Bill Gates Highlights the Magic of Consumer Software And the Coming Digital Decade at Consumer Electronics Show

LAS VEGAS, Jan. 7, 2002 — Microsoft Corp. Chairman and Chief Software Architect Bill Gates kicked off the 2002 International Consumer Electronics Show (CES) today with a keynote address highlighting the exciting and expanding range of consumer experiences that software enables to enrich everyday life.

In his third consecutive appearance at CES, Gates pointed to the release of three Microsoft® consumer products in the past year — the Windows® XP operating system, Xbox (TM) video game system and MSN®
7 Internet service — that have simplified daily tasks for people and helped them be more productive, communicate with friends and family, and enjoy personalized and more compelling forms of digital entertainment. Gates showed a number of new Microsoft products, including two sets of technologies code-named “Mira” and “Freestyle,” which extend the Windows XP experience, making it accessible anywhere in the home and enabling an environment in which the experience can be more easily shared.

Citing stronger-than-expected holiday sales of personal computers and consumer electronics, Gates said 2002 would be a defining year for consumer technology companies. Gates also announced strong momentum for Microsoft’s key consumer offerings:

  • In the two months since its launch, sales of Windows XP exceeded 17 million copies, making it the fastest-selling version of Windows ever.

  • Microsoft marked one of the most successful game console launches of all time, selling 1.5 million Xbox units through the end of 2001. Xbox has the highest game attach rate on record for a video game console launch, with 3.2 games sold with every system through Dec. 29, according to NPD TRSTS. In addition, the “Halo (TM) ” video game has made the NPD TRSTS weekly top-10 list every week since its Nov. 15, 2001 launch.

  • Visitors to MSN spent $5.6 billion online during the 2001 holiday season — a 56 percent increase over that of 2000. MSN eShop exceeded early predictions with a 106 percent increase in the number of shoppers who visited the site this year compared with last year.1

Looking ahead, Gates predicted that the increased availability of broadband connectivity to the home, simplified home networking, the proliferation of smart-connected devices in the home and advancements in the digital device ecosystem will provide the foundation for compelling consumer experiences in the Digital Decade.

“It really is an exciting time for consumers and for the industry,” Gates said. “Technology advances are enabling a new generation of end-to-end experiences for the consumer in areas such as music, photos, video, communications and gaming. The opportunities for the consumer electronics, software and media industries have never been greater, and this cycle of innovation has the potential to provide valuable stimulus to the economy.”

In his keynote address, Gates outlined how by building on its cornerstone consumer products — Windows XP, Xbox and MSN — Microsoft will deliver a set of unique products that will provide best-of-breed capabilities in their respective categories and enable a new generation of consumer experiences that work seamlessly across a range of devices:

Platforms. Gates announced the launch of Windows CE .NET, the robust, real-time embedded operating system that allows developers to rapidly build the next generation of mobile and small-footprint smart devices such as handheld devices, smart phones, TV set-top boxes, and retail point-of-sale devices and displays. Gates also demonstrated some of the first Windows CE .NET-based devices from industry leaders such as Hitachi Ltd., Samsung Electronics Co. Ltd. and Sony Corp. These are a few of the many companies that are already working with Windows CE .NET and are committed to delivering devices in 2002.

Microsoft’s strategy for making XML Web services available through the Microsoft .NET Platform will begin to yield direct benefits to consumers this year. While Windows XP provides the foundation that enables devices to work better together, .NET will help provide a consistency of user experiences across devices and services from Microsoft, its industry partners and the industry as a whole. A growing number of consumer sites, including BankOne Corp., eBay Inc., and Verizon, in addition to MSN, are enhancing their consumer offerings by building on the .NET Platform.

On the Go. With the proliferation of smart connected devices and the increased deployment of wireless networks, Microsoft continues to build mobile capabilities into its consumer products to support the needs of consumers on the move. During his keynote address, Gates demonstrated Microsoft’s Windows Powered Smartphone 2002 software, a platform that provides innovative functionality and instant access to the Web, e-mail and a user’s personal information, all in a mobile phone. Gates also previewed software that phone-enables Pocket PCs, bringing true voice and wireless data integration to the handheld space. Finally, Gates revealed a Remote Record feature for Microsoft UltimateTV®
service that will allow subscribers to set up a recording on a receiver using a handheld computer, PC or any Web-enabled device.

Around the Home. Gates announced two new Windows technologies that will extend the consumer experiences enabled by Windows XP and will make the sharing of consumer experiences around the home much easier in the coming years. First, Gates highlighted “Freestyle,” a set of technologies from the Windows eHome Division designed to enhance and extend digital media experiences Windows XP delivers. “Freestyle” puts the power of the PC into a long-distance viewing experience. With a remote control, users can easily step away from their PC and enjoy sharing photos, home movies and music with others. “Freestyle” enables a new TV experience on the PC and with a TV tuner card will allow video recording from the PC. Microsoft continues to work with leading OEMs to provide first-generation PCs that will support these extended consumer experiences.

Gates also announced that Microsoft is delivering a set of Windows technologies, code-named “Mira,” that will enable PC and consumer electronics companies to create a new generation of smart displays that will extend Windows XP experiences anywhere in the home. “Mira”-enabled devices utilize Windows CE .NET and provide an easy-to-use, low-maintenance smart display that allows users to gain access to their information with new form factors such as detachable, wireless, LCD monitors and digital televisions. Users will be able to undock their “Mira”-enabled monitors and carry them anywhere in the house to browse the Web, read e-mail messages, run applications and access information that resides on their PC. To accomplish this, Microsoft is teaming with leading companies, including Intel Corp., National Semiconductor Corp., ViewSonic Corp. and Wyse Technology Inc. to deliver “Mira”-enabled smart devices.

Entertainment. Chief Xbox Officer Robbie Bach joined Gates onstage to talk about the momentum for Xbox. The product is drawing wide acclaim for its compelling games titles, the most immersive game console experience available on the market and built-in broadband support (broadband scheduled to go live in summer 2002). Microsoft announced the availability of two hot new games, “Jet Set Radio Future,” scheduled to launch in Japan in February, and “RalliSport Challenge,” scheduled to launch in Europe in March.

In addition, Gates gave the first public demonstration of a DVD player that supports Windows Media (TM) Audio (WMA), the Panasonic DVD-RV32, the first of many Panasonic DVD products that will support WMA and thereby enable consumers to play back more than 22 hours of CD-quality music from a single CD. Gates said there is broad support for Windows Media from leading DVD player manufacturers, including Apex Digital Inc., Shinco (Jiangsu Shinco Electronics Group Company Limited) and Toshiba Corp., and from car stereo manufacturers AIWA, Blaupunkt, Kenwood and Pioneer. Today’s announcements continue the strong momentum of Windows Media in consumer electronic devices, bringing the total to more than 100.

Gates closed his keynote address with a commitment by Microsoft and an invitation to the industry to work together to enhance and ensure security, privacy and reliability for consumers using technology and the Internet.

“The willingness of consumers to embrace new technologies is dependent on their confidence in the ability of the industry, including Microsoft, to offer software, services and devices that put the consumer first in terms of security, privacy and reliability,” Gates said.

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.

Microsoft, Windows Xbox, MSN, Halo, UltimateTV and Windows Media 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.

1 Source: Comscore, BPI 2001

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