Microsoft Sinks $200 Million in Qwest Network
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Microsoft Corp. and Qwest Communications International Inc. Monday announced a $200 million alliance to collaborate on electronic commerce, Web hosting and related enterprise software applications and services.
Microsoft will license a variety of software to Qwest and will also become a shareholder in Qwest through the purchase of $200 million of Qwest's common stock at $45 per share.
Qwest expects roughly $150 million in new revenues from the service during the first two years, most of it in 2000. Microsoft expects to start making money on the venture in the 2000. The software giant will also invest $150 million in capital improvements over the first two years.
The collaboration is aimed at providing businesses with high-speed network services that maximize network resources, reduce costs, generate additional revenue streams and leverage management of computing operations. The Qwest service is built on the Microsoft Windows NT Server operating system and Qwest's Internet Protocol (IP)-based fiber optic network geared toward small, medium and large businesses.
New services offered on the Quest network will include:
- Dedicated e-commerce, offering customized systems for purchases, services and delivering order status.
- Web application hosting, including applications such as e-mail, human resources, finance and other operations to secure off-site servers with high-speed access and a single point of contact.
- Streaming media, delivering scalable, on-demand delivery capability that provides distribution of images to single and multiple locations to support videoconferencing, PC-to-PC conferencing and video distribution services.
- Managed software services, providing an outsourced solution of platforms, tools and utilities to enable the enterprise IT organization to provide for asset management, software distribution and management, network management, network performance tuning and desktop management.
- Virtual Private Networking (VPN) and Virtual Private Dial-up Networking, providing businesses the ability to connect their LANs, hosting sites, business partners, branch offices, telecommuters and mobile employees in an integrated, secure and simple manner.
"Qwest is confident that, by working with Microsoft, we will further the development of broadband applications and accelerate growth in the adoption of complete Web-enabled solutions," said Joseph P. Nacchio, president and CEO of Qwest Communications.
"We will help drive the availability of applications at performance and pricing levels that will significantly enhance the productivity of businesses. By working with Microsoft and its distribution channels, we believe that we will be able to accelerate by as much as 12 months our own plans for the delivery of Web-enabled applications."
"Microsoft is pleased to have this opportunity to work closely with Qwest in shaping this new end-to-end network service," said Steve Ballmer, president of Microsoft.
"We are investing in the company and its approach because we think this innovative broadband solution has the potential to bring enormous benefit to customers. "We believe this strategic relationship demonstrates that Windows NT Server meets communications companies' needs for a stable, secure and scalable solution to deliver a wide range of new network services."