Microsoft cuts staff at TV unit

Microsoft is to cut a third of its staff, or 168 positions, as it restructures its troubled television business.

The move will mean the end of the software giant's Ultimate TV unit in Silicon Valley. The unit was launched about a year ago and combines Microsoft's WebTV with a DirectTV satellite service and digital video recorder (DVR) technology.

DVRs, which are similar to VCRs but record to a hard drive instead of video tape, have had limited success.

Microsoft spokeswoman Erin Brewer said the company is looking at its TV efforts to better align them with its entertainment business.

"The crux of what we did involves about 420 employees, two thirds of which will be redeployed into three groups within the company," she said.

About 168 jobs will be eliminated and the employees will have three months to find other jobs within Microsoft. Brewer explained that the staff will go through an internal redeployment process working with the human resources group for at least three months.

The other two thirds of the division will be absorbed into a new TV services group within Microsoft's MSN division, while hardware engineers will join the Xbox video game console unit. Other employees will be absorbed into the Microsoft Television platforms group.

Brewer added that the service will not end but will continue to be supplied through Microsoft's partner, DirectTV.

Moshe Lichtman, who was previously in the MSN International Group, will replace Jon DeVaan, head of Microsoft's TV platform group. Lichtman will report to Microsoft chief operating office Rick Belluzzo.

The software giant faced competition from Sonicblue's ReplayTV and TiVo. ReplayTV, one of the first companies to market DVR services, refocused to licensing its technology to set-top box makers.

But after its acquisition by Sonicblue last year, ReplayTV has introduced new boxes that complement its licensing business.

TiVo unveiled its second-generation set-top box at this month's Consumer Electronics show in Las Vegas. The TiVo Series 2, which will come with a 60Gb hard drive that enables 60 hours of recording capacity, will be available in February.