Friday March 10, 2000

X-Box vs PlayStation 2

X-Box to Deliver Ultimate Console Gaming Experience

SAN JOSE, Calif. -- March 10, 2000 -- At a Microsoft executive retreat last March, a suggestion that the company develop its own video game console coincided with a similar idea already being explored by Microsoft’s DirectX team. The proposal quickly made its way up the ranks of approval and, one year later, has become reality.

Today, at the annual Game Developers Conference, Microsoft Chairman and Chief Software Architect Bill Gates revealed that Microsoft is entering the video game scene with the introduction of a new game console, code-named X-Box. Capitalizing on its software expertise, experience in maintaining MSN Gaming Zone http://www.zone.com -- the most popular gaming community on the Internet -- and advances in PC technology, X-Box is a game console that will deliver the most realistic, intense and action-packed game experience available.

"Building on our strengths as a software company, X-Box will offer game developers a powerful platform and game enthusiasts an incredible experience," Gates said. "We want X-Box to be the platform of choice for the best and most creative game developers in the world."

"Our success in PC games has afforded us the opportunity to invest more into PC game and extend our efforts into the entertainment hub of the home -- the living room," said Robbie Bach, vice president of Microsoft's Home & Retail division, referring to the fact that the company's PC-based games had four titles on the top 10 bestseller list this last holiday season.

Does the introduction of X-Box mean that Microsoft is moving away from PC-based games? Not according to Don Coyner, director of marketing in the newly formed Microsoft Games division.

"The PC and X-Box are complementary devices. Each has very distinct audiences," Coyner said. "PC games are more cerebral, while console games are more visceral. If you look at the top 10 games lists for these two platforms, you'll see that they don't really match up." The most popular PC games of 1999 include Age of Empires II, Half-Life, and SimCity 3000, while the most popular console games of 1999 include Pokemon Snap, Gran Turismo Racing, and Final Fantasy VIII.

Currently, there are about 29 million console players, 11 million PC game players, and 7 million who play with both, Coyner said. There is limited customer overlap, and there are clear differences in content. And the consumer pool is large enough to allow for multiple companies to do well.

"X-Box is expected to offer the most advanced graphics, the most flexibility in Internet gaming, and the most realistic play of any game console on the market," said Rick Thompson, vice president of Microsoft's Games division.

A "Future-Generation" Device

Microsoft is not concerned with its status as a "newcomer" to the games console industry. There are always opportunities for new leaders to emerge, and the company recognizes that the video game business is all about the games. From Atari to Nintendo to Sega to PlayStation, it has historically been shown again and again that gamers are loyal to the games -- not to the hardware. Microsoft is determined that X-Box will be the next success story in this market, by advancing video games through innovative new technologies.

As a "future-generation" device, X-Box will deliver rich, compelling graphics, and will enable a user's playing experience to be better and faster than any other games console available. It will push about 300 million polygons per second -- more than three times the graphics performance of its closest competitor, Sony PlayStation 2, which was recently released in Japan.

Perhaps the most significant difference between the two consoles is the hard drive built into X-Box, supporting 8GBs of hard disk space; PlayStation 2 does not have a hard drive. The hard drive will give X-Box gamers more realism, speed, expandability and storage, providing for richer game experiences. Fans of sports games, such as basketball, will no longer have to wait for their console to catch up to the action. "He shoots, he scores!" will be in real time.

"Subtleties like that really make games come to life," Thompson said.

A Superior Gaming Machine

Though X-Box is first and foremost a superior gaming machine, and like traditional game consoles will run through a TV set, it will have additional capabilities for a consumer's convenience. Out of the box, the console will come standard with four game controller ports, a DVD player, a hard drive, and broadband Internet access (it will be able to support a modem as an add-on), with a keyboard and mouse as optional peripherals.

As a dedicated, locked-down games system, it is not an all-purpose machine. It is designed specifically to provide the best console game experience available, and its add-on features support that goal. Broadband access will enable users to play with thousands of other gamers on the Internet, and will provide the ability to download the latest updates to games. In a basketball video game, for example, a user will be able to download the most current status of teams in the NBA, so the game will accurately reflect that information.

"We're taking the best of the PC and putting it into a console," Coyner said.

Although X-Box is Microsoft's initiation into the console arena, the company is not in unfamiliar territory. Microsoft has always recognized that games are a popular form of home entertainment. As a category, games represent 50 percent of consumer PC software sales, and Microsoft has recently delivered best-selling PC games to meet this demand. Consumers are becoming more and more comfortable with technology -- more than half of U.S. households now own a PC -- and Microsoft wants to take those technology advances into the living room, where 86 percent of U.S. families with teens have one or more game consoles.

Microsoft is dedicating significant resources in technology, developer support and marketing to make X-Box successful. As an example of this commitment, Microsoft Games was recently reorganized into a separate, dedicated division. Its staff comprises the former PC games team, experienced game developers, software engineers and designers, and others with experience in game consoles.

"Because the platform will be familiar to developers who have used PC architecture in the past, working with technology such as Direct X, X-Box reduces the learning curve normally associated with developing for a new console, and enables better first-generation games," Coyner said.

To some, the introduction of X-Box may seem like a departure for Microsoft, whose energies have historically been devoted to the PC. However, it is an extremely logical step to take, Coyner said. "There has been a generation change, and Microsoft recognizes that. People are expecting more from their devices, and that's as true for entertainment as anything else. And we at Microsoft have the experience to help by innovating with new technologies."

Over the past few months, the technology industry has been witness to this refocus. Microsoft recently changed its company vision statement from "a PC in every home" to "empower[ing] people through great software - any time, any place and on any device," and in that vein has made strides in wireless communication with the Pocket PC, and in interactive television with WebTV. The introduction of X-Box is an expansion of that vision, ultimately providing more value to the consumer.

Making Better Games, Faster

Consumers aren't the only ones who will benefit from X-Box. Microsoft is encouraged by the number of high-profile retailers, game developers and publishers that have responded positively to X-Box. Gamers have expressed excitement about the console, and developers are enthused as well, knowing they will be able to make better games and faster. About 30 percent of X-Box games will be developed by Microsoft, while the other 70 percent will be developed by third parties.

"We are very impressed with the technology and are looking forward to creating games that will leverage the power of the system," said Gregory Fischbach, co-chairman and CEO of Acclaim Entertainment, Inc. "We view the advent of the next generation consoles -- such as X-Box -- as a tremendous opportunity to grow our business."

Mitch Lasky, executive vice president of Activision, Inc., expressed similar sentiments. "We are excited about Microsoft's entry into the console business, and X-Box is positioned at the leading edge of next-generation technology," he said. "In particular, X-Box provides us with a familiar tool set for development, which will give us an advantage in delivering state-of-the-art game experiences to consumers."

While exact pricing has not yet been determined, the X-Box console and games will be competitive with other next-generation console systems already on the market and in development.

"It makes sense for us to take the recent advances in technology and put them to use in this new and exciting way," Thompson said. "Microsoft has the technical and game expertise to unlock the future of entertainment."