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Follow UsScott Hillis
SEATTLE: It's 7:55 a.m. at Microsoft Corp.'s Xbox video game console
division, and a bleary-eyed employee is rolling up a blanket after a night on
the couch.
This is crunch time for the world's biggest software maker as it prepares for
its first foray into the console market and puts the finishing touches on Xbox
demonstrations for next week's E3 video game industry expo. It is there that
Microsoft must put up or shut up, where it must prove that it has what it takes
to challenge Sony Corp. and Nintendo Co. Ltd. in the multibillion dollar video
game market.
"As much as we plan, it's always a scramble because everyone wants
things to look the best for the show," Ed Fries, Microsoft vice president
of games publishing, said after a recent walk through offices that look more
like college dormitories, with beanbag chairs strewn about and mountain bikes
leaning up against cubicles.
"I hope what we show will really bring out the character of Xbox
games," Fries said. Microsoft's hardware and initial launch titles will
debut together and the company will announce vital Xbox news - when it will go
on sale and for how much. But its presence at the Electronic Entertainment Expo
in Los Angeles is as much about building "street cred" as it is about
nailing down launch details.
"E3 is the turning point for us. That's when everything really starts to
focus on the games themselves," Robbie Bach - whose business card reads
"Chief Xbox Officer" - said in an interview.
Bigger, better games
For months, Microsoft has boasted that the Xbox hardware will blow away Sony's
PlayStation 2 and Nintendo's upcoming GameCube, with crisper graphics and
blazingly fast action.
At E3, the focus turns to the software. All the Xbox's power will be wasted
if game developers haven't made titles that are fun: Titles will build buzz and
sway shoppers unsure of which console to pick.
Video game trade press will line up at Microsoft's booth to play the handful
of titles that will be demonstrated. The impressions they take away and later
post on popular Web sites and gaming magazines will play a crucial role in the
fate of the Xbox. Will it be the must-have machine for the holiday season? Or
will it fail to distinguish itself from rivals?
"I think a lot of people are watching Microsoft but not yet
excited," said Ken Hsu, editor-in-chief of Electronic Gaming.
"Microsoft just has a few unproven titles." Microsoft is well aware of
the challenge.
It is making bigger, more involved games, so a racing title will have
hundreds, not dozens, of courses, while characters in a martial arts fighting
game aren't restricted to a single arena but can brawl continuously across
changing landscapes. "We're trying to create not just next-generation
graphics but next-generation gameplay," said Chris Cocks, a product
manager. Adds Fries, "It's not just the fidelity of the graphics, it's the
scope, the size of the spaces we're putting the player in."
Microsoft has said the Xbox could launch this fall with as many as 20 games,
but Bach and other executives said that number could be closer to 15. About a
third of those will be published by Microsoft while the rest will come from
third-party developers.
"If we wanted to, we could have a lot more, but what we are focusing on
for the launch is quality," Bach said. "If we end up with 10 or 12
(games) that's totally fine."
Avoiding shortages
And what will all this great gameplay cost? Bach isn't telling ahead of a
Microsoft news conference next Wednesday, but he hinted Microsoft isn't too
concerned about competing on cost.
Most analysts are betting on a price around $300. Console makers sell
machines below cost in order to build a large base of users who will buy the
highly profitable games. Microsoft is expected to lose about $130 on each Xbox
sold, and could take up to five years before it turns a profit, according to one
Wall Street analyst's calculations.
"Reducing the price over time will be important ... so it's something
that over the life of the Xbox we are absolutely focused on," Bach said.
"People don't go in and price-shop consoles. We know that we are going to
be able to sell every console we can produce," Bach said.
To ensure they can produce as many consoles as people want to buy, Microsoft
has taken precautions to avoid glitches like the chip shortage that forced Sony
to halve the number of units sent to the United States for the holiday season,
Bach said.
The Xbox promises plug-and-play gaming, but it is a complex machine. It
boasts a main processor based on Intel Corp.'s Pentium III, a graphics chip from
nVidia Corp., a separate audio chip, an 8-gigabyte hard drive, a high-speed
Internet jack, and four, not two, game controllers.
"We've been super careful in thinking about our supply chain. Almost all
our parts are multiple sourced, and we've already been buying components to make
sure we have enough for launch," Bach said. "We feel pretty
good."
(C) Reuters Limited 2001.