Microsoft and Lenovo Team Up on New Pay-as-You-Go PCs for Emerging Markets
May 21, 2006
Companies to launch market trials in China and India using Microsoft FlexGo technology.

SEATTLE — May 21, 2006 — Lenovo and Microsoft Corp. today announced that they will launch market trials in China and India that will validate the market for pay-as-you-go personal computing, using a model very similar to prepaid mobile telephone services. The announcement took place the day before the Microsoft Windows Hardware Engineering Conference (WinHEC) 2006 in Seattle.

“Lenovo is working with Microsoft to create innovative new business models and technologies tailored for the needs of different markets around the world,” said Philippe Davy, vice president of Strategic Alliances, Lenovo. “This program creates new options for people whose access to personal computing would be limited otherwise.”

Consumers will be able to purchase a Lenovo desktop PC by paying about half of its street price up front, and paying the balance over time through the purchase of prepaid cards from Lenovo. The innovative pay-as-you-go model enabled by the new Microsoft® FlexGo™ technology helps new budget-constrained consumers own a high-quality PC without being locked into a fixed monthly loan payment, and enables these consumers to manage their PC time in accordance with their monthly finances. After a predetermined number of usage hours, the balance of the PC will be paid off and the consumer will no longer need to purchase prepaid cards.

The new market trials in India and China will be launched during the next three months, building upon a successful market trial conducted by Microsoft during the past year in Brazil. The first pay-as-you-go market trials will feature high-quality, mid-range Lenovo desktop PCs, which are loaded with features attractive to consumers. These models are already available worldwide.

“Lenovo’s joint effort with Microsoft using FlexGo pay-as-you-go computing will bring high-quality PCs within the reach of millions of families for use in education, communications and entertainment,” said Will Poole, senior vice president of the Market Expansion Group at Microsoft. “We are pleased to be embarking on this new initiative with a leading and innovative partner, Lenovo, starting with market trials in China and India.”

Microsoft chose Lenovo as the computing equipment partner for the project because of Lenovo’s success and commitment in emerging markets. Since the formation of the new Lenovo just over one year ago, Microsoft and Lenovo have increased their level of collaboration on new initiatives, such as the Lenovo Innovation Centers in the U.S., China and India; the ThinkPad X41 Tablet PC; and the Genuine Windows® Experience Program to combat counterfeiting and piracy in China. These initiatives embody Lenovo’s motto, “New World, New Thinking.”

About Lenovo

Lenovo (HKSE: 992) (ADR: LNVGY) is dedicated to building the world’s most innovative personal computers. Lenovo’s business model is built on innovation, operational efficiency and customer satisfaction as well as a focus on investment in emerging markets. Formed by Lenovo Group’s acquisition of the former IBM Personal Computing Division, the company develops, manufactures and markets reliable high-quality, secure, and easy-to-use technology products and services worldwide. Lenovo has major research centers in Yamato, Japan; Beijing, Shanghai and Shenzhen, China; and Raleigh, North Carolina. For more information about Lenovo, see www.lenovo.com.

About Microsoft

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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