REDMOND, Wash., May 15, 2002 — Through a carefully planned effort that includes the participation of key retailers and third-party publishers, Microsoft Corp. today unveiled its plans for a North American price reduction of the Xbox (TM) video game system. Effective immediately, Xbox will have an estimated retail price of $199.99 in the United States ($299.99 CAN). The price reduction will be supported by a multimillion dollar national merchandising and marketing campaign set to begin this weekend. Microsoft also announced it is reducing the price of Xbox in Japan to 24,800 yen effective Wednesday, May 22.*
Xbox was originally priced at $299.99 in the United States, $459.99 in Canada and 34,800 yen in Japan.
“As part of our long-term strategy to broaden the reach of Xbox and make it accessible to more consumers, we’ve been working for several weeks with our key partners to make this announcement as seamless and high impact as possible,” said John O’Rourke, director of worldwide Xbox marketing at Microsoft.
With its cutting-edge technology, advanced graphics engine, hard disk drive and built-in Ethernet port, Xbox has been globally acknowledged as the most powerful video game console in the world. And with a rapidly expanding games portfolio featuring such titles as Game of the Year** “Halo (TM) ,” Xbox has become the system of choice for millions of enthusiasts around the globe.
“This new, lower price makes Xbox the best value among all competing video game systems,”
O’Rourke said. “The best box is now the best value.
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O’Rourke acknowledged that speculation surrounding a pending price reduction of Xbox has been pervasive in the last few weeks. “The traditional forum for making an announcement of this magnitude is the Electronic Entertainment Expo (E3) next week, but we’ve been ready to go for some time and can easily put this in place at retail now. We see no reason why eager gamers should have to wait a week to benefit from this tremendous value opportunity.
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“Xbox has been working closely with us to roll out this new pricing. We’re confident the planned marketing and promotional support behind it will really drive store traffic and bring Xbox to the attention of a lot more gamers,”
said Dan DeMatteo, president of GameStop.
In just six short months since its highly successful North American launch, Xbox is experiencing a software attach rate of 4.1 in North America, the highest of any video game console ever. And recent momentum in Europe and Australia demonstrates strong consumer demand for Xbox.
Microsoft currently expects to ship 3.5 million to 4.0 million Xbox consoles for the fiscal year ending June 30, 2002. The company is not providing any update to financial guidance provided on April 18, 2002.
About Xbox
Xbox ( http://www.xbox.com/ ) 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, and 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 http://www.microsoft.com/msft/ . All information in this release is as of May 15, 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.
* Actual retail prices may vary.
** Academy of Interactive Arts and Sciences, 2002 Game of the Year
Microsoft, Xbox 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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