REDMOND, Wash., DULLES, Va., and SUNNYVALE, Calif., July 15 -- Microsoft Corp. (Nasdaq: MSFT), America Online, Inc. and Yahoo! Inc. today announced an unprecedented collaborative effort to enable industry-first connectivity between Microsoft(R) Office Live Communications Server 2005 and the largest public instant messaging (IM) networks in the world: AOL, MSN(R) and Yahoo!

This IM connectivity arrangement reflects a shared vision for the potential impact of enterprise IM (EIM) as a productivity tool and platform for the delivery of value-added business services.

Building on the recent announcement that Live Communications Server 2005 will enable organizations to more securely communicate in real time with other organizations that also have deployed Live Communications Server 2005 in the enterprise, thereby enabling them to IM and view presence information, today's announcement takes Microsoft's commitment one step further by empowering businesses to extend their reach to the more than 400 million global customers, partners and vendors using AOL(R), AOL Instant Messenger(TM) (AIM(R)), ICQ(R), MSN Messenger and Yahoo!(R) Messenger services. This combination is the next step in making EIM as widespread and beneficial as e-mail.

"In much the same way that e-mail significantly has changed today's business landscape, instant messaging is becoming just as ubiquitous in organizations. Businesses are inquiring about ways to extend enterprise IM systems beyond network borders to empower their employees to more securely connect with customers, partners, family and friends," said Anoop Gupta, corporate vice president of the Real-Time Collaboration Business Unit at Microsoft. "Our enterprise customers' No. 1 request has been to enable connectivity with major public IM networks. The ability of Live Communications Server 2005 to connect with these three consumer IM networks -- AOL, MSN and Yahoo! -- delivers on that request."

"This agreement represents the dawn of the next era for instant messaging, which will unleash the true potential of real-time communication and collaboration in the workplace, and among our tens of millions of users at work and at home," said Edmund Fish, senior vice president and general manager of Desktop Messaging at America Online. "Because seamlessly connecting corporate users together is core to a collaborative experience, America Online is working to provide access to routing and network services within the Live Communications Server 2005 product."

"One hundred thirty million MSN Messenger customers worldwide already use MSN Messenger to communicate with their friends and family, but many also have a need to communicate broadly in their professional roles as well," said Blake Irving, corporate vice president of the MSN Communication Services and Member Platform Group at Microsoft. "The connectivity enabled by Live Communications Server 2005 will give professionals and organizations the tools they need to communicate more effectively both inside and outside the workplace."

"Through our relationship with Microsoft Live Communications Server, we are taking the right steps to open up the Yahoo! Messenger network to the enterprise IM community in a more secure, convenient and seamless manner, and we are bringing considerable value to our Yahoo! Messenger users with an enhanced communication tool for the workplace," said Brad Garlinghouse, vice president, Communication Products, Yahoo! Inc. "By working strategically with leaders in the enterprise IM environment, we are extending our presence and providing our business users with a productive, private and more secure experience."

Using the new connectivity solution to more securely communicate in real time inside, between and outside organizations will provide a competitive advantage to customers by allowing them to instantly connect people, information and business processes to increase productivity and enable them to make better and more-informed decisions.

Currently in beta version, Live Communications Server 2005 is a standards- based EIM solution and extensible real-time collaboration platform that allows enterprises to extend security, encryption and presence awareness to their customers and partners.

In a recent report, Nate Root, an analyst with Forrester Research Inc., said that interest in IM for business use -- enterprise IM (EIM) -- is running high. But many potential buyers are scaling back or postponing their planned investment as they run into one core question: Where's the return on investment? Without interoperability between networks -- including both public and private IM networks -- firms can only build half-baked versions of the high-value apps that will deliver the best ROI for EIM.* Building on the current product platform, Live Communications Server 2003, key features of Live Communications Server 2005 include these:

-- Presence. Live Communications Server incorporates presence capabilities into productivity and line-of-business applications in the enterprise. All participating users will be able to see whether someone is online

and available. -- Encrypted instant messaging. Live Communications Server provides easy-to-use and familiar text-based messaging in an encrypted and authenticated environment.

-- Standards-based architecture. Live Communications Server is built using industry-standard protocols Session Initiation Protocol (SIP) and SIP for Instant Messaging and Presence Leveraging Extensions (SIMPLE), enabling a broad partner and developer ecosystem.

-- Microsoft Office System integration. Live Communications Server acts as a "presence engine" behind the Microsoft Office System, enabling out-of-the-box presence integration with Microsoft Office System applications, servers and services. Live Communications Server also enables the viewing of presence information directly from Microsoft Office Outlook(R) 2003, Microsoft Office Excel and Microsoft Office Word as well as team sites and portals, such as Windows(R) SharePoint(R) Services.

-- Microsoft Office Live Meeting Integration. Live Communications Server users can instantly initiate a multiparty Web conference via Live Meeting from within an IM conversation. Key enhancements in Live Communications Server 2005 include the following:

-- Live Communications Server federation (between organizations). Presence information and IM now can be extended to partners, suppliers and customers, enabling more efficient collaboration and a channel for bringing geographically dispersed people together. Two or more organizations will be able to communicate and collaborate in real time, within an environment that provides them with tools that will enable message encryption and authentication.

-- Outside access solution. End users now can connect to presence and IM capabilities when they are outside the corporate network, whether working from home or on the road, or visiting customers or partners. Access is provided in a more secure and authenticated manner through the use of standard firewall ports, without the need for dedicated virtual private network (VPN) equipment in the enterprise.

-- Improved architecture. Customers can now benefit from substantially improved reliability, availability and scalability, allowing them to recover gracefully from unplanned downtime and delivering a higher level of availability through a tiered architecture. Deeper management options and administrative tools also have been added to reduce overall management time while increasing the level of control available to the administrator.

Availability

Live Communications Server 2005 is scheduled for release in the fourth quarter of 2004. At that time, customers will be able to try the connectivity offering to the AOL, MSN and Yahoo! IM networks. Pricing and licensing options will be announced later this year; customers should contact their Microsoft account manager or representative for more details.

Connectivity from Live Communications Server 2005 to the AOL, MSN and Yahoo! public IM networks is a significant step for the industry, and delivers on business requests for secure, archived real-time communication to partners, customers and colleagues outside their organization.

About America Online, Inc.

America Online, Inc. is a wholly owned subsidiary of Time Warner Inc. Based in Dulles, Virginia, America Online is the world's leader in interactive services, Web brands, Internet technologies and e-commerce services. About Yahoo! Inc.

Yahoo! Inc. is a leading provider of comprehensive online products and services to consumers and businesses worldwide. Yahoo! is the No. 1 Internet brand globally and the most trafficked Internet destination worldwide. Headquartered in Sunnyvale, Calif., Yahoo!'s global network includes 25 world properties and is available in 13 languages.

About Microsoft

Founded in 1975, Microsoft is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

* "Lack Of Interoperability Stifles EIM's Potential," Forrester Research Inc., June 17, 2004

NOTE: Microsoft, MSN, Outlook, Windows and SharePoint are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

Yahoo! and the Yahoo! logo are trademarks and/or registered trademarks of Yahoo! Inc.

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