Microsoft Sinks $200 Million in Qwest Network

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.

Starting in the second quarter of 1999, Qwest will unveil complete,
single-source, high-speed business services. The Qwest network will also
support development, integration and maintenance of advanced hosting
services, such as dedicated electronic commerce, Web application hosting,
streaming media, managed software services and virtual private networking
built on Microsoft platforms.

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.”

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