Microsoft's Ballmer is ordered to testify in Vista suit

Microsoft Chief Executive Steve Ballmer will face questions about a phone call he had with Intel CEO Paul Otellini on Jan. 30, 2006, the day Microsoft decided to make a change to its Vista Capable marketing program that would help Intel and PC makers sell hardware that would soon be obsolete.

U.S. District Court Judge Marsha Pechman ruled late Friday that Ballmer must be deposed within 30 days as part of a class-action lawsuit challenging Microsoft's Vista Capable program as deceptive.

She wrote that plaintiffs in the case have shown that "Ballmer may have relevant, unique personal knowledge of relevant facts."

The marketing program was designed to assure buyers of Windows XP computers in 2006 and early 2007 — before the launch of Windows Vista — that their machines would be able to run Microsoft's new operating system.

The release of Vista was delayed until Jan. 30, 2007, and the industry was concerned that sales of PCs would dry up as consumers waited for the new technology.

On Thursday, Microsoft asked the judge to dismiss the remaining claims in the suit on the grounds that plaintiffs have not offered evidence that addresses the legal issues in question.

Order sought

Earlier, Microsoft had sought an order protecting Ballmer from deposition, arguing that his knowledge of facts in the case duplicated that of Jim Allchin, former co-president of the Windows division, and Will Poole, then in charge of Windows Client Business. Both have already been questioned by lawyers for the plaintiffs.

But the judge sided with the plaintiffs, who argued that only Ballmer has knowledge of the conversation he had with Intel's Otellini.

In January 2006, Microsoft informed Intel that it was moving up the start date of the Vista Capable program from June 1 to April 1, in part to better fit retailers' schedules.

An Intel executive asked Microsoft to stick to the original June start date, giving Intel and its PC-maker customers more time to sell inventory that would not meet the Vista Capable requirements.

Internally, Microsoft saw the potential for Intel to lose $600 million in sales, and risk further loss of market share, as a result of the schedule change.

Poole would not budge on the date the marketing program would begin. The Intel executive, explaining the reason for a call between the two executives, told Poole in an e-mail, "Otellini wanted to talk to [Ballmer] — his prerogative. ... [H]e believes that when we agree to disagree — he and Steve have committed to tell each other."

On Jan. 30, Microsoft decided to drop a graphics-hardware requirement from the Vista Capable program, before Ballmer and Otellini spoke, Microsoft asserts.

That evening, Poole told Ballmer in an e-mail that the change would make "Intel's current integrated parts ... qualify for 'Vista Capable' branding starting in April. ... This change completely resolves their problem."

Ballmer's response

Ballmer replied, "I thought they had other issue certainly paul [Otellini] described other (non graphics) issues is this really resolved check with her thanks"

Judge Pechman focused on this exchange in her ruling.

"Mr. Ballmer himself seemed dubious about Mr. Poole's claim he resolved the issue," she wrote. "This fact is significant because it demonstrates Mr. Ballmer may have been evaluating Microsoft's response to Intel's concerns about the Vista Capable changes. In the Court's view, this is a sufficient basis to justify the deposition."

Pechman limited the deposition to three hours "at a time and place of Mr. Ballmer's convenience."

Microsoft issued a statement Friday, saying, "We will, of course, comply with the court's order."