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XBOX ANNOUNCES EUROPEAN AND UK MANAGEMENT CHANGES

LONDON, 7th September 2004 - Xbox today announced changes to its European and UK management team, deploying senior management resources to ensure Xbox will be maximising its success well into the future. The new appointments further strengthen senior management in Europe and the UK at a time when Xbox is enjoying strong growth and making inroads into the crucial casual gaming market.

Chris Lewis, currently director, UK Northern and Eastern Europe Home and Entertainment Division, becomes regional vice president, Xbox and Home and Entertainment Division, Europe, Middle East and Africa (EMEA). Lewis replaces Eduardo Rosini, who is taking on a new role as Microsoft Asia Pacific (APAC) regional vice president and will be based in Singapore. Neil Thompson, currently Home and Entertainment Division regional director for the Central & Southern Europe region, becomes director, UK Northern and Eastern Europe Home and Entertainment Division.

"We're very pleased to welcome Chris to his new role within the Xbox and Home and Entertainment Division EMEA team," said Mitch Koch, corporate vice president, Microsoft Home and Entertainment Division. "He has led the success of these businesses in the UK, where Xbox enjoys a market share in 2004 to date of 25%, as well as in Northern Europe, which has a market share in 2004 to date of 50%. Since he has been closely involved in the success of Xbox and the Home and Entertainment businesses in Europe we'll benefit from a smooth transition, and we look forward to Chris deploying his vast experience from the key UK and Northern Europe region across the whole of Europe. We're also confident Neil, another Xbox veteran with regional management experience, will build on the successful track record of Xbox and the Home and Entertainment Division in the UK and Northern Europe. With these strong senior managers in place we expect to continue the success of our consumer businesses in Europe.

"At the same time we wish Eduardo Rosini the best in his new role at Microsoft - he has successfully led the transition of Xbox in Europe from launch mode to a sustainable business that offers great opportunities for partners as well as exciting experiences for gamers," said Koch. "As VP of the Xbox and Home and Entertainment Division in EMEA, Rosini led the team that established Xbox as a solid player in the region in the last two years and developed the retail infrastructure that puts Windows and Office in the hands of millions of consumers across Europe. His new role is a boon for the Asia region and we wish him continued success at Microsoft."

Chris Lewis, Regional Vice President, Xbox EMEA

Bringing 15 years of experience within Microsoft to the European Xbox business, Chris Lewis becomes regional vice president, Xbox and Home and Entertainment Division EMEA, responsible for continuing the growth and success of Xbox and the Home and Entertainment Division across the region. In his previous role, which he took on in 1999, Lewis was responsible for the successful launch of Xbox in the UK and Nordic regions as well as growing the overall Home and Entertainment business in the UK and Northern Europe. Lewis' other roles at Microsoft have included management of the Enterprise Partner and Licensing business, the Corporate Customer and Services businesses, and Microsoft's Dealer and Distribution business.

"I'm proud of what we've achieved in the UK and Northern Europe region - for instance, in the UK we have sold over one million consoles and earned a solid second place in the market against some very long-standing competition," said Lewis. "I'm looking forward to expanding my role to take in all of Europe. We've made great progress across all countries and are looking forward to a very strong Christmas and 2005. I'll be focusing on continuing this success into the future and ensuring Xbox continues to offer great gaming experiences and great value to gamers, as well as strong business opportunities with Xbox and our other consumer businesses for our retail and publishing partners."

Neil Thompson, Director, UK Home and Entertainment Division

Neil Thompson becomes director of Microsoft's UK, Northern and Eastern Europe Home and Entertainment business and will manage all activity, including Xbox, in these key territories. One of the original management team responsible for the European launch of the console, Thompson is currently Home and Entertainment regional director of the Central & Southern Europe region with responsibility for all of Microsoft's consumer business across the region.

"I'm excited to be focusing on very important markets for Xbox," said Thompson. "UK and Northern European gamers are a discerning lot, and we'll be working hard to ensure Xbox continues to deliver for its fans as well as attracting the growing casual gamer market. This Christmas we have some truly great titles coming only on Xbox, not the least of which is the highly-anticipated Halo 2. Our great games portfolio, coupled with the million-plus Xbox Live community and the fantastic 149.99/£99 price point, makes Xbox very well poised to keep on delivering for current and new fans alike."

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About Xbox

Xbox (http://www.xbox.com) is the video game system from Microsoft that brings people together for the most exhilarating game and entertainment experiences. Xbox delivers an expansive collection of breakthrough games, powerful hardware and the unified Xbox Live online service. The new tagline, "it's good to play together," captures the spirit of Xbox as the social hub of the new digital entertainment lifestyle. Xbox is now available in Europe for an estimated street price of 149.99/£99.99.

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.

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