Paul Otellini

What did Intel CEO Paul Otellini say to Microsoft CEO Steve Ballmer on the phone, and what role did that conversation play in Microsoft's decision to lower the requirements for the "Windows Vista Capable" sticker? 

That's one of the questions raised by the internal documents unsealed today in the class-action lawsuit over the Vista Capable program.

Those documents include a January 2006 e-mail message (PDF, 4 pages) in which an Intel executive, Renee James, jubilantly told colleagues of the "unbelievable news" that Microsoft was lowering the requirements for the Vista Capable designation. The message concluded by crediting Intel's "#1 sales person Paul" for his ability to "close the deal." She sent the message to Otellini and others.

Plaintiffs in the case cite the message as evidence that Microsoft bowed to pressure from Intel to reduce those requirements, to help Intel sell a type of chipset that didn't meet the previous "Vista Capable" standards. The plaintiffs say that the lower standards caused some PC buyers to get "VIsta Capable" machines that couldn't run some of the operating system's best-known features.

E-mails turned over in the case suggest that the cost to Intel would have reached into the billions of dollars had Microsoft continued to deem the Intel 915 chipset inadequate for the VIsta Capable designation.

The newly disclosed messages make it clear that the issue reached the level of the CEO at each company. But the extent of their involvement is a subject of debate in the court case.

In its own filing (PDF, 16 pages), Microsoft acknowledges that Ballmer and Otellini talked on the phone, but the company says the decision to lower the requirement was made by others at the company, independent of that phone call -- and before Ballmer could even tell the decision-makers about the conversation.

Microsoft cites an e-mail in which Ballmer told then-Windows chief Jim Allchin -- who vehemently opposed the decision -- that Windows executive Will Poole was the one responsible. "I had nothing to do with this Will handled everything," Ballmer wrote, according to the Microsoft filing. "I am not even in the detail of the issues."

The Redmond company also cites a message from Intel's James to Microsoft's Poole, saying, "Paul did send a note to Steve thanking him for listening and making these changes" -- but adding to that she knew Poole made the decision.

The Vista Capable stickers were used during the 2006 holiday shopping season to assure consumers that the machines they were buying could be upgraded to Windows Vista when it debuted in late January 2007. Plaintiffs in the case allege that Microsoft's decision to lower the requirements for the sticker resulted in PCs being wrongly labeled as Windows Vista Capable even though they didn't support Vista's most heavily touted features. 

Based on the filings unsealed today, the January 2006 phone conversation with Otellini appears to be a key issue in the plaintiffs' efforts to depose Ballmer in the case. Microsoft opposes those efforts, saying there's no need to quiz the Microsoft chief executive as part of the case.

Ballmer "has no unique knowledge of the facts in this case," Microsoft spokesman David Bowermaster said in a statement. "Anything he knows about the Windows Vista Capable program he learned from executives whom he empowered to run the program and make decisions.”

The plaintiffs allege that Microsoft lowered the requirements, in part, "to help Intel sell millions of chipsets by calling them 'Vista Capable' even though they could never support" the advanced graphics in higher-end Vista versions.

Intel spokesman Chuck Mulloy declined to weigh in Thursday evening. "We generally don’t comment on litigation where we are not a party and we’re not a party to this litigation," he said. (Note: Mulloy's title corrected.)

The plaintiffs' request to depose Ballmer is one of the issues in the case awaiting a decision from U.S. District Judge Marsha Pechman in Seattle.

[Earlier: New court documents reveal internal Microsoft fighting over Vista, Intel]