Microsoft, Philips Semiconductors and SCM Microsystems Team to Support OpenCable

LOS ANGELES, Dec. 14, 1999 — Today at the Western Show, Microsoft Corp. (Nasdaq: MSFT), Philips Semiconductors (NYSE: PHG) and SCM Microsystems Inc. (Nasdaq: SCMM, Neuer Markt: SMY) announced a demonstration of the world’s first 1394-connected OpenCable receiver for the PC at the Microsoft booth 2311 and the CableNet booth. Together, the three companies will demonstrate technology that will enable cable TV operators to provide premium cable services on the PC. Furthermore, this PC receiver has fully implemented conditional access authentication and descrambling, thereby enabling pay services to be deployed over the digital cable network.

The OpenCable initiative, driven by Cable Television Laboratories Inc. (Cable Labs), permits a new generation of interoperable devices that enable a range of interactive services for cable customers and open the market for more competition and customer choice. Microsoft, Philips Semiconductors and SCM Microsystems have actively participated in the evolution of OpenCable and have collaborated on various digital TV initiatives. Philips Semiconductors and Microsoft have previously worked on Device Bay digital TV solutions, which established earlier generations of this technology. SCM Microsystems, a leading manufacturer of broadband receivers and conditional access, co-authored the OpenCable specifications for digital TV conditional access in the United States. The three companies are working together to utilize their respective expertise to open the digital TV world for PC users.

“This device will allow the PC platform to become a full-featured OpenCable client and will allow the PC to add value to the entire range of premium services offered by cable operators,”
said Dave Marsh, technical evangelist for TV, Video and Graphics at Microsoft.
“In the past, there have been various barriers to accomplishing this goal, the most obvious being conditional access. With the expected introduction of the OpenCable initiative on July 1 next year, this barrier will be removed.”

“Digital cable TV on the PC will soon be a practical reality, bringing with it the potential to revolutionize the industry,”
said Simon Wegerif, product marketing and business development manager at Philips Semiconductors.
“This three-way alliance and resulting PC receiver demonstration leverage a variety of Philips Semiconductors technologies, providing users with services such as data-enhanced and interactive programming.”

“By merging the PC and digital TV platforms, consumers can flexibly and conveniently maximize the benefits of broadband access with the rich content and services of digital pay-TV,”
said John Lynch, director of Digital TV at SCM Microsystems.
“The result of this alliance between Microsoft, Philips Semiconductors and SCM creates a tremendous market opportunity for many, and we look forward to maximizing our expertise for the benefit of consumers.”

The availability of an OpenCable receiver for the large installed base of PCs will provide significant benefits for cable operators in addition to PC users. This creates the possibility for interactive services that use the processing power and rich Internet functionality of the PC. Because the PC is a flexible platform, it enhances the inherent bidirectional interactive capability of cable, allowing cable operators to combine premium TV content with a broadband Internet connection. The result is greater integration of broadband Internet streaming video and cable-TV-delivered content for the PC user.

OpenCable Receiver Demonstration

The OpenCable PC receiver contains a number of Philips Semiconductors devices, providing all essential stages of signal processing from the cable to the 1394 link. SCM Microsystems provides the conditional access technology and OpenCable expertise that enables the device to access the pay services of digital TV. Combined with the Microsoft® Windows® operating system, this demonstration platform delivers full OpenCable support for premium cable TV services on the PC platform.

The OpenCable PC receiver is implemented as a Device Bay module, providing a sealed box that interfaces with any digital cable network. The receiver module easily fits into a standard racking system, providing an easy way for consumers to add functionality to the PC. An OpenCable point of deployment (POD) module fits into the receiver, providing conditional access authentication and descrambling. The Device Bay receiver being demonstrated contains all the necessary circuitry to interface a PC with a premium digital cable network and to allow the PC to receive premium TV services. The next version of this device will also incorporate a data-over-cable service interface specification (DOCSIS) modem for sending high-speed data across the Internet for broadband access.

The receiver can either be connected to the PC via a 1394 cable and used on the desktop, or slotted directly into a Device Bay-equipped PC, thereby eliminating the need for wires. In either configuration, the receiver tunes to the channel, demodulates the signal, handles all of the conditional access functionality, then outputs the requested copy-protected MPEG stream over 1394 to the PC. This, together with other PC infrastructure pieces, helps prevent high-resolution movies and other copyright-protected content from being illegally distributed or copied once delivered to the PC. Beta receivers are anticipated to be available in mid-2000 to coincide with the OpenCable rollout.

About Philips Semiconductors

Philips Semiconductors is the eighth largest semiconductor supplier in the world according to Dataquest’s 1998 market share report. Philips Semiconductors’ innovations in digital audio, video and mobile technology place the company in a leadership position in the consumer, multimedia and wireless communications markets. As a global company, offices in 40 countries serve major markets. Philips Semiconductors, headquartered in Eindhoven, The Netherlands, is a division of Royal Philips Electronics. Please join us at the Philips Semiconductors Web site: .

About SCM Microsystems

SCM Microsystems is the leading supplier of solutions that enable people to conveniently access digital content and services. The company operates in three primary markets — Digital TV, PC Security and Digital Media. SCM’s advanced silicon solutions and software enable secure exchange of electronic information for applications such as e-commerce and broadband content delivery by providing controlled access points to platforms such as PCs, Internet music players, and digital television set-top boxes. Global headquarters are in Los Gatos, Calif., with European headquarters in Pfaffenhofen, Germany. For additional information, visit the SCM Microsystems Web site at .

About Microsoft

Founded in 1975, Microsoft is the worldwide leader in software for personal and business computing. The company offers a wide range of products and services designed to empower people through great software — any time, any place and on any device.

The information contained in this document relates to a prerelease product that may be substantially modified before its first commercial release. Accordingly, the information may not accurately describe or reflect the product when first commercially released. This document is provided for informational purposes only, and Microsoft makes no warranties, express or implied, with respect to this document or the information contained in it.

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