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Read the tea leaves correctly, but nothing changed
More than two years before Microsoft Corp. extended Windows XP's lifespan so makers of new low-cost laptops could install the operating system, a company analyst had warned that Vista's "harsher" system requirements might mean trouble, according to internal e-mails.
The messages were among the hundreds made public by a federal judge two months ago, in a case where consumers have accused Microsoft with misleading PC buyers with its "Vista Capable" program in the months leading up to the operating system's release. Recently, that judge suspended the lawsuit while another court hears Microsoft's appeal of the decision to grant the case class-action status.
In early 2006, Gregg Daugherty, an analyst in Microsoft's hardware group, told Windows marketing executives that the personal computer market was skewing toward less-expensive laptops. "We all know laptops are growing, but I'm struck by the magnitude, especially in the home," said Daugherty in an e-mail on Feb. 28, 2006.
"I'm especially taken by the fact sub-$1,000 laptops are now 50% of the home laptop market, and in Dec. '05, accounted for 26% of all retail computers sold," he added. Daugherty sent that message and others to a list that included Mike Sievert, then the head of Windows marketing, and Brad Goldberg, who was general manager of Windows product management at the time.
Daugherty followed with a list of questions for the marketing team that revolved around the shift in sales to notebooks and Vista. Among the most pointed was one about Vista's hardware specifications.
"Aren't system requirements for Vista on laptops harsher than today, when XP Home works easily on these low cost models?" Daugherty asked.
Later the same day, Daugherty wrote another message, this time to an expanded list of recipients. "I may be wrong on the sys requirements, but I believe XP didn't have the same constraints we'll see in Vista AND we've never before had the ultra cheap laptop phenomena going on," he said.
Several replies to Daugherty's questions were among the insider e-mails unsealed by U.S. District Court Judge Marsha Pechman in February. For the most part, executives dismissed his concerns, although Sievert confirmed Daugherty's suspicions that Vista's hardware requirements were going to be more demanding. "Yes esp on memory," Sievert said in response to the analyst's question. "This is true for both [Vista] home premium and home basic."
Others took greater exception to Daugherty's implied criticisms of Vista's hardware demands. In a reply written later on Feb. 28, Goldberg commented on several of the analyst's questions, including one Goldberg defined as "will system reqs kill [the] golden goose?"
"I don't think so," said Goldberg, "and I'm not sure [of] the solution you would advocate here ... our system reqs for vista are locked, oems have made their decisions on what sku to lead with on what hw products, etc ... we are scaling with new hw and we have made exceptions for ultra mobile laptops in our logo plans ... I think the team has been through this but if there is a hole here or suggested action let me know."
Daugherty's messages were delivered about 25 months before Microsoft announced that it would let computer makers install Windows XP Home on a new class of low-cost portables through June 2010, two years after it will shut off the spigot to OEMs producing desktops and traditional notebooks.
Microsoft is giving XP Home a reprieve, but only for what it's calling ULCPCs (for ultra-low-cost PCs). The category is currently populated by Intel's Classmate and Asustek Computer's Eee, but Microsoft expects that many of the devices will be even lighter and cheaper, and equipped with between 2GB and 8GB of flash RAM in lieu of larger platter-based hard drives.
The company hasn't admitted that Vista won't work on such machines, but its ULCPC hardware specifications included a minimum system memory of 256MB, not enough for any version of Vista. The newer operating system also needs considerably more disk space than the 1.1GB cited by Microsoft for Windows XP in its ULCPC guidelines.
Two years ago, Daugherty seemed to be sounding an alarm, albeit a muted one, in his last message included with the unsealed e-mails. In a message dated March 1, 2006, he urged more investigation of the move toward low-priced portables and how it would affect Vista.
"My point is about the explosion in cheap laptops," he wrote. "Not sure how/why they are being purchased w/ respect to our premium sku aspirations. Guess I'd argue it's a new phenom that we should dig into.
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