Microsoft: "We Were Smoked" By Apple iTunes

An antitrust suit from a few years ago saw more than 3,000 internal Microsoft emails, which were made available to the public. Groklaw writes that the emails from the time of the iTunes launch are particularly interesting.

"It's Exhibit 7219 [PDF], and it's a flurry of emails from 2003, when the Microsoft top tier executives at Microsoft first heard about iTunes. Bill Gates said that Microsoft was caught "a bit flat footed again" by Steve Jobs and urged the troops to come up with something matching or better quick. Did they? Jim Allchin asked how in the world Jobs got the music companies to go along, and his assessment of the situation is short: "We were smoked."

Groklaw says that of the 3,000 emails (dating from 1988 to 2003), two are of specific interest. These are Bill Gate's response to the iTunes announcement, which amounts to, "How did they get such a good deal when the rest of us couldn't?" and former executive Jim Allchin's, "We were smoked," comment.

Check them out below.

----- Original Message ----- From: Bill Gates Sent: Wed 4/30/2003 10:46 PM To: Amir Majidimehr; Dave Fester Cc: Will Poole; Christopher Payne; Yusuf Mehdi; David Cole; Hank Vigil Subject: Apple's Jobs again.., and time to have a great Windows download service... Steve Jobs ability to focus in on a few things that count, get people who get user interface right and market things as revolutionary are amazing things.This time somehow he has applied his talents in getting a better Licensing deal than anyone else has gotten for music.This is very strange to me. The music companies own operations offer a service that is truly unfriendly to the user and has been reviewed that way consistently.Somehow they decide to give Apple the ability to do something pretty good.I remember discussing EMusic and us saying that model was better than subscription because you would know what you are getting.With the subscription who can promise you that the cool new stuff you want (or old stuff) will be there?I am not saying this strangeness means we messed up - at least if we did so did Real and Pressplay and Musicnet and basically everyone else.Now that Jobs has done it we need to move fast to get something where the UI and Rights are as good.I am not sure whether we should do this through one of these JVs or not. I am not sure what the problems are.However I think we need some plan to prove that even though Jobs has us a bit flat footed again we move quick and both match and do stuff better.I'm sure people have a lot of thoughts on this. If the plan is clear no meeting is needed. I want to make sure we are coordinated between Windows DMD, MSN and other groups.

.... Original Message .... From: Jim Allchin Sent: Wednesday, April 30, 2003 4:58 PM To: Amir Majidimehr; Chris Jones (WINDOWS); Will Poole; David Cole Subject: Apple's music store 1. How did they get the music companies to go along? 2. We were smoked. Jim

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