I followed Carl over from PROG thread and bought in yesterday. Microsoft partnering is interesting. Will they invest.Please, excuse my ignorance here.
news.com
Microsoft Spends Cash to Buy Into Broader Market for Windows CE
Bloomberg News
May 12, 1999, 10:03 a.m. PT
Microsoft Spends Cash to Buy Into Broader Market for Windows CE
Redmond, Washington, May 12 (Bloomberg) -- Microsoft Corp.,
the world's largest software maker, is using its $22 billion in
cash to buy into broad markets for its Windows CE software used
in Internet devices ranging from TV set-top boxes to cell phones.
Microsoft is in talks with Cable & Wireless Communications
Plc to buy a stake in the U.K.'s No. 2 cable-TV operator. The
talks follow Microsoft's agreement Monday to invest $600 million
in wireless phone company Nextel Communications Inc. and last
week's accord to invest $5 billion for a 3 percent stake in AT&T
Corp., gunning to be the No. 1 cable-TV company in the U.S.
Microsoft is pushing beyond desktop computing and into
Internet computing on a wide range of consumer devices to make
its Windows CE operating system as important as its flagship
Windows 98 and Windows NT systems used in personal computers and
large corporate networks. Microsoft is stepping up investments
because Windows CE is lagging behind products from competitors
Oracle Corp., Sun Microsystems Inc. and Europe's Symbian group.
''They (Microsoft) really have an inferior product,'' said
Abhi Chaki, an analyst at Jupiter Communications Inc.
''Competitors are making a lot of headway in these vital market
segments.''
Windows CE is a slimmed-down version of the Windows system
and is the brains behind cable TV set-top boxes, wireless phones
and personal organizers that link to the Internet. The software
hasn't been widely accepted because it's viewed as overly
engineered and overpriced, Chaki said.
To counter the competition, Microsoft has been using its
cash reserves to buy into key distribution beachheads for CE,
analysts said. Cable, wireless, satellite and copper digital-
subscriber line operators are targets because they offer the high-
speed access to the Internet.
''We're kind of agnostic on whether it's cable or the
telecommunications area that broadband will come from,'' said
David Svendsen, chairman of Microsoft Corp.'s U.K. division,
about Microsoft's investments in the U.K.
''Computing will go beyond the desktops that we know
today,'' Svendsen said. ''It will be in mobile phones and
televisions. That's where we want to be as well.''
Investments
On Monday, Microsoft agreed to invest $600 million for a
4.25 percent stake in Nextel. Microsoft and Nextel will offer a
wireless version of Microsoft's MSN network of Web sites to
provide e-mail and personal calendars to cellular phones.
Last week Microsoft agreed to invest $5 billion for a 3
percent stake in AT&T, which will be the No. 1 cable-TV company
after it acquires MediaOne Group Inc. Microsoft will get a 29.9
percent stake in TeleWest Communications Plc, the second biggest
cable operator in the U.K., through that agreement.
Last month, Microsoft said it would invest $30 million in
NorthPoint Communications Holdings Inc., a provider of digital
subscriber line technology. DSL offers Internet access up to 250
times faster than current rates.
In February, Microsoft and British Telecommunications Plc,
the No. 1 U.K. phone company, said they'll develop wireless
Internet and corporate data devices. They're competing against
the Symbian software being developed by Psion Plc with Motorola
Inc., Ericsson AB and Nokia Oyj.
In January, Microsoft put $500 million into NTL Inc., the
U.K.'s No. 3 cable operatoe, and $300 million into United Pan-
Europe Communications NV, the second-biggest cable operator in
Europe.
Today, Microsoft said it will buy Internet-software maker
Sendit AB of Sweden for 1.066 billion kronor ($120 million) and
will jointly distribute music and videos over the Internet with
Sony Corp.'s Music Entertainment Inc.
Wide Range of Bets
''They're not making a single bet in a single technology,
but spreading over several,'' said John Corcoran, a cable analyst
at Stephens Inc. Once Microsoft controls access into the home, it
can ''dictate what software and hardware people will use and can
control more information flow into the home, and control more
dollars flowing out,'' he said.
Microsoft, which is based in Redmond, Washington, had cash
reserves of about $22 billion before the AT&T investment, Chief
Financial Officer Greg Maffei said last week. Those reserves were
bringing in about $2 billion a quarter.
A 30 percent stake in CWC would cost about $4 billion,
analysts said, leaving Microsoft with about $13 billion.
The spending spree isn't over, analysts said. DSL, for
example, is an area that Microsoft still wants to beef up.
''They need to focus on that area with phone companies,''
Chaki said. DSL uses existing phone lines to provide high-speed
Internet access.
Microsoft rose 3/4 to 80 5/8 in late morning trading of 10.6
million, making it the fourth most active stock in U.S trading.
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