TCI Picks Microsoft

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Negotiations that went deep into Friday night (Jan. 9)
between Tele-Communications Inc. and Microsoft Corp. ended with a deal that puts
Microsoft's 'WinCE' operating system into a minimum of 5 million TCI set-tops.

John Malone, chairman and chief executive officer for TCI,
discussed the deal during a teleconference with reporters on Saturday morning.

'We chose Microsoft because we felt they were the
furthest along in terms of the convergence between the TV set and the Internet --
particularly in light of their WebTV develoments,' Malone said.

Malone repeatedly referred to the arrangement as 'an
arm's length contract' for software licenses only, and not funding or set-top
financing by Microsoft.

'With respect to how this all gets funded, there are a
number of proposals floating around with respect to leasing pools and financing packages,
that we're exploring,' Malone said.

'(Those decisions) will be made on the merits of the
investment, and not as an inducement to pick a particular technology,' he added.

Craig Mundie, senior vice president of Microsoft's Consumer
Platforms Division, declined to comment on whether or not Microsoft is participating in
those dicussions. 'That's really John's business,' he said.

Malone said that beyond the deal for a customized version
of WinCE, he's also interested in the 'Solo' chip in Microsoft's WebTV-plus box.
That chip handles display of Internet-related content and three-dimensional modelling on
TV sets.

He also said that the 5 million copies of WinCE will likely
expand, as TCI's HITS (Headend in the Sky) affiliates sign on. Last month, TCI ordered
11.5 million set-tops from NextLevel Systems Inc. (soon to be renamed General Instrument
Corp.) -- 6.9 million are ear-marked for TCI, and the remainder for TCI's 'friends
and family.'

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