Is Microsoft working on a game console?

Thanks to Manuel Lopez for the tip: According to a report in the Wall Street Journal, Microsoft Corporation is working on a video game console--code-named X-Box--that will attempt to wrest control of the video game market away from Sony using PC technology and Windows ease-of-use. Of course, such a product leaves a few obvious questions, especially since Microsoft's Windows CE operating system lays at the heart of the Sega Dreamcast, itself a competitor for Sony's Playstation, which currently rules the video game world. Though Microsoft refused to comment for this article or the WSJ original, some startling details have emerged.

Microsoft's investment in the X-Box is said to exceed $4 billion and four years of research and development. Like other Microsoft-branded hardware such as its joystick and mice, the X-Box will be built by outside manufacturers to the company's specifications and not built in-house. Expected in late 2000, X-Box will feature a DVD player, a hard disk drive, and an integrated 3D subsystem that is reportedly being developed by Nvidia. Like other modern consoles, it will connect to a TV set, home stereo, and/or PC monitor. As the company's first major foray into the living room, Microsoft hopes to sell the machine for under $300, and it is being designed to be as PC-compatible as possible.

The Wall Street Journal report contains a speculative quote from a consultant who believes that the new console will run a "new hybrid of Windows 98 and Windows NT" that sounds curiously like Windows Millennium, Microsoft's next Consumer Windows. However, this is not what I've heard; I expect to see a pumped up version of Windows CE at the heart of X-Box if Microsoft decides to make a go of it. And that's far from certain: The company is said to be debating its entry into the hyper-competitive home console market on an ongoing basis.

If it does decide to take on Sony, Nintendo, and Sega, which have been dividing the home console market amongst themselves for over a decade, Microsoft is going to find itself in the unlikely role of underdog. Many insiders speculate that Sony alone could prematurely kill X-Box by simply releasing a new Playstation-branded console, such as the Playstation 2 that is also due in late 2000. But as video game consoles eek closer and closer to PCs technologically (and, indeed, surpass them in some areas), it was only a matter of time before Microsoft turned its attention to this huge market. But a crash and burn with X-Box could set the company back years and perhaps irreparably harm any bid for continued dominance. For Microsoft to parlay its success with the PC into mass-market appeal, it's going to have to field a winner the first time out. There won't be a second chance to get this right