MICROSOFT CORPORATION, : DEFENDANT. : ______________________________________ : MICROSOFT CORPORATION, : COUNTERCLAIM-PLAINTIFF, : : V. : : DENNIS C. VACCO, ET AL., : COUNTERCLAIM-DEFENDANTS. : _____________________________________ WASHINGTON, D.C. OCTOBER 21, 1998 2:03 P.M. (P.M. SESSION) VOLUME III TRANSCRIPT OF TRIAL BEFORE THE HONORABLE THOMAS P. JACKSON UNITED STATES DISTRICT JUDGE
2 - [add a note] FOR THE PLAINTIFFS: CHRISTOPHER S. CROOK, ESQ., DAVID BOIES, ESQ., STEPHEN D. HOUCK, ESQ., RICHARD L. SCHWARTZ, ESQ., ALAN R. KUSINITZ, ESQ., A. DOUGLAS MELAMED, ESQ. ANTITRUST DIVISION, U.S. DEPARTMENT OF JUSTICE, P.O. BOX 36046, SAN FRANCISCO, CA 94102 FOR THE DEFENDANT: JOHN L. WARDEN, ESQ., STEVEN L. HOLLEY, ESQ., WILLIAM H. NEUKOM, ESQ., RICHARD J. UROWSKY, ESQ., MICHAEL LACOVARA, ESQ. SULLIVAN & CROMWELL, 125 BROAD STREET, NEW YORK, NY 10004 DAVID A. HEINER, ESQ., THOMAS W. BURT, ESQ. MICROSOFT CORPORATION, ONE MICROSOFT WAY, REDMOND, WA 98052-6399 COURT REPORTER: DAVID A. KASDAN, RPR, MILLER REPORTING CO., INC., 507 C STREET, N.E. WASHINGTON, D.C. 20003, (202) 546-6666
3 - [add a note] INDEX PAGE CONT'd X-EXAMINATION OF JAMES BARKSDALE 4 DEFENDANT'S EXHIBITS 7, 8, 9 ADMITTED 5 DEFENDANT'S EXHIBITS 11, 12, 13, 14 ADMITTED 65 DEFENDANT'S EXHIBITS 15 THROUGH 33 ADMITTED 81
4 - [add a note] 1 P R O C E E D I N G S 2 BY MR. WARDEN: 3 Q. MR. BARKSDALE, IS IT CORRECT THAT ANYONE WITH A MODEM 4 AND A CONNECTION TO THE INTERNET CAN DOWNLOAD NAVIGATOR OR 5 COMMUNICATOR? 6 A. THAT WOULD BE CORRECT. 7 THE COURT: YOU SAY IT IS CORRECT? 8 THE WITNESS: YES, SIR. 9 BY MR. WARDEN: 10 Q. AND FOR A PERSON HAVING A STANDARD TELEPHONE 11 CONNECTION AND A 28.8K MODEM, HOW LONG DOES IT TAKE TO 12 DOWNLOAD COMMUNICATOR 4.0? 13 A. PROBABLY, ON AVERAGE, BECAUSE IT WOULD VARY EVEN WITH 14 THOSE CONDITIONS, 30 MINUTES TO AN HOUR. 15 Q. THIRTY MINUTES TO AN HOUR? 16 A. UMM-HMM. 17 Q. AND HOW ABOUT THE CURRENT VERSION OF NAVIGATOR? 18 A. I DON'T KNOW THAT NUMBER, BUT LESS THAN THAT. 19 Q. MATERIALLY LESS THAN THE TIME FOR COMMUNICATOR? 20 A. PROBABLY IN THE NEIGHBORHOOD OF 20 MINUTES. 21 Q. TWENTY MINUTES. 22 A. TO LONGER, I MEAN... 23 Q. I'M SORRY? 24 A. WELL, IN THE NEIGHBORHOOD OF 20 MINUTES TO A LONGER 25 PERIOD. IT DEPENDS. YOU COULD HAVE THOSE CONDITIONS AND
5 - [add a note] 1 STILL, DEPENDING ON THE SPEED OF YOUR ISP CONNECTION AND 2 THE INTERNET ITSELF, IT COULD TAKE TWO HOURS. BUT I WOULD 3 GUESS THE AVERAGE COULD BE 20 TO MINUTES FOR THE 4 NAVIGATOR. 5 MR. WARDEN: YOUR HONOR, I HAVE HAD MARKED AS 6 DEFENDANT'S EXHIBIT 7, 8, AND 9, AND OFFER TWO NETSCAPE 7 PRESS RELEASES DATED SEPTEMBER 2ND, 1998, AND OCTOBER 8, 8 1998, AND A NETSCAPE DOCUMENT CAPTIONED "AUGUST 1998 WED 9 SITE HIGHLIGHTS." I DON'T INTEND TO PURSUE THESE BECAUSE 10 I COVERED THE CONTENTS WITH THE WITNESSES EARLIER. 11 THE COURT: WHAT WAS THE THIRD ONE? 12 MR. WARDEN: AUGUST 1998 WEB SITE HIGHLIGHTS. 13 THE COURT: AND WHAT WAS THE DATE ON THE SECOND 14 PRESS RELEASE? 15 MR. WARDEN: OCTOBER 8, 1998. 16 MR. BOIES: ON OBJECTION, YOUR HONOR. 17 THE COURT: ALL RIGHT. DEFENDANT'S 7, 8, AND 9 18 WILL BE ADMITTED. 19 (DEFENDANT'S EXHIBIT NOS. 7, 8, AND 20 9 WERE ADMITTED INTO EVIDENCE.) 21 BY MR. WARDEN: 22 Q. WOULD YOU JUST LOOK AT SEVEN AND EIGHT, 23 MR. BARKSDALE, TO SEE THAT THEY, IN FACT, ARE PRESS 24 RELEASES AND THAT THEY ANNOUNCE NUMBERS OF DOWNLOADS IN 25 PARTICULAR PERIODS?
6 - [add a note] 1 A. YES, SIR. 2 Q. WHY DO YOU ANNOUNCE TO THE PUBLIC THE NUMBER OF 3 DOWNLOADS OF YOUR BROWSING SOFTWARE? 4 A. WE WOULD ANNOUNCE THEM IN GENERAL BECAUSE IT SHOWS 5 PROGRESS IN MOVING OUR NEW PRODUCTS OUT. 6 Q. AND THE NUMBER OF DOWNLOADS IS MATERIAL INFORMATION 7 WITH RESPECT TO THE OPERATION OF THE COMPANY'S BUSINESS; 8 IS THAT CORRECT? 9 A. IT WOULD BE AN INDICATOR. 10 Q. SO, THE NUMBER ISN'T INTENDED, IN ANY WAY, AND DOES 11 NOT MISLEAD THE PUBLIC WITH RESPECT TO THE COMPANY'S 12 CURRENT OPERATIONS? 13 A. THAT WOULD NOT BE ITS INTENT. 14 Q. YOU TESTIFIED EARLIER TO SOME NUMBER, AND I DON'T 15 WANT TO PUT THESE WORDS IN YOUR MOUTH, AND MY MEMORY ISN'T 16 PERFECT, BUT I THINK IT MIGHT HAVE BEEN 4 MILLION OF SORT 17 OF HARD-CORE REPEAT DOWNLOADERS OF YOUR NEW RELEASES; IS 18 THAT CORRECT? OR DID I GET THE NUMBER WRONG? 19 A. I WOULD POINT OUT THAT THAT NUMBER HAS BEEN RELAYED 20 TO ME, BUT IT WAS IN THE NEIGHBORHOOD OF--FOR A NEW 21 RELEASE, LIKE OUR 4.5, WE WOULD EXPECT THAT IF YOU GOT SIX 22 OR SO MILLION DOWNLOADS, AS MUCH AS 5 MILLION OF THOSE 23 WOULD BE REPEAT AND 1 MILLION MIGHT BE NEW. THAT'S WHERE 24 I GOT THE INFORMATION, JUST DISCUSSIONS WITH THE PEOPLE 25 WHO--
7 - [add a note] 1 Q. NOW, IS THAT TRUE OF EVERY RELEASE OR ONLY A MAJOR 2 RELEASE? 3 A. THAT WOULD BE OF A NEW MAJOR RELEASE. POINT RELEASES 4 ARE ALMOST ALWAYS FOR PEOPLE UPGRADING FROM ONE POINT TO 5 ANOTHER POINT, SO IF IT WAS 5 MILLION, ALMOST ALL 5 6 MILLION WOULD BE REPEAT CUSTOMERS WANTING TO GET ABOVE FIX 7 OR SOMETHING LIKE THAT THAT WOULD BE A NEW RELEASE. 8 Q. HAVE YOU DISCLOSED PUBLICLY THE FACT THAT FIVE OUT OF 9 6 MILLION OR FIVE OUT OF 5 MILLION OF THE DOWNLOADS OF 10 YOUR VARIOUS RELEASES ARE PEOPLE ALREADY USING YOUR 11 PRODUCT? 12 A. I DON'T BELIEVE WE HAVE, NOR DO I THINK THAT'S 13 RELEVANT. 14 Q. HOW DO YOU KNOW THE NUMBER OF REPEATERS? 15 A. FROM OUR SITE, WHICH IS PART OF THE PROBLEM--I MEAN, 16 A LOT OF OUR PRODUCT IS DOWNLOADED FROM THESE MIRROR 17 SITES, SO WE TEND TO EXTRAPOLATE FROM OUR SITE AND 18 ESTIMATE THE MIRROR SITES BECAUSE WE DON'T KNOW ALL OF 19 THOSE VOLUMES. 20 AND ONE OF THE WAYS YOU WOULD KNOW THAT IS THE 21 COOKIE, OR THE SERIAL NUMBER, IF YOU WILL, OF THE CLIENT 22 THAT'S DOWNLOADING IT WOULD BE EXPOSED TO OUR SERVER, AND 23 YOU WOULD SEE IF THAT WAS NEW OR OLD, WOULD BE ONE OF THE 24 WAYS. BUT IT DEPENDS EXACTLY WHERE THEY'RE GOING. IF 25 IT'S GOING TO A BUSINESS MARKET, WHICH IS WHERE MOST OF
8 - [add a note] 1 THESE DOWNLOADS GO TO AS OPPOSED TO CONSUMER MARKET 2 BECAUSE THEY HAVE FASTER LINES AND SO FORTH, YOU WOULDN'T 3 KNOW EXACTLY BECAUSE A LOT OF THIS WOULD BE, QUOTE, BEHIND 4 THEIR FIREWALL, AND YOU DON'T HAVE ACCESS TO THE UNIQUE 5 USERS. 6 SO, IT IS AN ESTIMATE BY THE PEOPLE WHO WORK IN 7 THIS PART OF OUR BUSINESS. 8 Q. NOW, DO THE NUMBERS IN THE PRESS RELEASES THAT I HAVE 9 GIVEN YOU, THAT SEVEN AND EIGHT, DO THEY INCLUDE THE 10 MIRROR-SITE DOWNLOADS? 11 A. I BELIEVE THEY DO. IF YOU WILL LET ME FIND THE 12 NUMBER, I WILL... 13 (WITNESS REVIEWS DOCUMENT.) 14 A. IT IS MY UNDERSTANDING THAT WE ESTIMATE MIRROR SITES 15 AND ADD THEM TO OUR SITE. 16 Q. THAT IS NOT DISCLOSED IN THE PRESS RELEASES, IS IT? 17 A. I WOULD HAVE TO LOOK. I DON'T BELIEVE IT IS. 18 WE SAY THAT WE ESTIMATE MORE THAN 12 MILLION 19 COPIES HAVE BEEN DOWNLOADED FROM NETCENTER AND LICENSED 20 MIRROR SITES. YES, SIR, WE DO SAY THAT. 21 Q. OKAY. 22 A. IS THAT WHAT YOU MEANT? 23 Q. YES, THAT WAS MY QUESTION. 24 A. WE DO SAY THAT. 25 Q. THANK YOU.
9 - [add a note] 1 NOW, WHY IS IT MATERIAL TO THE PUBLIC TO KNOW THE 2 NUMBER OF DOWNLOADS IF THEY REPRESENT NOTHING MORE THAN 3 OLD CUSTOMERS? 4 A. I THINK IT'S VERY IMPORTANT FOR PEOPLE TO KNOW THAT 5 OUR OLD CUSTOMERS LIKE THE PRODUCT SO MUCH THEY WANT A NEW 6 VERSION OF IT. IT SHOWS TRAFFIC. IT SHOWS BUSINESS. IT 7 SHOWS CUSTOMER ACCEPTANCE OF THE NEW RELEASES. IT'S VERY 8 IMPORTANT THAT PEOPLE KNOW THAT OUR PRODUCT IS POPULAR AND 9 USEFUL AND LOTS OF PEOPLE WANT IT. 10 Q. BUT YOU DON'T SAY THAT OF THE 26 MILLION COPIES FROM 11 JANUARY THROUGH AUGUST OR THE 17 MILLION COPIES BETWEEN 12 JUNE AND SEPTEMBER, THAT MANY OF THOSE COPIES ALL WENT TO 13 BASICALLY 5 MILLION PEOPLE, DO YOU? 14 A. AS I HAVE SAID, WE SAY THAT WE DOWNLOADED THIS 15 NUMBER. WE DON'T HAVE A WAY OF KNOWING HOW MANY ARE NEW 16 OR USED. I'M GIVING YOU AN ESTIMATE WHEN YOU'RE ASKING ME 17 OVER THE COURSE OF A YEAR HOW MANY ARE DOWNLOADS FOR NEW 18 CUSTOMERS. I WOULD THINK THAT IT'S NOT NECESSARY TO POINT 19 OUT THAT NUMBER BECAUSE IT'S NOT A KNOWN NUMBER TO US. 20 WE, FOR INSTANCE, ARE NOT CERTAIN HOW MANY USERS THERE ARE 21 OF OUR PRODUCT IN TOTAL. WE TEND TO RELY MORE ON 22 MARKET-SHARE INFORMATION TO KNOW THAT, AND WE DO FROM TIME 23 TO TIME TALK ABOUT MARKET SHARE, WHICH IS A MORE RELEVANT 24 MEASURE, I THINK, OF CUSTOMER--OF TOTAL CUSTOMERS IN THE 25 UNIVERSE OF CUSTOMERS.
10 - [add a note] 1 Q. WELL, WHICH WOULD BE MORE RELEVANT? THE FACT THAT 2 SOMEONE HAD 50 PERCENT OF A $10 MILLION A YEAR MARKET OR 3 THAT SOMEONE HAD TEN PERCENT OF A $50 BILLION A YEAR 4 MARKET? 5 A. OBVIOUSLY, IT WOULD DEPEND ON WHO THEY WERE AND WHAT 6 THE MARKET WAS. A LARGE PERCENTAGE OF A SMALL MARKET 7 MIGHT BE A VERY SIGNIFICANT THING IF YOU'RE A SMALL PLAYER 8 IN THAT MARKET. IF YOU HAVE A SMALL PERCENTAGE OF A BIG 9 MARKET, IT COULD BE LESS RELEVANT IF YOU'RE JUST A SMALL 10 ENTITY. I MISSED THE POINT. 11 Q. MY QUESTION I WILL PUT A DIFFERENT WAY. 12 WHAT IS OF MORE INTEREST TO THE INVESTING PUBLIC, 13 THE FACT THAT SOMEONE HAS $5 MILLION A YEAR OF SALES, OR 14 TO TAKE IT OUT OF DOLLARS, 5 MILLION UNITS A YEAR OF 15 SALES, REPRESENTING 50 PERCENT OF A 10 MILLION MARKET, OR 16 THAT SOMEONE HAS 5 BILLION UNITS, OR DOLLARS, A YEAR OF 17 SALES REPRESENTING TEN PERCENT OF A 50 BILLION UNIT OR 18 DOLLAR MARKET? 19 A. I CAN'T ANSWER KNOW. IT WOULD DEPEND ON THE MARKET, 20 THE TIME, HOW OLD THEY ARE. IF THEY ARE A 21 HUNDRED-YEAR-OLD BUSINESS, IT WOULD MEAN ONE THING. IF 22 IT'S A BRAND-NEW BUSINESS, IT WOULD BE ANOTHER. IF IT WAS 23 ESTABLISHING A NEW MARKET, IT WOULD BE DIFFERENT THAN IF 24 IT WAS A MATURE MARKET. 25 Q. YOU MADE SOME REFERENCE A LITTLE WHILE AGO TO
11 - [add a note] 1 BUSINESS USERS, CORPORATE USERS, DOWNLOADING OVER THE 2 INTERNET TODAY; DO YOU RECALL THAT? 3 A. YES, SIR. 4 Q. ISN'T IT TRUE THAT WHEN THAT OCCURS, THAT BUSINESS 5 CAN REDISTRIBUTE THE DOWNLOADED COPY TO THOUSANDS OF USERS 6 WITHIN ITS ORGANIZATION? 7 A. THAT'S WHY I BROUGHT IT UP. 8 Q. SO, IF THERE WERE A THOUSAND DOWNLOADS BY BUSINESSES, 9 THAT COULD BE REPRESENT, JUST HYPOTHETICALLY, A MILLION, 10 IN FACT, USERS RECEIVING IT? 11 A. YES, SIR, IT COULD. 12 Q. HOW MANY SHARES OF NETSCAPE'S STOCK DO YOU OWN? 13 A. SOMEWHERE IN THE NEIGHBORHOOD OF 4.7 MILLION. 14 Q. WHAT IS THE VALUE-- 15 A. EXCUSE ME. 5 MILLION. 16 Q. FIVE MILLION. WHAT'S THE VALUE TODAY BASED ON 17 YESTERDAY'S CLOSE OF THOSE SHARES? 18 A. I DON'T KNOW WHERE IT CLOSED YESTERDAY, BUT IT WOULD 19 BE SOMEWHERE AROUND 20 SOMETHING DOLLARS, LOW TWENTIES PER 20 SHARE. 21 Q. THEN SOMEWHAT OVER $100 MILLION; IS THAT CORRECT? 22 A. SOMEWHERE IN THAT NEIGHBORHOOD, YES. 23 Q. DO YOU TRACK THE NUMBER OF PEOPLE USING YOUR BROWSING 24 SOFTWARE? 25 A. DO WE TRACK THE NUMBER OF PEOPLE?
12 - [add a note] 1 Q. YES. 2 A. WE, AT NETSCAPE, TRY TO COME UP WITH REASONABLE 3 ESTIMATES OF THE NUMBER OF PEOPLE, UNIQUE USERS. 4 Q. UNIQUE, WHAT DO YOU MEAN BY UNIQUE USERS? 5 A. WELL, A TERM OF ART IN THE INDUSTRY IS THAT WHEN A 6 WEB SITE IS VISITED, YOU COUNT NUMBER OF DAILY UNIQUE 7 VISITORS SO YOU DON'T DOUBLE COUNT. FOR INSTANCE, IF YOU 8 WENT TO A SITE THREE OR FOUR TIMES A DAY, WE WOULD TRY NOT 9 TO DOUBLE COUNT, SO YOU MEASURE THE SIZE OF WEB SITE 10 TRAFFIC IN GENERAL BY UNIQUE VISITORS OF THAT SITE IN A 11 DAY. 12 SO I WOULD SAY WE TRY TO ESTIMATE THESE NUMBERS. 13 WE GET THE INDUSTRY'S REPORTS AND SPECULATIONS. THE WHOLE 14 MARKET HAS GROWN SO QUICKLY IT'S, QUITE FRANKLY, DIFFICULT 15 TO GET EXACT NUMBERS. 16 Q. I'M SORRY, I MUST HAVE BEEN UNCLEAR. MY QUESTION 17 REALLY WAS THE NUMBERS OF PEOPLE USING YOUR BROWSING 18 SOFTWARE IN WHATEVER RELEASE, NOT THE NUMBERS OF PEOPLE 19 VISITING YOUR WEB SITE. 20 A. WE ESTIMATE THOSE NUMBERS IN DIFFERENT WAYS USING 21 MOSTLY OUTSIDE SOURCES NOW. WE USED TO TRY TO DO IT UP 22 UNTIL, OH, MAYBE SIX TO NINE MONTHS AGO WHEN WE 23 BEGAN--WHEN WE QUIT TRYING TO TRACK IT BECAUSE THE WAY WE 24 WERE DOING IT WAS NO LONGER VALID, PARTICULARLY ONCE WE 25 MADE THE PRODUCT FREE.
13 - [add a note] 1 Q. OKAY. BASED ON THE BEST ESTIMATE OR INFORMATION THAT 2 YOU HAVE, CAN YOU TELL ME HOW MANY USERS OF NETSCAPE 3 WEB-BROWSING SOFTWARE THERE ARE TODAY? 4 A. I CAN GIVE YOU A RANGE OF WHAT WE THINK THEY ARE. 5 Q. I WOULD APPRECIATE THAT. 6 A. SOMEWHERE BETWEEN 40 AND 70 MILLION. 7 Q. AND BASED ON THE SAME METHODOLOGY, WHATEVER IT MAY BE 8 THAT UNDERLIES THAT ESTIMATED RANGE, HOW MANY WERE THERE 9 AT THE END OF 1997? 10 A. AT THE END OF LAST YEAR, I HAVE SEEN NUMBERS THAT 11 HAVE RANGED FROM 35 OR SO MILLION UP TO 70 MILLION. 12 Q. AND THAT'S ON A CONSISTENT METHODOLOGY WITH THE 13 ESTIMATE FOR TODAY? 14 A. I DON'T CLAIM THAT WE HAVE A CONSISTENT METHODOLOGY. 15 WE DEPEND MOSTLY ON OUTSIDE RESEARCH REPORTS. OUR 16 BUSINESS IS MUCH PUBLICIZED IN TERMS OF, QUOTE, THE 17 BROWSER WARS, AND YOU SEE EVERYBODY AND THEIR BROTHER WITH 18 DIFFERENT ESTIMATES, SO I AM GIVING YOU SORT OF WHAT OUR 19 PEOPLE WOULD GATHER OFF OF THE WEB AS THOSE DIFFERENT 20 ESTIMATES. 21 Q. OKAY. AND AT THE END OF 1996, BASED ON AS CONSISTENT 22 A METHODOLOGY AS POSSIBLE, WHAT WOULD YOUR ESTIMATE BE? 23 A. I DON'T KNOW. 24 Q. WOULD IT HAVE BEEN LESS THAN THE NUMBER AT THE END OF 25 1997?
14 - [add a note] 1 A. PROBABLY. 2 Q. AND AT THE END OF 1995, WHAT WOULD THE NUMBER HAVE 3 BEEN? 4 A. I DON'T RECALL ANY NUMBER FOR THAT. 5 Q. WOULD THE NUMBER HAVE BEEN LESS THAN AT THE END OF 6 1996? 7 A. PROBABLY. 8 Q. ARE YOU AWARE THAT NETSCAPE EXECUTIVES HAVE STATED 9 THAT NETSCAPE'S WEB-BROWSING SOFTWARE IS UBIQUITOUS? 10 A. YES. 11 Q. IS THAT TRUE? 12 A. YES. 13 Q. IS IT TRUE THAT NETSCAPE'S WEB-BROWSING SOFTWARE IS 14 THE MOST WIDELY USED SOFTWARE APPLICATION OF ALL TIME? 15 A. AT ONE TIME THAT WAS A STATEMENT WE BELIEVED TO BE 16 TRUE BECAUSE IT OUTNUMBERED THE NUMBER OF WORD, WHICH UP 17 UNTIL THAT TIME, I THINK, HELD THE RECORD. SUBSEQUENT TO 18 THAT, I THINK IT NO LONGER COULD MAKE THAT CLAIM AS OF 19 TODAY. 20 Q. WHEN-- 21 A. IT WOULD BE ONE OF THE MOST SUCCESSFUL OF ALL TIME. 22 Q. WHEN DID THE FACTS CHANGE FROM MOST SUCCESSFUL TO ONE 23 OF THE MOST SUCCESSFUL? ABOUT WHAT TIME? 24 A. WITHIN THE LAST YEAR OR SO WHEN WORD HAD MORE COPIES 25 SOLD THAN OUR PRODUCT. AND THIS WAS AN ESTIMATE THAT WE
15 - [add a note] 1 HAD PUT UP. 2 Q. WHAT IS WORD? 3 A. MICROSOFT WORD. 4 Q. AND WHAT IS IT? WHAT KIND OF SOFTWARE IS IT? 5 A. IT'S A COMPUTER APPLICATION. 6 Q. AND WHAT DOES IT DO? 7 A. IT DOES WORD PROCESSING. 8 Q. ARE YOU AWARE THAT MR. ANDREESSEN WAS DEPOSED IN THIS 9 ACTION? 10 A. I AM AWARE OF THAT. 11 Q. HIS DEPOSITION WAS TAKEN ON JULY 15, 1998. AND AT 12 PAGE 257, STARTING AT LINE 11, THE FOLLOWING QUESTIONS AND 13 ANSWERS WERE GIVEN, (READING): 14 QUESTION: DO YOU REGARD YOUR CLIENT--WHAT 15 IS YOUR CLIENT'S SOFTWARE AGAIN, SIR? 16 ANSWER: NETSCAPE NAVIGATOR, NETSCAPE 17 COMMUNICATOR. 18 QUESTION: DO YOU REGARD IT AS UBIQUITOUS? 19 ANSWER: IT IS BROADLY AVAILABLE. IT IS 20 WIDELY USED. IT IS, BY SOME MEASURES, THE MOST 21 WIDELY USED SOFTWARE APPLICATION OF ALL TIME. 22 SO, ESPECIALLY IN CONJUNCTION WITH THE FREE 23 PRICE, YES. 24 WAS IT TRUE, AS OF JULY 15, 1998, THAT YOUR 25 BROWSING SOFTWARE WAS THE MOST WIDELY USED SOFTWARE
16 - [add a note] 1 APPLICATION OF ALL TIME? 2 A. I DON'T THINK IT WOULD HAVE BEEN, BUT, I MEAN, I 3 THINK WE ARE ARGUING OVER NUMBERS THAT ARE IN A ROUGH 4 ORDER SIMILAR. IN MY ESTIMATION IT WOULDN'T BE. I WOULD 5 DISAGREE WITH MR. ANDREESSEN. 6 Q. BUT IF NOT THE MOST, CLOSE TO THE MOST? 7 A. WELL, IF YOU ASKED ME THAT QUESTION A WHILE AGO, I 8 WOULD HAVE TOLD YOU THAT. 9 Q. I THINK YOU DID. 10 WHAT IS THE "NETSCAPE EVERYWHERE" CAMPAIGN? 11 A. WHEN WE FIRST STARTED THE COMPANY, WE HAD A SLOGAN 12 AND A CHEER THAT WE USED WITH EMPLOYEES AND ALL HANDS IN 13 OUR EMPLOYEE MEETINGS THAT WE FOUND TO BE POPULAR, AND IT 14 WAS CALLED "NETSCAPE EVERYWHERE TEAM," AND SO WHAT YOU SEE 15 SPELLS OUT NET, AND WE THOUGHT THAT WAS VERY CLEVER. 16 AND WE INAUGURATED A PROGRAM ONCE WE MADE OUR 17 PRODUCT FREE WITH THIS PROJECT ROCKET THAT YOU READ FROM 18 YESTERDAY. ONE OF THE THINGS WE DID, SINCE IT WAS NOW 19 FREE, WAS TO GO TO OUR VARIOUS DISTRIBUTORS OVER OUR WEB 20 SITE, PRIMARILY. THEY COULD SIGN UP, AND THEY COULD PULL 21 DOWN COPIES OF THE PRODUCT THAT THEY COULD THEN DISTRIBUTE 22 HOWEVER THEY CHOSE. SOME WOULD INCLUDE IT IN SOME OTHER 23 PROMOTION. SOME WOULD INCLUDE IT--THERE ARE A MYRIAD OF 24 WAYS, WHATEVER THEIR BUSINESS MODEL WAS, TO DISTRIBUTE THE 25 PRODUCT. BUT THE VAST MAJORITY OF THEM WERE TO BE
17 - [add a note] 1 DISTRIBUTED VIA CD-ROMS, DISKETTES, THAT WOULD BE 2 DISTRIBUTED TO THEIR CUSTOMERS OR PROSPECTS, PROBABLY MORE 3 PROSPECTS THAN CUSTOMERS. 4 Q. IS THE UNLIMITED DISTRIBUTION PROGRAM PART OF THE 5 "NETSCAPE EVERYWHERE" CAMPAIGN? 6 A. YES, SIR. 7 Q. AND EXACTLY HOW DO THESE PARTNERS DISTRIBUTE THE 8 NETSCAPE SOFTWARE? 9 A. SOME WOULD DISTRIBUTE--IF THEY WERE AN ISP, INTERNET 10 SERVICE PROVIDER, THEY WOULD DISTRIBUTE IT LIKE THEY WOULD 11 HAVE DISTRIBUTED THEIR OTHER PRODUCTS, EITHER ONLINE OR 12 MORE LIKELY WITH A STARTER KIT THAT THEY WOULD TAKE OUT TO 13 THEIR PROSPECTIVE CUSTOMER, OR MAILED TO THEIR CUSTOMER. 14 THAT WOULD BE ONE WAY. 15 BUT AS I SAID, I THINK I HAVE BEEN TOLD THAT THE 16 BIGGEST DISTRIBUTION IN TERMS OF NUMBERS WERE TO BE WHAT 17 WE CALLED CARPET-BOMBED TO DISTRIBUTE THEM BY THE MILLIONS 18 ON CDS THAT INCLUDED OTHER THINGS, PACKAGE PROMOTIONS FOR 19 AIRLINES, PACKAGE PROMOTIONS FOR BANKS OR WHATEVER. 20 Q. AND YOU DISTRIBUTE THE PRODUCT FREE TO THESE PARTNERS 21 SO THEY COULD REDISTRIBUTE IT; IS THAT RIGHT? 22 A. WE DISTRIBUTE THE PRODUCT FREE NOW TO EVERYONE. 23 Q. CAN THESE PARTNERS CUSTOMIZE YOUR WEB-BROWSING 24 SOFTWARE BEFORE THEY SEND IT ON TO THEIR PROSPECTS OR 25 CUSTOMERS?
18 - [add a note] 1 A. YES, SIR. 2 Q. HOW DO THEY CUSTOMIZE IT? 3 A. WELL, IT DEPENDS ON WHAT THEY ARE TRYING TO DO, BUT 4 BASICALLY THEY USE A KIT THAT COMES FROM US THAT THEY CAN 5 MODIFY WHAT WE CALL "THE CHROME," WHICH IS THE INDICATORS 6 AROUND THE PERIMETER OF THE HYPERTEXT SCREEN, AND THEY 7 ADVERTISE OR PROMOTE THEIR BRAND OR THEIR PRODUCTS. 8 Q. WHAT IS THE GOAL OF THE UNLIMITED DISTRIBUTION 9 PROGRAM? 10 A. THE GOAL OF THE UNLIMITED DISTRIBUTION PROGRAM WAS TO 11 GET THIS PRODUCT AS BROADLY DISTRIBUTED AS WE COULD FOR 12 THE LEAST AMOUNT OF MONEY, SINCE IT WAS FREE. 13 Q. AND ISN'T IT TRUE THAT THERE ARE OVER 14,000 14 REGISTERED PARTNERS IN THIS PROGRAM? 15 A. SOMEWHERE IN THAT NEIGHBORHOOD, YES, SIR. 16 MR. WARDEN: I HAVE ASKED MS. WHEELER TO MARK AS 17 DEFENDANT'S EXHIBIT 10, A NETSCAPE DOCUMENT ENTITLED 18 "SILVER BULLET UPDATE," DATED OCTOBER 2, 1997, AND I OFFER 19 IT. 20 MR. BOIES: WE NEED A COPY. 21 MR. WARDEN: OH, I'M SORRY. 22 THE COURT: LET ME INTERRUPT YOU, MR. WARDEN. 23 THIS MAY SOUND LIKE A DUMB QUESTION, BUT IF YOU DISTRIBUTE 24 THIS FREE TO EVERYBODY, HOW DO YOU GET PAID? 25 THE WITNESS: WE DON'T.
19 - [add a note] 1 THE COURT: HOW DO YOU MAKE MONEY? 2 THE WITNESS: WELL, AS I SAID IN TERMS OF REVENUE 3 IN THE LAST YEAR, IT'S GONE FROM A SIGNIFICANT PORTION TO 4 ZERO. WE DISTRIBUTE IT FREELY NOW PRIMARILY TO PROMOTE 5 OUR BRAND, THE NAVIGATOR AND COMMUNICATOR NAME AND BRAND 6 AND THE COMPANY'S NAME AND BRAND. AND THEN WE ALSO 7 DISTRIBUTE IT TO ENCOURAGE CUSTOMERS, COMPANIES, IF THEY 8 HAVE OUR PRODUCT DISTRIBUTED ON THEIR WEB SITE--I MEAN, ON 9 THEIR DESKTOPS, THEY BECOME A GOOD PROSPECT, THEN, FOR OUR 10 SALESPEOPLE TO GO CALL ON, WHICH IS ANOTHER FORM OF BRAND 11 AWARENESS, TO SELL OUR OTHER PRODUCTS. 12 THE COURT: TO SELL THE OTHER PRODUCTS? 13 THE WITNESS: TO SELL OUR SERVERS, ELECTRONIC 14 COMMERCE SERVER PRODUCTS, TO SELL OUR LINE OF 15 INFRASTRUCTURE SERVER PRODUCTS, WHICH IS OUR PRIMARY 16 SOURCE OF REVENUE. 17 THE COURT: I SEE. 18 THE WITNESS: AND WE BELIEVE THAT IF THEY'RE 19 ALREADY USING OUR PRODUCT, OUR CLIENT WITHIN THEIR 20 BUSINESS, THEY'RE MOST LIKELY TO USE OUR SERVERS OR AT 21 LEAST HAVE OUR SALESPEOPLE CALL ON THEM? 22 THE COURT: IT'S SORT OF A LOSS LEADER, IN OTHER 23 WORDS; IS THAT RIGHT? 24 THE WITNESS: ON THAT BASIS IT WOULD LOSE A FAIR 25 AMOUNT OF MONEY, YES.
20 - [add a note] 1 THE COURT: ALL RIGHT. 2 THANK YOU. GO AHEAD. 3 MR. WARDEN: THAT'S FINE. 4 BY MR. WARDEN: 5 Q. IN FACT, DO YOU REFER TO THE BROWSER AS "SEED CORN" 6 FOR THE SALE OF YOUR OTHER PRODUCTS? 7 A. YES. 8 Q. AND THE MORE PEOPLE THAT HAVE YOUR BROWSER, THE MORE 9 PEOPLE YOU EXPECT TO VISIT YOUR NETCENTER WEB SITE; ISN'T 10 THAT CORRECT? 11 A. THAT WOULD BE ONE OF THE OPPORTUNITIES, YES. 12 Q. AND THE SERVERS THAT YOU SELL IN THE BUSINESS 13 COMMUNITY, HOW MUCH DO THOSE PRODUCTS COST? 14 A. ANYWHERE FROM A FEW HUNDRED DOLLARS TO SEVERAL 15 HUNDRED-THOUSAND DOLLARS. 16 Q. PER COPY? 17 A. NO. WE WOULDN'T HAVE A PER-COPY SERVER TODAY THAT 18 SOLD IN THE SEVERAL HUNDRED-THOUSAND, BUT WE HAVE SOME 19 THAT SELL IN THE $50,000. I'M SORRY. SO, MULTIPLE COPIES 20 TO AN ACCOUNT WOULD BE SEVERAL HUNDRED-THOUSAND. 21 Q. AND IF YOU ALLOCATED THE COSTS, FULLY ALLOCATED THE 22 COSTS, OF YOUR BROWSER--AND I'M JUST LOOKING AT THE 23 BUSINESS OR ENTERPRISE SEGMENT HERE--OF YOUR BROWSER AND 24 YOUR SERVER, IN COMPARISON WITH YOUR SERVER REVENUES--YOU 25 HAVE A GOOD BUSINESS SELLING SERVERS, DON'T YOU?
21 - [add a note] 1 A. WE HAVE A SUBSTANTIAL AMOUNT OF REVENUE. RIGHT NOW, 2 WE ARE NOT MAKING MUCH MONEY ON IT. 3 Q. AND I BELIEVE WE ESTABLISHED EARLIER THAT NETCENTER 4 IS GENERATING REVENUES AT AN ANNUALIZED RATE AS OF THE END 5 OF JULY OF ABOUT $150 MILLION; IS THAT CORRECT? 6 A. REVENUES, YES. 7 Q. AND WILL NETCENTER REVENUES BE UP IN THE FOURTH 8 QUARTER OF THIS FISCAL YEAR? 9 A. WE DON'T MAKE PRE-ANNOUNCEMENTS OF OUR EARNINGS OR 10 OUR REVENUES. 11 Q. HAVE YOU GIVEN ANY GUIDANCE TO THE MARKET ABOUT 12 ANALYSTS OR OTHERWISE ABOUT-- 13 A. WE HAVE. 14 Q. --THE RESULTS OF THE FOURTH QUARTER? 15 A. WE HAVE. WE GIVE GUIDANCE TO THE ANALYSTS WHO FOLLOW 16 IT. 17 Q. WHAT GUIDANCE HAVE YOU GIVEN? 18 A. I BELIEVE WE HAVE GIVEN THEM GUIDANCE ABOUT OUR 19 NUMBERS. YOU WOULD HAVE TO ASK THEM ABOUT THE NUMBERS. 20 WE TEND NOT TO REPEAT THE INFORMATION THAT THEY GIVE OUT. 21 Q. WELL, I'M NOT ASKING YOU TO--YOU'RE HERE TESTIFYING. 22 IF YOU KNOW FACTS, I WOULD LIKE TO KNOW THEM. 23 WHAT GUIDANCE HAVE YOU GIVEN THEM? 24 A. THE FOURTH QUARTER IS NOT OVER WITH, SO THERE AREN'T 25 ANY FACTS. I DON'T HAVE A FACT OF WHAT IT'S GOING TO BE.
22 - [add a note] 1 AS FAR AS WHAT OUR ANALYSTS HAVE BEEN TOLD, WE HAVE GIVEN 2 THEM A BALLPARK ESTIMATE. 3 AND YOU MAY BE RIGHT. I WAS ADVISED THAT I'M NOT 4 SUPPOSED TO GIVE OUT THOSE NUMBERS. I'M A PUBLIC 5 CORPORATION, AND WE TEND TO SAY WE WILL REFER YOU TO THE 6 ANALYSTS. 7 MR. WARDEN: I COULD PRESS FOR THAT POINT, BUT I 8 DON'T, YOUR HONOR. ALL I ASK IS THAT HE REPEAT FOR THE 9 RECORD IN THIS PROCEEDING WHAT HE OR HIS COMPANY HAS 10 ALREADY SAID TO THE ANALYSTS BECAUSE THAT'S NO LONGER 11 CONFIDENTIAL MATERIAL INFORMATION ONCE IT'S GIVEN TO THE 12 ANALYSTS. 13 THE WITNESS: I WILL DO THAT. I JUST DON'T KNOW 14 WHAT THE RULES ARE. 15 THE COURT: WAIT A MINUTE. 16 GO AHEAD, MR. WARDEN. 17 MR. WARDEN: ANALYSTS ARE NOT A PRIVILEGED GROUP 18 IN TERMS OF THE SECURITIES LAWS AND ACCESS TO INFORMATION. 19 AND, IN FACT, THE LAW IS QUITE TO THE CONTRARY. 20 THE COURT: THE PROBLEM IS I DON'T KNOW WHAT AN 21 ANALYST IS OR DOES. 22 MR. WARD: I'M TALKING ABOUT SECURITIES ANALYSTS 23 THAT MAKE PROJECTIONS FOR INVESTORS AND WRITE UP REPORTS 24 ON THE COMPANY AND SO ON. 25 IN THE SEC'S VIEW OF EFFICIENT MARKETS,
23 - [add a note] 1 INFORMATION GIVEN TO ANALYSTS WILL BECOME KNOWN TO THE 2 INVESTING PUBLIC AND USED IN A USABLE FORM AND FORM THE 3 BASIS FOR DECISIONS. THE LAW DOES NOT PERMIT SELECTIVE 4 DISCLOSURE OF MATERIAL INSIDE INFORMATION. THE ONLY 5 REASON ANALYST GUIDANCE IS PERMITTED IS THE THEORY THAT IT 6 WILL BECOME KNOWN THROUGH THE ANALYSTS TO THE MARKETS, AND 7 I RESPECTFULLY SUGGEST THERE IS NO BASIS FOR REFUSING TO 8 DISCLOSE IN THIS COURTROOM INFORMATION THAT HAS BEEN GIVEN 9 TO SECURITIES ANALYSTS. 10 THE COURT: COUNSEL, APPROACH THE BENCH. 11 (BENCH CONFERENCE.) 12 MR. SNYDER: I'M ALLEN SNYDER, AND I REPRESENT 13 NETSCAPE COMMUNICATIONS CORPORATION. 14 THE COURT: ALL RIGHT. WHAT IS YOUR POSITION ON 15 THE MATTER? 16 MR. SNYDER: YOUR HONOR, I THINK THAT IF THE 17 WITNESS KNOWS THE STATEMENTS THAT HAVE BEEN GIVEN TO THE 18 SECURITIES ANALYSTS, WE WOULD HAVE NO OBJECTION AS TO HIS 19 REPEATING THEM, BUT I THINK HE SHOULD BE CAUTIONED THAT HE 20 SHOULD ONLY ANSWER THE QUESTION IF HE KNOWS EXACTLY WHAT 21 WAS SAID TO THE ANALYSTS. 22 THE COURT: FAIR ENOUGH. ARE YOU SATISFIED WITH 23 THAT? 24 MR. WARDEN: AS FAR AS I'M PRESSED. I THINK I'M 25 ENTITLED TO GO FARTHER, BUT I'M NOT GOING TO.
24 - [add a note] 1 MR. BOIES: WHILE WE ARE AT THE BENCH, COULD I 2 RAISE A SCHEDULING PROBLEM? 3 THE COURT: SURE. 4 MR. BOIES: MR. BARKSDALE HAS A NUMBER OF 5 BUSINESS MEETINGS HE HAS TO GET BACK TO THAT I'M INFORMED 6 OF, AND I HAVE BEEN ASKED WHETHER I CAN PREVAIL UPON THE 7 COURT TO SIT SOMEWHAT LATER TODAY AND TOMORROW AND FINISH 8 HIM THIS WEEK FOR SURE. HE'S BEEN HERE FOR A LONG TIME. 9 AND FORTUNATELY, HE PLANNED TO BE HERE THIS WEEK, AND 10 BECAUSE OF THE END OF THE QUARTER-- 11 THE COURT: LET'S GET AN ESTIMATE. 12 MR. WARDEN: YOUR HONOR, I WON'T FINISH TOMORROW. 13 AT LEAST, BASED ON ANY REASONABLE GOOD-FAITH EXPECTATION, 14 I WON'T FINISH TOMORROW. 15 THE COURT: TOMORROW IS THURSDAY. 16 MR. WARDEN: WE WILL HAVE TO HAVE MONDAY, AND I 17 CAN'T--I AM VERY TIRED, AND I OBJECT TO WORK DAYS BEING 18 LONGER THAN NORMAL. THAT'S TOO BAD, BUT THAT'S THE 19 REALITY. 20 THE COURT: I HAVE LOGISTICAL PROBLEMS WITH 21 KEEPING COURT PERSONNEL ON HAND, TOO. 22 I THINK WE WILL SIMPLY HAVE TO ASK HIM TO REMAIN, 23 WITHIN REASON, THROUGH NEXT MONDAY, AND I WILL INSTRUCT 24 HIM TO THAT EFFECT, IF ANYBODY FEELS THAT THAT'S 25 NECESSARY.
25 - [add a note] 1 MR. SNYDER: IT'S A LONG TIME FOR A CEO TO BE 2 AWAY FROM HIS COMPANY, BUT WE WILL TRY OUR BEST TO MAKE 3 HIM AVAILABLE. 4 MR. WARDEN: HE HAS THE THREE-DAY WEEK. 5 THE COURT: THE OTHER ALTERNATIVE IS TO BRING HIM 6 BACK, BUT I PREFER NOT TO DO THAT. I WOULD LIKE TO FINISH 7 WITH HIM. 8 MR. SNYDER: I UNDERSTAND. 9 THE COURT: AND I'M GOING TO HOLD YOU TO YOUR 10 MONDAY, AT THE LATEST, COMMITMENT. 11 MR. WARDEN: YOU WILL? 12 THE COURT: I WILL HOLD YOU. 13 MR. WARDEN: I DIDN'T THINK I MADE A COMMITMENT, 14 YOUR HONOR. 15 THE COURT: YOU JUST DID. 16 MR. WARDEN: I SAID I KNEW I WOULD NEED MONDAY. 17 I WILL TRY TO DO MY BEST TO BE FINISHED ON MONDAY, BUT I'M 18 NOT NEARLY SO FAR ALONG IN MY OUTLINE AS I EXPECTED TO BE. 19 THE COURT: WELL, HE'S NOT BEING EVASIVE. HE'S 20 BEING RESPONSIVE TO YOUR QUESTIONS. 21 MR. WARDEN: SOMETIMES HE DOESN'T SEEM TO 22 UNDERSTAND THEM, BUT THAT'S IN GOOD FAITH. 23 THE COURT: SOMETIMES I DON'T UNDERSTAND THEM, 24 EITHER. 25 MR. WARDEN: SOMETIMES I MAY NOT UNDERSTAND THEM,
26 - [add a note] 1 MYSELF. 2 THE COURT: LET'S TAKE A 10-MINUTE RECESS. 3 (END OF BENCH CONFERENCE.) 4 (BRIEF RECESS.) 5 BY MR. WARDEN: 6 Q. WE HAD A PENDING QUESTION, MR. BARKSDALE. DID YOU 7 HAVE A CHANCE, BY CHANCE, TO SPEAK WITH YOUR COUNSEL ABOUT 8 THAT QUESTION DURING THE BREAK? 9 A. I DID. 10 THE COURT: AND I BELIEVE THE CONSENSUS IS THAT 11 YOU MUST GIVE THAT ANSWER IF YOU KNOW WHAT THE ANSWER IS. 12 BY MR. WARDEN: 13 Q. DO YOU WANT ME TO REPEAT THE QUESTION? 14 A. WOULD YOU REPEAT THE QUESTION. 15 Q. MY QUESTION WAS SIMPLY: WHAT GUIDANCE HAS NETSCAPE 16 GIVEN TO SECURITIES ANALYSTS WITH RESPECT TO THE FOURTH 17 QUARTER OF THE CURRENT FISCAL YEAR WHICH IS DUE THE END, I 18 BELIEVE YOU SAID, AT THE END OF THIS MONTH? 19 A. SINCE I DON'T PARTICIPATE IN GIVING THAT GUIDANCE, I 20 DON'T KNOW. THAT'S TRUE. 21 Q. DO THE PEOPLE WHO GIVE THE GUIDANCE CHECK THE 22 GUIDANCE WITH YOU BEFORE THEY GIVE IT? 23 A. NO, SIR. 24 Q. WHO HAS THAT RESPONSIBILITY WITHIN YOUR COMPANY? 25 A. OUR CHIEF FINANCIAL OFFICER.
27 - [add a note] 1 Q. MAY I DIRECT YOUR ATTENTION TO-- 2 THE COURT: YOU WERE ON EXHIBIT 10. 3 MR. WARDEN: WELL, I'M GOING BACK TO EXHIBIT 9. 4 PAGE SIX OF 12 THEREOF, WHICH HAS THE BATES NUMBER ENDING 5 IN 86. 6 BY MR. WARDEN: 7 Q. YOU HAVE THAT PAGE? 8 A. SIX OF 12? 9 Q. YES. 10 AND DISCUSSES YOUR PARTNERS IN THE UNLIMITED 11 DISTRIBUTION PROGRAM; IS THAT CORRECT? 12 A. IT SEEMS TO. 13 Q. AND IT LISTS ISP'S AS NUMBERING 4,283; DO YOU SEE 14 THAT? 15 A. YES, SIR, I SEE IT. 16 Q. AND OEM'S AS NUMBERING 520? 17 A. CORRECT. 18 Q. AND DEVELOPERS OF THOSE ISV'S--DOES THAT MEAN THE 19 SAME THING AS ISV? 20 A. OH, YES. BY AND LARGE, YES. 21 Q. AND THAT NUMBER IS 2,301? 22 A. CORRECT. 23 Q. AND CONTENT PROVIDERS, ARE THOSE WHAT WE HAVE BEEN 24 REFERRING TO AS ICP'S? 25 A. YES.
28 - [add a note] 1 Q. AND THEY NUMBER 1,546? 2 A. YES. 3 Q. AND ALL THOSE NUMBERS OF ENTERPRISES ARE DISTRIBUTING 4 YOUR BROWSER SOFTWARE? 5 A. THEY WILL BE. THEY MAY BE IN THE FUTURE. THE 6 UNLIMITED DISTRIBUTION PROGRAM, BY AND LARGE, WAS GOING TO 7 BE ROLLING OUT AT THE END OF THIS YEAR, BUT--SO THEY WILL 8 BE DELIVERING OVER A PERIOD OF TIME. 9 Q. WELL, DOESN'T THIS SAY THAT YOU EXPECT BROWSER 10 DISTRIBUTION OVER THE NEXT SIX MONTHS TO BE 68 MILLION? 11 A. YES, BUT THIS WAS AS OF AUGUST. 12 Q. OKAY. AND THE SIX MONTHS AFTER THAT, 91 MILLION 13 ROUNDED OFF? 14 A. CORRECT. 15 Q. FOR A TOTAL OF 159 MILLION? 16 A. CORRECT. 17 Q. HOW MANY PC USERS ARE CONNECTED TO THE WORLD WIDE 18 WEB? 19 A. NO ONE KNOWS FOR SURE THAT NUMBER. I HAVE SEEN 20 ESTIMATES OF GREATER THAN 100 MILLION AND LESS THAN 150 21 MILLION. 22 Q. SO, YOUR UNLIMITED DISTRIBUTION PROGRAM WILL BE MORE 23 THAN THE TOTAL NUMBER OF PEOPLE CONNECTED TO THE WEB? 24 A. YES, IT WILL. 25 Q. AND THAT DOESN'T EVEN INCLUDE THOSE WHO ARE
29 - [add a note] 1 DOWNLOADING FROM THE INTERNET; IS THAT CORRECT? 2 A. THAT WOULD--YOU MEAN THE PEOPLE WHO ARE CONNECTED TO 3 THE INTERNET ARE NOT INCLUDED IN THIS WHO DOWNLOADED? IT 4 WOULD BE THE SAME PEOPLE. 5 Q. I DIDN'T MEAN THE PEOPLE--I'M ASKING YOU THE PEOPLE 6 WHO DOWNLOAD FROM YOUR NETCENTER WEB SITE INCLUDED IN THIS 7 159 MILLION. 8 A. THAT'S CORRECT. 9 Q. THEY ARE? 10 A. THEY'RE ALL THE SAME PEOPLE. 11 Q. BUT THOSE DON'T GO THROUGH A PARTNER; RIGHT? THOSE 12 ARE DIRECTLY FROM YOU AND YOUR NETCENTER WEB SITE? 13 A. THEY GO THROUGH OUR NETCENTER AND OUR MIRROR SITES 14 FOR NETCENTER, BUT THAT'S WHO ARE PARTNERS, IN A SENSE. 15 BUT THIS WAS AFTER WE MADE THE PRODUCT FREE. 16 Q. I BEG YOUR PARDON? 17 A. I JUST SAID THIS WAS SUBSEQUENT TO MAKING THE PRODUCT 18 FREE. 19 Q. OKAY. LET'S GO BACK TO YOUR DIRECT TESTIMONY, PAGE 20 THREE, PARAGRAPH 34, WHICH IS THE TOP PART OF THE PAGE. 21 THE COURT: PAGE 23? 22 MR. WARDEN: I BEG YOUR PARDON. PAGE 23, 23 PARAGRAPH 34. YES, YOUR HONOR. 24 BY MR. WARDEN: 25 Q. LOOKING AT THAT TABLE, THE BAR GRAPH AT THE END OF
30 - [add a note] 1 PARAGRAPH 34, WHAT DOES "NETSCAPE CLIENT" MEAN IN THE 2 HEADING? 3 A. IT MEANS THE BROWSER PLUS SUBSCRIPTION REVENUE. 4 SUBSCRIPTION REVENUE FOR THE BROWSER. 5 Q. THAT'S PEOPLE WHO CONTINUE TO PAY FOR USE; IS THAT 6 WHAT YOU'RE SAYING? 7 A. CORRECT. FOR NEW RELEASES, FUTURE RELEASES, AND 8 MAINTENANCE SUPPORT. 9 Q. THEY PAY A FLAT ANNUAL FEE? 10 A. YES. 11 Q. AND GET ALL THE RELEASES? 12 A. CORRECT. 13 Q. TURNING TO PARAGRAPH 35, THE FIRST SENTENCE REFERS TO 14 YOUR BELIEF IN NETSCAPE'S EXPECTATION; DO YOU SEE THAT? 15 A. YES. 16 Q. AND IT REFERS TO A TRAJECTORY AS OF MID 1996? 17 A. YES. 18 Q. IS THAT TRAJECTORY THE TRAJECTORY OF BROWSER REVENUES 19 SHOWN IN THE BAR GRAPH ABOVE? 20 A. THAT WAS THE--THAT'S WHAT THE STATEMENT REFERS TO FOR 21 THAT PORTION OF OUR REVENUES. 22 Q. AND THAT HAD REACHED $60 MILLION A QUARTER IN MID 23 1996, IF I READ THIS CORRECTLY; IS THAT RIGHT? 24 A. APPROXIMATELY, YES. 25 Q. WELL, IS THE LINE ON THE LEFT OF THE BAR CHART
31 - [add a note] 1 MILLIONS OF DOLLARS? 2 A. YES. 3 Q. AND HOW LONG DID YOU EXPECT TO CONTINUE ON THIS 4 TRAJECTORY? 5 A. WELL, FOR A PERIOD OF TIME, UNKNOWN, WE EXPECTED AND 6 HAVE ALWAYS ANTICIPATED THAT THE BROWSER WOULD BE A 7 SIGNIFICANT PORTION OF OUR REVENUE. WE DID NOT INTEND TO 8 EVER MAKE IT FREE, SO IT WOULD CONTINUE TO BE A PORTION OF 9 OUR REVENUE. I DON'T THINK THAT I WOULD ARGUE THAT IT 10 WOULD STAY AT THE SAME RATE OF TRAJECTORY FOREVER, 11 OBVIOUSLY, BECAUSE THERE ARE LIMITS TO EVERY MARKET, BUT 12 THAT'S WHAT WE BUILT OUR BUSINESS ON. 13 Q. GOING BACK TO PARAGRAPH 34 THERE ON THE SAME PAGE, DO 14 YOU SEE WHERE YOU REFER TO NETSCAPE'S BROWSER MARKET SHARE 15 IN THE THIRD LINE? 16 A. YES. 17 Q. WHAT DO YOU MEAN BY THE "BROWSER MARKET"? 18 A. THE BROWSER MARKET WOULD GENERALLY BE THE PEOPLE WHO 19 HAVE AND USE BROWSERS TO CONNECT TO THE INTERNET. 20 Q. AND NETSCAPE, YOU SAID, HAD OVER 70 PERCENT OF ALL 21 BROWSER USERS IN THE FIRST QUARTER OF '96? 22 A. YES. 23 Q. AND THAT, THEREFORE, WAS YOUR SHARE AT THAT TIME OF 24 WHAT YOU CALL THE "BROWSER MARKET;" IS THAT CORRECT? 25 A. THAT'S CORRECT.
32 - [add a note] 1 Q. WHAT WAS AOL'S SHARE AT THAT TIME? 2 A. IN THE FIRST QUARTER OF '96? 3 Q. OR THEREABOUTS, YES. 4 A. IT WOULD HAVE BEEN VERY SMALL. I DON'T KNOW THAT I 5 WOULD HAVE KNOWN AT THAT PARTICULAR POINT. I KNOW THAT 6 ONCE THEY BEGAN INTEGRATING THE INTERNET EXPLORER IN '96, 7 FALL TO THE SPRING OF OR EARLY SUMMER OF '97, THEY GAINED 8 SEVERAL MILLION VIEWERS. BY THE END OF '97, THEY HAD NINE 9 TO TEN MILLION USERS OF AOL WITH AN EMBEDDED IE BROWSER. 10 BUT IF YOU ASKED ME JANUARY, IT WAS PROBABLY A LOT LESS 11 BECAUSE AT THAT TIME THEY ONLY HAD THE WINDOWS 95 VERSION 12 OF THE BROWSER, OF THE INTERNET EXPLORER BROWSER, EMBEDDED 13 IN AOL, SO THEY PROBABLY HAD MAYBE A MILLION OR LESS. 14 Q. WHAT DO YOU THINK YOUR SHARE OF THE BROWSER MARKET, 15 AS YOU USED THAT TERM IN THIS PARAGRAPH, IS TODAY? 16 A. OUR ESTIMATES WOULD SHOW IT TO BE--TRYING TO COMPARE 17 APPLES TO APPLES. NOW, YOU GET A WIDE RANGE OF THESE 18 MARKET SHARES BECAUSE--AND IF YOU WANT, I WILL EXPLAIN 19 THAT. 20 Q. I WANT YOU TO DO APPLES TO APPLES, THE SAME BASIS, 21 WHATEVER IT WAS THAT YOU USED IN CALCULATING THE 70 22 PERCENT IN YOUR WRITTEN DIRECT TESTIMONY. 23 A. AND WHAT IS IT TODAY? 24 Q. YES. 25 A. WELL, TODAY IT WOULD BE APPROXIMATELY, USING THAT
33 - [add a note] 1 SAME MEASUREMENT, I BELIEVE IT'S AS OF LAST MONTH, 2 SEPTEMBER, WAS 54 PERCENT. AT THIS TIME, JANUARY OF '96, 3 IT WAS APPROXIMATELY 84 PERCENT, SO WE HAVE LOST 30 POINTS 4 OF SHARE IN A YEAR AND A HALF. 5 Q. AND IN THE LAST MONTH OR THE END OF LAST MONTH, WHAT 6 WAS AOL'S SHARE? 7 A. I HAVE SEEN INFORMATION GIVEN THAT WOULD SHOW IT WAS 8 SOMEWHERE IN THE 20 TO 25 PERCENT. 9 Q. HOW MUCH AS THE--IN TERMS OF NUMBERS OF USERS, HOW 10 MUCH HAS YOUR BASE GROWN SINCE THE END OF 1995; THAT IS, 11 THE NUMBER OF PEOPLE USING YOUR BROWSING SOFTWARE? 12 A. I DON'T KNOW AN ACCURATE ANSWER TO THAT QUESTION. 13 Q. DO YOU HAVE ANY IDEA HOW MANY PEOPLE ACTUALLY USE 14 YOUR BROWSER TODAY? 15 A. I THINK I GAVE YOU SOME NUMBERS A WHILE AGO THAT WERE 16 BROAD RANGE OF GUESTIMATES. I DON'T KNOW IF I COULD 17 REFINE THAT ANYMORE. 18 Q. NOW, RETURNING TO THIS BAR GRAPH AND LEAVING ASIDE 19 THE CURRENT FISCAL YEAR AS TO WHICH YOU HAVEN'T YET 20 REPORTED, ISN'T IT TRUE THAT NETSCAPE'S TOTAL REVENUE HAS 21 INCREASED IN EVERY YEAR THAT THE COMPANY HAS BEEN IN 22 BUSINESS? 23 A. YOU MEAN FOR THE FULL YEARS REPORTED OR INCLUDING THE 24 FIRST THREE QUARTERS OF THIS YEAR? 25 THE FIRST THREE YEARS IT INCREASED EVERY YEAR.
34 - [add a note] 1 THIS YEAR, IT PROBABLY WILL NOT INCREASE. 2 Q. OKAY. THE NUMBERS IN THE 199710K--AND I UNDERSTAND 3 WE DON'T HAVE FULL YEAR NUMBERS FOR THIS YEAR. 4 A. CORRECT. 5 Q. THAT'S WHY I EXCLUDED IT FROM THE QUESTION. 6 A. RIGHT. 7 Q. WE LOOKED AT A WHILE AGO, AND THEY WERE, 1995, 85 8 MILLION; 1996, 346 MILLION; AND 1997, 534 MILLION. 9 A. CORRECT. 10 Q. DOES THAT SOUND ABOUT RIGHT? 11 A. THAT SOUNDS ABOUT RIGHT, YES, SIR. 12 Q. IF YOU COMPARE THE 534 MILLION IN FISCAL YEAR 1997 TO 13 THE 85 MILLION IN 1995, THAT'S A GROWTH OF 500 PERCENT IN 14 TWO YEARS, IS IT NOT? 15 A. CORRECT. 16 Q. WILL 1998 FISCAL YEAR REVENUES BE ABOVE THE LEVEL OF 17 1996, WHICH IS 346 MILLION? I'M NOT ASKING WHERE ABOVE 18 THAT LEVEL THEY WOULD BE. 19 A. NO, BECAUSE THE FIRST QUARTER WAS MUCH SHORTER--THE 20 WAY THE ACCOUNTING RULES WORK, YOU REPORT A MUCH SHORTER 21 QUARTER. 22 Q. YOU COULD HAVE A TEN-MONTH YEAR? 23 A. YES. 24 Q. SO, ON AN ANNUALIZED BASIS, WOULD THEY BE ABOVE THE 25 1996 LEVEL?
35 - [add a note] 1 A. AGAIN, WITHOUT FORECASTING EARNINGS-- 2 Q. I DIDN'T ASK ABOUT EARNINGS, BUT I'M ASKING REVENUES 3 ONLY. 4 A. I CAN'T FORECAST EITHER ONE, BUT I COULD SAY THAT IF 5 YOU TOOK THE LAST TWO QUARTERS AND DID SOME REASONABLE 6 PROJECTION, IT WOULD BE GREATER THAN, WHAT WAS IT? 350 7 MILLION? 8 Q. YES. 9 A. IT WOULD PROBABLY BE GREATER THAN, YES. 10 Q. THANK YOU. 11 AND WHEN YOU WILL ANNOUNCE YOUR FISCAL--YOU CALL 12 THIS FISCAL 1998? 13 A. YES. WE WOULD ANNOUNCE THE THIRD OR SO WEEK OF 14 NOVEMBER. 15 Q. DID YOU MEET WITH TODD MILLER AND MARC ANDREESSEN AND 16 MIKE HOMER IN JANUARY OR FEBRUARY OF 1995 TO DISCUSS THE 17 PRICING OF NETSCAPE'S BROWSING SOFTWARE? 18 A. I DON'T KNOW. 19 Q. WHO IS TODD MILLER? 20 A. TODD WAS HEAD OF SALES. 21 Q. AT THAT TIME? 22 A. YES, SIR. 23 Q. ARE YOU FAMILIAR WITH A BOOK THAT IS IN PROOF FORM 24 ABOUT NETSCAPE PREPARED BY PROFESSOR CUSUMANO AND ANOTHER 25 CO-AUTHOR?
36 - [add a note] 1 A. YES, SIR, I'M AWARE OF THAT BOOK, YES, SIR. 2 Q. HAVE YOU READ THE MANUSCRIPT OR THE PROOF OR 3 WHATEVER? 4 A. I HAVE NOT READ ALL OF IT. I READ THOSE THINGS 5 ATTRIBUTED TO ME, AND I READ THE CONCLUSION, AND I THINK I 6 READ THE FIRST CHAPTER. 7 Q. AND YOU, AT NETSCAPE, MORE OR LESS, OPENED YOURSELVES 8 UP TO THESE AUTHORS FOR INTERVIEWS AND SO FORTH FOR THE 9 PREPARATION OF THIS BOOK, DID YOU NOT? 10 A. WE COOPERATED. 11 Q. ALL RIGHT. 12 A. THEY INDICATED THAT IF WE DIDN'T, THEY WERE GOING TO 13 WRITE THE BOOK ANYWAY, SO WE SAID, "WELL, WE WILL LET YOU 14 VISIT WITH US." 15 Q. AND YOU HAD AN AGREEMENT WITH THEM THAT YOU COULD 16 REVIEW THE MANUSCRIPT AND CORRECT ERRORS AND SO ON; IS 17 THAT RIGHT? 18 A. I DON'T KNOW IF WE HAD AN AGREEMENT. THEY ALLOWED US 19 TO DO THAT. 20 Q. THEY ALLOWED YOU TO DO THAT. 21 MR. WARDEN: OKAY. I'M GOING TO ASK TO HAVE 22 MARKED AS THE NEXT EXHIBIT FOR IDENTIFICATION ONLY A COPY 23 OF THE--AND I DON'T KNOW WHAT THE RIGHT TERM IS--PROOF OR 24 MANUSCRIPT OF THIS FORTHCOMING BOOK. 25 BY MR. WARDEN:
37 - [add a note] 1 Q. DO YOU KNOW WHEN THE BOOK IS GOING TO BE PUBLISHED, 2 MR. BARKSDALE? 3 A. NO, SIR, I DON'T. 4 MR. WARDEN: OKAY. MS. WHEELER ADVISES ME THAT 5 THIS IS GOING TO BE MARKED AS DEFENDANT'S EXHIBIT 34, 6 BECAUSE DURING THE RECESS SHE PRE-MARKED SOME OTHER 7 EXHIBITS THAT I WILL COME TO IN A MINUTE. 8 BY MR. WARDEN: 9 Q. THIS BOOK SAYS IT'S FORTHCOMING IN 1999. IT'S CALLED 10 "COMPETING ON INTERNET TIME: LESSONS FROM NETSCAPE IN THE 11 BATTLE WITH MICROSOFT" BY MICHAEL CUSUMANO AND DAVID 12 YOFFIE. AND AT LEAST PARTS, IF NOT ALL, OF THIS PROOF, 13 EVERY PLACE I COULD FIND A DATE, THAT DATE IS AUGUST 20TH, 14 1998. I'M NOT SURE THE DATE APPEARS ON EVERY PAGE, BUT IT 15 SEEMS TO APPEAR ON MOST OF THEM. 16 A. EXCUSE ME. I UNDERSTAND THERE HAVE BEEN AT LEAST 17 TWO, IF NOT MORE, REVISIONS. 18 Q. SINCE THEN? 19 A. NO, NO, NO. 20 Q. OKAY. 21 A. WHAT THEY CALLED THEIR REVISIONS, AND I DON'T KNOW 22 WHICH REVISION THIS IS. I WAS SHOWN REVISION ONE AND 23 REVISION TWO. IS THIS A THIRD REVISION OR A SECOND 24 REVISION OR A FIRST REVISION? 25 Q. I DON'T KNOW THE ANSWER TO THAT QUESTION. I WILL ASK
38 - [add a note] 1 MY COLLEAGUES. THIS IS THE FORM IN WHICH THE BOOK WAS 2 FURNISHED TO US BY YOUR COUNSEL IN RESPONSE TO A REQUEST 3 FOR PRODUCTION OF DOCUMENTS. 4 (COUNSEL CONFERRING.) 5 Q. I AM ADVISED THAT THIS IS THE THIRD VERSION, THE 6 LATEST ONE THAT WAS PRODUCED TO US. WE DON'T KNOW WHETHER 7 THERE WAS ANY AFTER THAT. DO YOU? THIS IS DATED AUGUST 8 20TH. 9 A. I'M THE SAME CUSTOMER AND GETTING THE THIRD REV OF 10 THIS BOOK. 11 Q. THAT'S WHAT I UNDERSTAND IS THE CASE TODAY. AND YOU 12 EVEN GOT IT FREE. 13 A. WELL, WE COULD ARGUE THAT LATER. 14 ALL I'M TRYING TO SAY IS I HAVEN'T SEEN THIS BOOK 15 IN THIS FORMAT. I DON'T KNOW IF I HAVE SEEN THIS EXACT 16 COPY. 17 Q. OKAY. TAKING THAT INTO ACCOUNT, WOULD YOU PLEASE 18 TURN TO CHAPTER THREE, PAGE EIGHT. 19 A. IT'S GOING TO TAKE A WHILE. 20 Q. THAT'S THE WAY IT SEEMS TO BE NUMBERED. IT HAS BATES 21 NUMBERS 67065. 22 A. PAGE EIGHT? 23 Q. YES. THE NUMBERS ARE DOWN AT THE BOTTOM OF THE PAGE, 24 AT LEAST IN CHAPTER THREE. 25 A. YES, SIR. I GOT IT.
39 - [add a note] 1 Q. OKAY. AND I DIRECT YOUR ATTENTION TO THE PARAGRAPH 2 AT THE TOP OF THE PAGE WHICH PURPORTS TO BE A QUOTATION OF 3 A STATEMENT MADE BY TODD RULON-MILLER; DO YOU SEE THAT? 4 A. I DO. 5 Q. WOULD YOU READ THAT TO YOURSELF, PLEASE. 6 A. YOU ARE TALKING ABOUT THIS TODD QUOTE? 7 Q. YES, I AM, MR. BARKSDALE. THE LARGE BLOCKED TEXT AT 8 THE TOP. 9 (WITNESS REVIEWS DOCUMENT.) 10 A. I SEE IT. I HAVE READ IT. 11 Q. DO YOU RECALL THE MEETING REFERRED TO IN JANUARY OR 12 FEBRUARY OF 1995? 13 A. I RECALL THE MEETING WITH THE SALESPEOPLE AND THE 14 ENGINEERING PEOPLE IN THAT PERIOD. I DON'T KNOW IF IT 15 WAS--EXACTLY WHAT DAY, BUT I DO REMEMBER THAT MEETING, 16 YES. 17 Q. IS THIS QUOTATION THAT PURPORTS TO BE-- 18 A. EXCUSE ME, YOU ARE TALKING ABOUT THE MEETING WITH THE 19 SALESPEOPLE? 20 Q. I'M TALKING ABOUT THIS MEETING, "IN JANUARY OR 21 FEBRUARY OF 1995, WE HAD A STAFF MEETING WHERE ANDREESSEN, 22 HOMER AND I AND EVERYBODY WERE SAYING," COLON AND SO ON. 23 A. IT GOES ON TO SAY, THEN WE HAD THIS FAMOUS MEETING 24 WHERE I CHOREOGRAPHED, WHICH IS A SUBSEQUENT MEETING. 25 WHICH MEETING ARE YOU ASKING ME ABOUT? I REMEMBER THE
40 - [add a note] 1 SECOND MEETING. I DON'T REMEMBER THE FIRST MEETING. I 2 REMEMBER THE STAFF DISCUSSION. 3 Q. YOU REMEMBER THE SECOND MEETING? 4 A. I DO REMEMBER THAT. 5 Q. THIS IS THE ONE THAT'S REFERRED TO AS, "WE HAD THIS 6 FAMOUS MEETING WHERE BARKSDALE, TO HIS CREDIT," ET CETERA? 7 A. I SEE THAT. 8 Q. OKAY. IS THE STATEMENT ATTRIBUTED TO 9 MR. RULON-MILLER IN THIS PARAGRAPH ABOUT THAT MEETING A 10 CORRECT DESCRIPTION OF THE MEETING? 11 A. I DON'T THINK SO. 12 Q. WELL, YOU TELL ME WHAT HAPPENED AT THE MEETING, THEN. 13 A. AS I REMEMBER THE MEETING, IT WAS A DISCUSSION 14 BETWEEN ENGINEERING AND THE SALES FORCE, EACH ARGUING 15 ABOUT DIFFERENT WAYS TO PRICE, COLLECT REVENUE FOR THE 16 PRODUCTS THAT WE HAD, THE BROWSER, AS WELL AS THE SERVER 17 PRODUCTS. THAT'S BASICALLY WHAT IT WAS. AND I REMEMBER 18 LETTING EACH SIDE SORT OF ARGUE THEIR CASE, AND IT HAD A 19 LOT TO DO WITH THE DEFINITION OF PERSONAL USE VERSUS 20 BUSINESS USE. 21 Q. DO YOU REMEMBER THE CONCEPT OR ANY CONCEPT CALLED 22 "FREE BUT NOT FREE"? 23 A. NO. 24 Q. DO YOU RECALL THAT NETSCAPE'S ORIGINAL BUSINESS MODEL 25 ANTICIPATED THAT MOST OF ITS SALES REVENUE WOULD COME FROM
41 - [add a note] 1 SERVERS, NOT BROWSERS? 2 A. I DON'T REMEMBER THAT, NO. 3 Q. NOW, WHEN THIS MANUSCRIPT, WHATEVER FORM IT WAS THEN 4 IN, WAS REVIEWED AT NETSCAPE, YOU WEREN'T THE ONLY PERSON 5 WHO REVIEWED IT, WERE YOU? OR LOOKED AT PARTS OF IT OR 6 THE WHOLE? 7 A. NO. I THINK THE PEOPLE WHO HAD BEEN INTERVIEWED 8 REVIEWED THEIR QUOTES OR THOSE THINGS ATTRIBUTED TO THEM. 9 I DON'T KNOW IF ALL--I DON'T KNOW, FOR INSTANCE, IF 10 MR. RULON-MILLER WAS GIVEN THIS TO REVIEW BECAUSE HE WAS 11 NO LONGER WITH THE COMPANY. 12 Q. DID ANYONE REPORT TO YOU THAT THE BOOK WAS RIDDLED 13 WITH FACTUAL ERRORS OR ANYTHING LIKE THAT? 14 A. I REPORTED TO YOFFIE AND CUSUMANO THAT I THOUGHT IT 15 WAS RIDDLED WITH FACTUAL ERRORS. 16 Q. DO YOU REMEMBER WHICH ONES IN PARTICULAR? 17 A. I FELT THAT THEY WERE UNNECESSARILY BELITTLING OUR 18 PRODUCT. IT WAS A WONDERFUL PRODUCT. IT CONTRIBUTED TO 19 GREAT GROWTH AND REVENUES. OBVIOUSLY, THE CUSTOMERS LIKED 20 IT, BUT THEY WANTED TO DWELL MORE ON THINGS LIKE THE 21 ELEGANCE OF THE CODE BASE, WHICH I DON'T THINK WAS THE 22 CENTRAL STORY OF NETSCAPE FOR ONE WHIT, SO I KEPT ON THEM 23 ABOUT THAT. BUT I DIDN'T READ THIS QUOTE UNTIL THIS 24 MOMENT BECAUSE IT WAS NOT ATTRIBUTED TO ME. I WOULD SAY 25 THAT'S MORE EVIDENCE OF AFTER-THE-FACT SORT OF PUTTING
42 - [add a note] 1 THINGS TOGETHER. 2 Q. YOU SEE THE PARAGRAPH FOLLOWING THE BLOCKED QUOTE? 3 A. YES. 4 Q. AND THE STATEMENT, "NETSCAPE MANAGEMENT HAD NO 5 ILLUSIONS. SOME PEOPLE WOULD PAY FOR THE TRIAL PERIOD AND 6 SOME WOULDN'T. IN EFFECT, THE BROWSER WOULD BE FREE, BUT 7 IF THE NAME OF THE GAME WAS VOLUME AND MARKET SHARE, FREE 8 BUT NOT FREE OFFERED THE PERFECT SOLUTION." 9 A. I SEE THAT PARAGRAPH. I DON'T AGREE WITH IT. 10 Q. YOU DO NOT AGREE WITH IT? 11 A. NO. 12 Q. DOES IT REPRESENT THINKING THAT, TO YOUR KNOWLEDGE, 13 MR. ANDREESSEN WOULD AGREE WITH? 14 A. I HAVE NO WAY OF KNOWING. IT WAS CERTAINLY NOT MY 15 INTENTION. 16 Q. DO YOU SEE THE STATEMENT IN THE NEXT PARAGRAPH, ABOUT 17 THE FOURTH SENTENCE, "BY DISTRIBUTING ITS PRODUCT OVER THE 18 NET AND WRITING THE CODE FROM SCRATCH, NETSCAPE'S VARIABLE 19 COSTS WERE EFFECTIVELY ZERO"? 20 A. I SEE THAT. 21 Q. IS THAT TRUE? 22 A. NO. 23 Q. GOING BACK TO THE PAGE BEFORE THAT, PAGE SEVEN, I 24 DIRECT YOUR ATTENTION TO THE BOTTOM OF THE PAGE AND THE 25 SENTENCE PRIOR TO THE BLOCKED QUOTE, "NETSCAPE'S CLEVER
43 - [add a note] 1 PROCESSING INNOVATION WAS TO CREATE A MODEL FOR BROWSERS 2 THAT MARC ANDREESSEN DESCRIBED AS, QUOTE, FREE BUT NOT 3 FREE, CLOSED QUOTE, AS ANDREESSEN EXPLAINED," AND THEN IT 4 GOES ON, AND I INVITE YOU TO READ WHAT IT SAYS. YOU COULD 5 READ IT TO YOURSELF, THE BLOCKED QUOTE. 6 (WITNESS REVIEWS DOCUMENT.) 7 A. I READ THAT. 8 Q. HAVE YOU EVER HEARD MARC ANDREESSEN DESCRIBE A MODEL 9 THAT IS FREE BUT NOT FREE? 10 A. NO. 11 Q. YOU NEVER HEARD HIM USE THOSE TERMS? 12 A. I HAVE NEVER HEARD THIS TERM "FREE BUT NOT FREE." 13 Q. HAVE YOU EVER HEARD MARC ANDREESSEN EXPRESS, IN 14 SUBSTANCE, WHAT'S STATED IN THE BLOCKED QUOTE AT THE 15 BOTTOM OF PAGE SEVEN? 16 A. NO, NOT IN ITS ENTIRETY. SOME POINTS HE MAKES HERE I 17 WOULD PROBABLY AGREE WITH, BUT THE GIST OF IT, THE FREE 18 BUT NOT FREE, I HAVE NOT HEARD HIM ESPOUSE THAT, I DO NOT 19 AGREE WITH THAT, AND THAT WAS NOT OUR STRATEGY. 20 Q. DID MARC ANDREESSEN BELIEVE IN '94 AND '95 THAT THERE 21 WOULD BE VALUE TO THE COMPANY LONG-TERM IF IT BUILT A USER 22 BASE FOR ITS BROWSERS EVEN WITHOUT CHARGING FOR THEM? 23 A. I DON'T KNOW THAT. 24 Q. MARC ANDREESSEN IS STILL WITH NETSCAPE, IS HE NOT? 25 A. YES, HE IS.
44 - [add a note] 1 Q. SO HE WAS ONE OF THE PEOPLE WHO WAS AFFORDED THE 2 OPPORTUNITY TO REVIEW THIS BOOK AND CORRECT QUOTES 3 ATTRIBUTED TO HIM IF THEY WERE ERRONEOUS? 4 A. I BELIEVE. I DON'T KNOW THAT HE DID THAT. 5 Q. WELL, DID HE HAVE THE OPPORTUNITY? 6 A. HE MIGHT HAVE. I DON'T KNOW. I KNOW THAT SOME 7 PEOPLE WHO HAD THE OPPORTUNITY DIDN'T REVIEW IT AND DIDN'T 8 COMMENT ON IT, SO I DON'T KNOW IF MR. ANDREESSEN DID OR 9 DID NOT. 10 Q. NOW, I DIRECT YOUR ATTENTION TO THAT BLOCKED QUOTE 11 WHERE IT--IN THE THIRD SENTENCE SAYS, "A LOT OF COMPANIES 12 WHO ARE GOING TO USE IT ARE GOING TO PAY FOR IT BECAUSE, 13 AMONG OTHER THINGS, THEY WANT TO PAY FOR IT." DO YOU SEE 14 THAT? 15 A. I SEE THAT. 16 Q. AND THEN IT CONTINUES, "FREE SOFTWARE IS USUALLY MORE 17 EXPENSIVE, IN THE LONG RUN, FOR COMPANIES TO USE." 18 DO YOU AGREE WITH THE STATEMENTS MADE IN THOSE 19 TWO SENTENCES? 20 A. I THINK THE FIRST SENTENCE, IF I UNDERSTAND IT, IS 21 PROBABLY CORRECT. BY THAT, I MEAN, IT IS TRUE THAT, AT 22 LEAST, IN U.S. BUSINESSES AND IN MOST OF THE 23 INDUSTRIALIZED WORLD BUSINESSES, THEY WANT THE SAFETY AND 24 PROTECTION OF PAYING FOR A LICENSE. THEY DON'T WANT TO 25 PAY A LOT IF THEY DON'T HAVE TO, BUT THEY WANT THE FACT
45 - [add a note] 1 THAT THEY GAVE CONSIDERATION, THEY HAVE TAKEN THIS 2 INTELLECTUAL PROPERTY, AND THEY SIGNED THE LICENSE THEN 3 AND THERE, YOU KNOW, NOT SUBJECT TO LATER LAWSUITS THAT 4 SOMEHOW THEY HAVE STOLEN THE PRODUCT. THAT USED TO BE A 5 PROBLEM IN THE SOFTWARE INDUSTRY. 6 Q. I READ THIS, AND CORRECT ME IF I'M WRONG, TO 7 REFERRING TO PAYING FOR IT VERSUS GETTING IT AT FREE, NOT 8 STEALING IT. 9 A. WELL, BUT THE POINT IS THAT THEY WOULDN'T BE ABLE TO 10 SHOW HOW THEY GOT IT UNLESS THEY COULD SHOW THEY PAID FOR 11 IT AND GOT A LICENSE. I MEAN, IT'S QUID PRO QUO. YOU 12 PAID FOR IT, YOU GET A LICENSE, YOU SIGNED THE LICENSE, 13 YOU PROVED YOU GOT X NUMBER OF COPIES. 14 Q. WELL, WHEN YOU MADE YOUR BROWSER SOFTWARE FREE, YOU 15 STILL LICENSED IT, DID YOU NOT? 16 A. WE DID, AND I'M JUST SAYING-- 17 Q. PEOPLE COULD PROVE THAT THEY GOT IT PURSUANT TO A 18 LICENSE, DID THEY NOT? 19 A. WE DID, BUT I'M SAYING THERE IS AN ARGUMENT TO BE 20 MADE THAT BUSINESSES ARE WILLING TO PAY MONEY FOR PRODUCTS 21 TO--THEY DON'T WANT TO PAY A LOT, BUT THAT WAS MORE OF A 22 CONCERN. IT WAS MORE OF A CONCERN OF THE BUSINESS 23 RECEIVING IT THAN THE COMPANY SELLING IT. 24 Q. DO YOU AGREE THAT FREE SOFTWARE IS MORE EXPENSIVE, IN 25 THE LONG RUN, FOR COMPANIES?
46 - [add a note] 1 A. NO, I DON'T AGREE. THAT'S THE PART I DON'T 2 NECESSARILY AGREE WITH. 3 Q. DO YOU KNOW WHETHER OR NOT MR. ANDREESSEN MADE THE 4 STATEMENTS ATTRIBUTED TO HIM IN THIS PARAGRAPH? 5 A. I DO NOT KNOW. 6 Q. ARE YOU IN A POSITION TO DENY THAT HE DID? 7 A. I THINK THAT WOULD BE IMPOSSIBLE FOR ME TO DENY IT. 8 I JUST DON'T KNOW. 9 Q. DID THE AUTHORS INTERVIEW YOU ABOUT THE MEETING IN 10 EARLY 1995 THAT'S REFERRED TO ON PAGE EIGHT AT THE TOP IN 11 THAT QUOTATION, THE FAMOUS MEETING? 12 A. I DON'T REMEMBER IF THEY DID OR NOT. 13 Q. WITHOUT KNOWING WHAT MR. ABDRESSEEN OR 14 MR. RULON-MILLER SAID, YOU ARE DENYING THE CORRECTNESS, IN 15 SUBSTANCE, OF MUCH OF WHAT'S IN THOSE TWO PARAGRAPHS WE 16 LOOKED AT? 17 A. YES, SIR, I AM. 18 Q. ISN'T THE STATEMENT THAT THE PROFESSORS MAKE ABOUT 19 DISTRIBUTION COSTS BEING VERY LOW CONSISTENT WITH THE 20 TESTIMONY WE LOOKED AT OR YOU HEARD ME READ EARLIER TODAY 21 FROM MR. CLARK, DISTRIBUTION OVER THE INTERNET? 22 A. I THINK MR. CLARK'S TESTIMONY IS ABOUT THE ECONOMIC 23 VIABILITY OF THAT DISTRIBUTION. HERE YOU'RE TALKING ABOUT 24 DISTRIBUTION COSTS. I TRIED TO MAKE THE DISTINCTION THAT 25 IT DEPENDS ON THE REVENUE SIDE OF THE EQUATION. BUT I
47 - [add a note] 1 ACKNOWLEDGED IN THAT DISCUSSION WITH YOU ABOUT MR. CLARK 2 THAT I UNDERSTOOD THAT THE DISTRIBUTION COSTS PER COPY, IF 3 YOU DISTRIBUTED ENOUGH, WAS RELATIVELY LOW. 4 Q. NOW, AT THIS TIME, ISN'T IT TRUE, AS SAID IN THE 5 MIDDLE OF PAGE EIGHT, LAST SENTENCE OF THE PARAGRAPH 6 FOLLOWING THE BLOCKED QUOTE, THAT THE NAME OF THE GAME WAS 7 VOLUME IN MARKET SHARE? 8 A. IF YOU MEAN BY THAT VOLUME OF REVENUE, I WOULD ACCEPT 9 THAT. I DON'T KNOW IF THAT'S WHAT THIS REFLECTS EXACTLY. 10 I DON'T KNOW IF THE AUTHORS WERE REFERRING TO VOLUME OF 11 UNITS OR VOLUME OF REVENUE, BUT CERTAINLY WE WANTED TO GET 12 REVENUE QUICKLY FROM THE PRODUCT, AND WE WANTED TO HAVE A 13 HIGH MARKET SHARE. 14 Q. ASSUMING THAT WHAT THEY ARE REFERRING TO IS UNIT 15 VOLUME, TOTAL VOLUME OF SHIPMENTS IN UNITS, DO YOU AGREE 16 THAT THE NAME OF THE GAME, IN EARLY 1995, WAS VOLUME AND 17 MARKET SHARE? 18 A. NO, I WOULD NOT AGREE WITH THAT. 19 Q. THAT IS NOT WHAT YOUR STRATEGY EMPHASIZED AT THAT 20 TIME? 21 A. WE EMPHASIZED MARKET SHARE, WHICH IS A FUNCTION OF 22 VOLUME, BUT WE ALSO, IN OUR EFFORTS, WERE RUNNING A 23 BUSINESS WHERE WE NEED TO MAKE THE PAYROLL, AND WE NEEDED 24 REVENUE. SO, TO HAVE NO REVENUE AND JUST MARKET SHARE, I 25 DIDN'T CONSIDER THAT THEN, NOW OR EVER, TO BE A VIABLE
48 - [add a note] 1 BUSINESS STRATEGY. 2 Q. WELL, YOU WERE SELLING SERVERS AT FAIRLY HIGH PRICES 3 AT THIS TIME, WEREN'T YOU? 4 A. BUT IT WASN'T ANYWHERE CLOSE IN TOTAL REVENUE ENOUGH 5 TO PAY FOR THE AMOUNT OF MONEY WE WERE INVESTING IN THE 6 BUSINESS. IT WAS A PORTION OF OUR REVENUE. AT THAT TIME 7 IT WAS PROBABLY SERVER REVENUE WAS LESS THAN 20 PERCENT, 8 AND BROWSER REVENUE IS PROBABLY 80 PERCENT IN SOME OF 9 THOSE QUARTERS. 10 Q. AND TOTAL REVENUE IN THE FIRST QUARTER OF 1995 WAS 11 PRETTY LOW IN ABSOLUTE TERMS, COUNTING EVERYTHING, WASN'T 12 IT? 13 A. IT WASN'T MUCH TO TOUT ABOUT, BUT WE WERE GLAD IN OUR 14 FIRST QUARTER TO HAVE BROUGHT IN TWO AND A HALF TO 15 $3 MILLION. 16 Q. AND HOW MUCH CAPITAL DID NETSCAPE HAVE AS OF, LET'S 17 SAY, MARCH 30, 1995? 18 A. THERE ARE RECORDS ON THAT. AT THAT TIME WE WERE IN 19 THE PROCESS OF SELLING OUR SERIES C ROUND OF INVESTMENT, 20 WHICH, I THINK, CLOSED AROUND THE EARLY PART OF APRIL, SO 21 AT THAT TIME WE WERE GETTING DOWN PRETTY THIN. 22 Q. WELL, WHEN YOU CLOSED THAT SERIES C, WHAT, AT THAT 23 POINT, WAS THE TOTAL AMOUNT OF CAPITAL YOU RAISED IN 24 EQUITY? 25 A. I DON'T REMEMBER EXACTLY. MY LAWYER TOLD ME NOT TO
49 - [add a note] 1 GUESS, BUT I WOULD SAY IT WAS SOMEWHERE IN THE 2 NEIGHBORHOOD OF 20-PLUS MILLION. 3 Q. AND JIM CLARK HAD CONTRIBUTED CAPITAL AT THE 4 FOUNDATION; IS THAT CORRECT? 5 A. AT THE BEGINNING, YES, HE DID. 6 Q. HOW MUCH DID HE CONTRIBUTE? 7 A. I THINK JIM PUT, WHETHER IT WAS AT THE BEGINNING OR 8 THROUGH THE COURSE OF THE FIRST ROUND, I THINK JIM HAD 9 5 MILLION IN THE BUSINESS. 10 Q. HOW ABOUT KLEINER PERKINS? DID THEY PUT MONEY IN? 11 A. THEY DID IN ROUND B. 12 Q. AND HOW MUCH DID THEY PUT IN? 13 A. I DO NOT REMEMBER EXACTLY. 14 Q. NOW, AS OF THE FIRST QUARTER OF 1995, WERE YOU 15 ALREADY PLANNING TO GO PUBLIC LATER IN THE YEAR? 16 A. NO. 17 Q. WHEN DID YOU BEGIN THAT PLAN? 18 A. WE BEGAN TO CONSIDER THAT WHEN SPYGLASS WENT PUBLIC, 19 AND I THINK THAT WAS IN ABOUT MAY. 20 Q. ISN'T IT TRUE THAT THE LARGER YOUR VOLUME AND MARKET 21 SHARE IN THE BUSINESSES YOU WERE IN, THE GREATER YOUR 22 CREDIBILITY TO ENTERPRISE CUSTOMERS? 23 A. I THINK IT WOULD BE FAIR TO SAY THAT MARKET SHARE WAS 24 OF INTEREST TO ENTERPRISE CUSTOMERS, YES, AND, THEREFORE, 25 TO INCREASE OUR CREDIBILITY, BUT OUR ENTERPRISE CUSTOMER
50 - [add a note] 1 WOULD BE MORE INTERESTED IN OTHER THINGS SUCH AS YOUR 2 ECONOMIC VIABILITY. YOU COULD HAVE A HUNDRED PERCENT OF 3 THE MARKET. IF YOU WEREN'T ECONOMICALLY VIABLE, THAT 4 WOULD NOT CAUSE AN ENTERPRISE CUSTOMER TO BUY YOUR 5 PRODUCT. 6 Q. AND ENTERPRISE CUSTOMERS PURCHASED FROM YOU 7 HIGH-MARGIN SERVER SOFTWARE; IS THAT CORRECT? 8 A. I HAVEN'T SAID WHETHER IT WAS HIGH MARGIN OR LOW 9 MARGIN. I JUST SAID THEY DID BUY SERVER PRODUCTS FROM US. 10 Q. WELL, WHAT IS IT? HIGH MARGIN OR LOW MARGIN? 11 A. AT THAT PARTICULAR TIME WE WEREN'T MAKING ANY 12 MARGINS. IT WAS ALL BREAKING EVEN ON THE WHOLE PRODUCT 13 LINE. 14 Q. HOW ABOUT ON A VARIABLE-COST BASIS? WHAT WERE YOUR 15 MARGINS? 16 A. OUR GROSS MARGIN AT THAT TIME ON A SERVER PRODUCT 17 WOULD BE 80-SOMETHING PERCENT. 18 Q. GOING BACK TO PAGE 24, PARAGRAPH 35 OF YOUR DIRECT, 19 THE LAST SENTENCE YOU REFER TO A SEPTEMBER 1998 IDC STUDY. 20 A. AGAIN, I APOLOGIZE. WOULD YOU POINT ME TO WHERE WE 21 ARE NOW? 22 Q. YES. PAGE 24. 23 A. OF MY DIRECT TESTIMONY? 24 Q. OF YOUR DIRECT TESTIMONY. 25 A. ALL RIGHT.
51 - [add a note] 1 Q. LAST SENTENCE OF PARAGRAPH 35, WHICH IS THE TOP 2 PARAGRAPH OF THE PAGE. 3 A. YES. 4 Q. YOU SEE THAT REFERENCE TO THE 1998 STUDY BY THE IDC? 5 A. YES, I DO. 6 Q. HAVE YOU READ THAT STUDY? 7 A. I HAVE SEEN PORTIONS OF THAT STUDY. THE ONE THAT WAS 8 JUST PUBLISHED IN SEPTEMBER, I HAVE SEEN EXCERPTS FROM IT. 9 Q. WHAT PERCENTAGE OF THE STUDY DID YOU SEE? 10 A. I REMEMBER SEEING THE TABLE OF THE DIFFERENT SEGMENTS 11 OF THE MARKET AND THE PERCENTAGES, SAY, YEAR OVER YEAR OF 12 IT. I JUST DIDN'T READ OVER THE BODY OF THE STUDY. I 13 REMEMBER NOTING THAT SOME 75 PERCENT OF THE RESPONDENTS 14 WERE HOME USERS; 25 PERCENT WERE BUSINESS USERS, THINGS 15 LIKE THAT. 16 Q. DO YOU REMEMBER THE SAMPLE SIZE FOR THE STUDY? 17 A. I DO NOT REMEMBER THE SAMPLE SIZE. 18 Q. DO YOU REMEMBER THE METHODOLOGY BY WHICH THE STUDY 19 WAS CONDUCTED? 20 A. I BELIEVE THEY WERE BASED ON TELEPHONE INTERVIEWS. 21 Q. WHAT ELSE CAN YOU RECALL ABOUT THE STUDY? 22 A. I REMEMBER THAT OUR BUSINESS USERS WERE MUCH HIGHER 23 THAN OUR HOME USERS, WHICH SEEM TO BEAR OUT THE POINTS I'M 24 TRYING TO MAKE IN MY TESTIMONY ABOUT HOW WHEN YOU GO IN 25 THE BUSINESS MARKET WHERE THEY GOT A CHOICE, WE DO A LOT
52 - [add a note] 1 BETTER THAN IN THE HOME MARKET WHERE THEY DON'T HAVE THE 2 CHOICE BECAUSE THE BROWSER COMES BUNDLED WITH THE PC AND 3 THINGS OF THAT NATURE. 4 I DON'T REMEMBER A WHOLE LOT MORE ABOUT IT THAN 5 THIS. 6 I REMEMBER THAT THE BUSINESS USERS, EDUCATIONAL 7 USERS AND GOVERNMENT USERS--I REMEMBER THOSE THREE 8 CATEGORIES--WERE MUCH HIGHER THAN HOME USERS, WHO, I 9 BELIEVE, IN THE STUDY WERE 35 PERCENT. AND I DO REMEMBER 10 THAT THEY BROKE OUT SEPARATELY, OR THEY POINTED OUT, 11 EXCUSE ME, THAT AOL WAS A BIG PART OF THE TOTAL MICROSOFT 12 MARKET SHARE. I BELIEVE ABOUT HALF OF MICROSOFT'S MARKET 13 SHARE WAS ATTRIBUTED TO AOL, AND AT THE SAME STUDY. 14 Q. YOU SAID, ONCE AGAIN, THAT HOME USERS DON'T HAVE A 15 CHOICE. 16 ISN'T IT A FACT, MR. BARKSDALE, THAT ANY HOME 17 USER WHO WANTS TO USE NETSCAPE'S BROWSING SOFTWARE HAS A 18 FREE CHOICE TO DO SO AT NO COST? 19 A. I JUST DON'T ACCEPT THE PREMISE OF YOUR QUESTION. IT 20 IMPLIES SOMETHING THAT IS VERY MISLEADING WITH JUST A 21 YES-OR-NO ANSWER, AND I JUST DON'T ACCEPT THAT. 22 Q. I DON'T KNOW THAT MY QUESTION HAD A PREMISE. IT WAS 23 A QUESTION. AND THE QUESTION SIMPLY IS: ISN'T IT TRUE 24 THAT ANY HOME USER OF A PC WHO CONNECTS TO THE INTERNET 25 MAY FREELY CHOOSE, AT NO COST, TO USE NETSCAPE'S
53 - [add a note] 1 WEB-BROWSING SOFTWARE? 2 A. IN A VERY BIASED WAY, THAT WOULD BE TRUE. 3 Q. IN A VERY BIASED WAY, IT'S TRUE? 4 A. MOST PEOPLE DON'T GO THROUGH THE TROUBLE TO DO IT. 5 Q. BUT THEY ARE FREE TO DO SO IF THEY WANT TO, ARE THEY 6 NOT? 7 A. THEY ARE FREE TO WALK DOWN TO A STORE AND BUY A NEW 8 EDSELL, BUT THAT DOESN'T MEAN THEY ARE GOING TO DO IT. 9 Q. I ACCEPT THAT STATEMENT. 10 A. NOTHING AGAINST THE EDSELL, BY THE WAY. 11 I JUST-- 12 MR. WARDEN: THERE IS NO PENDING QUESTION, YOUR 13 HONOR. 14 THE WITNESS: I'M TRYING TO MAKE A STATEMENT. 15 MR. WARDEN: YOUR HONOR, THERE IS NO QUESTION 16 PENDING. 17 THE COURT: WHAT'S YOUR NEXT QUESTION? 18 BY MR. WARDEN: 19 Q. NOW, HOW IS IT THAT 35 PERCENT OF NEW HOME USERS AND 20 MORE OF BUSINESS GOVERNMENT AND NONPROFIT EDUCATIONAL AND 21 SO ON, HOW ARE THEY ABLE TO USE NETSCAPE'S WEB-BROWSING 22 SOFTWARE IN SEPTEMBER 1998 IF THEY DIDN'T HAVE A FREE 23 CHOICE TO DO SO? 24 A. YOU MEAN, HOW DID WE GET ANY MARKET SHARE? 25 Q. THAT'S MY QUESTION. AND I DON'T THINK IT'S FAIR
54 - [add a note] 1 TO--DO YOU CHARACTERIZE 35 PERCENT AS, QUOTE, ANY MARKET 2 SHARE? 3 A. COMPARED TO WHAT IT WAS BEFORE MICROSOFT TOOK AWAY 4 HALF MY DISTRIBUTION, I WOULD SAY IT'S A SMALL MARKET 5 SHARE COMPARATIVELY. 6 Q. COMPARED TO YOUR GOD-GIVEN 95 PERCENT? IS THAT WHAT 7 YOU MEAN? 8 A. COMPARED TO WHATEVER I HAD BEFORE THEY GAVE IT TO ME. 9 Q. WHAT WAS GENERAL MOTORS' MARKET SHARE BEFORE THE 10 JAPANESE STARTED SELLING LARGE NUMBERS OF AUTOMOBILES IN 11 THIS COUNTRY? 12 MR. HOUCK: OBJECTION. 13 THE COURT: SUSTAINED. 14 WHAT'S YOUR NEXT QUESTION? YOU MADE YOUR POINT. 15 BY MR. WARDEN: 16 Q. LET'S GO TO THE NEXT PARAGRAPH, 36. HAS MICROSOFT'S 17 CONDUCT THAT YOU COMPLAINED ABOUT IN YOUR DIRECT TESTIMONY 18 REDUCED INNOVATION IN BROWSING SOFTWARE? 19 A. MAY I READ IT? 20 Q. YOU DON'T HAVE TO READ IT TO ANSWER MY QUESTION, I 21 DON'T THINK. 22 A. YOU ARE NOW REFERRING TO 36? 23 Q. YOU TALK ABOUT REDUCED INNOVATION IN THE LAST 24 SENTENCE, AND MY QUESTION TO YOU SIMPLY IS: HAS 25 MICROSOFT'S CONDUCT REDUCED INNOVATION IN BROWSING
55 - [add a note] 1 SOFTWARE? 2 A. HOW HAVE THEY DONE THAT BASICALLY BY-- 3 Q. I DIDN'T ASK HOW. I SAID "IF." HAS IT? HAS 4 MICROSOFT'S CONDUCT REDUCED INNOVATION IN BROWSING 5 SOFTWARE? 6 A. YES. 7 Q. WOULD THERE HAVE BEEN GREATER INNOVATION IF YOU HAD 8 MAINTAINED YOUR 85 PERCENT, OR WHATEVER, MARKET SHARE, AS 9 YOU CALCULATED, IN BROWSING SOFTWARE? 10 A. NOT NECESSARILY MARKET SHARE, BUT I WOULD ARGUE THAT 11 IF WE MAINTAINED REVENUE, WE WOULD HAVE BEEN ABLE TO PUT 12 IT IN MORE ADVANCED FEATURES OF THE PRODUCT, SURELY. WE 13 HAD MORE PLANS TO DO THAT, AND WE CANCELED THE PLANS. THE 14 CHOICE IS NOT GIVEN TO THE CONSUMER ANYMORE. 15 Q. SO, YOU HAVE REDUCED INNOVATION IN THE 16 BROWSING-SOFTWARE AREA AT NETSCAPE; IS THAT CORRECT? 17 A. AS THE END RESULT OF MICROSOFT'S ACTIONS TO MAKE THE 18 CATEGORY FREE, WE NO LONGER RECEIVE REVENUE AND ARE NOT 19 ABLE TO, THEREFORE, FUND ALL THE THINGS WE WOULD LIKE TO 20 DO. 21 Q. WE WILL COME BACK TO FUNDING, BUT HOW MANY RELEASES 22 DID YOU SAY YOU HAD THIS YEAR, 1998, OF YOUR BROWSING 23 SOFTWARE? 24 A. I THINK DURING THE COURSE OF THE YEAR, FOUR POINT 25 RELEASES, WHICH WERE MINOR UPGRADES AND ONE MAJOR UPGRADE.
56 - [add a note] 1 Q. SO, YOU ARE CONTINUING TO INNOVATE IN BROWSING 2 SOFTWARE? 3 A. FEWER FEATURES ARE MORE SPECIFICALLY GEARED TO 4 CERTAIN MARKETS AND NOT SERVING ALL MARKETS. WE DO NOT 5 ANY LONGER MAKE IT AVAILABLE ON AS MANY PLATFORMS AS WE 6 USED TO, THINGS OF THAT NATURE. 7 Q. YOU TESTIFIED SOMEWHERE IN HERE THAT WINDOWS IS 90 8 PERCENT OF THE PC OPERATING SYSTEM BUSINESS; IS THAT 9 CORRECT? 10 A. WELL, BUT EVEN-- 11 Q. IS THAT CORRECT, MR. BARKSDALE? 12 A. THAT WINDOWS IS 90 PERCENT? 13 Q. YEAH. 14 A. APPROXIMATELY, YES. 15 Q. OKAY. AND YOU STILL MAKE YOUR BROWSING SOFTWARE FOR 16 WINDOWS, DO YOU NOT? 17 A. WE DON'T HAVE AS MANY FEATURES AVAILABLE ON WINDOWS 18 3.1 AS WE PLANNED TO MAKE FOR THE PRODUCT. 19 Q. BUT HOW ABOUT WINDOWS 95 AND WINDOWS 98? 20 A. WINDOWS 95 AND WINDOWS 98, FOR INSTANCE, WE WERE 21 GOING TO MAKE A PRODUCT CALLED THE "JOBAGATOR" THAT WE 22 DROPPED AS A RESULT OF NOT GETTING ANY REVENUE. 23 Q. ISN'T MONEY FUNGIBLE, MR. BARKSDALE? 24 A. I'M NOT SURE I UNDERSTAND OR I'M QUALIFIED TO ANSWER. 25 I DON'T KNOW WHAT IS MEANT BY THAT. IS THAT AN ACCOUNTING
57 - [add a note] 1 TERM? 2 Q. IF ONE WANTS TO SPEND MONEY ON SOMETHING, IT'S THE 3 SAME MONEY, WHETHER IT COMES OUT OF HIS PAYCHECK AS A GIFT 4 FROM HIS FAMILY OR OUT OF THE SAVINGS. 5 MY QUESTION IS: MONEY IS MONEY, ISN'T IT? 6 A. IN SOME SENSE, I SUPPOSE YOU COULD SAY THAT, AND IN 7 ANOTHER SENSE, NO, IT ISN'T AT ALL. 8 Q. WELL, EXPLAIN HOW MONEY ISN'T MONEY. 9 A. WELL, IF I, FOR INSTANCE, HAVE VARIOUS PRODUCTS IN 10 THE BUSINESS, I WOULD GENERALLY WANT TO FIGURE OUT A WAY 11 TO GAIN MONEY FROM ONE OF THOSE PRODUCTS TO PAY FOR THAT 12 PRODUCT CATEGORY, IN GENERAL, AND SOME MONEY GAINED FROM 13 ANOTHER PRODUCT CATEGORY WOULD NOT BE AS FUNGIBLE BECAUSE 14 THE TEAMS INVOLVED IN IT WOULDN'T HAVE THE ECONOMIC 15 INCENTIVE TO FUND THE OTHER GUY'S PRODUCT, SO IT ISN'T AS 16 FUNGIBLE. 17 Q. THAT'S UP TO THE BOARD OF DIRECTORS, ISN'T IT? 18 A. THAT'S STILL A DECISION. THEREFORE, IT HAS TO BE 19 MADE WHETHER OR NOT IT IS FUNGIBLE IN THAT INSTANCE. YOU 20 ASKED ME IF IT'S ALWAYS FUNGIBLE, AND I WOULD SAY NO. 21 Q. WELL, WE WILL LEAVE THAT. IN RESPONSE TO THE COURT'S 22 QUESTION EARLIER THIS AFTERNOON, YOU ACKNOWLEDGED THAT 23 CONTINUED INNOVATION IN BROWSER SOFTWARE AND DISTRIBUTION 24 OF BROWSER SOFTWARE, SERVES THE INTERESTS OF YOUR BUSINESS 25 AS A WHOLE, DID YOU NOT?
58 - [add a note] 1 A. IT SERVES THE INTEREST OF MOST--OF MANY PARTS OF MY 2 BUSINESS. 3 Q. WELL, AND, THEREFORE, OF THE CORPORATION; IS THAT 4 CORRECT? 5 A. YES. 6 Q. WOULD THERE HAVE BEEN GREATER INNOVATION IN BROWSING 7 SOFTWARE IF MICROSOFT HADN'T STARTED MAKING SOFTWARE THAT 8 PROVIDES THE ABILITY TO BROWSE THE WEB? 9 A. FOR FREE? 10 Q. FOR A PRICE, FOR FREE, OR WHATEVER. 11 A. I WOULD ARGUE IF THEY MADE IT FOR A PRICE, THE MARKET 12 SHARE WOULD NOT HAVE DROPPED TO WHERE IT IS. IT WOULD 13 STILL NOT BE FREE. WE WOULD HAVE MORE THAN HALF OF THE 14 REVENUE STREAM COMING IN, AND WE WOULD BE INNOVATING A 15 HECK OF A LOT MORE, YES, SIR. 16 Q. OKAY. I'M GOING TO ADDRESS MY QUESTION, AND I THINK 17 IT WAS ADDRESSED ALREADY TO THE INDUSTRY AS A WHOLE, NOT 18 TO NETSCAPE. 19 A. I THINK THAT'S FINE. 20 Q. WOULD THERE HAVE BEEN LESS INNOVATION IN THE WHOLE 21 WORLD IN BROWSER SOFTWARE HAD MICROSOFT NOT STARTED TO 22 CREATE SOFTWARE THAT AFFORDED THE ABILITY TO BROWSE THE 23 WEB? 24 A. I APOLOGIZE TO YOU. I REALLY--I DON'T UNDERSTAND 25 THAT QUESTION. I THINK YOU GOT ME ON A DOUBLE NEGATIVE
59 - [add a note] 1 THERE. COULD YOU REPHRASE THE QUESTION? 2 Q. WELL, YOU HAVE BEEN, AND I DON'T WANT TO PUT WORDS IN 3 YOUR MOUTH, BUT AS I UNDERSTAND YOUR TESTIMONY, YOU 4 TESTIFIED THAT MICROSOFT HAD SOMEHOW REDUCED INNOVATION IN 5 BROWSING SOFTWARE. 6 HAVE THEY REDUCED IT ONLY FOR NETSCAPE OR FOR THE 7 ENTIRETY OF PEOPLE WHO CONTRIBUTE TO INNOVATION IN THAT 8 AREA? 9 A. I WOULD SAY THEY HAVE REDUCED IT IN INNOVATION IN THE 10 BROWSER SOFTWARE COMPONENT OR PRODUCT AREA FOR ALL PEOPLE 11 WHO WOULD HAVE BEEN WORKING IN THIS AREA TODAY BY GIVING 12 IT AWAY FOR FREE AND, THEREFORE, MAKING IT NONECONOMIC. 13 Q. AND HAVE BROWSER PRODUCTS GREATLY IMPROVED OVER THE 14 LAST FOUR YEARS? 15 A. THEY HAVE IMPROVED IN MANY WAYS, BUT CERTAINLY NOT AS 16 MUCH AS THEY COULD HAVE. 17 Q. AND ARE CONSUMERS BETTER OFF WITH THE BROWSERS THEY 18 GET FREE TODAY THAN THEY WOULD HAVE BEEN WITH THE BROWSERS 19 THAT THEY WOULD HAVE HAD TO PAY FOR IN YOUR HYPOTHETICAL 20 WORLD? 21 A. THEY MAY NOT BE, AND THEY MAY BE. IT'S MY OPINION, 22 AS I STATE HERE, THEY ARE NOT AS WELL OFF. 23 Q. AND TELL ME WHY AREN'T THEY AS WELL OFF. 24 A. BECAUSE I THINK THEY WOULD HAVE GOTTEN A BROADER 25 RANGE OF PRODUCTS IF OTHER COMPANIES HAD BEEN COMPETING IN
60 - [add a note] 1 THIS SPACE AND DEVELOPING PRODUCTS. YOU WOULD HAVE SEEN 2 NEW AND INNOVATIVE THINGS THAT COME ALONG THAT MAY COME 3 ALONG IN THE FUTURE. I SAID THE OTHER DAY, IT MAY BE A 4 YEAR OR TWO BEHIND WHERE IT WOULD BE. THAT'S MY OPINION. 5 Q. NOT FROM NETSCAPE BUT OTHER COMPANIES? 6 A. COMPANIES LIKE REALNETWORKS AND OTHERS WHO WORK IN 7 THIS AREA. 8 Q. THEY DO BROWSING SOFTWARE? 9 A. THEY DO A PORTION OF BROWSING SOFTWARE, A PLUG-IN OR 10 COMPONENT. 11 Q. AN APPLICATION ON TOP OF A BROWSER? 12 A. YES. 13 Q. DO YOU EXPECT THAT HAD MICROSOFT STAYED OUT OF THE 14 CREATION OF SOFTWARE THAT COULD USED TO BROWSE THE WEB, 15 THAT NETSCAPE WOULD HAVE MAINTAINED A DOMINANT 85 PERCENT 16 OR SO MARKET SHARE, AS YOU CALCULATED, IN WHAT YOU CALL 17 THAT MARKET? 18 A. I HAVE NEVER ARGUED THAT THEY SHOULD HAVE STAYED OUT 19 OF THE BROWSER BUSINESS. 20 Q. THAT WASN'T MY QUESTION. I'M NOT SUGGESTING YOU 21 ARGUED ANYTHING. I ASKED YOU A QUESTION WHICH I THINK YOU 22 CAN ANSWER YES OR NO. 23 IF MICROSOFT HAD STAYED OUT, DO YOU EXPECT THAT 24 YOUR MARKET SHARE WOULD HAVE REMAINED AT THE 85 PERCENT OR 25 SO LEVEL?
61 - [add a note] 1 A. IT PROBABLY WOULD HAVE STAYED HIGH. I DON'T THINK I 2 WOULD ARGUE THAT IT WOULD HAVE STAYED AS HIGH. I THINK 3 OTHER PEOPLE WOULD HAVE ENTERED. 4 Q. AND WHERE MIGHT IT HAVE BEEN TODAY IN THAT CASE? 5 MR. HOUCK: OBJECTION. 6 THE COURT: I DIDN'T HEAR THE QUESTION. WHAT WAS 7 THE QUESTION? 8 MR. WARDEN: I ASKED HIM IF MICROSOFT STAYED OUT 9 AND OTHER PEOPLE COME IN, WHERE WOULD HE EXPECT NETSCAPE'S 10 MARKET SHARE IN THE SO-CALLED BROWSER MARKET TO BE TODAY. 11 THE COURT: OVERRULED. 12 THE WITNESS: DOES THAT MEAN YOU OVERRULE THE 13 QUESTION? 14 THE COURT: IT MEANS YOU CAN ANSWER THE QUESTION 15 IF YOU UNDERSTAND IT AND KNOW THE ANSWER. 16 THE WITNESS: I DON'T KNOW--NO, I WOULD SAY IT 17 WOULD BE HIGH, BUT NOT AS HIGH. IT WOULD BE HIGHER THAN 18 IT IS TODAY IN SOME OF THESE CATEGORIES. 19 BY MR. WARDEN: 20 Q. ISN'T IT, IN FACT, TRUE THAT YOU HAVE ACTUALLY 21 INCREASED THE PACE AT WHICH YOU HAVE RELEASED NEW BROWSING 22 SOFTWARE IN RESPONSE TO MICROSOFT'S COMPETITION? 23 A. AS A RESULT OF THEIR IMPROVING THEIR PRODUCTS, WE 24 WORKED TO IMPROVE OUR PRODUCTS, AND I NEVER SAID 25 OTHERWISE.
62 - [add a note] 1 THE COURT: I THINK WE WILL TAKE A 10-MINUTE 2 RECESS NOW, MR. WARDEN. 3 (BRIEF RECESS.) 4 BY MR. WARDEN: 5 Q. MR. BARKSDALE, WE SPOKE YESTERDAY, I BELIEVE, ABOUT 6 THE LEVEL OF PENETRATION IN BROWSER USAGE THAT MICROSOFT 7 HAD ACHIEVED BEFORE IT BROUGHT OUT INTERNET EXPLORER 3. 8 DO YOU RECALL THAT CONVERSATION? 9 A. YES. 10 Q. AND I THINK YOU SAID IT HAD GOTTEN UP TO AROUND FIVE 11 PERCENT OR SOMETHING LIKE THAT? 12 A. I DON'T REMEMBER EXACTLY, BUT I THINK SO. 13 Q. LESS THAN TEN PERCENT? 14 A. I THINK I SAID LESS THAN TEN PERCENT. 15 Q. THEY DID BETTER WHEN THEY BROUGHT OUT INTERNET 16 EXPLORER 3, DID THEY NOT? 17 A. THEY DID BETTER AT THE BEGINNING ABOUT THE TIME THAT 18 INTERNET 3.0 BEFORE WINDOWS 95 HIT THE MARKET, BUT THEY 19 DID A LOT BETTER WHEN INTERNET 3.0 HIT THE MARKET FOR THE 20 WINDOWS 3.1 WHEN THEY GOT THE LIFT OF THE AOL CONTRACT. 21 Q. WHEN DID THE LIFT OF THE AOL CONTRACT HAPPEN? 22 A. SPRING OF '96. 23 EXCUSE ME. SPRING OF--NO, SPRING OF '97. 24 Q. DIDN'T HAPPEN UNTIL THE SPRING OF '97? 25 A. RIGHT. THAT'S ACCORDING TO AOL.
63 - [add a note] 1 Q. WOULD YOU AGREE THAT INTERNET EXPLORER 3.0 WAS 2 MATERIALLY IMPROVED OVER INTERNET EXPLORER 2? 3 A. IT WAS A BETTER PRODUCT. 4 Q. IN WHAT RESPECTS? 5 A. IT WAS MORE FUNCTIONAL. 6 Q. DO YOU REGULARLY READ COMPUTER TRADE MAGAZINES SUCH 7 AS PC WEEK OR PC WORLD? 8 A. I GET EXCERPTS FROM THEM SENT TO ME BY PEOPLE WHO DO 9 THAT OVER THE INTERNET. I HAVE BOTT THAT READS CERTAIN OR 10 GIVES ME INFORMATION FROM CERTAIN ONES. 11 Q. DO YOU FOLLOW PRODUCT REVIEWS IN THOSE TRADE 12 MAGAZINES INSOFAR AS YOUR PRODUCTS ARE INVOLVED? 13 A. MY PRODUCTS AND MY COMPETITOR'S PRODUCTS. 14 Q. DID YOU READ THE REVIEWS OF IE 3.0 WHEN IT WAS 15 RELEASED? 16 A. I MAY HAVE. I PROBABLY DID. I JUST DON'T REMEMBER 17 SPECIFICALLY. 18 Q. ARE YOU AWARE THAT SOME OF THE TRADE MAGAZINES 19 COMPARED IE 3.0 AND NAVIGATOR 3.0? 20 A. YES. 21 Q. AND ARE YOU AWARE THAT SOME OF THE REVIEWS CONCLUDED 22 THAT IE 3.0 WAS SUPERIOR TO NAVIGATOR 3.0? 23 A. YES. SOME. 24 MR. WARDEN: I WOULD LIKE TO INTRODUCE THREE--I'M 25 SORRY, FOUR REVIEWS OF INTERNET EXPLORER 3.0 NOT AS PROOF
64 - [add a note] 1 OF THE FACTS CONTAINED THEREIN, BUT AS A PROOF OF THE 2 POSITION THE REVIEWERS TOOK, YOUR HONOR. AND THEY HAVE 3 BEEN MARKED 11, 12, 13, AND 14, DEFENDANT'S EXHIBITS. 4 MR. BOIES: YOUR HONOR, WE HAVE NO OBJECTION. 5 MR. HOUCK: LIKEWISE. 6 THE COURT: WELL, LET'S IDENTIFY THEM SERIATIM 7 FOR THE RECORD. 8 MR. WARDEN: A REVIEW FROM PC WORLD DATED AUGUST 9 1996, VOLUME 14, NUMBER EIGHT, HAS BEEN MARKED AS 10 DEFENDANT'S EXHIBIT 11. 11 A REVIEW FROM PC COMPUTING DATED SEPTEMBER 1997 12 HAS BEEN MARKED AS DEFENDANT'S EXHIBIT 12, AND THAT 13 ACTUALLY CONTAINS THE COVER PAGE AS WELL AS THE REVIEW. A 14 REVIEW FROM COMPUTER SHOPPER WHICH SAYS ORIGINALLY 15 PUBLISHED IN THE DECEMBER 1996 ISSUE, HAS BEEN MARKED AS 16 DEFENDANT'S EXHIBIT 13. 17 AND A REVIEW FROM C/NET DATED, MS. WHEELER 18 ADVISES ME, DATED MAY 13, 1996, OH, YES, IN THE UPPER 19 RIGHT-HAND CORNER, HAS BEEN MARKED AS DEFENDANT'S 20 EXHIBIT 14. 21 THE COURT: IT LOOKS LIKE--JUNE OF '96? 22 MR. WARDEN: I BELIEVE IT SAYS 5/30/96. I THINK 23 THAT 6/3/96 MUST BE THE TIME THIS COPY WAS PRINTED OFF THE 24 WEB, AND IF YOU LOOK AT THE RIGHT-HAND UPPER CORNER LINE-- 25 THE COURT: ALL RIGHT. DEFENDANT'S 11, 12, 13
65 - [add a note] 1 AND 14 ARE ADMITTED. 2 (DEFENDANT'S EXHIBIT NOS. 11, 12, 3 13 AND 14 WERE ADMITTED INTO 4 EVIDENCE.) 5 MR. HOUCK: COULD I ASK FOR CLARIFICATION? I 6 THINK IT'S EXHIBIT 14. I JUST NOTICED IT. I DON'T KNOW 7 WHAT IT IS. 8 MR. WARDEN: I DON'T KNOW WHAT IT IS, EITHER. 9 THE COURT: I WON'T READ IT, EITHER. 10 MR. WARDEN: IT WAS PRODUCED FROM NETSCAPE'S 11 FILES. IT BEARS THEIR BATES NUMBER. 12 THE COURT: MR. HOUCK, LET ME REMIND YOU OF THIS 13 ONE-WITNESS-ONE-LAWYER RULE THAT WE AGREED ON BEFORE THIS 14 CASE STARTED. MR. BOIES INTRODUCED THE WITNESS. THIS IS 15 MR. BOIES'S WITNESS. 16 MR. HOUCK: YOUR HONOR, THE STATES BELIEVE THAT 17 WE ARE A PARTY HERE AND WE HAVE THE RIGHT TO OBJECT. 18 THE COURT: NO QUESTION ABOUT IT, BUT WE AGREED 19 EARLY ON THAT WE WERE GOING TO HAVE ONE-LAWYER-ONE-WITNESS 20 RULE, AND THE PLAINTIFFS ARE GOING TO HAVE TO DECIDE 21 JOINTLY WHICH MEMBER OF THEIR RESPECTIVE TEAMS WAS GOING 22 TO TAKE THE WITNESS. 23 NOW, YOU AND MR. BOIES WORK IT OUT. 24 MR. HOUCK: MR. BOIES, CLEARLY, IS GOING TO BE 25 DOING THE REDIRECT OF THIS WITNESS, IF ANY.
66 - [add a note] 1 AND, IN FACT, WE ARE ABOUT TO FILE A MOTION, SO 2 YOUR HONOR KNOWS, TO REQUEST THAT BOTH THE STATES AND THE 3 U.S. GOVERNMENT HAVE THE RIGHT TO DO SOME 4 CROSS-EXAMINATION, SO I HOPE YOUR HONOR WILL CONSIDER THAT 5 MOTION WHEN WE FILE IT. 6 THE COURT: I CERTAINLY WILL ENTERTAIN THE 7 MOTION. 8 BY MR. WARDEN: 9 Q. DIRECTING YOUR ATTENTION, AND WE COULD RUN THROUGH 10 THESE PRETTY QUICKLY, MR. BARKSDALE, TO DEFENDANT'S 11 EXHIBIT 11. 12 A. YES, SIR. 13 Q. THERE ARE NO PAGE NUMBERS, SO IF YOU WILL TURN TO THE 14 NEXT TO THE LAST PAGE, AT THE BOTTOM, YOU SEE THAT 15 PARAGRAPH WHICH SAYS, "WHICH WEB BROWSER WILL YOU BE 16 HAVING TODAY? NETSCAPE'S NAVIGATOR 3.0, MICROSOFT 17 INTERNET EXPLORER 3.0, OR BOTH?" 18 A. I SEE THAT. 19 Q. "YOU CAN'T GO WRONG WITH EITHER OF THESE BROWSERS, 20 AND IF YOU REALLY NEEDED A WORK GROUP INTRANET TOOL THAT 21 INTEGRATES WITH WINDOWS 98, THEN LOOK NO FURTHER FOR NOW. 22 THE WINNER IS INTERNET EXPLORER 3.0." 23 A. I SEE THAT. 24 Q. AND GOING TO NUMBER 12-- 25 A. EXHIBIT 12?
67 - [add a note] 1 Q. YES. 2 THE SECOND PAGE, THAT IS, THE FIRST PAGE AFTER 3 THE COVER, DO YOU SEE THE FIRST ENTRY UNDER "WEB BROWSERS 4 AND ADD," IT SAYS-- 5 A. EXHIBIT 12, SECOND PAGE? 6 Q. THE FIRST PAGE AFTER THE COVER, YES. 7 A. ALL RIGHT. WHERE DO YOU WANT ME TO LOOK? 8 Q. UNDER THE HEADING "WEB BROWSERS AND ADD," HYPHEN, I 9 CAN'T READ WHAT COMES IN THE BLACK THERE. IT THEN SAYS 10 THE FIRST PRODUCT DISCUSSED IS WEB BROWSERS; IS THAT 11 CORRECT? 12 A. YES. 13 THE COURT: I'M BEHIND YOU NOW. WHERE ARE YOU 14 NOW? 15 MR. WARDEN: EXHIBIT 12. IT SAYS PAGE 184 IN THE 16 BOTTOM LEFT-HAND CORNER. I THINK YOU HAVE THE RIGHT PAGE. 17 THE COURT: ALL RIGHT. 18 MR. WARDEN: THEN YOU COME UP TO THE TOP. FIRST 19 PRODUCT CATEGORY LISTED IS WEB BROWSERS. 20 THE COURT: WEB BROWSERS AND ADD-INS OR JUST WEB 21 BROWSERS? 22 MR. WARDEN: WELL, I THINK THE WHOLE THING IS WEB 23 BROWSERS AND ADD-INS, BUT IF YOU SEE THE FIRST BLACK 24 SECTION IT SAYS WEB BROWSERS FOLLOWED BY BROWSER UTILITY 25 AND SO ON.
68 - [add a note] 1 THE COURT: I GOT YOU. 2 MR. WARDEN: THE FIRST ENTRY THERE IS MICROSOFT 3 INTERNET EXPLORER 3.02, AND IT SAYS THE VERY BEST IN WEB 4 BROWSING IS YOURS FREE AND SO FORTH, AND THEN IT SAYS, 5 "ALSO CONSIDER NETSCAPE COMMUNICATOR 4.01." 6 BY MR. WARDEN: 7 Q. DO YOU SEE THAT? 8 GOING TO DEFENDANT'S EXHIBIT 13, YOU SEE THE 9 HEADLINE THERE, MR. BARKSDALE, MICROSOFT INTERNET 10 EXPLORER 3.0, A NEW GENERATION OF EXPLORATION, 11 MICROSOFT'S-- 12 A. I THOUGHT YOU WERE GOING--DO YOU WANT ME TO GET 13 THROUGH WITH THIS ONE? 14 Q. MR. BARKSDALE, I SAID GOING TO DEFENDANT'S 15 EXHIBIT 13, THAT'S THE NEXT ONE. 16 A. GOT IT. 17 Q. OKAY. 18 MR. BOIES: IS THERE A QUESTION ABOUT THE PRIOR 19 EXHIBIT? 20 THE COURT: I THINK HE HAS ABANDONED WHATEVER 21 QUESTION HE HAD. 22 MR. WARDEN: NO, THERE IS NO QUESTION. 23 THE COURT: THE QUESTION WAS, DID HE SEE IT. 24 BY MR. WARDEN: 25 Q. DID YOU SEE ANY OF THE REVIEWS AT THE TIME THEY WERE
69 - [add a note] 1 PUBLISHED? 2 A. I DON'T REMEMBER SPECIFICALLY SEEING THEM, BUT I 3 DON'T DENY SEEING THEM. I GET EXCERPTS FROM REVIEWS. 4 Q. OKAY. DO YOU REMEMBER SEEING EXCERPTS FROM REVIEWS? 5 A. NOT SPECIFICALLY THIS ONE, BUT I SEEN SO MANY 6 REVIEWS, IT WOULD BE HARD TO REMEMBER SPECIFICALLY THESE, 7 BUT I WOULDN'T DENY THAT I MAY HAVE SEEN THESE. 8 Q. DO YOU RECALL A REVIEW OF THE STATEMENT THAT'S ON THE 9 FIRST PAGE OF DEFENDANT'S EXHIBIT 13, "MICROSOFT'S NEW 10 FREE INTERNET EXPLORER FINALLY GIVES NETSCAPE NAVIGATOR A 11 RUN FOR ITS MONEY"? 12 A. I DON'T RECALL SPECIFICALLY SEEING THIS. I SEE IT 13 NOW. 14 Q. DO YOU RECALL SEEING REVIEWS OR EXCERPTS OF REVIEWS 15 WHICH STATE AS THIS DOES IN THE LAST SENTENCE OF THE FIRST 16 PARAGRAPH OF TEXT-- 17 A. CAN I ASK YOU A QUESTION? 18 Q. YES. 19 A. JUST CONFUSING, THIS 10/19/98 DATE AT THE BOTTOM WAS 20 THE DATE THIS WAS LOOKED UP, BUT THE DATE OF THE REVIEW 21 WAS DECEMBER OF '96. 22 Q. THAT'S CORRECT. 23 A. THANK YOU. I SEE THIS. 24 Q. YOU REGULARLY SEE DOCUMENTS THAT ARE PRINTED OUT IN 25 THIS FASHION, DON'T YOU?
70 - [add a note] 1 A. I DO. 2 Q. DO YOU RECALL SEEING REVIEWS IN OR AROUND DECEMBER OF 3 1996 THAT MADE STATEMENTS SUCH AS THOSE IN THE LAST TWO 4 SENTENCES OF THE FIRST PARAGRAPH OF TEXT, "ALTHOUGH 5 MICROSOFT HAS ALWAYS OFFERED ITS INTERNET EXPLORER FREE OF 6 CHARGE, PREVIOUS VERSIONS WERE BARELY WORTH THE TROUBLE. 7 MICROSOFT INTERNET EXPLORER 3.0, HOWEVER, CATCHES UP TO 8 NAVIGATOR AND, IN SOME AREAS, SURPASSES IT." 9 A. I SEE THAT. 10 THE COURT: AND THE QUESTION IS, DID HE SEE IT? 11 DID HE SEE REVIEWS TO THAT EFFECT IN OR ABOUT DECEMBER OF 12 '96? 13 MR. WARDEN: YES, THAT IS THE QUESTION. 14 THE WITNESS: I GET REVIEWS SUMMARIZED FOR ME 15 OVER A PERIOD OF TIME, AND THEY GIVE ME THE EXCERPTS, SO I 16 PROBABLY SAW THIS KIND OF A THING. I DON'T KNOW THAT I 17 READ THE WHOLE REVIEW. 18 BY MR. WARDEN: 19 Q. I DIDN'T ASK THAT. IN EITHER ORIGINAL OR EXCERPTED 20 FORM, DID YOU SEE IN OR ABOUT DECEMBER 1996 REVIEWS TO THE 21 EFFECT OF THE TWO SENTENCES I JUST READ? 22 A. TO THE EFFECT I HAVE SEEN REVIEWS AT THIS PERIOD OF 23 TIME, YES. 24 Q. LOOKING AT DEFENDANT'S EXHIBIT 14, IN OR ABOUT MAY OR 25 JUNE OF 1996, DID YOU SEE REVIEWS OR EXCERPTS OF REVIEWS
71 - [add a note] 1 TO THE EFFECT THAT MICROSOFT DELIVERED STUNNING BLOW TO 2 NETSCAPE WITH INTERNET EXPLORER 3.0? 3 A. I SEE THAT. 4 Q. DID YOU SEE REVIEWS OR EXCERPTS OF REVIEWS IN MAY OR 5 JUNE 1996 TO THAT EFFECT? 6 A. I DON'T REMEMBER SEEING THE STUNNING-BLOW STUFF, BUT 7 I WOULDN'T QUESTION THAT THESE PEOPLE GAVE IT A GOOD 8 REVIEW. 9 Q. AND HOW ABOUT EXCERPTS TO THE EFFECT THAT MICROSOFT 10 NOW HAS A WHITE-HOT NAVIGATOR KILLER ON ITS HANDS? 11 A. WHERE ARE YOU READING THAT? 12 Q. THE FIRST PARAGRAPH OF ORDINARY TEXT. 13 A. I SEE THAT. 14 Q. DID YOU SEE EXCERPTS OF REVIEWS IN OR ABOUT MAY OR 15 JUNE OF 1996 TO THAT EFFECT? 16 A. I DID, I'M SURE, BUT NOT SPECIFICALLY THAT. I DON'T 17 REMEMBER THAT ONE. 18 Q. AND LOOKING AT THE LAST PAGE OF THAT EXHIBIT BEARING 19 BATES NUMBER 8439, DID YOU SEE EXCERPTS IN MAY OR JUNE OF 20 1996 TO THE EFFECT THAT IT'S NOW NETSCAPE'S TURN TO PLAY 21 CATCH-UP? 22 A. I SEE THAT LAST SENTENCE. I SEE A LOT OF OTHER STUFF 23 ON THERE, TOO. 24 Q. THERE IS A LOT IN THERE THAT I DIDN'T-- 25 A. I NOTICED YOU DIDN'T.
72 - [add a note] 1 Q. MR. BARKSDALE, THIS WILL GO A LOT FASTER IF YOU JUST 2 ANSWER THE QUESTION. 3 DID YOU SEE AN EXCERPT OF A REVIEW TO THE EFFECT 4 OF THAT SENTENCE IN OR ABOUT-- 5 MR. BOIES: OBJECTION, YOUR HONOR. 6 THE WITNESS: NOT THAT SPECIFIC SENTENCE, NO. 7 THE COURT: LET ME HEAR THE QUESTION AGAIN. ASK 8 YOUR QUESTION AGAIN. 9 MR. WARDEN: I SHALL ASK. 10 BY MR. WARDEN: 11 Q. DID YOU IN OR ABOUT MAY OR JUNE 1996 SEE AN EXCERPT 12 FROM A REVIEW TO THE EFFECT OF THE STATEMENT MADE IN THE 13 LAST PAGE THERE, IN FACT, THE LAST SENTENCE OF DEFENDANT'S 14 EXHIBIT 14, NOW IT'S NETSCAPE'S TURN TO PAY CATCH-UP? 15 MR. BOIES: YOUR HONOR, MY OBJECTION IS WHAT THE 16 WITNESS STARTED TO DO WAS SAY THAT THAT WAS IN THE CONTEXT 17 OF A LOT OF OTHER STATEMENTS, AND WHAT HE SAW WERE 18 STATEMENTS IN CONTEXT. WHAT MR. WARDEN IS TRYING TO DO, 19 AND I APPRECIATE HIS DESIRE, IS TO TAKE PARTICULAR LINES 20 OF SOMETHING THAT HE HAS NEVER SEEN AND USE THE TIME WHILE 21 THIS WITNESS IS SITTING ON CROSS-EXAMINATION FOR THE THIRD 22 DAY, TO READ THEM INTO THE RECORD. I HAVE NOT OBJECTED TO 23 THESE GOING INTO THE RECORD. THESE ARE PART OF THE 24 RECORD. I OBJECT TO USING THE WITNESS'S TIME THIS WAY, 25 AND I OBJECT THAT THE WITNESS IS NOT PREPARED TO BE ABLE
73 - [add a note] 1 TO PUT THE STATEMENTS IN CONTEXT. 2 THE COURT: THE OBJECTION IS OVERRULED, AND YOU 3 WILL HAVE AN OPPORTUNITY ON REDIRECT TO PUT THE STATEMENT 4 IN CONTEXT. 5 BY MR. WARDEN: 6 Q. NOW, LET'S GO TO PARAGRAPH 238 OF YOUR TESTIMONY AT 7 PAGE 119. 8 MR. WARDEN: WE ARE NOT SKIPPING EVERYTHING IN 9 BETWEEN. 10 THE COURT: ARE YOU SENDING US A MESSAGE ON THIS? 11 MR. WARDEN: NO. 12 BY MR. WARDEN: 13 Q. ARE YOU THERE? 14 A. YES, SIR. 15 Q. TAKING A LOOK AT THOSE FIRST TWO SENTENCES, YOU 16 REFERRED TO MICROSOFT HAVING PUBLICLY CLAIMED THAT 17 INTERNET EXPLORER 4.0 WON 19 OUT OF 20 HEAD-TO-HEAD 18 REVIEWS AGAINST NAVIGATOR? 19 A. I SEE THAT SENTENCE, YES. 20 Q. IS THAT TRUE? 21 A. THAT THEY CLAIM THAT? 22 Q. YES. 23 A. YES, MR. GATES DID IN HIS TESTIMONY IN FRONT OF THE 24 UNITED STATES SENATE, WHEN I WAS SITTING RIGHT NEXT TO 25 HIM.
74 - [add a note] 1 Q. OKAY. AND YOU SAY IN THE NEXT SENTENCE YOU WERE 2 GENERALLY FAMILIAR WITH REVIEWS AND, BASED ON YOUR 3 KNOWLEDGE, BELIEVED THAT STATEMENT TO BE FALSE; IS THAT 4 CORRECT? 5 A. YES, AND STILL DO. 6 Q. OKAY. AND YOU CAUSED SOME RESEARCH TO BE DONE; IS 7 THAT RIGHT? 8 A. YES. 9 Q. DID YOU PERSONALLY COMMISSION THIS RESEARCH? 10 A. I DID. 11 Q. DID ANYONE FROM THE DEPARTMENT OF JUSTICE SUGGEST YOU 12 HAVE THIS RESEARCH PERFORMED? 13 A. NO, SIR. 14 Q. WHEN WAS IT PERFORMED? 15 A. OH, JULYISH. I FORGET EXACTLY WHEN I TESTIFIED 16 BEFORE THE SENATE, LIKE MARCH, AND THEN AFTERWARDS I GOT 17 TROUBLED BY IT, AND IT SEEMS I ASKED THE MARKETING FOLKS 18 TO LOOK INTO IT. AND I THINK IT WAS COMPLETED LATE JULY, 19 EARLY AUGUST. 20 Q. LATE JULY OR EARLY AUGUST. 21 A. I THINK THAT'S RIGHT, YES, SIR, BUT IT'S BEEN ADDED 22 TO. I THINK IT'S PROBABLY BEEN UPDATED THROUGH SEPTEMBER. 23 Q. OKAY. AND THIS STATEMENT REMAINS TRUE TODAY, THIS 24 STATEMENT IN YOUR TESTIMONY BECAUSE YOU PROPOUNDED IT HERE 25 YESTERDAY; IS THAT CORRECT? YOU SAID IT'S BEEN UPDATED
75 - [add a note] 1 THROUGH SEPTEMBER. 2 A. I'M NOT CERTAIN ABOUT THROUGH SEPTEMBER, BUT THE 3 STATEMENT IS TRUE. 4 Q. OKAY. AND YOU SAY THE RESEARCHER DIDN'T EVEN FIND 20 5 REVIEWS; IS THAT RIGHT? 6 A. NOT HEAD TO HEAD, NO, SIR. 7 Q. TELL ME WHAT A HEAD-TO-HEAD REVIEW IS. 8 A. THAT'S WHERE THEY COMPARE FEATURE FOR FEATURE, HEAD 9 TO HEAD OF TWO SIMILAR PRODUCTS IN ONE OF THESE REVIEWS. 10 THERE ARE MANY, MANY DIFFERENT PEOPLE WHO GIVE OPINIONS 11 ABOUT THESE PRODUCTS, BUT THEY DON'T GO HEAD TO HEAD WITH 12 THEM. THEY DON'T TELL YOU WHY THIS FEATURE IS BETTER THAN 13 THAT FEATURE. 14 Q. ALL RIGHT. I'M GOING TO SHOW YOU NOW 19 REVIEWS 15 WHICH HAVE BEEN MARKED DEFENDANT'S EXHIBITS 15 THROUGH 33. 16 A. ON INTERNET EXPLORER? 17 Q. I'M GOING TO LET YOU CHARACTERIZE WHAT THEY ARE AFTER 18 YOU LOOK AT THEM. 19 LET'S TAKE THEM ONE BY ONE, AND I WILL DESCRIBE 20 EACH ONE OF THEM FOR THE RECORD. 21 THE COURT: THAT WILL BE CUMULATIVE. 22 MR. WARDEN: NO, I'M NOT GOING TO READ THEM. I'M 23 GOING TO READ THEIR CAPTIONS. HE SAID HE COULDN'T FIND 24 THIS NUMBER. I'M NOT GOING TO DO THE SAME THING. 25 THE COURT: YOU'RE NOT GOING TO DO THE SAME THING
76 - [add a note] 1 YOU DID WITH DEFENDANT'S 11 THROUGH 14? 2 MR. WARDEN: NO, BUT HE SAID HE COULDN'T EVEN 3 FIND 20. NOW, I HAVEN'T PUT IN 20, I HAVE ONLY PUT IN 19, 4 BUT HE SAYS WE WERE FALSE WHEN WE SAID 19 OUT OF 20 WENT 5 OUR WAY. 6 AND I WILL BE HAPPY TO READ THE TITLE OF EACH ONE 7 AND ITS EXHIBIT NUMBER. I WILL BE HAPPY TO JUST LET THE 8 REPORTER DESCRIBE THEM FOR THE RECORD AS YOUR HONOR 9 PLEASES, BUT I AM NOT GOING TO GO THROUGH THEM ONE BY ONE. 10 THE COURT: THEY WILL SPEAK FOR THEMSELVES IF 11 THEY ARE ADMISSIBLE, AND YOU COULD ASK HIM WHETHER OR NOT 12 HE AGREES THAT THERE ARE 19 OF THEM THERE, DO THEY 13 REPRESENT HEAD-TO-HEAD REVIEWS AND WHETHER HE REGARDED 14 THEM AS FAVORABLE OR UNFAVORABLE FOR HIS PRODUCT, OR IN 15 COMPARISON WITH THE EXPLORER. 16 DO YOU WANT TO ASK HIM THOSE QUESTIONS? 17 MR. WARDEN: YES, I WANT HIM TO LOOK AT ALL OF 18 THEM, AND I WILL ASK HIM AS TO EACH ONE A HEAD-TO-HEAD 19 REVIEW, HOW DOES IT COME OUT. IT'S FASTER IF HE LOOKS AT 20 THEM ALL AT ONCE. 21 THE COURT: FAIR ENOUGH. 22 (WITNESS REVIEWS DOCUMENTS.) 23 THE WITNESS: I'M LOOKING AT THEM. 24 THE COURT: WOULD YOU LIKE TO DO SO AT GREATER 25 LEISURE, MR. BARKSDALE? I'M WILLING TO TAKE A RECESS NOW
77 - [add a note] 1 AND LET YOU TAKE A LOOK AT THEM. 2 THE WITNESS: I DON'T KNOW, YOUR HONOR. I KNOW 3 THAT SOME OF THESE AREN'T HEAD-TO-HEAD REVIEWS. 4 THE COURT: ARE YOU GOING TO ASK HIM THOSE 5 QUESTIONS? 6 MR. WARDEN: YES. 7 THE COURT: WE ARE GOING TO TAKE A BRIEF RECESS 8 SO HE COULD HAVE AN OPPORTUNITY TO LOOK AT THEM. 9 MR. WARDEN: THAT'S FINE. 10 (BRIEF RECESS.) 11 THE COURT: MR. WARDEN, YOU CAN QUOTE YOUR THREE 12 QUESTIONS, AND WE ARE GOING TO BE THROUGH FOR THE DAY. 13 BY MR. WARDEN: 14 Q. HAVE YOU HAD AN OPPORTUNITY TO LOOK AT THOSE 19 15 REVIEWS THAT WE HAVE MARKED AS DEFENDANT'S EXHIBIT 15 16 THROUGH 33? 17 A. I HAVE HAD A CHANCE TO READ SOME OF THEM IN THEIR 18 ENTIRETY, BUT NOT ALL. 19 Q. HAVE YOU HAD A CHANCE TO LOOK AT THE OTHERS? 20 A. I HAD A CHANCE TO LOOK AT THE HEADLINES, AND IF I 21 CAN-- 22 Q. I WAS GOING TO ASK YOU A FEW SIMPLE QUESTIONS. ARE 23 THERE SOME OF THEM THAT UNDER YOUR DEFINITION YOU DON'T 24 CONSIDER HEAD-TO-HEAD REVIEWS? 25 A. YES, SIR.
78 - [add a note] 1 Q. HOW MANY? 2 A. LIKE I SAY, YOU HAVE TO GO THROUGH THE TEXT TO 3 DETERMINE. SOME OF THESE ARE OPINION PIECES BY 4 JOURNALISTS, BUT THEY ARE JUST TWO OR THREE COMPONENTS. 5 THEY'RE NOT HEAD-TO-HEAD REVIEWS THE WAY THEY WOULD 6 NORMALLY BE DEFINED IN THE INDUSTRY. 7 AND YET, THEY ARE SOMETIMES EVEN CALLED BY THE 8 JOURNALISTS A HEAD-TO-HEAD REVIEW. 9 Q. NOW, MY NEXT SIMPLE QUESTION IS: ARE THERE ANY OF 10 THEM THAT DON'T SAY INTERNET EXPLORER 4.0 IS THE BEST OR 11 THE BEST ONE AVAILABLE? 12 A. THERE ARE SOME THAT DON'T SAY IT'S THE BEST, BUT THEY 13 CERTAINLY SAY WE LEAN TOWARD IT ON CERTAIN PLATFORMS AND 14 NOT OTHERS OR FOR CERTAIN REASONS AND NOT OTHERS. MANY 15 GIVE THEM HIGH MARKS BECAUSE IT'S FREE, AND YET THEY'RE 16 NOT A HEAD-TO-HEAD REVIEW. 17 Q. AND HOW MANY, IF ANY, DON'T SAY IT'S THE BEST OR THE 18 BETTER? 19 A. FOR CERTAIN APPLICATION--I WOULD SAY THAT CERTAINLY 20 ALL OF THESE THAT YOU PULLED WOULD INDICATE IT'S BETTER. 21 THERE ARE HUNDREDS OF ARTICLES WRITTEN ABOUT THESE 22 PRODUCTS THAT ARE NOT HEAD-TO-HEAD REVIEWS. 23 Q. AND IS IT POSSIBLE THAT MR. GATES OR MICROSOFT WOULD 24 HAVE A DIFFERENT DEFINITION THAN YOURS OF HEAD-TO-HEAD 25 REVIEWS?
79 - [add a note] 1 A. MR. GATES MADE THE IMPLICATION IN HIS-- 2 Q. THAT IS NOT MY QUESTION-- 3 THE COURT: HE'S ENTITLED TO A YES-OR-NO ANSWER, 4 AND THEN YOU MAY EXPLAIN. 5 THE WITNESS: WOULD YOU PLEASE ASK THE QUESTION 6 AGAIN. 7 BY MR. WARDEN: 8 Q. THE QUESTION WAS: IS IT POSSIBLE THAT MICROSOFT OR 9 MR. GATES HAS A DIFFERENT DEFINITION OF A HEAD-TO-HEAD 10 REVIEW THAN YOU HAVE? 11 A. THAT IS POSSIBLE. 12 THE COURT: IF YOU HAVE AN EXPLANATION, YOU MAY 13 OFFER IT. 14 THE WITNESS: THE REASON WE BEGAN TO WORRY ABOUT 15 THIS WAS THAT THE CHRONICLE, THE SAN FRANCISCO CHRONICLE, 16 WROTE AN ARTICLE WHERE THEY INQUIRED OF MICROSOFT WHAT 17 THESE 19 REVIEWS WERE BY A JOURNALIST NAMED SCHWARTZ. HE 18 WROTE A WHOLE ARTICLE ABOUT THIS, THAT MICROSOFT WAS NOT 19 ABLE TO GIVE HIM WHAT HE CONSIDERED TO BE 19 OUT OF 20 20 HEAD-TO-HEAD REVIEWS, BECAUSE MANY OF THESE FROM SOME 21 VERY--I DON'T KNOW WHO DESIREE NEWS IS. IT'S AN ARTICLE 22 BY A JOURNALIST. THAT IS NOT CONSIDERED THAT SORT OF A 23 REVIEW. 24 WE WENT THROUGH, AND THERE ARE HUNDREDS OF 25 ARTICLES ON THIS SUBJECT. IT'S A FASHIONABLE SUBJECT. WE
80 - [add a note] 1 FOUND WHAT WE CONSIDERED TO BE HEAD-TO-HEAD--16 REVIEWS 2 OVER THE LAST YEAR THAT WERE HEAD TO HEAD. THEY WON TEN, 3 WE WON SIX. SOME OF THE ONES THEY WON LAST FALL WERE 4 REVERSED IN THE SPRING, SO YOU GIVE THEM A WIN AND A TAKE 5 AWAY. 6 BY MR. WARDEN: 7 Q. BUT THE NET WAS TEN AND SIX? 8 A. OVER THE LAST YEAR, YES, SIR, NOT 19 OUT OF 20. 9 Q. AND IT'S YOUR TESTIMONY THAT IF THE WALL STREET 10 JOURNAL OR THE NEW YORK TIMES RUNS A PRODUCT REVIEW, 11 THAT'S NOT REALLY A PRODUCT REVIEW BECAUSE IT'S A 12 JOURNALIST'S VIEW? 13 A. I WOULD SAY THAT, FOR INSTANCE, ONE OF THE REVIEWS 14 WOULD BE WALT MOSSBERG IN THE WALL STREET JOURNAL, AND 15 HE'S QUITE INFLUENTIAL IN THIS MATTER. HE WRITES OPINIONS 16 ON THESE SUBJECTS, BUT THEY WOULD NOT BE CONSIDERED A 17 HEAD-TO-HEAD REVIEW ON SOME OCCASIONS, AND OTHER CASES 18 THEY MIGHT BE. 19 Q. SO, BEING A JOURNALIST DOESN'T DENY THEM THAT STATUS; 20 IS THAT CORRECT? 21 A. NO, I DON'T THINK THAT WOULD BE CORRECT. 22 MR. WARDEN: OKAY. YOUR HONOR, I OFFER THESE 23 DOCUMENTS NOT AS PROOF OF ANYTHING OTHER THAN THE OPINIONS 24 EXPRESSED THEREIN, AND YOUR HONOR CAN EXAMINE THEM AT 25 LEISURE, IF THAT'S NECESSARY, AND I HAVE NO FURTHER
81 - [add a note] 1 QUESTIONS ABOUT IT. 2 THE WITNESS: YOUR HONOR, I MEAN, MY PROBLEM IS I 3 WAS NOT ABLE TO READ ALL THESE IN THEIR ENTIRETY. I WILL 4 BE HAPPY TO READ THEM TONIGHT TO TELL YOU WHICH ONES FALL 5 IN WHICH CATEGORY BASED ON MY ANALYSIS. 6 MR. WARDEN: I HAVE NO FURTHER QUESTIONS. IF THE 7 COURT WOULD FIND THAT HELPFUL, I HAVE NO OBJECTION TO YOUR 8 DOING SO. 9 THE WITNESS: ANY OBJECTION? 10 MR. BOIES: I HAVE NO OBJECTION, YOUR HONOR. 11 THE COURT: TO THE DOCUMENTS? 12 MR. BOIES: NO. I ASSUME THAT THESE ARE BEING 13 OFFERED WITH THE REPRESENTATION THAT THESE ARE COMPLETE 14 DOCUMENTS FROM THE SOURCES THAT ARE INDICATED ON THEIR 15 FACE. 16 THE COURT: THAT'S IMPLICIT IN HIS OFFERING THEM. 17 MR. BOIES: ON THAT BASIS I ACCEPT IT. THESE 18 HAVE NOT BEEN PRODUCED IN DISCOVERY. I ASSUME THEY ARE 19 AUTHENTIC M,AND ON THAT BASIS I HAVE NO OBJECTION FOR THAT 20 PERMANENT. 21 THE COURT: I WILL ADMIT THEM FOR WHAT THEY ARE 22 WORTH. 23 (DEFENDANT'S EXHIBIT NOS. 15 24 THROUGH 33 WERE ADMITTED INTO 25 EVIDENCE.)
82 - [add a note] 1 MR. WARDEN: THANK YOU, YOUR HONOR. I HAVE A FEW 2 FURTHER QUESTIONS I COULD ASK, OR WE COULD QUIT NOW. 3 THE COURT: YOU COULD QUIT NOW AND PICK THEM UP 4 TOMORROW MORNING. 5 I WOULD LIKE TO SEE LEAD COUNSEL IN CHAMBERS FOR 6 ABOUT FIVE MINUTES. 7 (WHEREUPON, AT 5:07 P.M., THE HEARING WAS 8 ADJOURNED UNTIL 10:00 A.M., THE FOLLOWING DAY.) 25
83 - [add a note] 1 CERTIFICATE OF REPORTER 2 3 I, DAVID A. KASDAN, RPR, COURT REPORTER, DO 4 HEREBY TESTIFY THAT THE FOREGOING PROCEEDINGS WERE 5 STENOGRAPHICALLY RECORDED BY ME AND THEREAFTER REDUCED TO 6 TYPEWRITTEN FORM BY COMPUTER-ASSISTED TRANSCRIPTION UNDER 7 MY DIRECTION AND SUPERVISION; AND THAT THE FOREGOING 8 TRANSCRIPT IS A TRUE RECORD AND ACCURATE RECORD OF THE 9 PROCEEDINGS. 10 I FURTHER CERTIFY THAT I AM NEITHER COUNSEL FOR, 11 RELATED TO, NOR EMPLOYED BY ANY OF THE PARTIES TO THIS 12 ACTION IN THIS PROCEEDING, NOR FINANCIALLY OR OTHERWISE 13 INTERESTED IN THE OUTCOME OF THIS LITIGATION. 14 ______________________ 15 DAVID A. KASDAN