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Microsoft Restructures UltimateTV

22 Jan, 2002 By: Hive News

Microsoft's UltimateTV group will eliminate 168 of the 500 positions in a restructuring the company announced today.

The company launced UltimateTV about a year ago to offers digital video recording and Web surfing over DirecTV's satellite television network as part of a larger television strategy.

The service will continue to be available after the restructuring, Microsoft told Cnet.com.

The reorganization means that UltimateTV will no longer be a part of the Microsoft TV division and will become a part of a new television services group within Microsoft's MSN division, according to the company.

"We're reorganizing UltimateTV to better align it with our entertainment and television efforts" Microsoft spokeswoman Erin Brewer told Cnet. Brewer confirmed the company informed employees Tuesday through an internal e-mail that it was restructuring the unit.

The change will also mean that the 168 jobs in the UltimateTV business, all based in the San Francisco Bay area, will be eliminated. Employees in those positions will have three months to find other jobs within Microsoft, according to an internal memo. If they don't find a new position within that period, they will receive a severance package, a spokeswoman said.

The remaining two-thirds of the employees will be reassigned to jobs within the MSN, Xbox or Microsoft TV divisions. Rerouting employees from UltimateTV to Xbox divisions would seem to support an analyst's projection last week that Microsoft will speed development on its HomeStation all-in-one set-top box, which would build on the Xbox to add satellite, cable, Internet access and one-touch access to the game console's capabilities.

"It will be interesting to see what will happen with UltimateTV and Xbox. We could see the fruition of the Trojan horse idea to get into consumers' homes," Yankee Group analyst Aditya Kishore told Cnet. "Thus far, it has been difficult to sell DVR as a standalone product, but combining it with the popular Xbox could change that."Microsoft's television efforts, which include MSN TV (formerly called WebTV), Microsoft TV and UltimateTV, have been slow to pick up subscribers, Cnet noted.

MSN TV, which offers e-mail access via a television set-top box, has about 1 million subscribers, the company says. Microsoft TV licenses interactive TV software to cable companies. The company would not confirm the number of subscribers to UltimateTV, but sources have said that the service has been getting about 1,200 new customers per month.

Kishore said pickup rates for UltimateTV, like all digital video recording services, have not been as high as many in the industry had anticipated they would be.

Jon DeVaan, the senior vice president in charge of Microsoft TV, will take a leave after the reorganization of UltimateTV, Brewer said. Moshe Lichtman, who has been on leave, will take his place. And WebTV co-founder Bruce Leak will lead the television services group.

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