Microsoft wants Xbox to be center of gaming

The launch of Microsoft Corp.’s Xbox is designed to secure a foothold in the home video-game market for the company, an area seen as critical for long-term growth, according to a top executive of the game console project.

“This is not just another Microsoft project. This is a strategic direction we’re taking,” said Robert Bach, chief Xbox officer and senior vice president of the world’s largest computer software company.

In a recent interview with The Japan Times, Bach said the consumer business is a future growth area for Microsoft and that interactive gaming is an area where the company should be a major player.

“We need to be at the center of gaming in the home. And (that) is the console market,” he said.

Xbox is a powerful home video-game machine that will be launched in the fall. It will compete against Sony Corp.’s PlayStation2, which made its debut last year.

It will also mark Microsoft founder Bill Gates’ attempt to conquer another field of business.

Keen on paradigm changes in the computer industry, Gates has launched businesses to do battle against almost all of the newly emerging platforms that could jeopardize his Windows empire, ranging from Internet browsers and portal sites to the Java programming language, mobile computers and Web television.

While Microsoft failed in some of these areas, Bach said the Xbox project is different.

The difference is reflected in Microsoft’s $500 million investment to market the high-tech machine, which exceeds the company’s expenditure on marketing the Windows 95 operating system.

Despite the hype, however, the path ahead for Microsoft does not appear to be an easy one.

In addition to strong rivals, including Sony and Nintendo Co., the size of the console market itself has been shrinking in both Japan and the United States.

Sales of consoles and game software in Japan are expected to have suffered another drop last year, following consecutive declines in 1998 and 1999. Sales in the U.S. also contracted, by 5 percent in 2000, in the first fall in five years.

Bach, however, said Microsoft is optimistic about future growth potential. The temporary contraction is no surprise, he said, because the console and game software market is in transition.

Emerging online games will re-energize the overall video game industry, just as the transition from two-dimensional games to three-dimensional ones did five years ago, Bach said.

Connected to online networks, users can constantly update scenarios and characters to play “a game that never ends.”

Players can socialize with other players online and spectators can even join the network to enjoy watching battles, Bach said.

Equipped with an Ethernet port and 10-gigabyte hard disk drive, Xbox has advantages over other rivals, given its ability to accommodate broadband data communications, Bach said.

“We designed the box for online capability from the start,” he said.

Microsoft announced last week a key strategic alliance with NTT Communications Inc. to develop and launch a new broadband online game service this year in Japan.

But whether Microsoft’s new project will be successful remains to be seen. The two companies did not disclose details, including the target price range of the new online service — likely to be a key factor in a country with expensive data communications costs.