsworth. As of Wednesday, "Microsoft appears to have withdrawn its redaction requests for Kies, Ransom and Wadsworth," said Jay Ward Brown, an attorney with Levine, Sullivan & Koch, L.L.P., the Washington firm acting as the attorney for media intervenors in the Microsoft-DOJ case.

Microsoft had filed a request to edit information it claimed was confidential in a number of the 90 depositions from the case made public over the course of this week. Brown said Microsoft still intends to have information redacted from other depositions, but it decided to defer on the Kies, Ransom and Wadsworth depositions because they were released before the request could be processed.

In their testimony, Ransom, Packard Bell/NEC's senior vice president of marketing, and Kies, a senior product manager at NEC Computer Systems Division, touched on Windows 95 and Windows 98 licensing terms and what Packard Bell/NEC was allowed and not allowed to do with such items as Windows' wallpaper, splash screen and OEM preinstallation kits provided by Microsoft.

As the head of Microsoft's OEM division, Joachim Kempin, testified earlier this year in court, different OEMs operate under different Windows licensing terms. While Microsoft's top OEMs all have signed some type of Windows 98 licensing agreement, about 12 to 15 of them have had their contracts amended by letter from Microsoft, permitting them additional customisation freedoms not allowed all vendors.

The strict requirements enacted by Microsoft are intended to present end users with a consistent look and feel across all of the different PCs sold by OEMs. They regulate the boot-up sequence, including the Windows splash screen, and what software, such as Internet browsers and Internet service providers, can be preinstalled on a PC.

Though much of it was edited, testimony by Microsoft's Bengt Akerlind, general manager of its OEM multinational group, sheds light on Microsoft's attempts to control OEMs by delving into the company's assessment of proprietary shells used by OEMs like Packard Bell/NEC in 1996. Reacting to the use of such shells, Microsoft executives launched into an internal discussion that led to the idea of the "Windows Experience," or how a PC's boot-up process and desktop should look and feel to end users.

Out of this grew changes in Microsoft's "starting point documents," which are the basis of OEM license agreements for Windows that require OEMs to stick to Microsoft's definition of the Windows Experience, unless granted permission to do something different. Despite Microsoft's efforts to keep the Windows Experience consistent, the Packard Bell/NEC testimony bears out that consistency is not always in everyone's best interest.

NEC Computer Systems Division, a Mountain View, Californian unit of Packard Bell/NEC that serves the market for corporate PCs, decided to deliver its Versa notebook PCs without no Web browser preinstalled. Such a move would allow customers to decide which one they wanted to use. NEC received permission to do so in a letter from Kempin in December 1997. Asked if NEC was able to delete the IE icon from Windows 95 before then, Kies responded, "It's my understanding we were not allowed to delete anything related to Internet Explorer from Windows."

The basis for that understanding? "We had been advised that we had very little flexibility as to what we could or couldn't change on the hot load [NEC's name for the software that is pre-installed on its PCs]. And after doing my position for a number of years, we came to understand that the way Microsoft presented it to us, the [OEM preinstallation kit], we had to take it as provided and not do any customisation to it."

Asked if he knew about a provision in Packard Bell/NEC's contract prohibiting it from altering the boot up sequence, Kies replied: "My understanding is that after the boot and prior to the Microsoft splash screen that there should be no messaging or any other items provided to the end user."

NEC would have liked Microsoft to be more flexible on this issue, Kies said. "We wanted to provide our own marketing or to provide some other type of messaging to the end users, it would be beneficial for us to have the flexibility," he said.

Under its Windows 98 OEM preinstallation kits, Packard Bell was also prohibited from customising Windows 95 and 98 wallpaper "until after the initial boot sequence had already occurred," Kies said. Ransom testified that the company was able to use its own registration and online service sign-up procedures, instead of those provided by Microsoft. Hewlett-Packard learned a lesson about consistency the hard way. According to testimony by John Romano, research and development manager for HP's home products division, Microsoft made the company drop plans for a series of four "personal pages," or screens designed to help users set up and register their PCs during the initial boot-up of a Pavilion home PC.

Microsoft said that was a violation of HP's Windows license.

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