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Commentary: Microsoft isn't playing games with Xbox

No question about it: The popularity and revenue of games and game devices are reason enough for Microsoft to enter this arena.

By Lou Latham, Gartner Analyst

No question about it: The popularity and revenue of games and game devices are reason enough for Microsoft to enter this arena.

More than half the population

See news story:
Microsoft got game: Xbox unveiled
plays some sort of computer game, and the attendant revenue rivals what Hollywood grosses. Although only about 10 percent of gamers play on the Internet, many more of them want to; multiplayer interactivity is the No. 1 wish-list item for gamers who do not have it.

But gaming in general, which is console-based, and online gaming, which is largely PC-based, need to converge, since few consoles yet have Internet connectivity. Like PlayStation 2, Xbox is aimed at bridging that gap since it recognizes that gaming as a social activity better suits a portable appliance in the living room than does a PC.

By itself, Xbox offers significantly more performance headroom than the PlayStation because of its PC-class 733-MHz Intel processor and 64MB of memory. Developers of high-end PC graphics can write to it without the delay and difficulty of porting to another processor, and the extra graphics capabilities built into the Pentium III and Pentium 4 will give the console enormous room to grow.

Game boxes send output to the TV set, and the Xbox is one part of a two-prong Microsoft thrust into the non-PC arena--the other is its interactive Ultimate TV launch. This, along with Microsoft's .Net application-hosting initiative, signals Microsoft's awareness that the browser-connected Windows desktop can only go so far and last so long as the dominant computing metaphor. The market is moving steadily toward a residential, multi-application and multiply-connected environment.

Microsoft is also testing the waters with cell phones, but their screens are too small to offer good gaming. The midsize gamebox, e-book and personal digital assistant offer the ideal portable technology for gaming and other personal video applications. And it is no accident that both PlayStation 2 and Xbox can double as DVD players.

While games generate significant revenue, the Xbox is well positioned to become a delivery application for all sorts of mobile computing activities, including entertainment, productivity applications for mobile workers, personal interaction, and .Net-type application access. As Bluetooth and high-bandwidth wireless connectivity begin to free the interactive world from cables and desktops, Microsoft has begun to position itself to be once more the broad-spectrum, generic technology for the average user.

(For related commentary on the issues associated with video games, see registration required.)

Entire contents, Copyright ? 2001 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.