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Microsoft: '98 is PC-TV's year

Next year will be pivotal for the PC-TV convergence concept, a senior executive says.

Foreshadowing sharper focus on PC-TV convergence, a senior executive at Microsoft (MSFT) said today that next year will be pivotal for the hybrid concept.

"PC this year and TV-PCs next year," said Craig Mundie, senior vice president of the company's consumer platform division. The software giant, which earlier this month announced plans to acquire WebTV for $425 million in cash and stock, next year plans to make TV receivers out of PCs loaded with either its Memphis or Windows NT 5.0 operating systems.

"We expect there to be 40 million PCs by the year 2000 that are equipped with the hardware to be a digital broadcast receiver," Mundie said at Hambrecht & Quist's annual technology conference.

That news sits well with investors. "TV has a 98 percent penetration rate, and the PC only has 40 percent. But this [move with WebTV] goes to show that there is a whole other platform out there to use the Windows platform and that is very encouraging, but Microsoft is an expensive stock," said one investor who asked not to be named.

Brendan MacMillan, a portfolio manager with Inside Capital, said there are a lot of people don't understand the magnitude of opportunities in the PC-TV convergence concept.

"As they get bigger, they need to grow in different directions, and this is one step," said another investor, who indicated that he plans to continue to increase his Microsoft stake.

Mundie noted that the WebTV acquisition and Microsoft's new operating systems are just part of the software giant's plan to bring the TV concept to PCs, and vice versa.

Microsoft has also formed an alliance with Intel and Compaq Computer to develop new technical standards for digital television.