MSN and eMachines to Raise the Bar for Simplicity on the Internet

REDMOND, Wash., and IRVINE, Calif., June 28, 2000 — The MSN network of Internet services and eMachines Inc. (Nasdaq
“EEEE” ) the third-largest vendor of desktop PCs sold through U.S. retailers, today announced they plan to work together to provide consumers with an MSN® Companion device later this year. Further delivering on the MSN vision of the Everyday Web, the new device, to be sold by eMachines, will be designed to make it simple for users to get online, surf the Internet and communicate with others.

eMachines’ MSN Companion device will provide consumers with an easy, affordable and personal experience on the Web as well as a way to communicate with others via the Internet. The eMachines device, designed for consumers who are new to using e-mail and the Internet, will power on instantly, access the Web using the MSN Internet Access service, and automatically connect users to best-of-breed services from MSN such as the MSN Hotmail® Web-based e-mail service, MSN eShop and MSN Search, while providing users with full access to the entire Web.

“MSN Companion promises to be one of the easiest ways for new users to get connected to the Internet,”
said Yusuf Mehdi, vice president of the Consumer Group at Microsoft.
“We are pleased to bring MSN best-of-breed services together with eMachines’ expertise in delivering simple, affordable computers to consumers.”

Easy and Complete Solution

eMachines’ MSN Companion device will be designed for people who don’t need the full functionality of a PC but are searching for a simple way to access the Internet.

“Our relationship with MSN to provide an inexpensive device to access the Internet was a natural fit with our experience in working with first-time technology buyers,”
said Stephen A. Dukker, president and CEO of eMachines.
“We understand how intimidating technology can be, and by offering our MSN Companion device, we will better enable first-time computer users to access the Internet and send e-mail without fear or anxiety.”

Affordable Price, Monitor Choices

Scheduled for availability in the third quarter of this year, the eMachines’ MSN Companion device will be priced well below traditional PCs. The device will include a monitor to best meet the requirements of targeted consumers including senior citizens, who often need easy-to-view screens, overall system ease of use and the option to continue using the monitor if they upgrade to a full-size PC.

Using the Microsoft® Windows® CE operating system and industry-leading Microsoft Internet Explorer browser software, the device will include a 15-inch stand-alone monitor (17-inch and 19-inch also available), an Internet-enhanced eMachines eBoard™
containing an additional set of one-touch keys that take consumers directly to some of the most popular destinations on the Internet, and a mouse.

eMachines’ MSN Web Companion will be one of the first Internet devices to eliminate the complexity of the PC without sacrificing the PC’s high level of Internet functionality. Complete with music media players, video, animation and other multimedia technologies, the eMachines device will offer compatibility with a majority of the rich multimedia sites on the Internet.

About MSN

MSN, Microsoft’s network of complete, highly integrated Internet services, enables the Everyday Web — a more efficient and intuitive place to get daily tasks accomplished quickly — any time, any place and from any device. MSN has experienced record growth, with 500,000 net new access subscribers last quarter, more than 39 million unique visitors monthly and availability in 33 markets in 17 languages — more than any other portal. In addition to providing top-rated, fast and reliable Internet access, MSN enables consumers to get more from the Web with the award-winning MSN Messenger Service, which gives over 12 million active users instant access to friends online; the MSN Hotmail Web-based e-mail service, the world’s largest free e-mail system with over 66 million active accounts worldwide; MSN Mobile, which gives mobile phone and device users the power to access Internet content and services; the MSN MoneyCentral™
online personal finance service, one of the Web’s most popular personal finance sites; MSN Search, providing the most useful and relevant search results; MSN eShop, which offers users a complete, one-stop online shopping experience; MSN Custom Web sites, with up to 30 MB of storage for anyone to easily store, communicate and share information on the Web; and many other leading services designed to help people experience the Everyday Web. A leading innovator in Internet services, MSN is located on the Web at http://www.msn.com/ .

About eMachines

eMachines Inc. (Nasdaq
“EEEE”
) is a leading provider of Internet-enhanced, low-cost, high-value personal computers, and of Internet advertising, portal and software distribution services. Founded in September 1998, eMachines began selling its low-cost eTower model desktop computers in November 1998. In June 1999, eMachines sold the third highest number of desktop PCs through retailers in the United States, according to leading market research organizations, and has maintained the No. 3 market share position since that time. Since inception, eMachines has shipped over 2.5 million PCs through leading national retailers, catalog and online merchandisers. Approximately one of every two eMachines consumers is a first-time PC owner, providing the company’s advertising partners with a unique opportunity to introduce themselves to new online consumers before many of them have developed strong Internet brand loyalties. The company’s Web site is located at http://www.e4me.com/ .

About Microsoft

Founded in 1975, Microsoft (Nasdaq
“MSFT”
) is the worldwide leader in software, services and Internet technologies 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.

The information contained in this document relates to a prereleased product that may be substantially modified before its first commercial release. Accordingly, the information may not accurately describe or reflect the product when first commercially released. This document is provided for informational purposes only, and neither party makes any warranties, express or implied, with respect to this document or the information contained in it.

This press release contains forward-looking statements relating to future events and results that are based on eMachines Inc.’s current expectations. These statements relate to the outlook and prospects for eMachines and the markets in which it operates. These statements involve risks and uncertainties including, without limitation, the level of demand for the MSN Companion; eMachines’ and its suppliers’ ability to timely develop, deliver and support the MSN Companion; eMachines’ ability to manage inventory; the cost and availability of key product components; competitive pressures; new product introductions by third parties; technological innovations; and overall market conditions, including demand for the MSN Companion and Internet services in general. Consequently, actual events and results in future periods may differ materially from those currently expected. Additional information regarding the factors that may affect eMachines’ future performance is included in the public reports that eMachines files with the Securities and Exchange Commission.

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

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

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