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On Monday, Nov. 2, Open Source obtained and posted an internal Microsoft memo on the open source model and the Linux operating system. Since that time, part 2 of the document has also been posted. These memos, written by engineer Vinod Valloppillil, were originally distributed within Microsoft on Aug. 11, 1998, and were intended to stimulate internal discussion on the open source model and the operating system industry. The practice of researching and assessing competitors is standard procedure at the company; one which our shareholders and customers would expect.

It is important to note that these memos represent an engineer's individual assessment of the market at one point in time. These memos are not an official statement by Microsoft on the issue of open source software or the Linux model.

The existence of these documents demonstrates the vigorous competition that exists in the operating system industry. Microsoft does see Linux as one of many competitors in the lower-performance end of the general purpose server industry and the small to medium-size ISP industry. Microsoft also recognizes and has identified several challenges inherent to this particular business model (many which are outlined in part one and part 2 of these memos.) Furthermore, Microsoft has an obligation to its customers, business partners and stakeholders to monitor competition, one part of which is encouraging active interest by knowledgeable engineers and active discussion of the issues.

Linux and the Open Software Source Model - A Question and Answer Session With Ed Muth Enterprise Marketing Group Manager, Microsoft Corp.

Ed Muth, Enterprise Marketing Group Manager, Microsoft Corp. Catalyst: Internal Microsoft memos in the press regarding the open source model and Linux in particular.

Q: Are the Halloween documents posted on Open Source genuine?

A: Although Microsoft has not attempted to perform a line-for-line review of the posted documents, they do appear to be confidential Microsoft documents with annotation, sent internally to select staff and management on Aug. 11, 1998.

Q: What was the purpose of creating these documents?

A: It is standard practice at Microsoft to research, write about, and assess all competitors, from both a business model and technical perspective. We would be doing a disservice to our shareholders and customers if we were not monitoring and assessing market conditions and competitive offerings. Accordingly, such assessments of technical, business, and competitive issues are a routine practice across all industries and types of companies.

Honesty and creative ideas in such documents are critical to effective communication and the free flow of ideas. It is always unfortunate when a company's confidentiality is compromised, as it was in this case by the unauthorized or unintentional release of this document.

Q: Is this an official Microsoft response to the open source model and Linux in particular?

A: No. These documents do not represent an official Microsoft position or road map. They are technical analyses written by a staff engineer that represent the thoughts of one individual at one point in time. They were intended to encourage an informed internal discussion of issues by marketing and engineering middle managers.

Q: Who is Vinod Valloppillil and what is his role at Microsoft?

A: Vinod is a staff engineer who, from time to time, is chartered with the responsibility of monitoring and analyzing market conditions and competitive offerings. His analyses are intended to spur internal discussion about industry trends and market dynamics. He is not an official company spokesperson.

Q: How did these documents get leaked to the press?

A: At this point we cannot confirm how the documents were distributed outside the company or who is responsible for the action.

Q: Does Microsoft consider Linux a competitor?

A: Yes. Linux is a competitor on the client and the server. My analysis is that Linux is a material competitor in the lower-performance end of the general purpose server industry and the small to medium-sized ISP industry. It is important to recognize that Linux, beyond competing with Microsoft, is also, and perhaps even more frequently, an alternative or competitor to other versions of UNIX.

The operating system industry is characterized today by vigorous competition. This competition, of which Linux is only a part, exists at the technology level as well as in terms of business models, applications, channels and alliances.

Q: The first document talked about extending standard protocols as a way to "deny OSS projects entry into the market." What does this mean?

A: To better serve customers, Microsoft needs to innovate above standard protocols. By innovating above the base protocol, we are able to deliver advanced functionality to users. An example of this is adding transactional support for DTC over HTTP. This would be a value-add and would in no way break the standard or undermine the concept of standards, of which Microsoft is a significant supporter. Yet it would allow us to solve a class of problems in value chain integration for our Web-based customers that are not solved by any public standard today. Microsoft recognizes that customers are not served by implementations that are different without adding value; we therefore support standards as the foundation on which further innovation can be based.

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