Microsoft Changes ITV Channels

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Microsoft Corp.'s struggling interactive-TV unit will realign and pare down
its market focus, and that will result in about 60 pink slips being issued.

In addition, another 140 employees from its erstwhile UltimateTV division
will be taking their severance packages this week.

The development is part of a continuing process that began in January, when
Microsoft reorganized its TV business, folding in the UltimateTV unit and its
interactive-software-development teams under new boss Moshe Lichtman.

In the past three months, Lichtman and his team have evaluated the market and
the product line, and earlier this week, they presented a new TV-product
strategy to employees, according to Ed Graczyk, director of the Microsoft TV
platform group.

That includes eliminating 60 positions, constituting about 10 percent of the
TV division's work force. The layoffs include marketing, development and testing
positions, among others.

'As part of the new strategy, we have decided to focus on fewer things, do
them better and better integrate with other areas of Microsoft,' Graczyk said.
'So we will be relying more on technology from other groups than we have in the
past, which means we don't have to do that development in our division. And so,
of course, the natural result of that is efficiencies across the
organization.'

Another 140 former UltimateTV unit employees are also on their way out.

When UltimateTV was folded into the greater TV division, about 168 of its 400
San Francisco-based employees were not reassigned positions elsewhere at
Microsoft. They were given until now to find other positions within the company,
and about 25 did. But the remaining 140 will be taking severance packages and
exiting Microsoft this week, Graczyk said.

Meanwhile, the new market strategy will focus more on products that cable
operators can use now.

'We are really focusing very initially on the value proposition,' Graczyk
said. 'Any product decisions we make will be driven by whether or not there is a
justifiable value proposition that our solution would deliver to the
customer.'

It will also focus on creating software products for the new crop of
digital-media gateways, such as the Broadband Media Center platform jointly
developed by Digeo Inc., Motorola Inc. and Charter Communications Inc.

But Graczyk insisted that the advanced middleware platform for Motorola's
'DCT-5000' set-top box is not a casualty of this simplified market
realignment.

'That's still there and, in fact, you will hear a little bit more about that
at [the National Show],' Graczyk hinted. 'It turns out that what Microsoft TV
does on a DCT-5000 today is quite a long ways toward what the Media Center
does.'

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