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SEATTLE — What does Microsoft know about fun? The engineers who designed Xbox, the new 128-bit video game console that Microsoft plans to release sometime next year, know too much for their own good.

After unveiling the console’s specs at a trade show last March, the team held a small party to celebrate. Having polished off several bottles of champagne sent by well-wishers, the engineers piled into an elevator to head home. Ignoring the capacity sign, they squeezed inside. The last one in was Seamus Blackley, Microsoft director of advanced techno- logy, who had to launch himself into the air over the heads of the other people to fit.

The doors closed; the elevator plunged. Three floors later, a group of suddenly sober engineers emerged. They may have been sober, but they still had a lot to celebrate.

Hard to dispute hardware

Blackley and company may not know much about elevators, but they’ve mastered the art of designing video game consoles. Microsoft has yet to show an actual game running on Xbox, but judging by its specifications, the console should outperform all others.

Looking at the design plans, it appears that Xbox was built with the goal of outperforming Sony’s PlayStation2 on every specification. PlayStation2 generates 66 million raw polygons per second, so Xbox generates 150 million. PlayStation2 has 38 Mbytes of memory, so Xbox has 64. PlayStation2 has 48-channel sound, so Xbox has 256.

Like the Sony console, Xbox will play movies on DVD; but it also comes with a built-in hard drive, something PlayStation2 owners must buy separately. (Sega Dreamcast does not have a DVD drive, and Nintendo Gamecube will only read mini-DVDs.)

The one area in which PlayStation2 has bigger numbers is manufacturing costs. Despite the built-in hard drive and additional memory, Microsoft executives claim that Xbox is actually cheaper to build than PlayStation2 because it uses off-the-shelf components.

Sony, on the other hand, teamed up with Toshiba to design custom chips for PlayStation2. They have even opened their own factories to manufacture these chips.

Superior specifications do not always translate into superior games, however.

Softwhere?

Even without demonstrating games, Microsoft and its software partners have generated excitement with a number of significant announcements.

In September, Konami unveiled plans to create Xbox versions of several highly anticipated games, including “Silent Hill” and “Metal Gear Solid.”

Currently being developed by Konami’s Hideo Kojima, widely seen as one of the brightest stars in the latest generation of game designers, “Metal Gear Solid 2” was described by industry analysts as the first “killer application” for PlayStation2 after it was unveiled last May at a U.S. trade show called the Electronic Entertainment Expo.

An even more surprising result of Microsoft’s relationship with Konami is the announcement of “Crash Bandicoot X,” an Xbox game starring the dim-witted marsupial that many people considered Sony’s unofficial mascot.

“There’s been a lot of talk about ‘Crash Bandicoot’ for Xbox, but it wasn’t just ‘Crash Bandicoot X’ that they announced,” said Robbie Bach, senior vice president of the games division and chief Xbox officer at Microsoft. “It was ‘Metal Gear Solid.’ The Crash announcement was big symbolically, and Crash will be a big franchise so obviously we are excited about having it; but with the hardcore gaming community, ‘Metal Gear Solid 2’ is probably more important than Crash.”

Konami is not the only company that has signed on to do games for Xbox.

Microsoft recently released a list of more than 100 developers who plan to work on Xbox games, including such major companies as Namco (“Pac-Man” and “Tekken”), Midway (“Mortal Kombat”), Capcom (“Street Fighter”), and Eidos (“Tomb Raider”). According to Bach, publishers are attracted to Xbox because it is easily programmed.

“Game publishers will get better revenues faster from development resources placed on Xbox than they will on any other platform. We have great tools and the architecture of the system was designed to make that happen.”

Ease of programming is an important issue. In the 32-/64-bit generation, Sony PlayStation had the best tool library and was generally acknowledged as a very easy system for programmers. That ease of programming, along with a lucrative licensing program, attracted publishers to PlayStation.

This time, however, Sony has the hardest console to program. The Namco engineers who designed “Soul Calibur” for Sega’s Dreamcast gave the system rave reviews, as did Capcom’s Shinji Mikami, designer of “Resident Evil: Code Veronica.”

While Nintendo has been slow about sending out development kits for its new Gamecube console, the general reaction is that Nintendo has also focused on creating manageable tools.

Designers complain that Sony has not provided them with sufficient tools for PlayStation2. “Sony provided an extensive library with PlayStation,” said one famous game designer who wished to remain anonymous. “The library would do a lot of the work; but with PlayStation2, there is no library. We need to create our own library which poses its own set of problems in that there are so many choices to achieve the same effects.”

Challenges ahead

While Microsoft may have the best machine technologically, breaking into the video game market will not be easy for the computer giant.

As executives at Sega, Nintendo and Sony will testify, having a library of exclusive games is a must for video game console manufacturers.

Nintendo invests millions of dollars publicizing “Mario” games, as does Sega with “Sonic” and Sony with “Gran Turismo.” Within the video game industry, Microsoft is not perceived as placing much importance on internally produced, also known as first-party, games.

“If you are asking if we spend a lot of time working to insure that we will have a great first-party portfolio, the answer is yes,” Bach said. “The problem is that there isn’t really very much that we want to talk about, or even can talk about. We’re not ready to discuss the titles we’re doing internally yet for a variety of reasons.

“The more we talk about our plans, the more our competitors will know.”

Penetrating the Japanese market will be an entirely separate challenge for Microsoft.

While Japan is a relatively small country geographically, it is second only to the United States in video game sales. Japanese consumers purchased 17.4 million PlayStations, for instance. By comparison, Sony sold 27.7 million PlayStations to the entire North American market.

“A couple of things are going to help us break into Japan,” Bach said.

“The situation with Konami, Namco, Capcom, Bandai, Hudson . . . having those guys working on our platform will help a lot. Five of the top six or seven game companies in Japan are working on games for Xbox.

“We’re also building a distribution system in Japan. One of the problems that we’ve faced is that the overlap with the PC distribution system isn’t very high, so our existing retail infrastructure isn’t as strong as it is in the United States.”

“I think I’ve been over to Japan 12 or 13 times,” added Blackley. “The developers are excited about Xbox. When we first went over, it was really a hard sell because they didn’t know anything about the technology. Once we started talking to them, we told them about our power, our tools and our philosophy. They got really, really enthusiastic.”