After being assured that Tellme would be able to retain its Silicon Valley office, identity and quirky culture, McCue negotiated an $800 million sale to Microsoft and agreed to stay on as general manager. It's a decision that he says he doesn't regret 10 months into the marriage.

"We are pretty much doing everything we were doing before -- just a lot more of it," said McCue, 40. ...

"A really great entrepreneur ultimately has to follow the best path forward for the employees, shareholders and the vision that you are pursuing," McCue said. "I am pretty confident those three things will be on Jerry's [Yang, Yahoo! co-founder] mind when he finally makes his decision."

Only copies of the year-old operating system that are sold in boxes directly to consumers are affected by the price cuts -- not the versions pre-loaded on personal computers. The cuts will range from 20 percent to 48 percent.

The reductions are to coincide with the late March release of Vista Service Pack 1, a collection of security fixes and other improvements.

Microsoft said the new prices will apply to the Home Premium and Ultimate versions of Vista, in both their full editions and the editions that upgrade an older or more basic operating system.

The WorldWide Telescope (WWT) is a rich visualization environment that functions as a virtual telescope, bringing together imagery from the best ground and space telescopes in the world for a seamless, guided exploration of the universe.

On Wednesday Microsoft announced it is buying YaData, an Israeli startup that has makes behavioral targeting tools for marketers and whose founding team consists of data mining experts from the Israeli Defense Forces.

Microsoft (NasdaqGS:MSFT - News) was fined a record 899 million euros ($1.35 billion) by the European Commission on Wednesday for using high prices to discourage software competition in the latest sanction in their long-running battle.

The executive arm of the European Union said the U.S. software group defied a 2004 order from Brussels to provide the information on reasonable terms.

By my math, Live services were troubled or unaccessible for at least six hours. At 12:30 p.m. ET, services were down. I checked again around 1:50 p.m. ET and found all services accessible, but that doesn't mean they were available to everyone. I received Microsoft's statement of full restoration—"normal operations have been restored to all customers"—around 6 p.m. ET.

Windows Live users are reporting on February 26 that they are unable to access Windows Live Hotmail and Windows Live Messenger, two of Microsoft’s key consumer Internet services.

The Library of Congress has signed an agreement with Microsoft to make the library’s collection of historical artifacts more immediately available, both to online visitors and the 2 million people each year who come to the library’s Thomas Jefferson Building in Washington.

As a result of recent decisions made by Toshiba, Hollywood studios, and retailers, Microsoft plans to withdraw from HD DVD. Xbox will no longer manufacture new HD DVD players for the Xbox 360, but we will continue to provide standard product and warranty support for all Xbox 360 HD DVD Players in the market. As we stated earlier, we do not believe this decision will have any material impact on the Xbox 360 platform or our position in the marketplace. HD DVD is one of the several ways we offer a high definition experience to consumers and we will continue to give consumers the choice to enjoy digital distribution of high definition movies and TV shows directly to their living room, along with playback of the DVD movies they already own.

Today from the Healthcare Information and Management Systems Society (HIMSS) 2008 Conference & Exhibition, Microsoft Corp. announced it has signed a joint marketing agreement with SAP America Inc., a subsidiary of SAP AG, through which the companies have agreed to work together to deliver solutions that meet the unique needs of the healthcare industry. The companies’ collaboration will seek to help healthcare organizations increase operational efficiency and reduce costs using software to automate and streamline processes that are today often manual or based on cumbersome legacy technology. The companies will focus their healthcare collaboration activities in the United States.

“Healthcare is a complex industry, with slim margins, tight budgets and high administrative costs,” said Tim Smokoff, general manager of healthcare for the Worldwide Public Sector Team at Microsoft. “There is tremendous opportunity for these organizations to lower those costs and create value through the power of software. Together with SAP, we want to help the healthcare industry realize that value.”

The combination of solutions from Microsoft and SAP is proven to reduce costs and create operational efficiency, with one of the lowest total costs of ownership on the market today. As an example, with more than 70,000 admissions per year, Montefiore Medical Center is one of the largest healthcare organizations in the United States and the dominant medical system in the Bronx borough of New York City. Working with SAP software enabling technology and utilizing the Microsoft suite of products for communication, Montefiore has been able to overhaul and streamline processes related to procurement including all purchasing activity. Concurrently, Montefiore was able to transform the institution to an online, real-time financial management system, including the budget process, significantly reducing the amount of time it takes clinical and administrative staff to complete non-value activities so that they can spend more time to support patient care.

“Maintaining accurate, complete, up-to-date information on inventory levels and materials needs is critical to hospital operations,” said Charles Agins, vice president of finance, Montefiore Medical Center. “By providing this information in an easy-to-use format, our associates can enjoy a flexible work culture and at the same time stay focused on patient care.”

For the healthcare market, SAP and Microsoft will collaborate to leverage existing technologies including Duet, the joint product from SAP and Microsoft to provide seamless access to industry-leading SAP business processes and information via the familiar Microsoft Office environment. Health organizations stand to gain a great deal by streamlining processes for their managers with Duet, especially when it comes to people and suppliers.

“SAP helps healthcare organizations integrate industry-specific administrative processes in order to drive efficiency,” said David Corbett, vice president of the U.S. Healthcare Practice at SAP America. “Duet is a great example of the groundbreaking co-innovation between SAP and Microsoft; though this joint go-to-market initiative, Microsoft and SAP will enable providers to further streamline processes and drive down costs, all while improving the overall quality of care.”

Microsoft Corp. ramped up its fight to have its Office Open XML document format made into an international standard on Monday as delegates from 37 countries met to reconsider the proposal.

Their week-long meeting at the International Organisation for Standardisation, or ISO, is meant to help broker consensus after a preliminary vote on the standard failed six months ago.

U.S. District Judge Marsha Pechman certified the class action suit but whittled down its scope to focus primarily on whether Microsoft's "Vista Capable" labels created artificial demand for computers during the 2006 holiday shopping season, and inflated prices for computers that couldn't be upgraded to the full-featured version of Vista, which was released at the end of January 2007.

From: Kevin Johnson
Sent: Friday, February 22, 2008 12:48 PM
To: Platforms & Services Division
Subject: Update on Yahoo! Proposal

I want to provide all employees in the Platforms & Services Division with an update on our February 1 proposal to combine with Yahoo!, and answer a few common questions that have been asked.

As we’ve discussed, the online advertising industry is growing rapidly and is expected to be an $80B industry by 2010. We believe our proposal is a compelling one and that the combination of Yahoo! and Microsoft creates a more credible alternative to an increasingly dominant player in the advertising industry. We are committed to building great services for consumers while delivering great value to advertisers and publishers. We have been very thoughtful about this combination, and are excited about what our two companies can do together to collectively target growth opportunities in online services, search, and advertising.

It is important to remember that, while we have made what we believe to be a very compelling proposal for Yahoo! shareholders and employees, we do not have an agreement in place with Yahoo! at this time. While Yahoo!’s Board and management consider our proposal, let me share a perspective on the process going forward:

While Yahoo! has issued a press release rejecting our proposal, we continue to believe we have a full and fair proposal on the table. We look forward to a constructive dialogue with Yahoo!’s Board, management, shareholders, and employees on the value of this combination and its strategic and financial merits.

If and when Yahoo! agrees to proceed with the proposed transaction, we will go through the process to receive regulatory approval, and expect that this transaction will close in the 2nd half of calendar year 2008. Until this proposal is accepted and receives regulatory approval, we must continue to operate our business as we do today and compete in this rapidly changing online services and advertising marketplace.

It is important to note that once Yahoo! and Microsoft agree on a transaction, we can begin the integration planning process in parallel with the regulatory review. We can create the integration plan but we cannot begin to implement it until we have formal regulatory approval and have closed the transaction. Because the integration process will be critical to our success as a combined company, we are taking this very seriously. We have recent – and successful - experience in this arena, including our integration planning with aQuantive and Tellme, both of which led to successful combinations of talent, assets, and infrastructure.

Our proposal includes a thoughtful integration planning process for a Microsoft-Yahoo! combination. It is important to me that this process includes leaders from Yahoo! and Microsoft and is done in a way that enables us, together, to make decisions in a collaborative way. Importantly, this will be an inclusive process with Yahoo! employees as they are a key part of our success as a combined company.

With the above process and timeline in mind, I want our teams to stay focused on existing commitments and goals. We should continue to make progress against our plans for online services.

There has been a lot written about various aspects of our proposal. And there are compelling opportunities and tough challenges ahead. While it’s hard to predict the future, I want to convey my sense of where things are by responding to a set of common questions that have come up from employees.

Q: What are the benefits of a Microsoft-Yahoo! combination?

A: First, the industry needs a more compelling alternative in search and online advertising. I have personally met with top executives of the major media companies, and I know there is a desire for more competition in search and online advertising. Without this, there’s less innovation, less competition, and less value being generated for consumers, advertisers, and publishers. Together, Microsoft and Yahoo! would have an opportunity to change and evolve the experiences and value we deliver to all of these groups.

For consumers and developers, our expanded R&D capacity would allow us to drive innovation in emerging user experiences in areas such as search, video, mobile, commerce, and social media. Already, our collaborative work with Yahoo! on interoperability between our instant messaging services has benefitted consumers and made it easier for them to stay connected with friends and family.

For advertisers and publishers, scale economics would allow us to deliver more value to this customer base. By combining search and non-search advertising inventory on a single ad platform, yield is also improved. The other benefits and opportunities may include improving return on investment and decreasing the cost and complexity of running multiple campaigns. We also believe in an extensible ad platform. From my discussions with top advertising agency executives, they share this belief and want to play a key role in extending this ad platform for incremental value to advertisers.

For shareholders, a successful combination would provide superior value and an opportunity to participate in the upside of the combined company. There are expected operating efficiencies driven by synergies from eliminating redundant operating expenses, redundant capital expenses, and ensuring appropriate headcount allocation by function.

The focus of our combined company will be to build great experiences and platforms for our joint consumers, advertisers, and publishers. I am confident in the collective engineering & business talent we have at Microsoft and Yahoo! to drive towards this vision.

Q: What impact would this combination have on staffing? Would there be any reductions?

A: People are the single most important asset in this combination. We want the very best talent at the combined company, and we will demonstrate this to Yahoo! and Microsoft employees at each step of the deal. There’s no question we will dedicate significant rewards and compensation to Yahoo! and Microsoft employees.

While some overlap is expected in any combination of this size, we should remember that Microsoft is a growth company that has hired over 20,000 people since 2005, and we would look to place talented employees throughout the company as a whole. We have no shortage of business and technical opportunities, and we need great people to focus on them.

Q: How should we view the two cultures at Microsoft and Yahoo!? How would we bring the two cultures together?

A: Both companies share a passion for great engineering, creativity, and development of services and technologies that truly can change the world. Respect for both the creative and analytical aspects of advertising is core to both companies, along with recognition that advertising is an industry that represents opportunity and growth. We would have an opportunity to bring together the best of both companies – Microsoft’s culture of innovation, and long-term commitment to tough R&D problems, with Yahoo!’s blend of Web-centric DNA and innovative engineering, 21st century media expertise, and advertising talent. Some aspects of the two cultures will naturally merge quickly and some will remain unique in the near-term and merge more slowly over time. At Microsoft today, we have a corporate culture, but individual teams develop, nurture, and retain a culture of their own as well. The culture of the combined entity will be shaped by individuals and teams from both Yahoo! and Microsoft.

Q: How would we address the multiple brands and technologies within Live, MSN, and Yahoo!? Which brand would we keep?

A: Both Microsoft and Yahoo! have great brands and technologies. Yahoo! has a very strong consumer brand and we are committed to build on the Yahoo! brand as a major part of the combined products and services we deliver to customers. The Yahoo! brand is one of the reasons the combination of the two companies would create so much value. It is premature to say which aspects of the brands and technologies we would use in our combined offerings. As part of the integration planning effort, it is important that we enable a joint team of leaders from Microsoft and Yahoo! to make thoughtful decisions about brands and technologies. How we integrate Microsoft and Yahoo!’s brands, products, and services are the types of decisions that would be made during this integration planning process—by leaders from both companies—and implemented over time after the transaction closes.

Q: If we move forward with a combination, what’s our plan for addressing Yahoo!’s technology infrastructure, since it’s non-Windows based?

A: Services we’ve acquired over the years have been based on both Windows and open source technologies. Although Windows is our strategic platform and in some cases the teams ultimately migrated their products to Windows for a variety of reasons, in other cases we have prioritized continuity and have used open interoperability mechanisms to achieve effective systems integration. Yahoo! has made significant investments in both its skills and technologies, so we would work closely with Yahoo! engineers to make pragmatic platform and integration methodology decisions as appropriate, prioritizing above all how those decisions would impact customers.

Q: Would we maintain locations in both Silicon Valley and Redmond?

A: Absolutely. Silicon Valley is one of Microsoft’s largest presences outside our Redmond headquarters, with nearly 1,800 employees in a variety of key engineering and business roles. Yahoo!’s campus houses over 10,000 employees and plays a key part in their innovative culture. In bringing the companies together, we would be committed to maintaining Yahoo!’s significant presence in Silicon Valley, and we anticipate that there would be exciting opportunities for a combined Microsoft and Yahoo! talent base in Silicon Valley, Redmond, and many other cities worldwide.

Q: How should we interact with Yahoo! employees?

A: It’s important that Microsoft employees not speculate with Yahoo! employees about the proposal or about what a deal would mean for the combined company. Prior to close of the transaction, no Microsoft employee should reach out to Yahoo! employees for the purpose of integration planning unless specifically instructed to do so by the integration team and its LCA advisors.

Prior to the close, we must continue to compete with Yahoo! as before. At the same time, there are areas where we partner with Yahoo!. If you have questions about what is permissible, please contact your team’s LCA leader.

Q: How does this impact our relationship with customers and partners?

A: Our commitment to customers and partners remains paramount. While this proposed combination is exciting, Microsoft and Yahoo! remain separate companies and will continue to compete in the marketplace.

Q: What can I expect going forward?

A: It’s business as usual and, as such, your commitments remain unchanged. Please stay focused on your key priorities, whether it’s a technical product roadmap, serving our advertiser or publisher customers, or connecting with users of our services. It’s important that we stay focused on our business commitments and let the process for the transaction take its course.

At the appropriate times, we will update you further on progress and news regarding this proposed transaction.

Thanks again for your continued focus on our business and customers during this period.

Regards,

Kevin Johnson, President
Microsoft Platforms & Services Division

Hoping to appease antitrust regulators in the European Union, Microsoft on Thursday said it would work to make its software products more interoperable with those of its competitors.

Microsoft ... executives promised to support standards and work more closely with the industry, including proponents of free, "open-source" software.

In a conference call, Microsoft Chief Executive Steve Ballmer said: "While we've shared lots of information with our partners over the years, enabling developers to write many, many, many -- now hundreds of thousands -- of applications, for example, for Windows, today's actions represent a significant expansion toward even greater transparency and interoperability."

The XNA Community Games Platform team is delighted to offer you a sneak peek at our first major feature for XNA Game Studio 3.0: The ability to build games for the Zune platform! This will let you write one game and deploy it to all three platforms that XNA Game Studio 3.0 will support: the Xbox 360, Windows, and now the Zune. While the Zune lacks the 3D graphics horsepower to drive high-end games like you can on the Xbox 360, we’ve taken extreme steps in making sure that you will have the broadest access to the XNA Framework APIs possible, allowing you to create fun Zune games while still letting you integrate carefully with the overall Zune media experience.

Today at the Game Developers Conference (GDC) 2008, Microsoft Corp. provided an exciting glimpse at what promises to be another landmark year for games and online entertainment on the Xbox 360 platform and officially announced the launch of “Gears of War 2,” exclusively for Xbox 360 this November.

Providing a dramatic close to Microsoft’s GDC keynote address, Epic Games Inc.’s lead designer Cliff Bleszinski announced that the epic saga of Marcus Fenix and Delta Squad continues exclusively on the Xbox 360 this fall with “Gears of War 2.” This highly anticipated sequel to the 4.5 million-selling blockbuster “Gears of War” delves deeper into humanity’s struggle for survival against the nightmarish Locust Horde, and promises to take high-definition visuals to a whole new level.

In addition, acclaimed developer Peter Molyneux of Lionhead Studios took the stage to showcase exciting new multiplayer features for “Fable 2,” introducing dynamic cooperative play, a first to the franchise. Molyneux also announced that later this year, and before the launch of “Fable 2,” gamers can get a sneak peek at the game’s world when the “Fable 2” pub games debut as a stand-alone download on Xbox LIVE Arcade. When “Fable 2” launches, gamers will have the ability to transfer currency earned in the pub games directly to their character in “Fable 2.” This unique and first-of-its-kind experience, which can be found only on Xbox LIVE Arcade, will give the millions of “Fable” fans and gamers all around the globe the opportunity to jump into the “Fable 2” world with money already in the bank.

Tomonobu Itagaki also revealed new “Ninja Gaiden II” game-sharing features, including Ninja Cinema, which is enabled solely through Xbox LIVE, providing exciting and innovative entertainment experiences for the more than 10 million Xbox LIVE members worldwide by allowing players to record and upload their best ninja moves to Xbox LIVE. ...

This year, the most anticipated games will be found exclusively on Xbox 360, including the next chapters of top franchises such as “Gears of War,” “Fable” and “Ninja Gaiden,” as well as new titles such as “Too Human.”

• “Gears of War 2” (Epic Games). “Gears of War 2” is the sequel to the 4.5 million-selling blockbuster that redefined the third-person tactical action game genre. “Gears of War 2” continues the story of Marcus Fenix and Delta Squad in an epic saga of survival, loss and retribution. Developed by Epic Games exclusively for Xbox 360, “Gears of War 2” launches this November.

• “Fable 2” (Lionhead Studios). In addition to the dynamic co-op mode unveiled onstage, Peter Molyneux also announced that Carbonated Games is bringing the “Fable 2” experience to Xbox LIVE Arcade. Before the game’s launch, gamers will be able to get an early taste of the “Fable 2” experience and gain a head start on earning currency for use in “Fable 2” by playing “Fable 2”-themed pub games that will be downloadable via Xbox LIVE Arcade. The currency earned in these Xbox LIVE Arcade titles will enable players to purchase items in “Fable 2” when the game launches later this year.

• “Ninja Gaiden II” (TECMO/Team NINJA). Tomonobu Itagaki debuted several tantalizing new Xbox LIVE features of “Ninja Gaiden II,” including the ability to capture and share videos of a player’s glorious battles via the Ninja Cinema feature and upload them to Xbox LIVE. “Ninja Gaiden II” launches worldwide this June.

• “Too Human” (Silicon Knights). Microsoft also showcased the epic action game from renowned Canadian developer Silicon Knights, “Too Human,” at a media event before today’s keynote address. In “Too Human,” players are treated to a nonstop barrage of action powered by the seamless integration of melee and firearms combat, plus deep role-playing elements fueled by breathtaking visuals enabled by the power of Xbox 360.

With online multiplayer gameplay, downloadable content and ways to stay in contact with a global community, these forthcoming blockbusters harness the power of Xbox LIVE to create truly innovative and exciting entertainment experiences. Each game also comes packed with Achievements, so Xbox LIVE members can help add to the more than 1 billion Achievements already unlocked on the service to date. And, as with the “Fable 2” pub games, downloadable content in Xbox LIVE Marketplace allows gamers the opportunity to customize and enhance their gameplay experiences. Since the service launched, Microsoft has seen more than $250 million in digital revenue from Xbox LIVE Marketplace through the purchase of more than 20 billion Microsoft Points.

Xbox LIVE members have been using a large portion of those Microsoft Points in Xbox LIVE Arcade, which is the premier destination for digitally distributed, high-definition original and classic games. With over 116 games to choose from on Xbox LIVE Arcade, everyone’s invited to get instantly immersed in the fun. Xbox LIVE Arcade is also home to the world’s most innovative independent developers, with more than 25 independent studios serving as the creative fuel behind the original games that represent more than a quarter of the Xbox LIVE Arcade library. The following titles represent a sample of games launching on Xbox LIVE Arcade in the near future from the world’s leading independent developers:

• “Braid” (Number None Inc.). Developed by Independent Games Festival Winner and experimental game designer Jonathan Blow, “Braid” is a platform experience that bends all the rules with the manipulation of time. “Braid” will launch this spring.

• “Castle Crashers” (The Behemoth). “Castle Crashers” is the second title currently in development by award-winning independent developer The Behemoth, creator of “Alien Hominid HD.” The role-playing game (RPG) adventure will let up to four players hack, slash and smash their way together through a visually stunning hand-drawn landscape. “Castle Crashes” launches this summer.

• “Defense Grid: The Awakening” (Hidden Path Entertainment LLC). “Defense Grid: The Awakening” is the definitive tower defense game experience designed specifically for Xbox LIVE Arcade and launches this summer.

• “Go! Go! Break Steady” (Little Boy Games). An Xbox LIVE Arcade exclusive, “Go! Go! Break Steady” is the debut title from independent developer Little Boy Games. The combination music and puzzle game combines break dancing with novel gameplay and launches this summer.

• “Penny Arcade Adventures: On the Rain-Slick Precipice of Darkness” (Hothead Games). The first video game collaboration between Penny Arcade creators Mike “Gabe” Krahulik and Jerry “Tycho” Holkins and legendary game designer Ron Gilbert, “Penny Arcade Adventures” is an RPG-adventure game set in a highly stylized 1920s universe filled with bizarre characters, outrageous combat and adult humor. The first episode of the game launches this summer.