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Gamers Respond To Extraordinary Xbox Value Proposition

LONDON, 8th May 2002 – Xbox today reported a sizeable
increase in console sales as customers respond energetically to its recent price
reduction. Now available in Europe for an estimated street price of

€299/£199*, the award winning Xbox is the
most powerful video game system on earth. With 40 games currently available and
more than 150 to be available by Christmas, Xbox is the only video game console
designed for the future of gaming with a built-in hard drive and broadband
adapter. Since the European price reduction took effect on 26th April, weekly
sales are running neck-and-neck with PlayStation 2 – based on week on week sales
since launch, Xbox represents 49% of the next generation console market in the
UK, 46% in France and 55% in Germany.

Already-strong attachment rates for Xbox games have increased as well – an
average of 3.7 games were sold for each Xbox video game system in the UK.
Award-winning Microsoft Game Studios title Halo (recently awarded Game of the
Year, Technical Achievement of the Year and Audio Achievement of the Year by
influential industry magazine Edge) built on its success, with an average attach
rate of 88%. Increased European sales have taken Halo well past the one million
sales milestone world-wide.

"Our customers have reacted positively to the price drop and we have seen an
uplift in sales since 26th April,” said Alex Croft, Head of Buying for GAME
Stores Group Ltd. “This activity re-affirms Microsoft's commitment to the market
and highlights the excellent value Xbox now represents to our customers." “I’m
glad that more gamers in Europe are able to experience Xbox for themselves,”
said Sandy Duncan, Vice President, Xbox Europe. “Our strategy is to give
outstanding value to as many consumers as possible, and the increased Xbox sales
since the price reduction indicate that strategy is on track. The new price
allows us to be more competitive and make serious inroads into the hearts of
European gamers leading up to Christmas 2002.

“As we’ve said before, this is a marathon, not a sprint – and these initial
figures are extremely encouraging,” said Duncan. “But it is delivering great
games and great experiences to hundreds of thousands of happy consumers in
Europe over the long term that is our most important goal, and we will continue
to drive initiatives to continue this cycle of success.” In addition to the new
price point, word-of-mouth recommendations and stellar reviews are driving
gamers to the great games available on Xbox.

Early Xbox adopters have responded very positively to the Xbox customer
reward package offer - all Xbox owners who purchased their system before the
price reduction will receive two free games and a free official Xbox controller.
This unprecedented offer has also secured great feedback from retail and
publishers, who welcome the move to reward those who contributed to the early
success of Xbox.

About Xbox

Xbox (
) is Microsoft’s future-generation video game system that delivers never before
seen gameplay experiences. With more than three times the graphics performance
of the latest generation of game consoles, Xbox empowers game designers with the
technology to realise their vision of great games that are challenging,
exhilarating and fun. Xbox is now available in Europe for an estimated street
price of €299/£199.

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.