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Full text of the deposition portions are below. Editor's Note: There may be errors in the text resulting from the scanning process.

Q: BY MR. HOUCK: I'd like you to look at Trial Exhibit 336, Mr. Gates, right here in front of you. This is a memorandum that purports to be from you to your executive staff dated May 22, 1996, and it attaches, for want of a better word, an essay entitled "The Internet PC" dated April 10, 1996.
 Do you recall writing that essay?
A: It looks like this is an e-mail, not a memorandum.

Q: Do you recall writing the essay dated April 10, 1996 entitled "The Internet PC"?
A: Well, it looks like an essay I wrote. I don't remember specifically, but it does look like something I wrote.

Q: The portion I refer you to is at the bottom of the first page under the heading called "The Latest Killer App." Do you see that?
A: I see a heading.

Q: First paragraph under that heading reads as follows: "Our industry is always looking for the next 'killer application'-- for a category of software that, by its utility and intelligent design, becomes indispensable to millions of people. Word processors and spreadsheets were the killer applications for business PCs starting in 1981."
 And the next sentence reads, "The latest confirmed 'killer app' is the web browser."
 Do you recall writing that, sir?
A: No.

Q: Do you have any reason to believe you didn't write it?
A: No.

Q: Can you explain what you meant here by describing the Web browser as a "killer app"?
A: I just meant that browsing would be, in our view, a popular thing, not necessarily on the web but just browsing in general would be a popular activity.

Q: Is a killer application an application that drives sales of other products like operating systems and hardware?
A: No.

Q: Do you have a definition in your own mind of killer application?
A: It means a popular application.

Q: Let me resort again to the Microsoft computer dictionary, and I'll read you what that says about killer applications. You may disagree with it, and if so, you can tell me. The Microsoft computer dictionary, 1997 edition, defines killer app as follows, and it gives two definitions. And I 'll be very complete this time, Mr. Gates.
 The first definition is, "An application of such popularity and widespread standardization that fuels sales of the hardware platform or operating system for which it was written.

End of segment

Q: The second definition is, "An application that supplants its competition."
 Let me go back and read you the first definition again, now that you've heard both of them.
 The first definition reads as follows: "An application of such popularity and widespread standardization that fuels sales of the hardware platform or operating system for which it was written."
A: I already told you that my definition of killer app is a very popular application.

End of segment

Q: What about a relationship to an operating system?
A: Usually they're just talking about it being a very popular application. I certainly know of things that have been referred to as killer applications that haven't driven hardware sales or operating system sales.

Q: What other applications would you identify as being killer applications?
A: Applied simulator.

End of segment

Q: Does Microsoft endeavor to track its market share with respect to operating systems on personal computers?
A: There's not some unified effort to do that.

Q: Is there anybody in Microsoft responsible for trying to determine what Microsoft's market share is with respect to PC operating systems?
A: No.

Q: Have you seen any figures indicating what Microsoft's market share is with respect to operating systems on personal computers?
A: From time to time people doing marketing analysis may pull together some figures like that. And depending on, you know, what the context is, they will be different numbers.

End of segment

Q: I'd like you to turn to the page of this document that ends in 022. And the heading reads "x86 OS Analysis for Fiscal Year '96."
A: Okay.

Q: On the page that is titled "x86 OS Analysis for Fiscal Year '96" appears a statement, "All other competitive licenses, less than 5%"
 Do you have any understanding that in or about early 1996 Microsoft's share of the market with respect to operating systems sold for x86 computers was in the vicinity of 95 percent?
A: No.

Q: What is your understanding of what the Microsoft market share was at that time?
A: I wouldn't know.

Q: Do you have any idea, as you sit here today, what Microsoft's market share is with respect to operating systems sold for x86 architecture computers?
A: Well, piracy alone is greater than 5 percent. But no, I don't know the number.

Q: What other companies besides Microsoft sell operating systems for x86 architecture computers?
A: There's a great number

Q: Can you identify them?
A: Santa Cruz. Red Brick. Caldera. IBM in many different products. Sun Microsystems. Microware. Wind River.
  Those are all I can think of right now.

Q: Do you have any estimate as to what the collective market share of those companies is with respect to operating systems sold for x86 architecture PCs?
A: No

Q: Is it under 10 percent?
A: Well, I've said to you I don't know the numbers.

End of segment

Q: BY MR. HOUCK: Would you take a look at Exhibit 339, Mr. Gates. Exhibit 339 contains a number of e-mails, and I want to ask you a couple questions about one on the first page from Russell Siegelman to yourself and others re MCI as an access provider dated October 13, 1994.
  Do you recall receiving this e-mail?
A: No.

Q: Do you have any reason to believe you didn't get it?
A: No.

Q: What was Mr. Siegelman's position in October of '94?
A: He was involved with looking at Marvel.

Q: And what was Marvel?
A: It was a code name for what we would do in terms of Internet sites or online service activity.

Q: Do you understand that in this e-mail here Mr. Siegelman is opposing a proposal to give MCI a position on the Windows 95 desktop as an Internet service provider?
A: I don't remember anything about MCI. This talks about how we'll have a Mosaic client in Windows 95. I don't see anything in here about the desktop.

Q: It references in this e-mail the Windows box. What do you understand the Windows-box to mean?
A: Well, the Windows box is certainly not the Windows desktop. The Windows box is a piece of cardboard.

Q: Is it your understanding that when he uses "Windows box" here, he means a piece of cardboard?
A: Well, he is probably talking about the stuff that's inside. He is saying access to the windows box. He is talking about the bits that are on the --

End of segment

(Record read.)
THE WITNESS: This is electronic mail and Russ is suggesting that he disagrees with doing a deal with MCI under these particular terms

Q: BY MR. HOUCK: In the e-mail he refers to Windows distribution as a unique and valuable asset, more specifically as "our one unique and valuable asset." Do you see that?
A: I see a sentence that has those words in it.

Q: Do you have an understanding as to what he meant?
A: Well, the Marvel people were having a hard time coming up with a strategy, and in retrospect we can look back and say they didn't come up with a good strategy. And they were looking at, you know, what could they do that would be attractive to a lot of users. And sometimes their goals and the goals of the Windows group were different. And in retrospect it's clear they weren't able to attract a lot of users.

End of segment

Q: Do you have any understanding as to what Mr. Siegelman meant here by his reference to Windows distribution being "our one unique and valuable asset"?
A: Was that the question I was asked --

Q: Yes, sir.
A: Can you read me back the previous question?
  (The record was read as follows)

"Q: In the e-mail he refers to Windows distribution as a unique and valuable asset, more specifically as 'our one unique and valuable asset.' Do you see that? "A. I see a sentence that has those words in it

Q: Do you have an understanding as to what he meant?"

THE WITNESS: Well, maybe there is some understanding -- you said do I understand what he meant. I thought you were asking about his e-mail as a whole.

BY MR. HOUCK: Let me re-ask it for the third time and see if I can get an answer.
  Do you have any understanding what Mr. Siegelman meant when he referred to Windows distribution as our one unique and valuable asset?
 MR. HEINER: This is a line of questioning about the mail that Mr. Gates does not recall reading; is that right?
 MR. HOUCK: The question has been put.
 THE WITNESS: I think the Marvel group in their search for what they could do to get millions of users at this particular point in time was thinking about making it easy to sign up to the Windows box being something that would be helpful to them and therefore an asset for the Marvel group in what they were doing.

Q: BY MR. HOUCK: Do you understand that Mr. Siegelman in his reference had in mind the large market share that Microsoft has with respect to operating systems?
A: I don't see anything about that in here.

Q: That's not your understanding?
A: Remember, Russ isn't involved with the Windows business, he is involved with the Marvel business.

Q: Do you consider Windows distribution a unique asset of Microsoft?
A: I know that the inclusion of what Marvel became didn't lead to its being popular.

Q: Again, let me ask the question, Mr. Gates. I wasn't asking about Marvel. I was asking about Windows distribution.
A: Well, Marvel was a thing that was put into the Windows box and so, in fact, if the question is is [sic] putting things in there, is that valuable in the sense that it creates popularity for those things, there are many good examples that we know where it obviously does not create popularity. So in terms of how much of a value that is, it's very instructive to look at Marvel and what subsequently happened to that because we did include it in the Windows box as one of the things that the user had on the desktop.

End of segment

Q: BY MR. HOUCK: Let me put the question again without reference to this document. Mr. Gates, do you believe that Windows distribution is a unique asset that Microsoft has?
 MR. HEINER: Objection. Form. Foundation. Defined terms.
 THE WITNESS: What do you mean when you say "Windows distribution" there?

Q: BY MR. HOUCK: Do you have an understanding what Mr. Siegelman meant by the phrase "Windows distribution" in his e-mail that he wrote to you?
A: He means -- I think he means, I don't know for sure, I think he means including an icon on the desktop for access to Marvel.

Q: And by "the desktop," you mean the windows desktop?
A: In this case, yes.

End of segment

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