Microsoft disgruntled with partner Dell's interest in open source

January 27, 2007

According to a 2002 email exchange obtained by lawyers in an Iowa case, Microsoft executives wanted to "whack" Dell because it was focusing on Linux deals a little too much.

The first email by Bill Veghte, currently a company vice president, describes a Linux panel where a Dell executive explains their plans to increase Linux in the enterprise market. The responses to his email start in a worried tone over market competition but quickly escalates as Paul Flessner, a senior vice president in Microsoft's server applications unit, states: Now there is nothing to disagree around what we should do. We should whack them, we should make sure they understand our value, we should do all the things you and Brian suggest.

Paul Flessner then goes on to describe the advantages to promote Linux over Windows for Dell: In the end, if I were them [Dell], I would do all I could to see Linux succeed because it would put $50/pc [$50 per PC Dell sells] (or whatever our OEM license costs) back into my pocket. Sure Windows has greater value and lower TCO [total cost of ownership] and all of that. I would keep my relationship with MS [Microsoft] and customers and do the dance. But every chance I get I would invest in Linux and try to make more sales on Linux because I increase my margin by $50/pc. It is an advantage for Linux.

A recent study funded by the EU Commission concluded that "in almost all the cases, a transition toward open source reports of savings on the long-term costs of ownership of the software products." In addition, Microsoft has long been at the center of criticism and allegations over its alleged unfair and anticompetitive business tactics in Europe and elsewhere.