A new court filing reveals disputes at Microsoft's highest levels leading up to Windows Vista's release -- including CEO Steve Ballmer describing former Windows chief Jim Allchin as "apoplectic" over a move to lower the standards for the "Windows Vista Capable" logo.

The filing, unsealed today in U.S. District Court in Seattle (PDF, 29 pages), details extensive wrangling between Microsoft and chip giant Intel over the graphics hardware requirements needed by a PC to receive the  Vista Capable logo. Prior to Vista's January 2007 release, the e-mails show, Intel was stuck with a large supply of chipsets that didn't meet Microsoft's original requirements.

The lack of a "Vista Capable" designation would have significantly diminished the standing of those Intel 915 chipsets in the market. In one e-mail quoted in the filing, a Microsoft executive estimated that Intel's potential costs "could get into the billions."

Ultimately, Microsoft changed its mind and lowered the requirements so that PCs with those chipsets received the "Windows Vista Capable" logo -- even though they couldn't run the glossy Aero Glass interface or other signature Windows Vista features.

According to the filing, Intel CEO Paul Otellini personally thanked Ballmer for making the change, writing a note to express his pleasure. An Intel executive thanked then-Windows executive Will Poole for his "commitment to embrace 915."

[See related post: Vista suit links Microsoft, Intel CEOs.]

Allchin, who has since retired from Microsoft, took the opposite view. The filing quotes from one of his e-mails:

I'm sorry to say that I think this plan is terrible and it will have to be changed.

I believe we are going to be misleading customers with the Capable program. OEMs (computer makers) will say a machine is Capable and customers will believe that it will run all the core Vista features. The fact that aero won't be there EVER for many of these machines is misleading to customers. ...

We need to meet on this. Please set this up ASAP. We need something simpler in my view. I know we don't want to hurt the OEMS, but end-customers must be the top priority. We must avoid confusion. It is wrong for customers. And we probably will have to change your current plans.

According to the filing by the plaintiffs in the case, the decision was a particular disappointment to Hewlett-Packard. The computer maker had made "a large investment" to shift to the advanced graphics hardware originally required by Microsoft, the plaintiffs wrote. H-P was left "without a competitive low-end product in the newly expanded Vista Capable universe."

The class-action lawsuit was filed on behalf of consumers who bought PCs in the months leading up to Windows Vista's release. The plaintiffs allege that many PCs were improperly given the "Windows Vista Capable" designation even though they couldn't run many of the features Microsoft had been touting.

Microsoft spokesman David Bowermaster said in a statement this afternoon that the e-mails "reflect the normal back-and-forth discussion about an internal decision Microsoft made in January 2006, long before it began communicating about the Windows Vista Capable program to consumers in May 2006." He added: 

"Ultimately, we provided choices to consumers, giving different options for Windows Vista Capable PCs at various price-points to meet their needs. We conducted a comprehensive education campaign through retailers, PC manufacturers, the press, and our own Web site that gave consumers the information they needed to choose an affordable computer that would run the edition of Windows Vista that best fit their needs or lifestyle."

The primary filing unsealed today was the plaintiffs' motion for partial summary judgment in the case.

In it, the plaintiffs argue that the e-mails "demonstrate beyond any reasonable doubt why Microsoft temporarily dropped the (graphics hardware) requirement: (1) to help itself by nearly doubling the number of PCs that would qualify for the Vista Capable designation, and (2) to help Intel sell millions of chipsets by calling them 'Vista Capable' even though they could never support" the advanced graphics.

See this post for more background on the case.