The Convergence Game

This week, Microsoft launched the Xbox, a new gam­ing sys­tem that takes the Red­mond giant into another mar­ket. Today, Nin­tendo is unveil­ing the Game­Cube, their new entry in a bat­tle they have fought with Sony for many years. With these new gam­ing sta­tions enter­ing the mar­ket, a new war is start­ing and in the end, it is a war that may change the way we all watch TV, lis­ten to music, get movies, or play games.

As many of you already know, the game sta­tion is a small box that attaches to your TV and on which you can play video games. How­ever, the fire­power of new gen­er­a­tion boxes now on the mar­ket is now equiv­a­lent or higher than that of most com­put­ers. The main logic behind this was that gamers wanted a more real­is­tic expe­ri­ence and crunch­ing 3D rep­re­sen­ta­tion in an ever-changing envi­ron­ment required more and more pro­cess­ing power.

Playsta­tion 2 opens the gate

Last year, Sony intro­duced the Sony Playsta­tion 2, a new gam­ing sys­tem that included a built-in DVD player and a 3D graphic engine that made com­puter video card look ridicu­lously out­dated. At that time, Sony admit­ted that their goal was to go beyond games and con­trol the dig­i­tal liv­ing room. Recent part­ner­ships with Macro­me­dia, AOL, and Real Net­works seem to show that Sony has estab­lished a clear roadmap as to how it would get into the online mar­ket. And with a grow­ing installed base of (8 mil­lion so far, and an expected 34 mil­lion by 2004), Sony could become a major online player.

Microsoft unveils the Xbox

Hav­ing sur­vived the browser wars with Netscape (Inter­net Explorer now con­trols 80% of the mar­ket), Microsoft is start­ing to worry. If one could down­load music and exchange videos via a gam­ing sta­tion, as well as play video games, where would the home PC go? And where would that leave Microsoft’s ambi­tious .net strategy?

As a result, Microsoft had to play in that field and to do so, it went to game devel­op­ers. After much dis­cus­sion, the result is here for every­one to test: it’s called the Xbox, and is essen­tially a PC pack­aged as a gam­ing sta­tion. If you read the doc­u­men­ta­tion, the Xbox becomes more dif­fi­cult to clas­sify as sim­ply a gam­ing box. For starters, there is a DVD player, which was added just to match Sony’s Playsta­tion 2 DVD player. But Microsoft goes fur­ther by build­ing a Dolby decoder within the sys­tem as well as adding parental con­trols to the box.

The sec­ond thing they added to the box is the abil­ity to put in a CD, play it, and burn it onto the built-in hard drive (through what they call a music man­ager). All of a sud­den, the Xbox becomes a music stereo box.

Going fur­ther is the mat­ter of the Eth­er­net port and the mys­te­ri­ous broad­band net­work touted by Microsoft. Early inside reports point to the first broad­band gam­ing net­work that might go beyond gam­ing. At the cur­rent time, there are rumors of a net­work that would also allow for Inter­net brows­ing, email, and instant mes­sag­ing, as well as gaming.

The mes­sag­ing por­tion is an inter­est­ing one since it would include and optional plug-in for the box called the com­mu­ni­ca­tor, a head­phones and micro­phone device peo­ple would use to com­mu­ni­cate either via IM, or while play­ing online games. The unit includes a wire­less head­set with micro­phone, which could eas­ily be used to make phone calls if Microsoft uses some of the tech­nol­ogy it is cur­rently build­ing into the Microsoft Mes­sen­ger. Long term, the Xbox could become another entry point into MSN, and into the web as a whole.

Mov­ing for­ward: the Playsta­tion 3

Sony, how­ever, is not rest­ing on its lau­rels. Now that Microsoft is enter­ing its turf, the com­pany is see­ing its dom­i­nance on the dig­i­tal liv­ing room being challenged.

With the PS3, orig­i­nally slated for mid 2003 but pos­si­bly being released ear­lier, Sony plans to inte­grate offer­ings from its music and movie divi­sions into the system.

Con­sid­er­ing the fact that the com­pany already offers a suite of MP3 play­ers, it is easy to see that the com­pany will build that func­tion­al­ity into the next box.

Rumors are that the com­pany will build a large hard drive within the box, which would make it a per­fect stor­age area for an MP3 collection.

But going beyond music, the com­pany is also look­ing at pack­ag­ing a dig­i­tal TV recorder within the unit, turn­ing it into a device that would com­pete with Tivo and Replay in the mar­ket for cus­tomized television.

Also built into the box would be a TV tuner, and rumors has it that the sys­tem would also include a satel­lite TV decoder. In order to counter the online capa­bil­i­ties of the Xbox, Sony will release an online pack for the PS2 but will build that func­tion­al­ity directly into the PS3 box.

The unit would be offered in two dif­fer­ent ver­sion: a light ver­sion, which would focus on gam­ing and be sold for around $250-$300 and a more expen­sive full fea­tured con­ver­gence ver­sion which would retail for $400-$500.

Games Only: The Game Cube

Mean­while, Nin­tendo believes that games and only games is what con­sumers want out of their boxes. As a result, the Game­Cube is a smaller, less pricey gam­ing box. How­ever, this does not mean that it is offer­ing less per­for­mance. It’s just that it’s a dif­fer­ent take on the world. As far as Nin­tendo seems to see the world, gamers will want to pay no more than $200 for a gam­ing box but may be will­ing to pay extra for new features.

In a con­ces­sion to Microsoft and Sony, the box will soon sport two dif­fer­ent modem adapters: a 56k mod­ule for peo­ple who use a phone line and a faster broad­band mod­ule for peo­ple who have a net­work at home. Rumor has it that Nin­tendo is prepar­ing a mem­ber­ship net­work with ser­vices like online video game, full Inter­net access, and the dis­tri­b­u­tion of music data. Since the Game­Boy advance can inter­face with the Game­Cube, it seems that Nin­tendo is work­ing on a hard­ware strat­egy that will make the game­cube a con­nect­ing sta­tion into the home, while the Game­Boy will become a roam­ing device that can get updates from that box.

Con­ver­gence is here

Based on those recent devel­op­ments, it seems pretty clear that hybrid boxes are now start­ing to pop up and that we will soon see more appli­ca­tions (ini­tially in the gam­ing world but even­tu­ally in other areas) become the norm. I would strongly rec­om­mend that TNL.net read­ers who are involved in devel­op­ing online con­sumer appli­ca­tions pay atten­tion to the gam­ing space as it is the next arena for which we might have to for­mat our out­puts. Based on early show­ing, I would say that Playsta­tion 2 will keep its pre­dom­i­nant posi­tion for the next year or so but may be get­ting some com­pe­ti­tion from the new under­dog in this arena: Microsoft.