Free Resolve and Fortitude : Microsoft's ''SECRET POWER BROKER'' breaks his silence by Joachim Kempin

honoring personal ties. A handful of them displayed a touch of hostility. Around 95 percent of the discussions centered on pricing and contract terms. If you made any concessions, everybody would know within the hour and demand equal treatment. An interesting climate to negotiate in!
    There was a common theme broached by our Korean customer. They envied per-processor and per-system agreements. Why then, I wondered, had they entered into them? There was a per-copy option providing maximum flexibility. Welcome to Asia. In our debriefing sessions, Ron and I probed the local team about these complaints. We concluded that per-copy licensing counted as a personal failure for the ambitious sales reps. June Park, the local manager, confirmed this in private. The behavior was typical for Far East culture; avoiding a potential loss of face in the office trumped over allowing customers to choose freely. I praised the team for their achievements but explicitly told the assembled warriors to offer all options in the future. They promised. Culturally, they had a hard time following through. There was no serious interest for Windows. The Korean manufacturers’ motto was selling cheap, bare-bones consumer machines, leveraging up their deliciously low labor costs.
    The third stop, Hong Kong. Our largest customer, VTech. Her main business was toys and phones, which she was producing in the People’s Republic of China (PRC). VTech had ventured into the PC business, selling her own brand locally and manufacturing PCs for European companies, one of them being Vobis. A first sign of things to come! The discussions with VTech went well overall; her executives appreciated the first visit of an MS VP. Bosco Ho, her chairman and CEO, brought up one interesting point I did not want to compromise on. As I mentioned earlier, VTech was manufacturing PCs for other companies. Bosco Ho wanted us to grant him a universal DOS license for all PCs his company manufactured, to gain a higher-volume discount regardless of who sold these machines down the road. Agreeing to his demand would have led to an overall royalty reduction, effectively granting her distributor status. I was adamantly opposed to entertain this. We had plenty of offices around the world to license and support OEMs locally. Our business approach helped us gain insight into regional markets and improve market share, a good reason for continuance. Bosco Ho understood my position, and we found a way to compensate VTech with marketing funds mandating her to combat local piracy. Grasping this would help both of us; we parted as friends.
    Next stop, Taiwan—Acer and smaller OEMs. Under the leadership of her founder, Stan Shih, Acer had developed into a PC powerhouse. The main discussion centered on renewing her DOS license and exploring opportunities for Windows. The latter did not materialize. Agreeing on a new DOS license, we gave Acer pretty favorable terms. Again her management used the DRI threat effectively to achieve dreaded discounts. DRI had indeed been superactive in Taiwan. Several local companies were licensing her products in place of ours; I had to take Acer’s arguments seriously and dared not to lose her business. SVP Simon Lin was the main negotiator. He was a reasonable, smart, and friendly man, so the two of us reached the desired compromise in a short time. We promised to stay in touch, which developed into a long-lasting friendship. Not having a local subsidiary, we conducted our Taiwanese OEM business out of HK. As soon as I returned to Seattle, I lobbied for opening one to support local OEMs better and fight DRI more effectively.
    My most important stop: Beijing. The undeveloped PRC market represented an incredible opportunity. Despite consistent effort, not a single local PC manufacturer had ever bought any software from us. Yet MS-DOS could be found on 99.9 percent of PRC’s PCs. How had it gotten there? Strictly through piracy! The locals had never paid a cent. What a