Xbox Strengthens Grip on No. 2 Position and Widens Lead Over GameCube

REDMOND, Wash., Feb. 19, 2003 — Coming off an impressive holiday season, the Xbox( video game system continues to show strong North American sales and solidify its position in the highly competitive video game industry. Microsoft Corp. today confirmed that Xbox got off to a very happy new year, with outstanding January sales.

According to NPD Group/NPD Funworld, Xbox maintained a 24 percent next-generation market share in January, double the share of Nintendo’s GameCube system.

“It’s always nice to know that gamers agree with us in thinking that Xbox is a fabulous machine and a great entertainment value,”
said Robbie Bach, senior vice president and chief Xbox officer at Microsoft.
“After 15 months on the market, we’re right on target with our business plan and will continue to provide the best interactive experiences possible.”

With January sales, Xbox increased its cumulative software-to-hardware attach rate to an impressive 4.9 units, the highest for any next-generation console after 15 months on the market.* In addition, the Xbox Live (TM) service continues to excite gamers around the world. Microsoft has now sold 44 percent more Xbox Live starter kits than Sony has sold of its PS2 network adapters during their first three months in the market.*

The biggest noise in the month of January was made by
“Dead or Alive Xtreme Beach Volleyball,”
the highly anticipated title from Tecmo Inc., developed exclusively for Xbox. Released on Jan. 22,
“DOA Xtreme Beach Volleyball”
immediately became the month’s No. 1 selling Xbox title, selling as many units in 10 days as GameCube consoles sold during the entire month.* When the game launched in Japan during the same period, it rose to the No. 2 bestseller position across all platforms for the week with just two days of sales behind it (Media Create Co. Ltd.).

“We’re glad that the ‘DOA’ franchise continues to be a strong force behind the success of Xbox,”
said John Inada, general manager of Tecmo.
“Following the success of our million-selling Xbox launch title ‘Dead or Alive 3,’ we were confident that the loyal fans of the ‘DOA’ series would embrace ‘DOA Xtreme Beach Volleyball’ in full force. Combine the high-level gameplay and compelling game concept with the best machine and you really can’t lose.”

Xbox continued to capitalize on its momentum coming out of the recent holiday by outselling GameCube on console sales by a 2-to-1 margin in January, the widest variance in the past eight months. Moreover, after four months on the market, the Xbox holiday offer, which includes an Xbox system, a new controller and two free Sega games for $199,** proved to be a huge hit with consumers. The Xbox holiday offer outsold the Nintendo Mario Bundle by a margin of more than 3 to 1.*

Overall, the strength of Xbox helped propel the industry to a stellar January performance. Next-generation hardware sales increased 26 percent year over year, while software sales rose an astounding 46 percent.*

About Xbox

Xbox ( http://www.xbox.com/ ) is Microsoft’s future-generation video game system that delivers the most powerful gaming experiences ever. Xbox empowers game artists by giving them the technology to fulfill their creative visions as never before, creating console games and, with the advent of Xbox Live, online games that blur the lines between fantasy and reality. Xbox is now available in North America, Europe, Asia and Australia .

About Xbox Live

Xbox Live is the first comprehensive, online game arena fully dedicated to fast-action broadband gaming experiences. Xbox Live will allow gamers to play multiplayer Xbox

games with other gamers virtually everywhere via a high-speed Internet connection. With a built-in hard drive and Ethernet port, the Xbox console was built from the ground up to be an online gaming system. Xbox Live enables all gamers to find and play with their friends easily; talk to other players during gameplay through the Xbox Communicator headset; and download current statistics, new levels and characters to their Xbox hard drive.

About Microsoft Game Studios

Microsoft Game Studios is a leading worldwide game company with two core businesses: game development and publishing ( http://www.microsoft.com/games/ ) and Zone.com. ( http://www.zone.com/ ).

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.

* NPD Funworld TRSTS January 2003 data

** U.S. estimated retail price. Actual retail prices may vary.

Microsoft, Xbox, Xbox Live and the Xbox logos 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 : If you are interested in viewing additional information on Microsoft, please visit the Microsoft®
Web page at http://www.microsoft.com/presspass/ on Microsoft’s corporate information pages. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://www.microsoft.com/presspass/contactpr.asp.

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