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Microsoft Restructures UltimateTV Unit

Microsoft confirmed reports that it plans to cut more than 150 jobs and will restructure its UltimateTV interactive television unit.

Although Microsoft said it will continue to offer its UltimateTV services to subscribers, the UltimateTV division, which has about 500 employees, will be eliminated, and about two-thirds of its workers will be relocated to other divisions. The remaining employees will be given three months to find other jobs.

A Microsoft spokesperson said the company would continue to support the UltimateTV subscription digital video recorder service with WebTV access, and will continue planned system upgrades and support for forthcoming second-generation products. The company recently announced a new service upgrade at the Consumer Electronics Show.

Last March, Microsoft shifted control of WebTV operations — the TV-based Internet access service that was added to UltimateTV — to its Redmond, Wash., headquarters.

Meanwhile, the UltimateTV hardware group will be moved to Microsoft’s Xbox team, and its television services will be moved to MSN TV Services (formerly WebTV). The UltimateTV television platform group will move to the Microsoft Television platforms group.

Moshe Lichtman, former manager of MSN’s international business, will head the Microsoft Television platforms unit, and Bruce Leak, a founder of WebTV, will head up the TV Services group, reporting to Yusuf Mehdi, Microsoft VP.

With a number of set-top box hardware developers shifting to work on Xbox platforms, some speculation has arisen that the company may eventually develop UltimateTV features as a component for future-generation game consoles.

At CES, Microsoft announced it would soon deliver a software download to upgrade the UltimateTV boxes in the market with remote program recording of UltimateTV terminals via the Internet.

The function enables UltimateTV owners to log onto a forthcoming website using PCs, PDAs and other Internet appliances, to browse through a TV program guide grid tailored to their accounts.

The software upgrade will be sent free of charge to UltimateTV subscribers soon, although an exact date has not be determined. Also planned in the upgrade are the UltimateTV Movies and Auto Record functions.

UltimateTV Movies is described as a powerful new program search tool that helps viewers find the hottest new movies offered by DirecTV’s pay-per-view services by providing short text movie reviews from E! Online.

The Auto Record function will be Microsoft’s answer to rival TiVo’s intuitive recording system.