Microsoft Prepares to Launch MSN China

REDMOND, Wash., and BEJING, China — May 11, 2005 – MSN, the online services division of Microsoft Corp., today announced it has formed a joint venture with Shanghai Alliance Investment Ltd. (SAIL) to launch MSN China. The newly formed entity Shanghai MSN Network Communications Technology Company Ltd., which received approval from Chinese government agencies, is set to deliver popular and innovative MSN® products and services to consumers throughout China. Microsoft also unveiled plans to acquire certain assets of TSSX and enter into exclusive arrangements with the company, a prominent Chinese mobile software and services company, to provide the foundation for delivering enhanced MSN Mobile products and services to the Chinese market and globally.

Although many consumers in China’s mainland already use the MSN Messenger instant messaging service and the MSN Hotmail® e-mail service in Chinese, the launch of the MSN China online portal planned for later this spring is expected to deliver a comprehensive online experience for China’s consumers that integrates communications, information and content services. MSN China also will create compelling opportunities for advertisers to reach the attractive and growing audience of busy professionals in one of the world’s largest Internet markets. China Internet Network Information Center (CNNIC) reported that 94 million Chinese were online in 2004, an 8 percent increase over the previous year.

“The rapid growth in Internet adoption and mobile device usage in China, along with the exceptional energy and talent of its people, make this one of the most important new markets for MSN,” said David Cole, senior vice president of MSN at Microsoft. “The MSN China joint venture is a significant step in our long-term strategy and commitment to delivering innovative online services that help consumers connect with the people and information they care most about. Combining TSSX’s expertise with the innovative work of our developers in Redmond will strengthen Microsoft’s ability to create and deliver cutting-edge mobile services in China and across the globe.”

The transaction with TSSX marks the first arrangement for Microsoft with a company based in China involving mobile Internet services. Overall, Microsoft has had a long-standing presence in China as part of its commitment to working with government and local industry to support the growth and development of China’s software and IT industry. As part of the MSN agreement, Microsoft plans to form a China Mobile Development Center based in Shenzhen that will include TSSX employees and that will integrate TSSX technologies and service offerings with those of MSN Mobile. This is expected to enable MSN China to quickly provide compelling mobile information, communication and multimedia services to Chinese consumers. According to ITFacts, China is the largest telecommunications market in the world, with an estimated 340 million mobile phone users.

“Creating a joint venture for MSN China and SAIL and our transaction with TSSX signifies the importance Microsoft attaches to the Chinese market,” said Tim Chen, a Microsoft vice president who serves as chief executive officer of Microsoft Greater China. “In addition to delivering MSN services to meet local consumers’ needs and interests, we are working closely with local companies as part of our ongoing commitment to contributing to the growth of the local technology industry in China.”

About SAIL

Founded in 1994, SAIL is a professional investment company funded by the State-owned Assets Supervision and Administration Commission of the Shanghai Municipal Government. SAIL seeks to strategically invest financial and information technology resources toward promoting new economic development in Shanghai and other parts of China.

About MSN

MSN attracts more than 400 million unique users worldwide per month. With localized versions available globally in 40 markets and 20 languages, MSN is a world leader in delivering Web services to consumers and online advertising opportunities to businesses worldwide. The most useful and innovative online service today, MSN brings consumers everything they need from the Web to make the most of their time online. MSN is located on the Web at http://www.msn.com. MSN worldwide sites are located at http://www.msn.com/worldwide.ashx.

About MSN China

Shanghai MSN Network Communications Technology Company Limited is a Sino-foreign limited liability equity joint venture company formed by Microsoft and SAIL that has been granted a nationwide value added license by the Ministry of Information Industry in China.

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Microsoft, MSN and Hotmail 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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