May 29, 2002 9:30 AM PDT

Microsoft mulls Xbox-PC connection

An online survey conducted recently by a Microsoft partner indicates that the software giant is considering producing a kit that would let people use an Xbox video game console and a TV to access entertainment files stored on their PC.

The survey, sent to registered Xbox owners, was conducted by Greenfield Online, a research firm that has worked extensively with Microsoft's MSN online service. It appears to focus on Freestyle, an extension to Microsoft's Windows XP operating system aimed at turning PCs into digital media jukeboxes, although the survey refers to the product as "NewPC."

The survey includes a number of questions about a proposed Xbox Connection Kit that would let Xbox owners use the console to remotely access MP3 music and other entertainment files stored on a PC. The kit would include software and a remote control for the Xbox that would allow people to access music files and other media via a TV screen. Owners would need to have a home networking system set up to connect the Xbox and the PC.

"The Xbox Connection Kit is an add-on for your Xbox game system," according to literature included with the survey. "With it, you can access NewPC's TV, photo and music functions from other rooms in your home."

The survey indicates Microsoft would sell the device for $29 and could have it on the market within 12 months.

A Microsoft representative confirmed the company commissioned the survey but said the Xbox product was purely hypothetical. "There's no business plan or budget plan behind it," the representative said. "This is just another examples of how the different divisions at Microsoft are looking at ways to provide consumer value to our customers."

Analysts said they were not familiar with the specific product plans but said Xbox networking makes sense as part of Microsoft's broad eHome plan to extend PC functions throughout the home. At a recent developers conference, Chairman Bill Gates talked about being able to access PC files from numerous displays throughout the house, including TV sets.

"Microsoft is clearly looking at ways to extend your (Windows) XP content to the living room," Gartner research analyst P.J. McNealy said. "They've had a difficult time going through the set-top box, so this would give them another avenue."

Matt Rosoff, an analyst at research firm Directions on Microsoft, agreed that Xbox networking would fit with the company's broader eHome plan. "The drive is to make the PC more of an entertainment device experience, like using a television," he said.

The danger, Rosoff said, is that adding such functions to the Xbox could detract from Microsoft's efforts to establish the console as a valid game system capable of competing with Sony's PlayStation 2. Despite frequent speculation about the console serving as Microsoft's Trojan horse to enter the living room, Xbox executives have been adamant about the machine working exclusively as a game system.

"The people in the Xbox group have been routinely denying there are any other plans for the Xbox...but then you have Bill Gates talking about that kind of stuff," Rosoff said.

Sean Badding, an analyst with the Carmel Group, a research firm, said Microsoft is likely to bide its time before adding any nongame functions to the Xbox.

"First and foremost, they need for the Xbox to succeed in the marketplace as a gaming device, which is going to take two or three years," Badding said. "After that happens, then they can think about leveraging it for other services."

Badding added that the Xbox and Freestyle are targeted at different markets, so linking the two won't do much to help drive sales of either.

Other analysts have speculated that Microsoft will combine the Xbox with digital media functions in a single device.

Freestyle, which Gates announced early this year, is Microsoft's plan to have PCs act as central home entertainment servers. Freestyle is expected to make a modest debut late this year with Freestyle-branded PCs that will include a remote control and extra software to simplify playback of digital media.

The survey indicates Freestyle PCs will be priced around $1,500 and will have minimum hardware requirements including a 2GHz processor, 256MB of memory and a DVD drive.

 

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