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September 20, 2006 4:00 AM PDT

Newsmaker: Building an empire, an Xbox at a time

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In mid-November, both Sony and Nintendo plan to release their next-generation game consoles, the PlayStation 3 and Wii, respectively.

But as the game world welcomes these new consoles--and the first round of games for them--Microsoft's Xbox 360 will be reaching its first birthday with a year's head-start in games and accessories. Further, while the Wii is getting a lot of good press for its $250 price tag, Sony's decision to put Blu-ray players in the PS3 and thus price its high-end console at $599 has resulted in a lot of criticism. Microsoft's "premium" Xbox costs $399.

Since the Xbox 360 launch last November in the Mojave Desert, Microsoft also has put a great deal of effort into bolstering its Xbox Live service and has recently unveiled its XNA Game Studio Express, which will enable small teams of developers to make games for the Xbox or for the PC, and have those games made available to the public.

At the same time, the company has been touting its Xbox Live Arcade service, through which the company is regularly releasing hit games of the past such as "Pac Man," "Galaga" and "Defender." Those games cost less than $10 to download and have become a hit on the service.

Throughout it all, Microsoft Vice President Peter Moore has presided over the growing Xbox 360 empire. The company has said it eventually intends for a billion people to be connected in some way to that empire. And although that goal may be a fantasy, it's not hard to imagine Microsoft doing all it can to try to get there.

CNET News.com sat down recently with Moore at Microsoft's Xbox headquarters in Redmond, Wash., as Moore was preparing to head overseas for the Tokyo Game Show and then, among other things, a trip to India to launch the Xbox there.

Q: Why release the Xbox 360 in India?
Moore: It's an incredibly fascinating market. India's growing, finally getting a middle class that's of a proportion that you really feel you can grow some business with.

How much does Xbox cost in India?
Moore: Obviously, it's in rupees. It's probably the dollar equivalent of where we are today here. In some instances, we will price down a little bit for the marketplace, but it's a premium product. And as I mentioned earlier, there is a middle class there, and clearly we have to market to them. Not only do you want to market to the consumers that buy the console, we want to market to the consumer that can connect online. And broadband penetration is growing fast there. Plus, the business model is about selling software. The software pricing is where we could look at being a little more market conscious.

Given different costs of living, the price of an Xbox 360 is not the same in San Francisco and Topeka. How do you deal with that?
Moore: It's more expensive in Topeka. But we don't just look at the console cost in isolation. We look at what it takes to be up and running and have the best experience. We call it "TCO," total cost of ownership.

So the question is how you attract that next 20 million consumers when you need $199 as a price point for example, to do that.

You look at hardware cost itself, and then you look at what software costs, you look at game subscriptions and peripherals. It is something that companies like ourselves, Sony and Nintendo spend a lot of time figuring out. Where is the sweet spot? You're not going to make any money on the hardware in the early going.

When you look at an ideal Xbox consumer, who is that person?
Moore: He is a male. He is connected. He is very, very used to going online for community. He's probably played PC games online. He's part of a "Halo 2" clan and has been for two years. That comes from him playing "Halo" in college--so he's 23 or 24--with his buddies. He still loves to go out on a Wednesday night with them, even though they're spread all around the U.S. But they all come together Wednesday night to relive the days in the dorm room.

What else does he want?
Moore: He also expects instant gratification, the delivery of game demos to his hard drive via his broadband network. And he's popular enough to have his profile online and he's pretty competitive, so he loves (Xbox game) achievements. He'll stay up all night to get achievements in games that his buddies have because it just pisses him off that they've got them first. He also would rather starve to death than not have a high-definition TV. He'll go without food rather than have a standard-def 27-inch TV.

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"Vista is a games platform."
by extinctone September 20, 2006 4:57 AM PDT
You heard it from the horses mouth, so to speak.

Do you want to run your business on a "games platform?" Ever wonder why MS platforms, since day one, are unstable and insecure? So we can play games! Yeah, that's what my business needs to be doing all day. I want one of those Microsoft 2003 Server game platforms holding and securing my data.
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Not seeing the big picture
by Christopher Hall September 20, 2006 6:54 AM PDT
Let's forget for a moment that countless thousands of businesses currently run their day-to-day operations on a "games platform" (Windows being that by default since no other OS even comes close to its capability). Let us also discount that this supposedly "unstable and insecure" OS has yet to be abandoned by any major - or sane, for that matter - corporations for its alleged insecurity and instability all the while surviving a near constant barrage of threats and attacks.

All that aside, one of the many roles the Windows line plays is that of an entertainment platform. Windows has always been and likely always will be (until something better comes along) the preferred platform for games. And it's exactly that kind of versatility that makes it such a fit for consumers, regardless your application. Want to do everyday menial tasks like word processing, email, and digital photo management? Windows does that. Want to play cutting-edge games? Sure, Windows does that, too. Want to run a multinational, Fortune 500 megacorporation? No sweat. For the cost and ease of use, it's a hard trick to beat.

Further, you'd have to be stupid to turn your back on a multi-billion dollar industry and completely write that out of your capabilities. Video games are huge, and aren't likely to get any less huge in the coming years.
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Vista Games Platform??
by chopsperry September 20, 2006 8:10 AM PDT
More like the horses behind, that is the most appletized ignorant statement I've ever heard. The versatility of the products is what might make it vulnerable a true professional will have no problems with it........ Go to school or read a book or something
GAME
by YankeePoodle September 20, 2006 9:13 AM PDT
What is a game to an OS? It a process, which harnesses the computational ability and good graphic rendering ability. Which is not very much different from many business processes.

So to speak GAMES are the most sophisticated piece of application that demand a lot from OS. I do not see any conflict of interest when an OS tries to CATER to business as well as entertainment via games. May be you are the "minimalist", just give me what I need types. But when catering to mass market that kind of customization is hard esp. with great chances of alienating segments of customers. (and customers get to choose between 5 flavors of VISTA, which I think is a bit of too much).

The instability and lack of security in Windows platform can hardly be attributed to its gaming capabilities.

You can find better reasons why you wont run VISTA on your server or desktop, but your current "sarcasm" is at the best misses the mark by a mile.
Games have advanced the OS considerably
by aabcdefghij987654321 September 20, 2006 12:06 PM PDT
and those advances also help the business uses. It's in the gaming where many of the most innovative changes will be seen first.
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Spoken like
by Lindy01 September 20, 2006 12:45 PM PDT
a true linux or mac fangirl.

Honestly open your eyes....or brain. The video gaming industry passed the movie industry in 2002 or 2003 is terms of sales. Console gaming sells more games than PC's.....5 to 1.

Of PC games...99.9% are sold for the PC. If you could write a game that would port from console to PC very easily and vise versa you would be making a smart move. That is what MS is trying to do with Vista, DX10, the 360 and XNA SDK.

If you use XNA to write a game it should port very easily from Vista to the 360 or vise versa.

MS is going to extend their Xbox Live service to PC's running vista as well. In fact the is a showcase DX10 game that is going to ship at the same time Vista ships or shortly after that will be on the PC/Vista and the 360. What makes it different is the fact that you can play on the new Live service against each other for the first time....same game...one user on the 360 and one on the PC.

Only Microsoft has the depth to make this all happen currently in terms of market penetration.

You can take it another step further when you add in Media Center and a home network....view phots and video over you network from your Vista PC to your 60inch wide screen TV through your 360....I do it today. Play music as well. Oh and then comes Zune with its wireless NIC....stream that same music to your Zune with WMC on Vista...or from your 360 on your wireless home network.

Man you lack vision.
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PS3/Xbox 360
by bfleming98 September 20, 2006 5:22 AM PDT
I'm curious to see how the PS3 will integrate all the online componenets. Hats off to Microsoft. I think they've nailed it with the 360.

- Bryan
http://www.BryanCFleming.com
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"Nailed It"?
by kuguy3000 September 20, 2006 8:47 AM PDT
I assume the poster that claimed that Microsoft 'nailed it' was begging a little hyperbole. MS hardly nailed anything, let alone the one thing that truly differentiates them from their competitors...

The online Live service is nice, but it's fractured. It's a pay service with an impossible-to-determine user base (due to all the sporatic, free memberships), with nearly half the games not functioning properly online. Tried playing anything other than Halo online? Or a driving game? Good luck...

Their Arcade service, contrary to popular output, hasn't been the success the media would have likened it to be. 10 dollars for PacMan? Not to mention a curious pricing scheme that makes players PAY to play offline content (Lumines, among others). Paying for continuous online content is one thing, but making the consumer pay for offline is another...and it's very, very dirty.

They do seem to have a 'vision' of connectivity, with the Live service, and MS Live enabled phones and their Zune player...but the fact remains that any one of these components doesn't work very well in the field it's supposed to. LIVE on the XBOX is a medium-grade online service (hyped only because it's the only real option), the new LIVE Messenger is a buggy mess, and from all accounts the Zune player is a complicated relic being released as the new iPODS and iTunes usher in a new era.

Plus, Moore claiming that the Wii is a 'fun box' for 'minutes' at a time is extremely different than what he was saying minutes after he actually played the thing. He was extremely enthusiastic (as is the entire games industry) that the Wii is indeed a revolutionary thing, amazingly fun to play, cost-effective, and very much a competitor.
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Xbox got my business
by City_Of_LA September 20, 2006 6:49 AM PDT
It's a great console. It's cheap, I have my TV and PC connected to it, the Live service is pretty cool if you're into such things.

And damn, that Peter Moore guy got it spot on. I'm 25, ultra competitive, have a house that resembles Best Buy electronics and PC World rolled into one, love hanging out online, have a 32meg unlimited broadband connection etc etc.

I might get a Wii and will only buy the PS3 IF it supports a KB/M for FPS upon release.
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Ideal user is male? They're missing it.
by XenoChron September 20, 2006 9:06 AM PDT
The fact that he says the ideal user is Male is why they'll miss their mark and someone like Nintendo or others will make it. There are a ton of women gamers out there. There is a huge generation of older gamers (older than 24 that is for sure) that have grown up playing games. They want their wives and families to enjoy gaming too. Guess what, it'll be easier to convince the woman to buy one if they enjoy it.

It's funny he mentions $199 as a price point too! Can you get an XBOX 360 at $199???
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Wii
by YankeePoodle September 20, 2006 9:21 AM PDT
Wii would cater to certain segments, but if you have to buy ONE Console, it would be XBOX or PS3. The hardware of Wii is hardly promising, and their "magic wand" controller is best only when a single user is playing (on Multiplayers it get uncomfortable). Nintendo is trying to profit from both console as well as games, where as it a mega bargain that your getting a fully loaded XBox360 for $399 and I can see a price cut once PS3 enters the market.

Wii will fade out of competition just like Gameboy. If you are targetting Non-gaming segment $250 is certainly a high price tag, and with Wii's hardware spec its hard to attract gaming segment.
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Have you ever been online? SHEESH!!
by baswwe September 20, 2006 9:30 AM PDT
there is maybe 1 female for 50 guys.
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Yes it is.
by Akiba September 20, 2006 10:55 AM PDT
Ideal user does not mean the only user. Its species the user that will spend the most on games and services. You seem to be referring to potential new users not the ideal user.

People's wives will never be the ideal user because they will usually have more moderation when it comes to gaming no matter how much they enjoy it. They are a potential market for growth.

Also female gamers aren't necessarily attracted to marketing and games that target females.
Yeah
by Lindy01 September 20, 2006 12:24 PM PDT
my five year old daughter likes to play lego star wars on the 360 with her twin brother....but I play a few games on Live and I dont think I have ever heard a female on there.

I dont know for sure but I am guessing I am 98% correct.

I know of a few female co-workers that play WOW on the PC....but they play it with 20 other guys.

He was dead on....video gaming for males probably seriously starts around 7???? Probably peeks at around 24 just when they can start to afford their electronic gear and would rather have a new console then by a frame for that mattress in their bedroom.

Of course you get older and other things like wife, kids, work.....cut into your gaming. I will be 40 next month and I play on my 360 once or twice a week for about 1-2 hours each. I would love to play more....but I just dont have time.
Next-Gen Critism
by techned September 20, 2006 11:45 AM PDT
Peter Moore's take on the "ideal customer" being male and between the ages of 24 and 30 seems a bit narrow in regards to target penetration you want to get into people's homes with a game machine.
Granted this is the group that gets the most money and is more influenced by "trends" but you leave out families, specifically kids - boys and girls below the age of 13, who may have parents who are either watching their budget or want to be more responsible as to what games their children play.
If you look at the game store web sites - Xbox and 360 do not exactly cater to age groups that are below the age of 13 or have any games that can be considered "party" games (though I think I did see DDR for Xbox once). If M$ wants to get a bigger share of the game market, expecially in Japan, it has to expand beyond Peter Moore's definition of the "ideal game player".

This is kind of the opposite of what Nintendo does - it basically aims for families, especially kids but Nintendo systems have very few adult -oriented or themed titles; basically Nintendo is aiming for the budget consicous parent but not adults above the age of 24.
Revolution (not Wii) seems to try to get away from that mindset with an expanded bunch of games that seem to aim for people above age 24 - unfortunately all of this comes from publisher Ubisoft but if Fil-Ames is serious in getting the Revolution into more homes than Nintendo has to get stuff from Rockstar Games, Activision (like Prey, Doom, Star Trek, etc.), Eidos - because other third party publishers seem to have their launch titles filled with too much licenced cartoon games than a balance offering.
Revolution looks like a system that can actually really compete with M$ and Sony, with innovative game controls and hardware that seems less like a toy and more in line what a cutting-edge game machine should look like but it's the software that will either make or break the systems and Nintendo should take lessons from Sony regarding this matter.

The reason I like the Playstation brand is that there is variety in the software - you can get your cute cuddly kid game (like Sponge Bob) or get something really extreme like Rockstar's "Manhunt" (good game but I sure as Hell won't let a kid below 19 yrs old play it - it was a bit too disturbing, even for me).
My critism about Sony's Ps3 is about an analyst's prediction that they will have more of the $599 model than the $499 model around Xmas - which I consider just plain stupid in my POV.
Considering hom much gas cost these days and the only reason you would buy this machine is to play games and movies - I can't see the reason why you would want the $599 machine; big deal that the $599 machine has SD/CF media ports, a bigger HD, and HDMI - what is the point of trying to sell more of these machines than the basic, which is basically the equivalent of the Premuim 360, with HD-DVD drive.
The PS3 - both machines will come with USB, where you can easily get a media card reader anywere for less than $40 (Sony could've sold this device as a package with updated software for the PS3 OS, like it did with the PS2 DVD remote control), and Sony has stated that the hard drive in the PS3 could be customer replaced - it's cheaper to get a bigger HD for the $499 model than getting the $599 model for the 60Gb drive. If this analysis is true - it is something that M$ could use to their advantage to put the screws to Sony - like I said - Plain Stupid.
And HDMI - is this really necessary for gaming? Maybe movies but it's possible to program the movie discs to not invoke the DRM restrictions on PS3 so it can put 1080i through composite cables - M$ is going to do it for the HD-DVD drive - maybe because it would just put the "Stupid" into building a $599 PS3 machine in the first place.

Well, there is my gripe about the Next-Gen machines.
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interesting, but some of my comments to yours
by ackmondual September 20, 2006 3:26 PM PDT
>QUOTE
Granted this is the group that gets the most money and is more influenced by "trends"
>unQUOTE

does "gets" mean earns AND receives through other sources? AFAIK, the stats on 24 to 30yo these days is if they're making $40K+ salaries, in a decent cost of living area, they'll be able to afford a HDTV set as well as a premium 360 bundle + games and accessories. However, that would sap a good amt of $$ from their budget.

Another major complaint with the 360, at least the *** version is that it's backwards comp with XB1 games is **** poor. I think it was around <10% in contrast to 90% for the US and Europe versions?

.

Nin does need better 3rd party supp. Word goes Nin will do MUCH better for the Wii with more 3rd party devs lined up. Some even saying they haave the #s there to match Sony or M$

However, a plus with the Wii is it's remote. Nin's philosophy is that the TV remote, is commonplace in this day in age. Making their new controller in the shape of a remote and including motion sensors/gyroscopes to allow interface with more natural body motion than a pair of analog sticks and doz+ buttons will enable them to capture a market only somewhat realized.... non gamers. This marketshare is evident as we see ppl who otherwise would'v had very little to no interest in vid games still getting a GC/PS2/XB so they can play games using the bongo drums/DDR/eye toy/guitar hero/<gun> peripherals. It's done wonders for those consoles and it could do the same for the Wii.

.

As for the PS3, one con is i hear games will be quite difficult to dev for. Wii development is based off of GC dev, the latter in which i hear is dev friendly, so the Wii will be like dev for GC but with the wii-remote and some extras. 360 is M$ and some1 who's dev-ed for 360 says it's streamlined and dev friendly. I myself have used M$ dev products for other platforms and if it's one thing i gotta say about M$, many of them are a delight to use. PS3 will be a nightmare in this regard.

as for basic vs premium, it's nice to hear about the user-swappable HDs, but the basic version can't be upgrated into the prem version. Some of the prem features like built in wifi, and other integrated features are only on the prem bundle
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Diamond dose
by wildchild_plasma_gyro September 20, 2006 4:28 PM PDT
Money made for rich people
little gold ring at the corner with a diamond or two on it.
what do you think about people have so much money they can buy worth the value of diamond money with it
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Diamond dosh
by wildchild_plasma_gyro September 20, 2006 4:29 PM PDT
Money made for rich people
little gold ring at the corner with a diamond or two on it.
what do you think about people have so much money they can buy worth the value of diamond money with it
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