Microsoft Lands Milestone 5,000th Patent

REDMOND, Wash. - March 6, 2006 - Microsoft Corp. has reached a patenting milestone by logging its 5,000th patent granted in the United States. Patent no. 6,999,083 provides for technologies that allow people to not just play video games against each other online, but to join the game as a spectator from anywhere in the world. The patent, which covers technologies that will be featured in Xbox 360^TM games, brings new innovation to online gaming by allowing consumers to tune into a video game much as they would a sporting event broadcast. Obtaining its 5,000th U.S. patent marks Microsoft's progress in developing innovations and opening the doors over the past three years to its multibillion-dollar research and development efforts.

"The 5,000th patent is a marker of the progress we have made in the past few years - building a high-quality, innovative and industry-recognized portfolio," said Brad Smith, senior vice president, general counsel and corporate secretary for Microsoft. "Through patents, we are able to license our technologies widely to others in the industry, increasing the availability of our innovations and getting beneficial solutions in the hands of customers."

Transparency and Opportunity Through IP

Since its public commitment to patent and intellectual property (IP) licensing in December 2003, Microsoft is following the industry examples of other long-time patent licensors such as IBM Corp., with its portfolio of over 25,000 U.S. patents, and other giants such as HP, Intel Corporation, Samsung and Sony. Microsoft has used its expanding IP portfolio to launch a number of development-seeding licensing initiatives, including IP Ventures, a program dedicated to bringing customer-ready technology to emerging businesses for immediate business benefit and customer use. In addition, Microsoft entered into licensing agreements with companies of all sizes and types - from competitors to longtime industry partners - including Autodesk Inc., Inrix Inc., Motorola Inc., Palm Inc., SAP AG, Softedge-Systems, Sony Ericsson, Sun Microsystems Inc., Symbian Ltd. and Turbolinux Inc.

Microsoft's annual multibillion dollar investment in research and development results in one of the highest-quality IP patent portfolios in the information technology industry. The most recent patent scorecard published by IpIQ (formerly published by Technology Review), ranks Microsoft in the top 10 overall, and as No. 1 in the Current Impact Index (which measures the broader significance of a company's patents by examining how often its U.S. patents are cited as prior art) and in Science Linkage (which shows the average number of scientific references listed in a company's U.S. patents; a higher figure indicates a company closer to the cutting edge than competitors with lower values.) While others in the industry decrease R&D budgets, Microsoft continues to spend several billion U.S. dollars annually. This has resulted in Microsoft developing a broad, valuable patent portfolio that continues to grow at a rapid pace.

By patenting its IP and making its existing library of patents and IP broadly available through licensing to businesses of all sizes, the company can reinvest the proceeds in research and development and continue the pursuit of innovation. The patents that Microsoft has obtained to date - over 7,000 worldwide - represent potential fuel for further innovation. Microsoft continues to strive toward its goal of filing for 3,000 patents per year, which, according to a study by the National Research Council of the National Academies, is consistent with the average for information technology companies of filing about two patents for every $1 million spent on research and development.

The Technology

The milestone patent relates to a host of technologies, some of which are currently included in portions of Xbox Live^®, for creating a unique spectator experience similar to the viewing of a sporting event broadcast. Here is what the technology can do:

• A system for generating a spectator experience in real time from a game or event, such as highlights, instant replays, and unique views of the action within a game to enhance the experience for spectators rather than players. Using viewing controls, a spectator can control one or more virtual cameras to select desired viewpoints or an automated camera control to frame the action and perform specific cuts to best convey the story and action. The game and in turn the spectator experience may vary as a function of participant interactions and other contributions to the game based on real-time spectator activity.

• A portal such as a Web site to access spectator-related services such as schedules and information on multiple games and events as well as the number of spectators and participants in each. The portal allows the spectator to find the most popular games to watch, preview the action, and then connect to the desired game or event.

Microsoft's 5,000th patent represents its technology research focus in the networked game field, which complements its research and development across flagship product lines. Microsoft's vision for servicing this growing community reflects the model of the sports industry viewership on television.

Founded in 1975, Microsoft (Nasdaq "MSFT") is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

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