Posted on 01/24/2002 7:06:10 AM PST by UnBlinkingEye
Microsoft cuts 168 UltimateTV jobs, reshuffles execs
2002-01-23
by Cydney Gillis
Journal Business Reporter
REDMOND -- Poor sales have led Microsoft Corp. to cut 168 jobs and disband the company's Mountain View, Calif.-based UltimateTV unit in a new reorganization.
The job cuts are a first for the Redmond software maker, which often says that it's hiring. But a poor economy has made one-year-old UltimateTV -- an interactive television service that runs on satellite through DirecTV -- a hard sell that has gained only 50,000 subscribers.
The service, which is sold by Microsoft's WebTV division in Mountain View, is part of the company's push to expand beyond software sales into consumer services. It includes Internet access and a programmable set-top box with a digital video recorder that can pause and play live broadcasts.
According to Microsoft spokeswoman Erin Brewer, UltimateTV will continue, but not its Silicon Valley unit, which employs 420.
About two-thirds of those jobs, or 252, will be moved to three divisions in Redmond, including a newly named TV services group.
Because Microsoft often reorganizes, Brewer said the remaining 168 employees are not being laid off. If they cannot find a job at Microsoft in the next three months, however, they will be terminated, Brewer said.
``We're pretty serious about this in terms of assigning human resource staffers,'' Brewer said. ``There are quite a (number) of open positions and opportunities at Microsoft.''
The reorganization includes an executive shuffle in Redmond in which the company has replaced Jon DeVaan, head of Microsoft TV -- the set-top box operating system that runs UltimateTV -- with Moshe Lichtman.
Lichtman worked in the international group of MSN, Microsoft's Internet service. Brewer said he will report to Chief Operating Officer Rick Belluzzo.
DeVaan will take a leave of absence, but is expected to return to the company, Brewer said.
The changes follow a shift last March in which Microsoft moved oversight for WebTV -- an Internet service originally sold by WebTV Networks, which Microsoft bought in 1997 -- from Silicon Valley to Redmond. Last July, WebTV was also renamed MSN TV.
Operations for UltimateTV will now move to a new TV services group, which will absorb some of the 252 positions.
The group will be housed in Microsoft's consumer division under Bruce Leak, current head of UltimateTV. Leak will report to Yusuf Mehdi, vice president in charge of MSN.
The rest of the 252 jobs will be allocated to the Microsoft TV platform and the Xbox video game console, which Brewer said will take UltimateTV's hardware engineers.
For now, she said, those engineers will focus on Xbox for gaming, rather than for any of the digital entertainment initiatives Microsoft plans with Xbox.
``First and foremost, we have to succeed as a game console,'' Brewer said.
She added that Microsoft is carrying forward with its plans to provide entertainment in the home -- whether on TV or through computers using Microsoft's Windows operating system.
``Our effort is behind the TV work, and our effort is behind the Windows work,'' Brewer said. ``Certainly, it's not a lessening of our commitment to the TV work.''
Analyst Sean Badding, vice president of the Carmel Group, a telecommunications market research firm in Monterey, Calif., agreed.
Badding described it as a temporary setback for UltimateTV caused by the economic recession -- and a lack of awareness among consumers as to what interactive TV is. According to Cambridge, Mass.-based Forrester Research, only 800,000 U.S. homes have a digital video recorder today.
As a result, Badding said, UltimateTV competitors such as Sonic Blue and TiVo are also ailing.
``It's like climbing a large wall to entice consumers,'' Badding said of interactive TV. ``It's a tough sell right now because (of the) economy.''
But Microsoft isn't giving up on UltimateTV, he said.
``Since Xbox was released, Microsoft has been placing more resources in that division,'' Badding said. ``By no means is the company going to cut (UltimateTV) or kill it.''
For now, he added, ``It's just reallocating resources to areas in higher demand.''
After the cuts, Brewer said about 1,000 employees will remain at work in a variety of Microsoft units in Mountain View.
This report includes information from Associated Press and Bloomberg News. Cydney Gillis can be reached at 425-453-4226 or cydney.gillis@eastsidejournal.com.
UNEMPLOYMENT TELEVISION
So anybody here ever actually watch UTV? I don't even watch PMSNBC. I get all the MS I can stand from my computer thanks.
The one I'm really interested in is X-Box vs Nintendo. This one will be a corporate battle royal, niether company has ever lost when faced with direct competition. So far it's seeming even, but word on the street is X-Boxes have an unfortunate tendency to break in about a week. They also cost more than the cube, but ship with more games so I consider that a break even.
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