Microsoft Highlights Strengths in Core Business Areas, Demonstrates Future .NET Technologies

REDMOND, Wash., July 27, 2000 — Microsoft Corp. Chairman and Chief Software Architect Bill Gates today told financial analysts that the company’s core businesses – including the Microsoft Windows operating system and Microsoft Office, as well as the company’s other applications, server, online and consumer products – had a record year and already are building the foundation for the Microsoft .NET strategy. Microsoft’s annual Financial Analyst Meeting showcased a combination of sales and performance momentum for core products and previewed a range of next-generation software technologies.

Speaking to an audience of more than 250 financial analysts, investors and journalists, Gates said,
“This will be a defining year for Microsoft and our industry. We launched our flagship product, Windows 2000, to rave reviews and solid customer adoption. We’re on the eve of delivering an unparalleled range of the most scalable, highest-quality servers ever brought to market at one time by one company. And we’ve just outlined the .NET vision, which we believe will guide development for the next generation of the Internet. If the year 2000 is any indication of how Microsoft is poised for the future, it’s going to be an amazing millennium for the company.”

Core Businesses

Underscoring momentum for Windows 2000, Microsoft executives today announced two important milestones – four new Microsoft SQL Server performance benchmarks and a key win in the e-commerce space. Microsoft announced that, with four new performance records achieved on SQL Server 2000 Enterprise Edition, the Windows 2000 platform now holds the top five TPC-C performance positions. These new numbers beat the best performance results from Oracle Corp. and Sun Microsystems Inc., delivering nearly twice the performance of the largest Sun system. Also among the new results is the industry’s best price/performance figure for clustered hardware – a better price/performance ratio than IBM Corp.’s best DB2 cluster result and less than a quarter of the cost of the best Oracle-Sun result.

Microsoft, Intel Corp. and Lycos Inc. also announced that Lycos has selected Microsoft’s e-business platform, coupled with Intel-based servers, as the primary technology to support the Lycos Network, one of the leading Internet hubs reaching nearly half of all U.S. Web users. Lycos’ implementation, which is already in progress, will include Windows 2000 as well as the soon-to-be-released Microsoft Application Center Server 2000.

Gates said the strength of Windows 2000 and new application servers will help customers take advantage of the scalability, reliability and manageability of the new operating system. Over the next two quarters, Microsoft is scheduled to launch SQL Server 2000, Exchange 2000, BizTalk Server, Application Center Server and the Host Integration Server, allowing corporate customers, IT managers and application developers to create and utilize integrated solutions, bridging the Windows platform and the Internet experience.

Moving Toward .NET

Demonstrating further progress toward its .NET vision, Microsoft previewed the next version of its Office suite of business productivity applications, including new technologies that integrate Web services directly into the Office user experience. The company showed technologies that make it easier for users to learn new features and use existing features more effectively; simplify the process of working with others; and provide new tools that enable users to store, access and analyze relevant business information.

Microsoft also previewed an upcoming XML-centric server application, code-named
that will deliver significant value to users of Office 2000 and the next version of Office.
simplifies the process of setting up collaboration workspaces within teams and throughout organizations by enabling individuals and groups to more effectively find, share and publish information. By combining easy-to-use document-management functionality with an out-of-the box Digital Dashboard-based portal that provides one-touch access to enterprise information,
is expected to give Microsoft a significant competitive advantage in the collaboration software industry.

Later in the day, Microsoft Chief Financial Officer John Connors will outline plans for the evolution of the company’s business model as it moves toward the .NET vision. He also will talk about increasing Microsoft’s research and development and related spending to $4.4 billion in the next fiscal year, and provide further details about Microsoft investments in key growth areas – including next-generation Web development, wireless, devices, games and services – tied to realizing the .NET vision.

Since announcing its plans for Microsoft .NET on June 22, the company has launched various development tools to help thousands of developers begin creating .NET applications, which will allow customers to extend their current investment in Microsoft products to take advantage of the next generation of the Internet.

About Microsoft

Founded in 1975, Microsoft (Nasdaq
) 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.

Microsoft, Windows, BizTalk and PowerPoint 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.

Note to editors: A live webcast of Microsoft’s Financial Analyst Meeting is available on the Microsoft Investor Relations Web site at . Speaker PowerPoint slides and transcripts will be posted within 24 hours after each presentation.

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