From: Steven Sinofsky To: Jeffrey Epstein <[email protected]> Subject: theory Date: Sun, 12 May 2013 18:22:33 +0000 Importance: Normal I am still mystified what exactly it is that they think I would say or do. I can't decide if it bums me out or it makes them even crazier than I think. Here's my theory on your Windows 8 question: • There were doubts already. People anxiously awaited sales numbers. It was the biggest change to the single most used product on earth, and there is a memory of the last big change gone crazy (Vista). • Ballmer had told people "Windows 8 is the riskiest bet Microsoft has ever made". It was an off the cuff remark in Korea (ironic) widely picked up. Dumb. This was a long time ago but basically every story about Windows 8 carried this statement. • Microsoft announced 60MM copies sold in January. That surprised people. Then people realized that is the PC sales rate anyway. • PC sales were down a lot (April). IDC/Gartner had double digit declines. One analyst said it was because of Windows 8--no new evidence cited. • ValueAct invested in Microsoft. This made people think differently. All of a sudden the street valued the Windows business at effectively zero and magically the rest of the company was worth the share price. • Then came earnings and the numbers were better than expected. But many folks felt there was something fishy but didn't know what. • Microsoft announced 100MM copies sold. This was not a good number even though it was big. Steve pushes for these momentum numbers. People then realized the 60MM number wasn't what it should have been and was a bit fake. This depressed folks. (Last week) This got tied back to the decline in PC sales and the cause being Windows 8. • With a blog post and conference, Windows announced the 100MM number and that "Microsoft is listening to feedback". This started a whole round of stories on "new coke". The killer stories were the FT ("Microsoft makes a U-turn") and the Eco