Steve Ballmer

Windows typically by then came with the hardware. So you were mostly using the OEM channel? For Windows, yeah. Okay. Yeah. Even to this day. upgrades and stuff are sold direct to enterprises, but the basic computer that comes to an enterprise would have the operating system licensed to the OEM.

Windows typically by then came with the hardware. So you were mostly using the OEM channel? For Windows, yeah. Okay. Yeah. Even to this day. upgrades and stuff are sold direct to enterprises, but the basic computer that comes to an enterprise would have the operating system licensed to the OEM.

And so we were on, you can call it the honor system, but we just couldn't make people buy discs from us or CDs from us. Enterprises didn't like that. So we had this thing called Select, and Select had two problems with it. Number one, Very hard to copy the software you print. And number two problem, we were selling upgrades and new licenses.

And so we were on, you can call it the honor system, but we just couldn't make people buy discs from us or CDs from us. Enterprises didn't like that. So we had this thing called Select, and Select had two problems with it. Number one, Very hard to copy the software you print. And number two problem, we were selling upgrades and new licenses.

And upgrades were less than half the price of new licenses. So what does that mean? The company was headed to a world where its revenue was half of its existing revenue.

And upgrades were less than half the price of new licenses. So what does that mean? The company was headed to a world where its revenue was half of its existing revenue.

So it was a real problem-looking thing. And, uh, bill and I, we'd always dreamed of this thing where you get some recurring revenue and then we came up and say, okay, well, why don't we just do a license? that you didn't have to count the number of licenses you printed, just the number of computers. It made life simpler.

So it was a real problem-looking thing. And, uh, bill and I, we'd always dreamed of this thing where you get some recurring revenue and then we came up and say, okay, well, why don't we just do a license? that you didn't have to count the number of licenses you printed, just the number of computers. It made life simpler.

And we said, instead of doing, sell you a new license, and then God knows when we would sell you another upgrade or whatever, we'll do something that just says, hey, look, you sign up for three years, you pay us per machine, and you just pay us the same amount of money each year for three years. And it sort of led us...

And we said, instead of doing, sell you a new license, and then God knows when we would sell you another upgrade or whatever, we'll do something that just says, hey, look, you sign up for three years, you pay us per machine, and you just pay us the same amount of money each year for three years. And it sort of led us...

So we solved the upgrade price problem and we solved the difficulty of administration problem. And that was the enterprise agreement. And was it from the beginning of you get everything? No, that was a special enterprise agreement. So you got all the upgrades during that three-year period to the products you licensed.

So we solved the upgrade price problem and we solved the difficulty of administration problem. And that was the enterprise agreement. And was it from the beginning of you get everything? No, that was a special enterprise agreement. So you got all the upgrades during that three-year period to the products you licensed.

You could. We were encouraging you to buy Office.

You could. We were encouraging you to buy Office.

But we also had this all-you-can-eat license. I can't remember what we called that. But basically then I think you counted the number of employees and you could use any of our software for anybody. So we just tried to go simpler and simpler and simpler in the administration. recurring revenue that didn't decline over time and sort of as much as you wanted to eat, the upgrades, everything.

But we also had this all-you-can-eat license. I can't remember what we called that. But basically then I think you counted the number of employees and you could use any of our software for anybody. So we just tried to go simpler and simpler and simpler in the administration. recurring revenue that didn't decline over time and sort of as much as you wanted to eat, the upgrades, everything.

We did want essentially what you have now, which is a recurring services business, but we didn't have the cloud. We weren't delivering things, but we're already on that path. I think we started the Energizer. You guys mentioned what we do with Energizer, which is where we wanted to run their IT department.

We did want essentially what you have now, which is a recurring services business, but we didn't have the cloud. We weren't delivering things, but we're already on that path. I think we started the Energizer. You guys mentioned what we do with Energizer, which is where we wanted to run their IT department.

They were a pilot customer for this concept, right?

They were a pilot customer for this concept, right?