(OT) Would you buy a MSFT microprocessor? -- From Page One of Electronic News: November 30, 1998 Issue
Microsoft Targeted MPU Biz
By Robert Ristelhueber
Microsoft targeted National Semiconductor and Advanced Micro Devices for acquisition last
year in the event Intel expanded its software development to compete in the operating system
market, according to documents disclosed at the Microsoft antitrust trial.
A memo sent to Bill Gates by a top Microsoft executive proposed acquiring one or both of the
chip companies should Intel start offering operating systems in addition to its own chips.
According to a December 16 E-mail from Joachim Kempin, senior vice president for OEM sales,
such a possibility weighed heavily on the minds of some Microsoft brass.
"If (Intel) decides to own the OS as well as the CPU our business it will get ugly," said the memo,
which was also sent to Steve Ballmer, president, and Paul Maritz, group vice president for
platforms and applications. "Our reaction could be to buy Nsemi or AMD or both and own the
CPU and the SW business."
The E-mail proposed selling microprocessors at cost and software at $100. "How sure are we of
our partnership and how fast could we react if needed? We could bring compatibility to another
platform better than anybody and we would have the money to fund the fab capacity."
Kempin made the proposal after a meeting of his OEM team. He expressed fear that Intel would
form a coalition with Compaq Computer and Netscape, possibly buying the Sun Microsystems
SunSoft OS or developing an operating system of its own. "I am convinced they have been
thinking about this for some time...If they decide to sell the OS for $1 and the CPU for $200 they
will get the OEMs on their side."
The takeover idea apparently never went further, as Intel didn't enter the OS market. In
videotaped testimony shown at the antitrust trial, Gates said he told Intel to back off from its
software push. "We may have suggested at some point that the net contribution of their software
activities could even be viewed to be negative," he said.
Asked whether Microsoft approached AMD about a buyout, AMD spokeman Scott Allen
responded, "My guess is even if they did, it would not be something we could talk about." A
National spokesman, Bill Callahan, said he asked John Clark, senior vice president and general
counsel about the matter, and "he said he was surprised by the question. He never heard of any
inkling of any move by Microsoft to try to buy Cyrix from us. If anything happened at all, Clark
would certainly have heard about it."
Kempin's memo discussed various threats to Microsoft's business, including the trend toward
low-priced PCs. "The current (price) decreases for PC manufacturers will make us a much higher
component of the system cost than ever before....While we have increased our prices over the last
10 years other component prices have come down and continue to come down...The danger
does exist that more PCs might get shipped without an OS and we should not take this lightly!"
The memo can be read on the Department of Justice's website at
usdoj.gov. |
