GigaMedia and Microsoft Announce Strategic Agreement To Develop Broadband Internet Services in Taiwan

Business Wire, Nov 12, 1999

TAIPEI, Taiwan & REDMOND, Wash.--(BUSINESS WIRE)--Nov. 12, 1999--

GigaMedia Ltd. and Microsoft Corporation today announced a series of agreements under which the companies will work together to provide broadband Internet services within Taiwan.

The alliance will foster the creation, delivery and operation of a co-branded broadband portal and a shopping channel. Both companies believe that providing a localized broadband portal will help deliver on the vision of enabling the "Everyday Web" for consumers in Taiwan.

As part of these agreements, Microsoft and GigaMedia will align their efforts more closely in the portal space. Initially Microsoft will look into extending its use of GigaMedia content in Microsoft's Taiwanese portal. In addition, both companies will work to create a new shopping channel that will be available on the narrowband MSN portal and the new broadband portal.

The companies will also jointly develop a broadband version of the MSN portal which will include all of the core MSN services such as Hotmail, Messenger, Communities, Search and the new shopping channel. This broadband portal will be based on Microsoft's MCIS server technologies, which provide the backbone for GigaMedia's existing services.

To help speed the roll-out of this new service, Microsoft will make an investment in GigaMedia. This investment will contribute to the deployment of the broadband service and represents a big step towards making broadband access a reality for consumers in Taiwan.

Chester Koo, chairman of GigaMedia said, "We are preparing to embrace a revolutionary trend in the convergence of information technology and communications. Today's agreements signify an advancement in our relationship, from a technology alliance to a closer partnership. It is a complementary and strategic move, reflecting the strengths of both companies. Microsoft Corporation is committed to empowering people through great software - any time, any place, and on any device. This investment in broadband networks is a major step towards delivering on the promise of the Everyday Web in Taiwan."

Moshe Lichtman, Vice President of Microsoft's Consumer and Commerce Group said, "We look forward to providing enriched content and services to consumers in Taiwan through this cooperation with GigaMedia."

GigaMedia, a subsidiary fully owned by Koos Group, was an early adopter of Microsoft MCIS - Microsoft Commercial Internet Services platform. Since April 1998, Microsoft has been providing technical support for GigaMedia.

Under today's equity stake agreement, GigaMedia and Microsoft will also explore further business cooperation encompassing four dimensions: technology, content, marketing and e-commerce. Mr. Koo said, "The excellent working relationship developed through our technical alliance has helped shape this new equity partnership between The Koos Group and Microsoft."

About GigaMedia Ltd.

GigaMedia is a leading provider of broadband Internet access services through the cable television infrastructure in Taiwan, which has one of the highest cable penetration rates in the world, (73%). The company has provided cable access to approximately 3.4 million households and 500,000 small and medium business enterprises in Taiwan.

GigaMedia began providing broadband Internet access services in late 1998, and has since emerged as the market leader in subscriber base, territory coverage, and quality of service. Currently, over 50% of the total online population in Taiwan has access to the GigaMedia service. GigaMedia also operates the leading Chinese broadband Website, http://www.giga.net.tw.

The website offers rich, interactive, multi-media content that is both uniquely optimized for broadband access and tailored for the Chinese-speaking population.

About Koos Group

Koos Group is among the leading conglomerates in Asia Pacific Region with over $30 billion in assets and interests spanning manufacturing, financial services, media, telecommunications, real estate, and travel and leisure.

About Microsoft

Founded in 1975, Microsoft (Nasdaq:MSFT) is the worldwide leader in software for personal and business computing. The company offers a wide range of products and services designed to empower people through great software -- any time, any place and on any device.

Microsoft, MSN and Hotmail are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

For more information from GigaMedia, analysts and press only:

Chris Tung, 416/706-0831, chris_tung@hgc.com.tw

Tony Hynes, Ogilvy Public Relations, 415/541-8495,

tony.hynes@ogilvy.com

For more information from Microsoft, press only:

Zoe Cherng, (886) 2-25087103, zoec@microsoft.com

Sandra Goh, (60) 3-7693023, sandgoh@microsoft.com

Forward Looking Statements

This release may contain forward-looking statements regarding GigaMedia's products, business, customers or other factors that may affect future earnings or financial results. Such statements involve risks and uncertainties, both known and unknown, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements.