Xbox Hits Major Sales Milestones for Console and Games

REDMOND, Wash., July 23, 2002 — Two independent research groups confirmed today that the Xbox (TM) video game system is on a roll. The NPD Group Inc. reported that Xbox posted a stunning sales increase of approximately 131 percent in the United States in the first two months following a $100 price cut in May. In addition, “Project Gotham Racing (TM) ” from Microsoft®
Games Studios and “Dead or Alive 3 (TM) ” from Tecmo each have sold more than a million units worldwide. According to the International Development Group, this makes Xbox the first video game system ever to have three million-unit-selling launch titles after just eight months on the market. The numbers put the system on track for another blockbuster holiday season, when gamers will be able to choose from more than 200 Xbox games.

Since the day one launch of the console in November 2001, the award-winning lineup of software for Xbox has reached a number of key sales milestones. According to independent data from the NPD Group, the definitive source of sales and market data on the video game industry, Xbox has sold more than 10 million units of software in the first eight months the console has been on the market in the United States. That’s the most software ever sold for a new video game system in the United States in the same period of time. Last week, Microsoft Corp. reported that 20 million units of Xbox games were sold worldwide in its past fiscal year.

Although all three major game console manufacturers announced price cuts in May, Xbox has had the largest percentage gains with sales having spiked approximately 131 percent in the United States in the two months since the price cut, according to NPD.

On the software side, two exclusive Xbox launch titles — “Project Gotham Racing” from Microsoft Game Studios and “Dead or Alive 3” from Tecmo — have topped the 1 million mark in worldwide sales. Earlier this year, another blockbuster Xbox launch title, “Halo (TM): Combat Evolved,” also from Microsoft Game Studios, became the first million-unit seller for Xbox. According to the International Development Group, an independent market research firm that tracks worldwide video game sales, this would make Xbox the first console to ever achieve worldwide sales of more than 1 million units on three different launch titles in less than eight months on the market.

“More and more consumers are getting the message that games look and play better on Xbox,” said John O’Rourke, director of worldwide Xbox marketing at Microsoft. “We’re now gearing up for the holiday season, when gamers will have more than 200 titles to choose from on Xbox, with a total of 300 titles currently in development. Gamers can also look forward to the launch this fall of Xbox Live, the first online console gaming service fully dedicated to fast-action, always-connected broadband gaming experiences.”

Xbox in New Markets

Microsoft also announced today that Xbox is moving into new territories this year, bringing the unique Xbox experience to gamers in Korea, Hong Kong, Mexico, New Zealand, Singapore and Taiwan.

“We’re moving into new territories faster than any other gaming platform in history, highlighting our global commitment and investment for the future of Xbox around the world,” O’Rourke said. “These six territories were selected because of the high interest in intense Xbox games and because many of them are hotbeds for online gaming.”

Each territory will be announcing specific launch details, including timing, price and launch titles, in the weeks ahead.

About Xbox

Xbox ( ) is Microsoft’s future-generation video game system that delivers the most powerful games experiences ever. Xbox empowers game artists by giving them the technology to fulfill their creative visions as never before, creating games that blur the lines between fantasy and reality. Xbox is now available in North America, Japan, Europe and Australia.

About Microsoft

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.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as entry into markets with vigorous competition; market acceptance of Xbox; continued acceptance of Xbox; product price discounts; delays in product development and related product release schedules; reliance on sole-source suppliers for key components of Xbox that could result in component shortages and delays in product delivery, obsolete inventory or product returns by distributors, resellers and retailers; warranty and other claims; technological shifts; customer demand for Xbox; the availability of competitive products at prices below our prices; product life cycles; product sale terms and conditions; the financial condition of our customers and vendors; unavailability of insurance; uninsured losses; adverse results in litigation; the effects of terrorist activity and armed conflict such as disruptions in general economic activity and changes in our operations and security arrangements; general economic conditions that affect demand for Xbox; currency fluctuations; trade sanctions or changes to U.S. tax law resulting from the World Trade Organization decision with respect to the extraterritorial income provisions of U.S. tax law; and financial market volatility.

For further information regarding risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s investor relations department at (800) 285-7772 or Microsoft’s investor relations Web site at All information in this release is as of July 22, 2002. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

Microsoft, Xbox, Project Gotham Racing and Halo 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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