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April 7, 1998
Microsoft Corporation
Sony Corporation

Microsoft and Sony to Collaborate in
Creating the Convergence of Personal Computer,
Digital Television and Consumer Audio-Visual Platforms

(Redmond, WA and New York, NY) April 7, 1998- Microsoft Corporation and Sony Corporation today announced plans to begin collaboration to create a convergence of the personal computer and consumer AV electronics platforms.

To facilitate the fusion of the PC and AV platforms, the two companies plan to cross-license key software technologies. Sony intends to license Microsoft's Windows CE operating system for use in certain future products. Similarly, Microsoft intends to license Sony's Home Networking Module for use with certain versions of Windows CE.

Windows CE is a leading operating system for use in a wide range of digital consumer electronics products. Sony's Home Networking Module is middleware that supports home networking standards currently being proposed. Cooperation between the two companies will help realize the creation of a home-networking environment that applies the best innovations from both the Consumer Electronics industry and the PC industry for the benefit of consumers.

"The time has come for the PC industry and the AV industry to shake hands," said Nobuyuki Idei, President of Sony Corporation. "Sony supports the establishment of an open architecture that will enable the seamless integration of PC and AV products. The cooperation between Microsoft and Sony will play a key role in making this happen."

To ensure that PCs and AV equipment do not continue to evolve on separate paths, Microsoft and Sony will support and endorse various DTV formats. Issues related to three key steps -- production, transmission and reception -- will be addressed jointly by the two companies to enable the seamless transmission and display of digital content. Because video formats can differ at each step, Microsoft and Sony plan to support the formats that will enable the fastest migration to Digital Television.

Microsoft and Sony will support the use of 1080 interlaced as the preferred format for HDTV production and archiving because it is the highest resolution format which is cost effective and currently available. In addition, Sony will develop 480 progressive production equipment in the near future and 1080 progressive equipment as the ultimate goal in the longer term.

Sony will also support any of the ATSC transmission formats, including progressive scan formats. Sony will market DTV receivers capable of displaying all digital television programs, regardless of the format in which they are produced or transmitted.

"Sony's ability to develop consumer electronics products with broad consumer appeal is second to none" said Bill Gates, CEO of Microsoft Corporation. We hope that our combined efforts will give birth to even more exciting products and applications in both the computer and AV entertainment arenas."

Sony Corporation is a leading manufacturer of audio, video, communications and information technology products for the consumer and professional markets. Its music, pictures, and computer entertainment operations make Sony one of the most comprehensive entertainment companies in the world. Sony recorded consolidated annual sales of over $45 billion for the fiscal year ended March 31, 1997, and it employs more than 163,000 people worldwide.

Founded in 1975, Microsoft is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

NOTE: Microsoft and Windows CE are registered trademarks of Microsoft Corp. in the United States and/or other countries. Other product and company names herein may be trademarks of their respective owners.