Microsoft Enters the Gaming Console Market with X-Box Launch

Microsoft, the world's biggest software company, is set to challenge Sony, Nintendo, and Sega in the $10 billion gaming console market with the launch of its X-Box console. The X-Box, a stripped-down PC with a PC-based chip and added graphics chips, internet capability, and a built-in DVD player, will use a cut-down version of Windows to make it easier for games developers to write programmes for it. The console is expected to be launched before autumn 2001.

Microsoft's entry into the gaming console market is seen as a move to expand its grip beyond the desktop, where its Windows operating system runs on nearly all PCs. The company has talked about producing a games console for some time, and Shelly Field at Nintendo, which intends to launch its next-generation "Dolphin" machine early next year, welcomes the competition but notes that profit is made in games software, not hardware. Microsoft's chairman, Bill Gates, is closely involved in the development of the X-Box.

Key Takeaways:

• Microsoft is launching a games console, dubbed the X-Box, before autumn 2001 to expand its presence beyond the desktop.
• The X-Box will use a PC-based chip with added graphics chips, internet capability, a hard drive, and a built-in DVD player.
• Microsoft has a cut-down version of Windows to make it easier for games developers to write programmes for the console.
• The gaming console market has exploded in the past few years, with an estimated five million Playstations sold in the UK alone.
• Sony's PlayStation2 model has sold nearly a million units in six days since its launch in Japan, with some customers experiencing problems with the inbuilt DVD player and memory chip.
• Microsoft's motives for entering the gaming console market are to offset slowing growth in the PC market and the limited success of Windows CE for handheld machines.
• Nick Gibson, an analyst at Durlacher, forecasts that Microsoft will use "brute force" with a huge advertising budget to compete in the market.
• Jerry Sanders, a UK computer analyst, notes that the X-Box may appeal to families who already have PCs and games, where parents want to reassert ownership of the PC.
• Curt Feldman, editor of Games Business, believes there is a chance for Microsoft to do well in the market.

Statistics:

• Estimated five million Playstations sold in the UK alone.
• Nearly a million units of Sony's PlayStation2 model sold in six days since its launch in Japan.
• 26% of Sony's service calls in Japan were from people who were simply befuddled by their new gadget.
• Microsoft plans to use a huge advertising budget to promote the X-Box.

Sources:

• "Microsoft to Launch Games Console" by [no author] in [no publication date].
• "Sony Admits Problems with PlayStation2" by [no author] in [no publication date].
• "Microsoft Enters Gaming Console Market" by [no author] in [no publication date].
• Interview with Nick Gibson, analyst at Durlacher.
• Interview with Jerry Sanders, UK computer analyst.
• Interview with Curt Feldman, editor of Games Business.