Microsoft Corp and Qwest Communications International Inc have signed an agreement that will see the software giant invest $200m in the networking infrastructure company. The two companies will work together in developing a range of internet and communication services that will be offered over Qwest’s fiber optic cable network. Microsoft will license software products to Qwest for high bandwidth internet and e-commerce services built around the Windows NT Server and Microsoft internet software. Microsoft has purchased almost 4.5 million shares of Qwest’s common stock at $45 per share. The investment has been approved by the boards and shareholders of both parties. It is the third largest investment that Microsoft has made into vertical markets. In April 1997 Microsoft made an ill fated $1bn investment in Comcast; and earlier this year it made a $215m investment in Roadrunner – Time Warner Inc’s and US West Media Group Inc’s internet access over cable venture. The deal is non-exclusive: Qwest will also be offering services based around Unix servers to larger customers and Microsoft may find other distributive outlets for its internet software. The services portfolio will include dedicated electronic commerce facilities; web application hosting; streaming media, such as video conferencing; software management services; and Virtual Private Networking (VPN) service. The internet services will be aimed at businesses and corporations, which represents a departure from Qwest’s usual client base. The services will go into beta testing in the first quarter 1999, with initial services being offered by the second quarter, and a full service becoming available in the third or fourth quarter. The agreement does not currently extend to Europe.
