This WSJ story on xbox is puzzling: Dean Takahashi knows intimately the whole process of creating xbox, yet does not mention cpu vendor for xbox??
He knows, why he does not tell in his story, just posted on WSJ Interactive edition? Really undecided?
How Four Renegades Persuaded
Microsoft to Make a Game Machine
By DEAN TAKAHASHI
Staff Reporter of THE WALL STREET JOURNAL
The battlefield of Nintendo, Sony and Sega will gain a big new combatant
Friday when Microsoft Corp. officially announces one of its most unusual
forays ever: a plan to build a video-game machine called the X-Box.
Created by a renegade group of Microsoft engineers who spent months
lobbying the software giant to branch out, the X-Box is a simplified version
of a personal computer. It has a hard-disk drive and graphics that claim to
be three times faster than those of other game-machine makers. The world
has known sketchy details of the X-Box since last fall, when news of its
existence surfaced in the media, but Microsoft hasn't divulged specifics
until now.
Does the world really need another video-game console?
That question can't be answered until after the fall of 2001, when
Microsoft plans to start selling the X-Box. In any case, the long lead time
will provide plenty of opportunity for defensive moves by Japan's Big
Three: market-share leader Sony Corp., No. 2 Nintendo Co. and No. 3
Sega Enterprises Ltd.
Sony officials decline to comment on the X-Box, but they note that they
have the advantage of 70 million current customers and a long history in
consumer electronics. "We're totally aware that we face some incredible
competition," says Mr. Gates in an e-mail interview.
The entry of Microsoft into game-machine making is a sign that the
electronic-games industry has come of age. Last year sales hit $6.9 billion,
just shy of movie box-office receipts of $7.3 billion. And the industry is
expected to outpace other types of entertainment as a new generation of
consoles takes off. With Microsoft entering the fray, "this is the beginning
of a battle for the living room that is going to last 10 years, starting with
games and then going into all forms of entertainment," says David Cole, an
analyst at DFC Intelligence in San Diego, Calif.
Microsoft is already a big player in computer games, and its "DirectX"
software is widely used to create PC games with intense 3-D graphics.
The company sells games like "Age of Empires" and "Flight Simulator,"
makes such game hardware as "Sidewinder" joysticks and has a side deal
to supply game software to Sega. It also runs the MSN Gaming Zone, an
online games Web site with millions of players.
But Microsoft has never built a computer for sale, and in February 1999 it
certainly had no official intention of making a game computer. Nonetheless,
on the company's campus, in Building 27 and Building 5, a "garage-shop"
game console was taking shape in the spare time of four engineers, Seamus
Blackley, Kevin Bachus, Ted Hase and Otto Berkes.
Existing machines from the likes of Nintendo were custom-made for
games. The four engineers were designing a PC stripped of everything
game playing didn't require. That would let Microsoft exploit the huge
economies of scale of the PC industry, using the same hardware
components as PCs and the same game-programming software,
Microsoft's DirectX. This strategy would also make it easier for software
makers to adapt computer games to run on the new machine.
The four men soon obtained permission from their bosses to work on the
box full-time. They began showing their early work to some higher-ups in
March 1999.
The X-Box idea might have stopped there but for something Microsoft
was just starting to perceive as a threat: the Sony PlayStation 2.
Video-game consoles were never much of a concern for Microsoft, but
after Sony unveiled plans for its new machine in March, it became clear
that the machine could act as a Trojan Horse, putting Sony into living
rooms: It was a game machine, but also a DVD-movie player and an
Internet-access device.
"We were thrilled when we heard about the Sony plan," says Mr.
Blackley, a graphics specialist and game programmer. "It was really good
for us because it brought validity to the games market. It was our big
motivator and helped us get noticed within the company."
Still, top Microsoft executives didn't know about the X-Box project when
they met with Mr. Gates at a resort near the Canadian border for an annual
brainstorming session in mid-March. The sessions split into eight possible
new product areas. Mr. Gates attended the discussion about games
because Sony's announcement had riveted executives' attention to that
market. Mr. Gates and other senior executives concluded that they needed
to move beyond the PC and offer something new to gamers. Part of their
rationale was that video-game players have traditionally been the earliest
adopters of new technology.
After the retreat, Craig Mundie, a Microsoft consumer-electronics
executive, acted on the group's decision by forming a task force on games.
He was still unaware of the X-Box project, but found out about it quickly
when the box's builders showed up uninvited at a meeting scheduled to
iron out Microsoft's game-computer strategy.
"They were going in the right direction," says Robert Bach, the vice
president now overseeing the X-Box, and the four quickly got approval to
keep going.
The first big conflict flared in May. In a meeting with the X-Box team, Mr.
Gates agreed with a demand from Ed Fries, general manager of
Microsoft's game division, that unlike competitors' game consoles, the
machine should have a hard drive. He argued that it was a strategic feature
that could make games designed for the X-Box richer in terms of
animation, audio, speed and expandability.
Opponents responded with the classic arguments: A hard drive is a liability
because it introduces complexity, cost and reliability problems. The group
decided to keep the hard drive, but it had to continue to justify its presence
at each contentious product meeting.
Rick Thompson, head of Microsoft's mouse and joystick hardware
division, became project head on July 21, and he shifted 20 people from
his hardware group onto the X-Box team. By then he had the backing of
Microsoft President Steve Ballmer. But Mr. Thompson still encountered
skeptics in the company. They were worried that Microsoft might lose
hundreds of millions of dollars in the venture.
Mr. Thompson eventually got a boost from J. Allard, a programmer
famous for writing a memo in 1993 that motivated Bill Gates to get serious
about the Internet. Mr. Allard was on leave from Microsoft, looking for a
chance to either "go home or go big." When he heard about the X-Box
from a friend, he decided to join up, convinced, he says, that "the X-Box is
going to change the world."
As head of the X-Box's software effort, Mr. Allard chose to use a
bare-bones version of the software behind the Windows 2000 operating
system, known for its stability, as well as the DirectX software. But the
system was going to avoid the quirks that lead to frequent PC crashes by
running games that were specially designed for the X-Box. By this time, the
X-Box was pulling in Microsoft people from all divisions, though Microsoft
won't say how many eventually joined the group.
Then the outside evangelization began. In the fall, Messrs. Bachus and
Thompson courted game developers intensely, soliciting opinions on what
would make the best box. "We were very enthusiastic about the
technology that they were coming up with last fall," says Tom Dusenberry,
president of Hasbro Inc.'s games division. "As they gained feedback from
developers, they adjusted their targets on the hardware."
Hardware-component vendors vied to be designed into the box. Nvidia
Corp., for example, won the contract to supply the graphics chip only after
multiple rounds of talks.
Then a potential show-stopper hit. The plan was to have PC makers build
and sell the Microsoft-designed box. In September, though, Mr.
Thompson came back from a trip with news that PC makers were
declining the job, seeing it as a money-losing proposition. Console makers,
after all, typically make most of their profit on game software, not
hardware.
The news came as a relief. Mr. Thompson realized Microsoft would have
to make a bigger bet and take on the risk of manufacturing, but he believed
this would make it easier to match the prices of rival consoles and keep the
whole project coordinated. So the group decided to hire a manufacturer to
build machines that would carry the Microsoft nameplate. Microsoft hasn't
said who the manufacturer is.
On Dec. 21, the X-Box group went to Messrs. Gates and Ballmer with
two options: launch a less-sophisticated machine in 2000 or a more
ambitious one in 2001. Mr. Gates told the team that Microsoft's machine
had to provide several times the performance of the PlayStation 2. "We
weren't aiming to build a parity product," Mr. Gates said. He told the team
to wait until 2001, which would let it use a Nvidia chip that operates at a
trillion operations a second, as much as three times as fast as the Sony
machine.
At the end of the same "go or no-go" meeting, Mr. Ballmer said, "You're
asking me for a decision on this with a Big 'D,' not with a little 'd,"' meaning
that it was a long-term bet. Then Mr. Ballmer turned to Mr. Thompson
and boomed: "Go!"
After Friday's announcement comes the hard part. Microsoft must
formalize licensing arrangements with software makers, focus on cutting
manufacturing costs to the bone, and contemplate further the "killer" game
that the company knows it will need to succeed against its entrenched
rivals.
The delay may give Sony a chance to cement its hold on the market with
the PlayStation 2. But Microsoft's early announcement could lead some
consumers to wait for a machine with more advanced features. The
common high-tech tactic, branded "vaporware" by rivals, has angered
antitrust regulators in the past.
"We made a big bet with Windows, a big bet with the Internet," says Mr.
Bachus. "We're making a big bet with games." |
