WebTV Networks and Microsoft are Joining Forces

By now many of you have heard the news that WebTV Networks, Inc. is being acquired by Microsoft Corporation. I realize that this may have come as a bit of a surprise to some of you, so I wanted to bring you up to date on these exciting new developments.

The first thing you should know is that although WebTV Networks is being purchased by Microsoft, we will continue to operate as an independent company, maintaining the same standards of excellence you have come to appreciate with the WebTV Network, and continuing to develop innovative upgrades and new technologies. We will be maintaining the same world-class development team and the same management structure, we'll continue to operate from our offices in Palo Alto, California, and, of course, we're keeping the same familiar name, "WebTV". In short, if we hadn't announced that we were becoming a subsidiary of Microsoft Corporation, you probably wouldn't have noticed anything different.

The second thing you should know is that by joining forces with Microsoft, WebTV Networks will be able to benefit from Microsoft's vast resources to make the WebTV Network even better than it is today. Microsoft is the largest software company in the world, and in addition to incredible financial resources, they have some of the most advanced computer technology in the world. All of this will be at the disposal of WebTV Networks for the enhancement of WebTV Networks products and the WebTV Network, ultimately resulting in a better experience for the you, the WebTV Network subscriber.

I also wanted to share with you some of the reasons why we chose to move forward with the acquisition. Needless to say, it was a big decision for the company.

Twenty months ago, the three co-founders of WebTV Networks - myself, Bruce Leak, and Phil Goldman - set out to create a product that we hoped would fundamentally change people's lives around the world. It was our dream to create a product and a service that would place the power of the Internet into the hands of a general audience in a truly affordable, easy-to-use and relevant package. The dream was WebTV, and I'm very proud to say that by bringing together perhaps the finest team ever assembled in Silicon Valley, by partnering with two of the best consumer electronics companies in the world, Sony and Philips/Magnavox, and, well, by working like crazy day and night, we made that dream into a reality, a reality that is already having a profound impact on the world.

People who could never have afforded a computer are happily sending and receiving email through the WebTV Network every day. People who have never even typed on a computer before are browsing the Internet on WebTV Internet terminals like pros. And there's a whole bunch of us (myself included!) who are quite adept at handling a computer, but we'd rather surf the Web with simplicity in the comfort of the living room on WebTV Networks' terminal and service.

WebTV Networks has consumerized the Internet, and in doing so has vastly expanded the reach of thousands of people throughout the United States, and soon throughout the world.

WebTV Networks has a very big vision. But, although the company is growing fast, we're still relatively small. After careful thought and deep consideration we decided that the best way to achieve our vision, and most especially to serve our subscribers, was to establish a partnership with a larger company who shared our vision, and had a reputation for the highest quality products and customer service.

Microsoft is that company. Like us, they are committed to bringing the Internet to a general audience on a world-wide basis, and like us, they are committed to creating products of high value and high relevance to their customers. And, most importantly, they are absolutely committed to supporting our efforts to improve and expand the depth and capabilities of WebTV Networks products and services, and to bring continuing value to WebTV Networks subscribers.

WebTV Networks, Inc. is delighted to become the newest member of the Microsoft family, and we are looking forward to the great opportunities that this relationship will bring.

Thanks for your time, and happy surfing!

     Steve Perlman
     Co-founder, President and CEO
     WebTV Networks, Inc.