Can Microsoft's PC-based console compete with gaming giants?

March 14, 2000
Web posted at: 12:03 p.m. EST (1703 GMT)

In this story: Gates knows way to San Jose Will PC pedigree hurt the X-box? Sega: 'Not in fetal position just yet' Playstation2 already a hit in Asia RELATED STORIES, SITES

From staff reports

SAN JOSE, California (CNN) -- Industry experts questioned this week if Microsoft's proposed game console can compete against established heavyweights on the market.

The software giant announced over the weekend plans to enter the lucrative home video game market with the X-box, a machine still in development that will use many PC components.

"I think Microsoft is going to have a tough entry to an already established market," said Billy Pidgeon, a computer games analyst for Jupiter Communications.

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CNN San Francisco Bureau Chief Greg Lefevre looks at the X-Box, Microsoft's newly announced video game console. (March 13) Real 28K 80K Windows Media 28K 80K

"Sony and Sega have been there for quite awhile and they know what they're doing. I'm a little skeptical."

Microsoft co-founder Bill Gates offered a glimpse of the X-box's capabilities during a simulation shrouded in secrecy this weekend at the Game Developers Conference in San Jose, California.

Cameras were banned from the auditorium where Gates revealed the X-Box concept. Microsoft offered simulated clips of the console's capabilities, but showed no actual pictures of the X-Box. The company said it did not want to present a false image of what the console will look like.

Some developers were impressed. The video motion seemed smooth, graphics looked detailed and clean. Many show attendees agreed with the choice of NVIDIA's graphics chip.

Microsoft plans to release the X-box in late 2001. Using a stripped down Windows operating system, it will sport a 600 megahertz Intel X86 processor, an 8-gigabyte hard drive, 64 megabytes of memory, an Ethernet port to play games with multiple players on the Internet, and a DVD drive that can load games and show movies.

Microsoft is banking on developers accustomed to working with personal computers to produce new games. The company said it announced the X-box so early to gain attention of game software writers.

"Eighteen months out we have to go to developers and talk to them about the platform, talk to them about the tools and the architecture so that when the product ships, there are amazing games available," said Robbie Bach, a vice-president of Microsoft.

Some wonder if the X-boxes will suffer for their PC pedigree. While many PC games can use a joystick, driving wheel or gamepad, they are optimized for a keyboard, mouse and single play from one station, Pidgeon said.

"I'm wondering how different X-box will be from current PC games," he said.

Microsoft intends to muscle its way into a market dominated by Sony and Sega, which seem unfazed by the challenge. "We're not curling up into the fetal position just yet," said Peter Moore of Sega America.

Why would Microsoft enter such dangerous waters? The game console market stakes are huge. U.S. consumers will spend $11 billion dollars on games this year.

"Revenues the retail revenues from interactive software games will be in excess of box office receipts at the movies," Moore said.

And perhaps Microsoft worries about losing out on other digital markets.

"It probably has a lot to do with Sony's posturing of becoming the hub of the home entertainment system," Pidgeon said.

Sony intends to distribute a lot of content via broadband, whether games, music or video, he said.

The established market players will present some serious obstacles for Microsoft. Sega's Dreamcast has done extremely well since it went on the market in September. Sony scored a hit since its launch Saturday of Playstation2 in Asia.

More than one million consoles were sold within the first several days of release, the company said. Another major console maker, Nintendo, will announce a new game machine ahead of Microsoft early next year.

Price pressures abound as well. Sony's PlayStation2, the most advanced machine available on the market, is selling for about $370. But the Sega Dreamcast, which uses software developed with Microsoft, retails for $200.

San Francisco Bureau Chief Greg Lefevre contributed to this report.

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