Andersen Consulting and Microsoft in $1 Billion Pact To Form Joint Venture and Expand Global Alliance

NEW YORK CITY and REDMOND, Wash., March 13, 2000 — Andersen Consulting and Microsoft Corp. today announced plans for the formation of a joint venture and the expansion of their existing relationship under an agreement designed to address the needs of enterprise customers. The two organizations will team to create business value for customers seeking to buy, build or integrate large-scale industry solutions, including e-commerce offerings, built on the Microsoft® enterprise platform and Windows® 2000 operating system.

Highlights of the pact, valued at $1 billion, include the following:

  • Forming a joint venture company named Avanade (av’ e năd) that, subject to regulatory approval, will deliver Internet-specific and other enterprise platform services based on the Windows 2000 operating system platform

  • Creating a new organization within Andersen Consulting entirely dedicated to designing and building business solutions with speed and predictability, based on the Microsoft enterprise platform

  • Providing joint programs for marketing, business development and the delivery of services that target Fortune 500 companies, new market entrants and Internet start-ups

Building on Andersen Consulting’s deep technology capabilities, roughly 25,000 Andersen Consulting professionals will receive enhanced training on the Microsoft enterprise platform, including Windows 2000, Microsoft SQL Server TM , Exchange Server, e-commerce technologies, Windows DNA 2000 and Visual Studio® development system-based tools. In addition, Microsoft product groups will work with both Andersen Consulting and Avanade professionals as Microsoft develops next generation technologies and platforms.

“The combination of the respective capabilities of Andersen Consulting and Microsoft, together with the services Avanade will deliver, is a vivid example of the whole being greater than the sum of its parts,”
said Joe W. Forehand, managing partner and CEO of Andersen Consulting.
“Microsoft’s ability to provide a scalable, cost-effective platform in combination with innovative Web services will help Andersen Consulting create customized e-commerce solutions that take customers to the next level.”

“Windows 2000 changes the landscape for enterprise computing,”
said Steve Ballmer, Microsoft president and CEO.
“By combining our technology strengths with Andersen Consulting’s recognized business and industry expertise, we can ensure that the most demanding enterprise customers receive all the benefits possible from Windows 2000 and Microsoft’s entire enterprise platform.”

$1 Billion Pact

Under the $1 billion pact, Microsoft will contribute $385 million cash to support Avanade, as well as solutions development support and other intellectual capital. Andersen Consulting will provide intellectual capital, training, resources, solutions development and other services.

Avanade Will Focus on Services

With headquarters planned for the Seattle area, Avanade, which will be co-owned by Andersen Consulting and Microsoft, will provide Internet and technical services based on the Windows 2000 platform. Avanade, which is subject to regulatory approval, will specialize in developing the following:

  • Reusable e-commerce applications

  • Windows DNA development and application integration

  • Highly available enterprise and Web infrastructures

  • Data center consulting services

Within the first 24 months, Avanade will hire a highly skilled team of more than 3,000 technologists with expertise in Microsoft’s products. Avanade will work directly with not only Andersen Consulting and Microsoft, but also with key Original Equipment Manufacturers (OEMs) and other technology providers. Andersen Consulting conservatively estimates that the customer segment for the services offered by Avanade could reach $15 billion by 2002.

Mitchell C. Hill, an Andersen Consulting partner with more than 20 years’ experience with the firm, will be Avanade’s CEO. The board of directors will comprise executives from both organizations, including Jack Wilson, managing general partner of AC Ventures, John Connors, CFO at Microsoft, and Paul Maritz, group vice president, Developer Group at Microsoft. The new company will draw on talent from Andersen Consulting, Microsoft Consulting Services (MCS) and Microsoft Product Support Services (PSS) in its start-up phase and plans to expand its work force to 5,000 certified technical experts through aggressive recruiting.

In addition to its Seattle location, Avanade plans to open offices in San Francisco, Dallas, Chicago, New York, London, Frankfurt, Sydney, Paris, Sao Paulo and Singapore in the next 18 months. Plans also call for taking Avanade public at some future date.

“The Internet creates unparalleled potential for customer and supplier intimacy through new business models,”
Hill said.
“Avanade will help customers realize this potential by providing large-scale, highly reliable e-commerce applications based on the Microsoft Windows 2000 platform. Our skills will be coupled with the business and technical expertise of Andersen Consulting and Microsoft to increase speed-to-value for our clients.”

Microsoft Solutions Organization Created by Andersen Consulting

As part of the expanded alliance between the two companies, Andersen Consulting is creating a dedicated organization of 3,000 business solution architects with deep expertise in Microsoft technologies and products to support the development of industry-specific and cross-industry solutions on the Windows 2000 platform. The new organization will be headed by Karl E. Newkirk, a senior Andersen Consulting partner and former global managing partner for the firm’s Enterprise Business Solutions (EBS) line of business.

Andersen Consulting’s Microsoft Solutions Organization, leading with Windows 2000, will define and build reference architectures, develop and distribute reusable knowledge capital, and establish eight new Microsoft solution centers to support its teams in delivering enterprise solutions. In addition, Andersen Consulting will leverage its business and technology expertise and experience to develop solutions across a variety of industries, including automotive, financial services, government, health care, manufacturing, retail, telecommunications and utilities. Andersen Consulting and Microsoft will also provide horizontal and vertical offerings based on the products of key Independent Software Vendors (ISVs), including Commerce One Inc., PeopleSoft Inc., Siebel Systems Inc. and SAP AG.

“The combination of Microsoft and Andersen Consulting — together with Compaq’s leading Windows 2000 platforms and market share with key ISVs — will enable a powerful new generation of scalable, highly available solutions,”
said Michael Capellas, CEO of Compaq Computer Corp.

As a worldwide prime integrator for Windows 2000, we look forward to

working with Microsoft and Andersen Consulting to redefine price/performance while helping customers rapidly deploy e-business solutions based on Windows 2000.

About Andersen Consulting

Andersen Consulting is an $8.3 billion global management and technology consulting organization whose mission is to help its clients create their future. The organization works with clients from a wide range of industries to link their people, processes and technologies to their strategies. Andersen Consulting has approximately 65,000 people in 48 countries. Its home page is .

About Microsoft

Founded in 1975, Microsoft (Nasdaq
) 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.

Microsoft, Windows and Visual Studio are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

For more information, press only:

Ed Trapasso, Andersen Consulting, (917) 452-3555, [email protected]

Roxanne Taylor, Andersen Consulting, (917) 452-5106, [email protected]

David Deal, Andersen Consulting, Analyst Relations, (312) 693-7483, [email protected]

Rachel Weikum, Waggener Edstrom, (503) 412-3661, [email protected]

Rapid Response Team, Waggener Edstrom for Microsoft, (503) 443-7000, [email protected]

For more information, investors only:

Carla Lewis, Microsoft, Investor Relations, (425) 936-3703, [email protected]

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at on Microsoft’s corporate information pages.

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