Posted at 9:09 AM PT, May 27, 1999
RALEIGH, N.C. -- A top IBM executive testified in the Microsoft antitrust case Thursday that Microsoft made threats against PC makers who were considering IBM's OS/2 operating system.

Garry Norris, who was IBM's lead negotiator in securing Windows operating system licensing agreements from Microsoft, also said that IBM saw a sharp increase in the royalties it paid to Microsoft because the software giant viewed IBM as a competitive threat.

Norris, who was deposed in a courtroom here by Microsoft attorney Richard Pepperman, said that in 1995 IBM paid $40 million in royalty agreements for Windows 3.1, but in 1996 it paid $220 million in royalty agreements for Windows 95. Norris is a rebuttal witness in the trial, which has been on a break for several months and is slated to resume June 1.

Norris said royalty fees increased from $9 per copy for Windows 3.1 to $45.90 per copy for Windows 95.

In addition, Norris said that Compaq told him it wanted to use OS/2 but didn't because of fear of retaliation from Microsoft. Hewlett-Packard made a similar decision about OS/2 for the same reason, Norris said.

He also said the IBM PC Co. also feared reaction from Microsoft.

"I was simply told repeatedly that they [the manufacturers] feared retaliation from Microsoft," Norris said.

The Windows 95 agreement was signed 15 minutes before the launch of the operating system, Norris said. Prior to that agreement there was a period of time when Microsoft became unresponsive during its negotiations, he said. Norris said he was worried that IBM was going to be cut out of a deal with Microsoft.

Norris' deposition will continue Thursday.