Internal Microsoft e-mails made public by the "Vista Capable" class-action lawsuit against the company reveal infighting, partner favoritism and a general sense of confusion -- none of which, it turns out, is all that unusual in the software industry.

You really don't want to know how sausage is made. Just about anybody who's intimately familiar with sausage production will attest to the wisdom and truth of that old cliché. It's such a nasty process that many people, if forced to watch it, would probably go crashing to the floor like the police officers who faint during the opening credits of classic TV series "Quincy, M.E." when Jack Klugman pulls a sheet off a corpse.

But chances are, most of us really don't care how sausage gets made. It's the product that matters, not the process -- at least for those not involved in the process. And so it was with Windows Vista, Microsoft's latest operating system -- until documents made public as part of a class-action lawsuit gave partners, customers and the general public a peek into Microsoft's Vista-making process. Suddenly, the process got more attention than the product itself. And, as with sausage making, the picture wasn't a pretty one.

Vista is supposedly a moneymaker for Microsoft, if the company's recent quarterly earnings statements are any indication -- and Microsoft said in January that it had sold 100 million Vista licenses by the end of 2007. Still, in its first year-plus of availability, Vista has had a difficult time cracking the enterprise, where Windows XP, its venerable predecessor, remains popular.

In fact, more than making a splash in the marketplace, Vista is now also known for the lawsuit, which contends that Microsoft deliberately misled consumers. The suit, filed in April 2007 and granted class-action status in February 2008, primarily contends that some PCs labeled "Windows Vista Capable" could only run Vista Home Basic, a baseline version of the OS that doesn't include many of the GUI enhancements that Microsoft touted in Vista.

The Vista Capable suit really caught fire in early February when it led to the public release of internal Microsoft e-mails discussing Vista marketing plans as well as how the company worked with OEM and retail partners on the OS release. The e-mails -- collected in a 158-page PDF document originally made available on reporter Todd Bishop's blog at the Seattle Post-Intelligencer's Web site -- have garnered tremendous attention.

Bloggers, the trade press and even mainstream journalists have given the e-mails the Starr Report treatment in various media outlets, poring over every word passed between Microsoft executives and from Microsoft to partners such as Hewlett-Packard Co., Dell Inc. and Intel Corp.

Some of the e-mails seem revealing at least and downright shocking at most, with Microsoft employees -- up to and including CEO Steve Ballmer -- discussing the failure of the Vista Capable label, Intel's favored status over partners such as HP and internal confusion about who was responsible for some of the less-successful aspects of Vista's launch.

It all adds up to a pretty sorry scenario for Microsoft -- but not a particularly unusual one. Experts say that the release of a major product from any large company -- and especially the release of an OS from Microsoft -- is a fairly ugly and sometimes disorganized exercise. So, while the Vista Capable e-mails might initially seem shocking, they really shouldn't be-all they do is reveal how things typically work, how the sausage of a major product launch gets made. In any case, the Vista Capable e-mail saga is a good reminder to channel members that when dealing with Microsoft, even the biggest of partners can come away unhappy. (For Microsoft's side of the story, see "Redmond's Response").

Fear and Loathing in Redmond
In places, the Vista Capable e-mails read a little like something from Jack Kerouac or maybe Hunter S. Thompson -- they're oddly intriguing but can be awfully hard to follow. (They're also inconsistent in terms of grammar and punctuation; we've edited them as needed for clarity.) Cut apart and pasted back together, they tell lots of stories of Vista's evolution from 2005 through and well past its early-2007 launch. There are tales of dodgy drivers, frustrated retailers and partners who didn't have drivers ready because they apparently didn't trust Microsoft's release date for Vista. But a few stories in particular jump off the page.

First -- and potentially most damaging, although that's ultimately up to the legal system to decide -- is one Microsoft executive's expression of his own frustrations about Vista Capable PCs. In one e-mail from February 2007, Mike Nash, corporate vice president of Windows product management, wrote (with RCP's clarifications in brackets): "I personally got burned ... on a laptop that I PERSONALLY [bought] (e.g. with my own $$$). Are we seeing this from a lot of customers? I know that I chose my laptop because it had the Vista logo and was pretty disappointed not only that it wouldn't run Glass [part of Vista's interface], but more importantly wouldn't run Movie Maker ... I now have a $2,100 e-mail machine."

Nash's e-mail was in a thread that included a long message from Steven Sinofsky, senior vice president of Microsoft's Windows and Windows Live Engineering Groups and the successor to former Windows head Jim Allchin. In his message to Ballmer, Sinofsky revealed some of Vista's darker secrets, including an apparent desire at Microsoft to help Intel sell a chipset that didn't support Vista's Aero interface.

Sinofsky's e-mail indicates that many PCs labeled as "Vista Capable" couldn't really run Vista's slick new interface, which was a major selling point for the product -- although the company never claimed that it was available in the Home Basic edition of the OS. The lack of Aero capability is also a major complaint in the lawsuit.

"Their 945 chipset, which is the baseline Vista set, barely works right now and is very broadly used," Sinofsky wrote. "The 915 chipset, which is not Aero capable, is in a huge number of laptops and was tagged as 'Vista Capable' but not [tagged for] 'Vista Premium.' I don't know if this was a good call. [T]hese function, but will never be great."

Redmond's Response
Not much has emerged from Redmond -- at least not voluntarily -- regarding the Windows Vista Capable lawsuit, which is understandable given that companies rarely comment on legal proceedings. Microsoft, however, did post a statement about the case on its PressPass Web site, along with some key legal filings from its defense team.

Here's what Microsoft's Web site had to say about the Vista Capable case:

"Microsoft is defending itself against a class-action lawsuit in U.S. District Court in Seattle over the 'Windows Vista Capable' marketing program, which ran from May 2006 to January 2007. The program allowed PC manufacturers to alert computer shoppers to the PCs then on the market that could be upgraded to run the Windows Vista operating system when it was released.

"Computers marked 'Windows Vista Capable' could be upgraded to run a version of Windows Vista, ranging from Windows Vista Home Basic to premium editions of Windows Vista. More advanced PCs marked 'Premium Ready' could be upgraded to run a premium edition, such as Windows Vista Home Premium.

"Microsoft offered different versions of Windows Vista to meet the varied needs of customers purchasing computers at different price points. We implemented a comprehensive education campaign through retailers, manufacturers, the press and our own Website, all designed to explain the program. The campaign gave consumers the information they needed to choose the PC that would run the version of Windows Vista that best fit their lifestyle."

As for the e-mails themselves, David Bowermaster, a Microsoft spokesperson, released the following statement to Todd Bishop of the Seattle Post-Intelligencer in February: "The e-mails cited in today's hearing are isolated, and in many instances, outdated and really just snippets of a broad and thorough review that took place during the development of the Windows Vista Capable program. Throughout this review, Microsoft employees raised concerns and addressed issues with the aim of making this program better for our partners and more valuable for consumers. In the end, we believe we achieved both objectives."

Outside of a few statements specific to individual events in the case -- such as the judge's decision to allow a class action -- Microsoft hasn't had anything more to say. As the suit proceeds, Redmond might open up (voluntarily) again.

-- L.P.

As much as pointing to Microsoft potentially having misled -- and undoubtedly confused -- consumers, Sinofsky's message reveals another intriguing story line in the history of Vista -- Intel's status as preferred Microsoft partner, which seemed to take precedence even over Redmond's relationships with HP and Dell. HP in particular had hoped to lure PC buyers into using Vista's revolutionary interface, but instead appears to have been stuck selling "Vista Capable" machines that couldn't run Aero -- and that used old Intel chipsets.

Intel's lofty status and Microsoft's apparent kowtowing to its longtime partner are running themes throughout the e-mails.

In February 2006, Mike Ybarra, director of product management at Microsoft, wrote to Allchin, then co-president of the company's platforms and services division and the head of Windows product development, to protest Microsoft's compromises in favor of Intel.

"We are caving to Intel," Ybarra wrote. "We worked hard the last 18 months to drive the UI experience and we are giving this up ... We are really burning HP -- who committed to work with us to drive the UI experience across platforms and have already made significant investments. We are allowing Intel to drive our consumer experience ... I don't understand why we would cave on this when the potential to drive the full UI experience is right in front of us."

The Vista Capable e-mails also include Microsoft executives' attempts to explain the Vista logo program to counterparts at HP. The real smoking gun with regard to Intel, though, appears to be a blunt e-mail from John Kalkman, a Microsoft general manager, written a year after Ybarra's plea: "In the end, we lowered the requirement to help Intel make their quarterly earnings so they could continue to sell motherboards with the 915 graphics embedded."

It is, of course, very difficult to take a slice of the thousands upon thousands of e-mails that swirled around Microsoft about Vista and make fair judgments about how well the company handled the launch of the OS. The Vista Capable e-mails might be examples of the worst situations Microsoft encountered -- or there might have been worse than what we know. It's also hard to judge the credibility of the various messengers involved -- there are a lot of them from inside and outside Microsoft -- and it's impossible for an outside observer to fully understand the context of some of the e-mails.

Strictly judging by the available e-mail file, though, Allchin appears to have played the role of Sgt. Schultz from the old TV sitcom "Hogan's Heroes": Put simply, he said consistently that he knew nothing. That might be a tad harsh, but the distance Allchin took from the Vista scenario is striking: "I wasn't involved and it is hard for me to step in now and reverse everything again," he wrote in response to Ybarra's message about Intel and HP. "We really botched this ... You guys have to do a better job with our customers," he said in another e-mail regarding the Vista Capable logo. And in yet another message regarding the logo, he chided his charges by saying, "This is not OK," but offered no real advice or direction.

Allchin, who retired the day Microsoft released Vista to consumers, was an accomplished and tenured executive in Redmond, and as co-president he certainly would have delegated a lot of aspects of Vista marketing to underlings. But he's also been in court before on Microsoft's behalf, and it's hard to say whether he was just covering himself via e-mail in anticipation of showing up there again because of Vista -- or whether the head of Windows really was so detached from so many processes that seemed critical to the success of the OS. In retrospect, Allchin's vague responses lend an extra sense of confusion to a situation that already seemed disorganized at best. Ultimately, we might find out what Allchin was up to; at press time, Allchin had been subpoenaed to testify in the Vista Capable suit.

Standard Operating Procedure
There are more plot lines, characters, accusations and revelations in the Vista Capable e-mail file, and the whole package has the feel of an overturned ant farm or a beekeeping experiment gone horribly wrong -- complete chaos with the potential for injury to some of the parties involved. What's actually more interesting is experts' take on the saga: They say that it's fairly normal.

"This is e-mail that comes through every day," says Mike Harvath, president and CEO of Revenue Rocket Consulting Group, a Bloomington, Minn.-based management consultancy that works with Microsoft partners. "Anybody who's worked in the business will say this is pretty innocuous. It's absolutely standard operating procedure. These are all calls that are made every single time a new product comes out and is going to impact as big a user population as an operating system."

As for Microsoft appearing to favor Intel over other major longtime partners such as HP, Harvath wasn't surprised by that, either: "I worked for a public company that worked heavily with Microsoft, and conversations went on like that quarterly. That communication goes out among all the major vendors all the time."

And it's not as though HP is suffering, says Matt Rosoff, analyst at Directions on Microsoft, the Kirkland, Wash.-based research firm. Rosoff notes that HP is still the world's No. 1 PC manufacturer, and that its relationship with Microsoft remains strong.

"[HP's] business is going well regardless of how Microsoft is treating them," Rosoff says. "Any company that manages a relationship with Microsoft knows that they're not always going to get things the way they want it."

Harvath echoes that point, noting that whatever acrimony might have existed between Microsoft and HP or Dell must not have been that serious, or HP and Dell would've raised more of a stink about it.

"HP and Dell could have been more communicative," Harvath says. "What I read about that is that it wasn't that big of an issue, otherwise they would have had a bigger problem. They were selling systems -- it's not like there were a million of them coming back."

Rosoff also says that the problems detailed in the e-mails aren't necessarily the same problems that have hindered widespread Vista adoption. "The problem was Microsoft, in their quest to improve revenue per sale, created a lot of SKUs," he says. Rosoff also attributes part of Vista's struggles to Microsoft's overestimation of the capabilities of PC hardware.

Beyond that, Harvath says that the Aero interface -- the center of the Vista Capable saga -- wasn't even a big selling point. It's a battery drain for laptops, he says: "Most people switch it off." Furthermore, Harvath doesn't believe the Vista Capable suit or its e-mail collection will change partners' impressions of Microsoft.

Don't Look Too Closely
So, after all the e-mails, and despite all the intrigue, what the Vista Capable e-mails really reveal is how things usually work at Microsoft -- and at any other vendor of Redmond's scope and scale. "I saw it and said, 'Yup, been there, done that,'" Harvath says.

It might be helpful, then, for smaller partners to realize that even the HPs of the industry can come away from dealings with Microsoft not getting everything they want. Smaller players should be ready to fight for their needs, but shouldn't be surprised if Redmond doesn't meet all their requests or fulfill all their desires.

After all, metaphorically speaking, Redmond has been making a lot of sausage for a long time, and it's mostly been a very profitable operation. It's just not very pretty to see how the sausage gets made. Then again, it never is.


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