MSN and eMachines Unveil Low-Cost MSN Companion

REDMOND, Wash., and IRVINE, Calif., Oct. 9, 2000 — MSN and eMachines™ Inc., the third-largest vendor of desktop PCs sold through U.S. retailers, today announced product specifications and retail information on the soon-to-be-available MSN® Companion by eMachines. To provide consumers with simple and affordable devices that facilitate getting online, MSN has joined forces with eMachines to deliver a low-cost MSN-based Internet appliance that enables consumers to connect more easily and communicate more clearly using leading services from the MSN network of Internet services such as the MSN Hotmail® Web-based e-mail service, MSN Search and the MoneyCentral™
online personal finance guide. With the addition of this product, MSN now offers one of the widest range of choices for consumers in the Internet appliance market.

“Today more than 40 percent of U.S. homes don’t own a PC or have an easy way to access the Internet,”
said Yusuf Mehdi, vice president of MSN at Microsoft.
“Now with the MSN Companion by eMachines, consumers have an easy and very affordable way to experience the best of the Internet and MSN for popular activities like e-mailing, instant messaging and online shopping.”

“The eMachines MSN Companion is one of the first in a new generation of Internet appliances to unleash the power of the Internet to consumers in a simple and affordable way,”
said Stephen Dukker, president and CEO of eMachines.
“We’re providing consumers with an easy-to-use device that includes built-in music media players as well as video and animation that offer compatibility with a majority of the rich multimedia sites on the Internet.”

The MSN Companion by eMachines is uniquely designed for use with a standard-size PC monitor and keyboard. eMachines implemented this approach as a benefit to consumers who intend to use the device as their primary means of accessing the Internet and thus require the comfort and readability of an easy-to-view screen. In addition, consumers have the option to continue using their monitor if they decide to purchase a full-size desktop PC. The USB wheel mouse and full-size eBoard™
keyboard included with the MSN Companion by eMachines provide consumers with easy, one-touch access to best-of-breed services from MSN such as MSN Hotmail, MSN Search, MSN MoneyCentral and other Internet sites, while providing users with access to the Web.

Availability and Pricing

The MSN Companion by eMachines, the second MSN Companion device to be announced within the past 60 days (additional information can be found at ), is scheduled to be available by the end of October from retailers throughout the United States including Circuit City Stores Inc., Office Depot Inc., selected Wal-Mart stores, MicroWarehouse Inc., Micro Center, and Cyberian Outpost Inc. With the purchase of the $349 (suggested retail price) MSN Companion by eMachines and a total in-store transaction of $400, consumers may be eligible for a $400 mail-in rebate* when they subscribe to MSN Internet Access for a three-year term at $21.95 a month. eMachines is also offering matching 15- and 17-inch monitors, priced separately, which provide consumers with an option to select the easy-to-view screen of their choice

“The widespread availability of information appliances can help bring e-mail and the World Wide Web to the many households that are not yet online,”
said Bryan Ma, consumer devices analyst at IDC. IDC forecasts that worldwide information appliance shipments will reach 89 million units in 2004, totaling $17.8 billion.

Superior Hardware, Software, Services

Powered by the Microsoft® Windows® CE operating system, Microsoft Internet Explorer browser software and MSN services, the MSN Companion by eMachines is automatically updated periodically via the Internet for worry-free maintenance. Based on a National Semiconductor Geode 200MHz processor, it includes 32 MB of SDRAM memory, 16 MB flash memory storage, 1 MB of shared video 800 x 600 memory, AC ’97 CODEC audio, a 56Kbps V.90 modem, two USB ports and a built-in speaker. Software plug-ins include HTML, Java Script, Java Virtual Machine, Macromedia Flash, ActiveX® Controls, Microsoft Windows Media™
Player for MP3 Windows audio and streaming video. Indicator lights are conveniently located on the front of the device to display when it is powered on or connected to the Internet, or when the user has new e-mail.

About eMachines

eMachines Inc. (Nasdaq
) 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 3 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 .

About MSN

MSN is an integrated network of content and services that help consumers get more from the Web — any time, any place and from any device. MSN is the most popular destination on the Internet, attracting 201 million unique monthly visitors worldwide, and is available in 33 markets in 17 languages — a broader global presence than any other portal. MSN Internet Access is the highly rated, fast and reliable way for consumers to get on the Web, now with 3 million subscribers. MSN delivers The Everyday Web™
experience by providing more than just the basics for new Internet users, with benefits for more advanced users looking for richer functionality. Best-of-breed services include MSN Hotmail, the world’s largest e-mail system, with more than 67 million active accounts; MSN Messenger Service, the fastest-growing instant messaging service, with more than 18 million users; MSN Search, the second most popular search service on the Web; MSN Mobile, the customizable wireless information service; the award-winning MSN MoneyCentral online personal finance service; MSN eShop, the one-stop online shopping resource; MSN Custom Web Sites, the easy way to share information on the Web; and many other widely used services that make MSN a leading innovator of Internet technologies. MSN is located on the Web at .

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.

* With the purchase of the $349 (suggested retail price) MSN Companion by eMachines included in a total in-store single transaction of $400, consumers may be eligible for a $400 mail rebate with a three-year MSN Internet Access subscription at a monthly rate of $21.95. Monitor available separately. Offer valid in the 50 United States, the District of Columbia and Puerto Rico with qualifying proofs of purchase. Expires Dec. 31, 2000. MSN is the sole ISP for the MSN Companion by eMachines.

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.

eMachines and eBoard are trademarks of eMachines Inc. in the United States and/or other countries.

Microsoft, MSN, Hotmail, MoneyCentral, Windows, ActiveX, Windows Media and The Everyday Web 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 may be the trademarks of their respective owners.

For more information on the consumer products announced today, please visit .

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at on Microsoft’s corporate information pages.

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