Drexler Technology Warns Microsoft of Probable Patent Infringement.

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--May 8, 1998--Drexler Technology Corporation (NASDAQ:DRXR) has informed Microsoft Corporation (NASDAQ:MSFT) that Microsoft's entry into the optical ROM card (OROM) market could probably lead to infringement of five of Drexler's U.S. patents plus additional foreign counterpart patents.

Recent news stories and Web-site publications have disclosed Microsoft's plans for active participation in the optical ROM card market. Harel Kodesh, general manager of the consumer appliance group at Microsoft, is quoted as saying, "We expect the innovative OROM storage peripheral will have a far-reaching impact on the way software and other content is distributed and used in compact portable devices and embedded systems."

Joseph Quagliani, Microsoft's marketing manager for Windows CE operating systems, is quoted as saying Microsoft is backing this technology because it "enables a whole new range of devices. I expect this to be very widely deployed."

Drexler's letter to Microsoft states that to resolve this matter promptly, Drexler is prepared to sell non-exclusive licenses for optical memory cards, readers, and reader/writers on license terms and conditions normally offered to companies that have not infringed Drexler's patents.

In its advisory to Microsoft, Drexler Technology said that Microsoft's OROM (card) program could probably lead to the infringement of the following Drexler Technology-owned patents: -0-

     1.   U.S.P. 4,864,630 and a Canadian counterpart patent.

     2.   U.S.P. 4,634,850 and counterpart patents in France, Germany,
          Sweden, United Kingdom, Canada, Japan, Korea, Mexico, Spain,
          and Israel.

     3.   U.S.P. 4,786,792.

     4.   U.S.P. B1 4,500,777 and counterpart patents in Japan,
          Australia, Mexico, Spain, and Israel.

     5.   U.S.P. B1 4,544,835 and counterpart patents in Belgium,
          Canada, France, Germany, Israel, Korea, Mexico, Spain, and
          United Kingdom.

-0-

Drexler Technology has received optical-memory-card related patent license fees of over $35 million to date. Previously announced licensees that are listed on U.S. stock exchanges include British Telecommunications (NYSE:BTY), Canon, Inc. (NASDAQ:CANNY), Hitachi Ltd. (NYSE:HIT), and Matsushita Electric Industrial (NYSE:MC).

Headquartered in Silicon Valley, Drexler Technology has received orders from the U.S. government totaling 4 million digital optical memory cards to be used by the INS as digital "Green Cards" and by the U.S. State Department as "Laser Visa" cards. -0-

Forward-Looking Statements: Certain statements made in this report relating to plans, objectives, and economic performance go beyond historical information and may provide an indication of future results. To that extent, they are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and each is subject to factors that could cause actual results to differ from those in the forward-looking statements. Such factors are described in the Company's Report on Form 10-K and other documents filed by the Company from time to time with the Securities and Exchange Commission. -0-

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CONTACT: Drexler Technology Corp.

650/969-7277