REDMOND, Wash., December 15, 1998 — Companies of all sizes will soon be able to boost their productivity with Internet-based services ranging from electronic commerce to video conferencing, thanks to a strategic relationship announced this week between Microsoft and Qwest Communications International Inc.
A multimedia communications company based in Denver, Qwest is laying an 18,500-mile fiber optic network that will transport multimedia content such as images, data and voice as easily as traditional telephone networks transport voice communication. The two companies will combine Qwest’s Internet Protocol-based fiber optic network with Microsoft’s Windows NT Server operating system to offer businesses a range of services aimed at helping them maximize network resources, reduce costs, generate new sources of revenue and better manage their computing operations.
As part of the deal, Microsoft will license a broad range of its software to Qwest. In addition, Microsoft will become a shareholder in Qwest by purchasing $200 million of Qwest’s common stock at $45 per share.
Beginning in the second quarter of 1999, Qwest will use its high-speed network to offer businesses a wide range of advanced communication services built on the Microsoft platform. For example, businesses will be able to take advantage of a dedicated electronic commerce solution that enables them to sell goods and services and monitor order status in a secure, high-speed network environment.
Businesses will also be able to speed up critical business applications such as e-mail, human resources, finances and other operations by moving them to a high-speed off-site server that offers around-the-clock customer support. They will be able to take advantage of video conferencing and video distribution services as well as “Virtual Private Networks” (VPNs) that allow companies to connect their Local Area Networks (LANs) with business partners, branch offices, telecommuters and mobile employees in an integrated, secure and simple manner. Finally, businesses can purchase “managed software services” that help them distribute and manage software used throughout their organizations.
“We are extremely delighted to work with Qwest in this new relationship,” said Thomas Koll, vice president of Microsoft’s Internet customer unit. “Whether it’s telecommuting, VPN, electronic commerce, dedicated hosting or managing software for our customers, these are tremendous services that we can offer in the marketplace.”
The deal marks the first time businesses will have access to a comprehensive set of Internet-based services from a single source. Up until now, services such as these have been offered regionally only, making it difficult for companies with multiple locations in the U.S. to fully take advantage of them. In addition, similar services have suffered from high prices, unreliable technology, bandwidth constraints and negative perceptions about security.
By combining the Microsoft Windows NT platform with Qwest’s high-speed network, Qwest’s goal is to provide reliable and secure services over high bandwidth networks at low prices. Qwest, which will create a new business unit that focuses on these services, expects the services to generate approximately $150 million in revenues during the first two years it is offered.
“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 meet communication companies’ needs for a stable, secure and scalable solution to deliver a wide range of new network services.”