SAN FRANCISCO — March 9, 2005 —Today at the annual Game Developers Conference (GDC), Microsoft Corp. announced the first details of its next-generation Xbox® video game system platform, highlighting how hardware, software and services are being fused to power enhanced game and entertainment experiences.

Microsoft Corporate Vice President and Chief XNA™ Architect J Allard further outlined the company’s vision for the future of entertainment, citing the emergence of an “HD Era” in video games that is fueled by consumer demand for experiences that are always connected, always personalized and always in high-definition.

“In the HD Era the platform is bigger than the processor,” Allard said. “New technology and emerging consumer forces will come together to enable the rock stars of game development to shake up the old establishment and redefine entertainment as we know it.”

Building on 10 years of innovation with the DirectX® API, the Microsoft® Windows® and Xbox platforms will enable ground-breaking game experiences in the HD Era. Illustrating what that means for gamers, Allard shared the first details about the next-generation Xbox guide. Persistent across all games and media experiences, the guide is an entertainment gateway that instantly connects players to their games, their friends and their digital media.

Features of the guide include these:

· Gamer Cards. Gamer Cards provide gamers with a quick look at key Xbox Live™ information. They let players instantly connect with people who have similar skills, interests and lifestyles.

· Marketplace. Browseable by game, by genre, and in a number of other ways, the Marketplace will provide a one-stop shop for consumers to acquire episodic content, new game levels, maps, weapons, vehicles, skins and new community-created content.

· Micro-transactions. Breaking down barriers of small-ticket online commerce, micro-transactions will allow developers and the gaming community to charge as little as they like for content they create and publish on Marketplace. Imagine players slapping down $.99 to buy a one-of-a-kind, fully tricked-out racing car to be the envy of their buddies.

· Custom playlists. This feature eliminates the need for developers to support custom music in games. The guide instantly connects players to their music so they can listen to their own tracks while playing all their favorite next-generation Xbox games.

Typifying the HD Era game experience, the guide requires hardware designed with software in mind. System-level features of the guide such as custom playlists, the Xbox Live Friends list and voice chat are enabled at the chip level, liberating developers to focus on creating games, not developing for technical certification requirements (TCRs).

To support consumer demands for the HD Era, the next-generation Xbox is designed around key principles that let developers maximize real performance, using concepts they are already familiar with.

The next-generation Xbox hardware design principles include the following:

· A well-balanced system that will deliver more than a teraflop of targeted computing performance

· A multicore processor architecture co-developed with IBM Corp. that provides developer “headroom” and flexibility for the HD Era

· A custom-designed graphics processor co-developed with ATI Technologies Inc. designed for HD Era games and entertainment applications

In addition, familiar software technologies such as DirectX, PIX, XACT and the recently announced XNA Studio — an integrated team-based development environment tailored for game production — complement the new hardware to help game developers unlock increasingly powerful and complex silicon.

The HD Era gaming platform will strike an elegant balance of hardware, software and services to power the new experiences consumers demand. Games and entertainment features such as the next-generation Xbox guide represent a shift toward more immersive and integrated consumer experiences. This shift will be further illustrated by a significant leap to high-definition graphics, where character movements and expressions are intensely vibrant and nearly indiscernible from real life; by multichannel, positional audio fidelity so clear and precise that players will be able to hear the faintest enemy footsteps sneaking up behind them; by richer online communications; and by an abundance of on-demand content for game consoles.