Philips and Microsoft to Bridge Consumer Electronics and PC Worlds for Digital Entertainment

EINDHOVEN, Netherlands, and REDMOND, Wash. — May 11, 2005 — Royal Philips Electronics (NYSE: PHG, AEX: PHI) and Microsoft Corp. today announced a set of long-term nonexclusive agreements to facilitate the seamless flow of digital entertainment content between Windows®-based PCs and products equipped with the Nexperia® family of semiconductors by Philips. Philips plans to support Microsoft® Windows Media® Audio and Video and Windows Media Digital Rights Management 10 (DRM) technology in its Nexperia family of multimedia semiconductors for use in digital media receivers, personal video recorders, portable audio players, IP set-top boxes and video phones. Support of Windows Media in Nexperia solutions for in-car entertainment as well as next-generation digital TV systems will follow later in the year.

As the leading media processing programmable platform, Nexperia’s inherent programmability leads to flexibility and easy support of multiple formats. This announcement extends Nexperia’s leading-edge image and audio processing capabilities with support for the family of Windows Media technologies.

For consumer products, Philips will add Windows Media to currently supported formats in its Mobile Infotainment and Streamium products this month. With this addition, Philips’ customers around the globe will have fast and easy access — in the home or on the go — to a broad range of audio and video content. Windows Media Audio and Video and Windows Media DRM power more online digital music and video services worldwide than any other technology, with more than 150 services delivering popular music, movies and television programming. In addition, Philips announced that it is committed to obtaining PlaysForSure (TM) verification for these products, which will ensure that customers can access a broad choice of downloadable or subscription content on their devices.

“Philips’ support of Windows Media and Windows Media DRM on its Nexperia chipsets and in a range of consumer products demonstrates a strong commitment to delivering anytime, anywhere access to the best digital entertainment experiences for consumers,” said Amir Majidimehr, corporate vice president of the Windows Digital Media Division at Microsoft. “The breadth of available content in Windows Media format continues to grow exponentially, and Philips has extended the reach of that content significantly by adding support across such a wide range of technology and consumer electronics products.”

As the consumer electronics and personal computing worlds continue to converge, high-quality digital media technologies are bridging the two arenas and enabling new and exciting scenarios that deliver Philips’ and Microsoft’s shared vision of multimedia content available anytime, anywhere.

“The Internet is becoming increasingly vital as a means of multimedia content distribution,” said Frans van Houten, president and CEO of Philips Semiconductors. “By supporting Windows Media technology in our designs, we’re opening up additional opportunities for our customers to offer a seamless user experience from the Internet and the PC to consumer electronics devices at home and on the move. As the flow of content between PCs and digital media players increases, adding this technology to the Nexperia platforms offers a simple solution to ensure that, regardless of the device on which a video is being viewed or a song is being played, it looks and sounds great every time.”

“We see this initiative as a next step in the realization of the Connected Planet, our vision of a world where consumers can access content anywhere, anytime,” said Rudy Provoost, CEO of Philips Consumer Electronics. “The essence of this initiative is to provide consumers, in addition to the currently supported formats, wireless access to a growing number of digital photos, music and videos on their PC and Internet, which they can enjoy on their TVs, home entertainment systems and stereos everywhere in the home.”

Philips’ vision of the Connected Planet focuses on easy access to content — anywhere, anytime and on any device of choice. These agreements, including Philips’ licensing of Microsoft Windows Media technology for both audio and video applications, and its support of high-definition formats, works toward delivering on that vision. Philips also will continue to support other industry formats and digital rights management solutions.

About Royal Philips Electronics

Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is one of the world’s biggest electronics companies and Europe’s largest, with sales of EUR 30.3 billion in 2004. With activities in the three interlocking domains of healthcare, lifestyle and technology and 160,900 employees in more than 60 countries, it has market leadership positions in medical diagnostic imaging and patient monitoring, color television sets, electric shavers, lighting and silicon system solutions. News from Philips is located at http://www.philips.com/newscenter.

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, Windows, Windows Media and PlaysForSure are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

Nexperia is a registered trademark of Koninklijke Philips Electronics N.V.

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

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