SAN JOSE, Calif.--Microsoft is trying to get into your living room, whether you
like it or not.
Microsoft chairman Bill Gates today outlined his vision for the X-Box--a
game console with
built-in high-speed Internet access and e-commerce capabilities that
could well supplant the PC in many areas--to an overflowing crowd at the Game Developers Conference here.
"This is a huge milestone for us. It's a new platform for the industry,"
Gates told an estimated 2,000 attendees. "The PC won't be the only device people
use to get on the Internet to be
Arriving on store shelves in the second half of 2001, the X-Box will compete
directly against Sony's PlayStation2, Nintendo's Dolphin and Sega's
Dreamcast in the lucrative gaming market.
The battle among the four companies will largely be waged over winning the
hearts, minds and wallets of teens. To lure that crowd, Microsoft promises the X-Box will come with an easy-to-use
operating system, an 8-GB hard drive, built-in connections for high-speed Net access,
ultra-realistic graphics and a bevy of games. As previously reported, an Intel chip will serve as the brains of the box.
In many ways, the X-Box will create its own ecosystem. With the Net connection, users will be able to download trial versions of a game and
then buy it if they want it after a test-drive, Gates said.
"Microsoft's vision is a very broad and ambitious one. It is about
empowerment," he said, a statement that drew a mixed reaction from the crowd.
Whether the company will succeed remains to be seen, several analysts said.
Microsoft has extensive technological expertise and financial resources, but
game consoles represent an entirely new market for the company. And it is a
market that operates under its own peculiar rules. By contrast, companies such as Sony and Sega understand the game console market because they created it.
"Sony knows the consumer, and they really know how to market to the
customer," said Schelley Olhava, an analyst at International Data
Corp. "What successful consumer product has Microsoft had?"
To succeed, "(Microsoft) will need to have a decent library of games
when that thing comes through the door and not just rehashed games for the
PlayStation2," she added.
The X-Box will mark another step into the hardware
business for Microsoft. The Redmond, Wash.-based software giant plans to sell
these devices under its own brand, Olhava said. Currently, Microsoft makes
most of its money by selling operating systems and software to computer
makers, which wrap the software into their own boxes.
Through its WebTV subsidiary, Microsoft sells TV set-top boxes, but these are
co-branded with hardware manufacturers. In all likelihood, an overseas
manufacturer will assemble the X-Box, but Microsoft has said it will be
actively involved in designing it and planning the manufacturing.
Game console makers typically sell the box for under cost and make up the difference on sales of games.
Besides the big hard drive, the X-Box will contain a Pentium III processor from Intel, 64MB of RAM and a graphics processor from Nvidia capable of
processing 1 trillion operations per second, Gates said.
"It will be a brand new GPU (graphics processing unit). It is nothing that
we have in the pipes right now," said Michael Hara, vice president of
marketing for Nvidia.
"I think that 'stable platform,' being a Windows platform developer, are the
kindest, sweetest words (Gates used)," Paul Schuytema, president of Magic Lantern Playware, said of the
presentation. Magic Lantern develops PC games for companies like Red Storm
Entertainment, author Tom Clancy's entertainment company.
Schuytema said smaller development companies like his will be excited by
the possibility of making a console-type game because it will be a more
affordable proposition than PlayStation or Dreamcast development. Windows
programmers are more readily available, and the skills they already have
will apply to this new market.
Another plus: "Microsoft likes to win at whatever they do. You know they
will put in the resources to create a market," he said. "Sony is so strong,
Microsoft is not going to crush it," said Schuytema. "I think it's going to
be a two-platform world now" between Sony and Microsoft.