Microsoft's decision to change Vista Capable marketing for Intel angered HP, others

Internal Microsoft e-mails made public late Monday illustrate how executives debated whether to lower the standards for the Vista Capable marketing program to appease one of the company's most important partners: chip maker Intel.

Once the decision was made, e-mails show, Microsoft scrambled to contain the fallout with other partners.

The messages are evidence in a Windows class-action lawsuit brought by PC customers in U.S. District Court in Seattle. Microsoft is accused of deceiving consumers who bought PCs in 2006 labeled "Vista Capable," but which could only run a basic version of the operating system.

Surprise, then scramble

Jan. 30, 2006, was a long Monday for the Windows team at Microsoft.

Word of the company's controversial decision to drop a new Windows Vista graphics technology from requirements for the Vista Capable marketing program was quickly spreading among its customers.

The technology, known as the Windows Device Driver Model, or WDDM, was dropped in part because a widely used Intel "915 chipset" would not support it, meaning computers built with that chip would not qualify for a "Windows Vista Capable" sticker, making them appear less desirable and hurting sales.

Intel had pressured Microsoft to make the change to the marketing program, designed to prop up PC demand during the 2006 holiday shopping season, before Vista PCs would be on the market.

"We need good messaging for the elimination of WDDM in Capable, as we have had this as a requirement since inception over 18 months ago," wrote Mark Croft, a Microsoft marketing director, in an e-mail to several others on the Vista team that morning.

Microsoft was scrambling to coordinate communication of this major surprise revision, which some would love and others — Hewlett-Packard in particular — would hate.

Croft circulated draft talking points outlining the change. Employees on several teams prepared to make potentially uncomfortable phone calls and e-mails to their partners in the PC industry explaining the decision.

(The next day, a Microsoft general manager urgently requested the communications plan for graphics chip makers Nvidia and ATI, noting he needed to be ready to "diffuse this situation.")

In the talking points, Microsoft noted that even though the WDDM requirement was being eliminated from the Vista Capable program, Microsoft still viewed it as "an important aspect of the Windows Vista PC experience."

Midmorning on the 30th, Mike Ybarra, a product manager, sent a message marked "urgent due to customer satisfaction escalation" to then-Windows boss Jim Allchin and Will Poole, then in charge of the Windows Client Business.

Poole was the one who ultimately made the decision to drop the WDDM requirement.

In an August 2005 meeting, "you both committed to HP that we would not move off the WDDM requirement and HP made significant product roadmap changes to support graphics for the full experience," Ybarra wrote, adding that an HP executive committed to investing in graphics "if MS would give him 100% assurance that we would not budge for Intel."

By noon, anger from HP was reaching Microsoft, which had planned to communicate its changes the next day. Poole wrote to Ybarra and Allchin at 12:16 p.m.: "Intel leaked this despite my explicit agreement with [an Intel senior vice president] that we would communicate together."

The WDDM change, apparently too late to reverse, seemed to take Allchin by surprise.

Microsoft had announced four months earlier that Allchin would retire at the end of 2006 as part of a broad company restructuring meant to streamline decision making.

"I knew nothing about this," he wrote. "Will, you need to explain. I don't even understand what this means. ... "

E-mails flew back and forth at least as late as 11:06 p.m. that night as the team finalized its communications plan.

— Benjamin J. Romano

Months of tension

The tension between Microsoft and Intel over the 915 chipset went back months.

Rajesh Srinivasan, a senior product manager in the Windows Client group, called out "egregious Intel behavior" in an e-mail on Aug. 6, 2005.

Srinivasan was concerned that business customers would be misled by "enterprise guidelines," telling them what it would take for computers to be Vista-ready.

Specifically, he was concerned about statements suggesting the 915 chipset would provide "for an optimal Windows Vista experience."

"When I met with Intel yesterday to review this page, I clearly told them that including Intel 915 chipset under mobile graphics category makes me uncomfortable. The 915 chipset for mobile does not provide an 'optimal Windows Vista experience' and this is clearly misleading. It should not even be in the list of recommended hardware for Windows Vista," he wrote.

In an Aug. 8 e-mail, he discussed escalating his concerns about Intel's messaging to Chris Jones and Will Poole.

"I feel strongly about this — their misleading enterprise customers ... would significantly impact enterprise adoption of Windows Vista. Can you please advise?"

— Brier Dudley

Column swipe

An article by Wall Street Journal technology columnist Walt Mossberg noted in October 2005 — more than a year before Vista was introduced — "[y]ou also won't have to worry about Vista if you buy one of Apple Computer's Macintosh computers, which don't run Windows. Every mainstream consumer doing typical tasks should consider the Mac."

It struck a chord inside Microsoft, where workers were hashing out a two-tiered system to help shoppers chose a PC that could later run different versions of Vista.

Wrote Padmanand Warrier: "A premium experience as defined by Walt = Apple. This is why we need to address."

Richard Russell replied that his take was Microsoft had "failed to communicate Vista's value. ... Apple doesn't differentiate between 'standard' and 'premium'. Vista does," he wrote. "Vista will give a very good experience and as lots of value even if it is not running on a premium system."

— Kristi Heim