"Today I'm pleased to announce that Microsoft and Sun Microsystems have settled all of the pending litigation between our two companies, and entered into a broad technology collaboration that will provide a new framework for our two companies to cooperate and compete in a more constructive manner going forward.

This agreement represents a dramatic event in the industry. While it doesn't change the fact that we compete, it does mean that Microsoft and Sun will be working together in ways that we haven't in the past. This agreement is good news for Microsoft, good news for the industry, and good news for customers and developers.

Under the agreement:

• Each company will provide the other with greater access to technology that will help promote interoperability, enabling Sun and Microsoft to develop products that work better together. Virtually every large IT customer has a "mixed" computing environment; this agreement will help IT managers to run their mixed systems.
  
• Sun has also agreed to take a license for the Windows desktop operating system communications protocols under the program established through our consent decree in the United States.
  
• In addition, Microsoft and Sun will work together to improve the technical compatibility between our .NET platform and their Java technologies.
  
• Microsoft will also be able to provide product support for the Microsoft Java Virtual Machine that our customers have deployed in our products. Without this agreement, our ability to provide support for our JVM customers would have expired in a few months.
  
• Microsoft and Sun have agreed to a broad covenant not to sue each other with respect to any past patent infringement claims, and will embark on negotiations for a forward-looking patent cross-license.

As a part of this agreement, Microsoft will be paying $1.6 billion to Sun, to resolve all pending antitrust and patent issues. We will also be making a one-time payment of $350 million to license Sun's technologies for potential use with our products. Conversely, Sun will make payments to Microsoft in the coming years as they incorporate our technologies into their products.

While we have resolved past legal threats and agreed to increased technical collaboration, Microsoft and Sun will continue to compete vigorously. Microsoft will move forward with great .NET-connected products and services, while Sun continues to develop Java. This healthy competition will foster further innovation.

This agreement underscores what I believe is a fundamental reality in the technology business today — given the increasingly interconnected nature of technology, we will continue to find ourselves simultaneously working in partnership with and competing with other companies in the industry. Our ability to do both in a focused, professional, and responsible manner will be critical to our success going forward.

Thanks to everyone at Microsoft who contributed to the challenging negotiations that resulted in these historic agreements. Today's news once again demonstrates Microsoft's commitment to responsible industry leadership that helps people and businesses throughout the world to realize their full potential.

Steve"

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