Microsoft increases market share

Microsoft reported its results for the December quarter, Robbie Bach said the company would focus heavily on new software this year after a strong launch for
the online gaming component for the xbox.

Since its Nov. 15, 2001 launch, the $199 Xbox has sold more than 8 million units worldwide, including
more than 250,000 $50 starter kits for its Xbox Live online gaming service since that product’s
Nov. 2002 launch. Analysts have said Microsoft loses $100 or more on each Xbox unit it produces.

Of the total sold to date, 5.4 million units were sold in North America, 1.8 million were sold in Europe
and about 850,000 were sold in the Asia-Pacific region, with just less than half of those in Japan.
“We had a very good holiday so it’s fun to finally be able to talk about it,” Bach said. “We gained about
four share points on the console side in North America (and) another four share points in Europe. We
feel very good about where the business is.”Bach did not detail market share figures.

Despite warnings of weak sales from a number of major game publishers and game retailers in mid-December,
Bach said the game business had shown some resiliency compared to the retail market in general.
“You have to look at the broad economic situation,” he said. “The industry we think actually had a very good holiday.”
Last year Microsoft acquired privately-held game developer Rare, in a move that was widely seen as an attempt to
bolster the company’s internal game development effort.

Bach downplayed the potential for Microsoft to acquire any full-blown publishers, as has been widely rumored,
saying the company would concentrate its attention on smaller, private developers to bolster its internal lineup in any
acquisitions.”Now you’re in a cycle in the games where it is about the software portfolio,” he said.
Bach has in past conceded the Xbox has struggled in Japan. Magazine publisher Mediaworks estimated it sold just
shy of 63,000 units from Oct. 28 to Jan. 5, about 15 times less than what the PS2 sold.
We’re very committed to the Japan market,” he said. “The challenge in Japan is about differentiating Xbox from our
competition.”