Microsoft: Out of the X Box

How Bill Gates built his new game machine--and changed your living room forever

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Of course, war gamers aren't what really occupies Gates. He has them already. (Note to the hard-core faithful: the next version of Halo will not, repeat not, be ready in time for the launch of Xbox 360. It will be part of the all-important second wave next spring. "It's perfect," Gates says, radiant with bloodlust. "The day Sony launches [the new PlayStation], and they walk right into Halo 3." Microsoft is expected to announce that Xbox 360 will play Halo 2 and other Xbox games.) But there's still a significant demographic that for some reason doesn't consider wiggling a joystick to pretend they're shooting somebody a major priority in their lives. To woo this wider group, video games will have to get easier, more approachable, and they will have to expand into genres that don't yet exist.

Most video games are action movies. Where are the romantic comedies? And the dramatic weepies? "We're not gonna get so everybody in the family loves this thing just with sports and shooters and racers," Gates admits. "We're gonna have to fund, both internally and externally, some high-risk genres and see if those can stick. We can't just stay with the tried and true."

But maybe the new Xbox doesn't need fancy-dancy games or new, risky genres. Maybe it doesn't need games at all.


There's a top-secret 147-page internal document at Microsoft called "The Book of Xenon." Xenon is Microsoft's private code name for the Xbox 360, and "The Book of Xenon" spells out the company's entire strategy for it. Large chunks of "The Book of Xenon" deal with something it calls the D.E.L., which stands for the Digital Entertainment Lifestyle. This is shorthand for the notion that all media--movies, music, games, cameras, phones, TV--are becoming digital media, and that's changing how we relate to them and how they relate to one another. They're merging into a single integrated, portable, customizable media gestalt. This is what used to be known, in the quaint parlance of the now distant 1990s, as convergence.

Which is why, in addition to games, the Xbox 360 plays CDs. You can also use it to rip songs off CDs and play them from the hard drive. You can plug your iPod into the Xbox 360 and play songs off that too. You can watch DVDs on it. If you have a digital camera, you can plug it into the Xbox 360 and pop the images up on your TV, which beats making everybody crowd around the computer monitor in your study. If you have sufficient techno-gumption, you can even connect the Xbox 360 to your PC wirelessly, via wi-fi, and access whatever music and pictures you have stored there.

That's not all. The Xbox 360 has ambitions as a communications device. Unlike either Sony or Nintendo, Microsoft has a fully fledged online service, called Xbox Live, to go with its game console, and with the launch of the new Xbox, Gates & Co. is hoping to turn it into a major online community with Friendster-like features that match up compatible gamers. Companies will use Live to distribute game trailers and sell mini-games and new game levels. It will be a free-for-all bazaar. Players will be able to customize games--say, the way the skateboards might look in Tony Hawk's American Wasteland--and then sell their custom wares to one another online.

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