Microsoft has started a pilot program rewarding computer system builders for turning their customers over to Microsoft's license enforcement department. If the builder or reseller receives an RFQ (Request For Quote) that includes computers to be shipped without Windows installed, Microsoft wants a copy of the RFQ sent to them, and, if you are the first to submit that particular RFQ, you'll be awarded points toward winning prizes. Full text is included below.

Microsoft says this is to "help you help your customers be compliant".

Will system builders and resellers turn in RFQs and trust Microsoft to maintain the promised "privacy"? Well, they're obviously pitching to individuals, not companies, and I bet there's plenty of employees at many builders who would scramble for the opportunity.

What will happen to companies that submit the RFQs? I suspect they will be subjected to one of Microsoft's fearsome license audits, and will probably end up paying many thousands of dollars in fines. For details of this gut wrenching process, see our article Software Licensing.

In other license enforcement action, we (and probably everyone else in Microsoft's System Builders program) have been called on the phone by Microsoft reps asking if we have bought any copies of Microsoft products from other than their approved distributors, and if so is there any possibility that they could be selling "non genuine" products. I wouldn't be at all surprised if resellers that turn in distributors for "non genuine" products are themselves audited for having purchased such products.

[ UPDATE: 5-May-01 - Once The Register based a news item on this article (and provided a link back to here), it was picked up by /. (Slash.Dot) and Linux Today, and from there picked up by many news publications including the Wall Street Journal. Links to articles by these publications are listed below.

For several days we got many phone calls from noted columnists and our Web site was visited many thousands of times (but was mysteriously off-line almost all day Tuesday (we have no evidence Microsoft was responsible)).

Microsoft remained silent until mid-week when "big names" like Brian Livingston and the Wall Street Journal started calling. Spokesperson Matt Pilla stated the whole thing was blown way out of proportion, that the contest was not aimed to sniff out companies using Linux and other operating systems, but just companies "misinterpreting" their licenses for Microsoft products.

Analysis

How the press (both print and on-line) ran with this story shows just how deep distrust of Microsoft runs. People would be amazed if any other major corporation did something like this, but from Microsoft it's just expected. As a well known columnist from Ziff Davis remarked while he was interviewing me, "This is just so Microsoft".

Matt Pilla is right saying the contest was being widely misinterpreted. The Linux community in particular did not read the email carefully enough and presumed it was a direct attack on companies ordering computers to use with Linux. A careful reading shows you can only earn prizes if the RFQ states the company has Microsoft site licenses.

Matt Pilla is wrong, however, in saying reaction was overblown. This is very serious stuff.

• Microsoft's presumption its resellers will violate confidentiality for a few cheap prizes certainly doesn't display much respect for the integrity of their resellers.
• The words "pilot program" indicate this was just a trial, that a much larger, and perhaps much deeper program was planned. If successful, would this method not be used to track down companies buying "naked PCs" (as Microsoft calls them) for harassment by the BSA? All past behavior says it would.
• It demonstrates just how desparate Microsoft is to bring in more licensing money. Somebody up there is predicting quarters that don't meet their numbers, and that could be very damaging to Microsoft.
• It exposes just how thoroughly Microsoft has failed in bringing in revenue from new sources. They still must rely totally on licensing their two core products, Windows and Office.
• It shows Microsoft has learned nothing about ethics since the anti-trust trial and the Calera action, where just about every far-fetched story of Microsoft dirty tricks was shown to be painfully true.
• This bodes ill for how Microsoft will treat customers under .NET. To participate in .NET, the first step is to hand your balls to Microsoft on a platter. Prepare to have them squeezed.

Press Based on This Article

• The Register - Major IT news site in England (exchanged email with AAx).
• CNet News.Com - Famed Windows columnist Brian Livingston (called AAx directly).
• The Wall Street Journal - Microsoft Offers Prizes to Identify Orders for PCs Without Windows
• MSNBC - This is just a copy of the Wall Street Journal article repeated. Remember, the MS in MSNBC stands for "Microsoft", so no investigative journalism here.
• CNN Financial Network - Microsoft rewards tattlers
• Sm@rt Partner - Ziff Davis reseller magazine - Steven J. Vaughan-Nichols (called AAx directly).
• Slashdot - Infamous hangout of Linux radicals.
• Linux Today - News affecting Linux, with reader comments.
• InfoWorld - Microsoft offers PC builders prizes to be finks
• Information Week - Microsoft Hunts for Stool Pigeons (called AAx directly)

Full Text of Microsoft's eMail to System Builders

MIND YOUR RFPs and Qs 

Action: Mind Your RFPs and Qs


Microsoft OEM Western Region Pilot Program
Identifying PC Bids that do not include an Operating 
System for each PC 

Microsoft OEM western region introduces a pilot program 
that rewards you for notifying us about Bids that do 
not include operating systems and helps you help your 
customers to be compliant. 

WHAT:
         We understand that there is some confusion 
         regarding Microsoft licensing of Operating 
         Systems and we need your help in assuring 
         that each and every PC has a licensed and 
         legal operating system. 

WHY: 
         It has come to our attention that many 
         organizations that are sending out bids believe 
         that because they have enrolled in a Microsoft 
         volume license program (i.e. Select Agreement 
         or Enterprise Agreement), that operating 
         systems for newly-acquired PCs are automatically 
         enrolled in the volume program as well. There is 
         no volume licensing program at Microsoft that 
         covers operating systems for new PCs. Therefore, 
         we strongly advise that each new PC that will be 
         running a Microsoft Operating System be pre-
         installed with an OEM version of the Operating 
         System. The alternative would be to purchase 
         retail product, at greater cost and 
         inconvenience to your customers. 

Following is an excerpt from a bid that was recently 
revised to include operating systems. 

"The Company has a site license for most Microsoft 
software including the Windows Operating Systems. The 
vendor will be responsible for installing a Company image 
that includes the Windows Operating Systems at no 
additional charge. Documentation providing proof of the 
Company's site license will be provided upon award of the 
contract. All software required to operate or interface 
with the equipment covered in this bid shall be supplied 
without additional cost to the Company. Such software 
includes but is not limited to drivers for hard drives to 
interface with network software. Windows 98, ME and NT 
drivers shall be provided, if available. All software 
drivers should be pre-installed and configured without 
memory or internal conflicts prior to delivery."


NOTE: The licensing program referenced above and all 
Microsoft licensing programs only cover upgrades of 
operating systems for existing PCs. 

It is to your benefit as an OEM to sell Operating Systems 
with each PC, especially if you will be servicing and 
supporting your customer. 


MIND YOUR RFPs and Qs 

You may be eligible to win prizes! Here's how.

By submitting bids that request PC systems without an 
Operating System due to a Microsoft site license, you 
can earn points and win! 

-     Notify and provide copy of the bid to your 
Microsoft Account Manager at: SBWest@microsoft.com 
Notification must be received by June 30th to be eligible. 

      Your submission will be acknowledged and acted upon 
within 24 hours 

      If you are the first to identify the bid you will 
be awarded one point for each PC specified on the bid. 
Points from multiple bids may be combined through 6/30/01. 

 
POINTS        REWARD 

 250 points   5 Microsoft game titles 

 500 points   Above reward plus a Fossil Big Tic watch 

 1000+        Above rewards plus a Fast Cook & Grill 
              Combo and Travel Chair 

**Please note that your privacy will be maintained - 
Microsoft will not disclose your Company's identity as the 
source of the bid information. 

***At your request a letter can be sent to the issuing 
Company clarifying Microsoft licensing policies.