Microsoft and ScanSoft Expand Strategic Relationship To Deliver Electronic Paper Solutions

REDMOND, Wash. and PEABODY, Mass., October 17, 2000 — Microsoft (NASDAQ: MSFT) and ScanSoft â, Inc. (NASDAQ: SSFT), a leading provider of digital imaging software, announced today that they are working together to deliver electronic paper solutions, such as document imaging, to customers around the world. As part of the strategic relationship, Microsoft has licensed the image segmentation, compression and viewing technology from ScanSoft.

ScanSoft’s advanced image processing technology segments, compresses and formats documents containing both text and images. This technology outputs to the emerging industry standard file format known as TIFF FX, which was designed to facilitate the storage and delivery of such documents.

ScanSoft’s technology enables users to scan in documents and share them with colleagues, while maintaining the image quality of the original paper document. Through this advanced image processing, scanned color documents are segmented so pictures and graphics maintain the high resolution of the original, while the text is saved as a binary image to provide clean text and greater readability. In addition, ScanSoft’s technology reduces scanned color documents to a small fraction of their original file size, which reduces storage requirements and makes it easier and faster to share the electronic file, particularly over dial-up and wireless connections.

This is the second technology alliance between the two companies. In November 1999, it was announced that Microsoft had licensed ScanSoft’s Optical Character Recognition (OCR) technology for inclusion in Microsoft Office 10, which is currently in beta testing.

“We chose ScanSoft’s technology because of its unique ability to segment a scanned image and compress that image into a high-resolution format,”
said Dick Brass, Vice President of Technology Development at Microsoft.
“ScanSoft’s Image Processing Technology offers the best of clean, crisp graphics and clear text on a scanned image. We see this as the next step toward delivering greater readability of electronic documents for our customers.”

ScanSoft’s Image Processing Technology will be particularly valuable to companies that deliver solutions in areas such as Internet fax, email, wireless communications, document management, workflow and e-book technology. Later this year, ScanSoft will release its Image Processing Software Development Kit, which will allow developers and solution providers to incorporate TIFF FX into their applications.

“Because Microsoft is at the forefront of electronic document creation and sharing, its use of this technology will certainly promote the technology’s acceptance and proliferation,”
said Paul Ricci, Chairman and CEO of ScanSoft.
“We plan to aggressively market this technology starting in the fourth quarter of this year.”

TIFF FX has been approved for implementation by the Internet Engineering Task Force (IETF). Companies participating in the specification and testing of TIFF FX include ScanSoft, Microsoft, Xerox Corporation, Northern Telecom, Intel, NTT, Mitsubishi Electric Corp., Matsushita, and NEC. For more information about this technology, see ScanSoft’s TIFF FX White Paper at

About ScanSoft, Inc.

Headquartered in Peabody, MA, ScanSoft, Inc. (NASDAQ: SSFT) is a leading developer of digital imaging software that enables users to leverage the power of their scanners, digital cameras and other electronic devices. ScanSoft’s award-winning product line — Pagis, TextBridge, PaperPort, OmniPage Pro, OmniForm, eOmniForm, OmniPage Pro Scan Suite Plus, Developer’s Kit 2000, PageKeeper, Paper Converter, Kai’s PhotoSoap2, Kai’s SuperGoo, Kai’s PowerShow and PhotoFactory — enables users to capture, recognize, edit, manage and share documents and photos electronically by taking advantage of ScanSoft’s cutting-edge technology.

ScanSoft has established numerous strategic partnerships with the industry’s leading scanner and multifunction vendors to deliver the most comprehensive and cost-effective solutions for its customers. Vendors who have chosen ScanSoft’s cutting-edge OCR technologies to incorporate into their own product offerings include Brother, Canon, Epson, Fujitsu, Hewlett-Packard, Lotus Development Corporation, Microsoft, Microtek, Mustek, Primax, Sharp, Symantec Corporation, Visioneer, Xerox and others. ScanSoft continues to cultivate and develop strategic partnerships to deliver the most comprehensive and cost-effective solutions for its customers.

ScanSoft software is sold and marketed worldwide through retail, dealer and OEM channels and the Internet, capturing the consumer, small office/home office (SOHO) and corporate markets. There are more than 6.5 million registered users of ScanSoft products. ScanSoft can be found on the Web at

About Microsoft

Founded in 1975, Microsoft (Nasdaq
) is the worldwide leader in software, services and Internet technologies 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.

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This press release contains forward-looking information within the meaning of Section 27A of the Securities Exchange Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbors created by those sections. These forward-looking statements include statements relating to the perceived benefits of the agreement between Microsoft and ScanSoft, the implementation of the technology into ScanSoft’s Image Processing Software Developer Kit and the commercial acceptance and use of the TIFF FX standard. Actual results may differ materially due to a number of factors, including adoption of alternative technology for image segmentation, compression, and viewing, the growth of the digital imaging market, agreements with and dependence on the actions of third parties; and the ability to generate revenue from image segmentation, compression, and viewing technology. The matters discussed in this press release also involve risks and uncertainties described in ScanSoft’s filings with the SEC. ScanSoft assumes no obligation to update the forward-looking information contained in this press release.

PageKeeper, Paper Converter, Pagis, TextBridge, PaperPort, OmniPage, OmniPage Pro Scan Suite Plus, OmniForm, eOmniForm, Developer’s Kit 2000, PhotoFactory, Kai’s PhotoSoap2, Kai’s SuperGoo, and Kai’s PowerShow are registered trademarks or trademarks of ScanSoft, Inc. All other trademarks and trade names are hereby recognized and may be registered to their respective holders .

For more information, press only:

Jane Van Saun
ScanSoft, Inc.
Tel: (978) 977-2114
Email: [email protected]

Phil Missimore
Waggener Edstrom for Microsoft
Tel: (408) 654-5200
Email: [email protected]

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