Microsoft enters chip business

Microsoft will release its own communications chip this fall. Its first use will be to run the next version of its subsidiary WebTV's box, but it will also be available for other new Web devices. Analysts see this departure from Microsoft's longstanding pact with Intel not to get into one another's businesses, as an important predictor of Microsoft's new business model.

Estimates are that Microsoft has spent more than $100 million developing the Solo2 chip, that will allow several simultaneous WebTV activities. A team of 50 WebTV engineers is designing the chips, which are reportedly being manufactured by Toshiba in Japan.

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