Microsoft Might License Xbox Software

[James Fee]

<div class='os_post_top_link'><a href='http://www.usatoday.com/tech/products/games/2005-06-30-microsoftxbox_x.htm' target='_blank'>http://www.usatoday.com/tech/products/games/2005-06-30-microsoftxbox_x.htm</a><br /><br /></div><i>"A coy Microsoft Chairman Bill Gates hinted Thursday that his company might license the software underlying its Xbox gaming machine to a variety of outside companies in a bid to expand the market share for the Xbox machine — a platform that trails the sector's No. 1 Sony PlayStation. The U.S. software company is considering offering "the basic software" for Xbox, although no decision has been made, Microsoft Japan spokesman Kazushi Okabe said Thursday, confirming the Gates' comments reported in Thursday's editions of Japan's top business daily Nihon Keizai Shimbun. Gates hasn't offered specifics about the kind of software or which companies would be involved. He also hasn't said whether the arrangement will involve manufacturers making products other than game machines, such as digital consumer electronics gadgets that combine PC functions with home appliances."</i><br /><br /> <img src="http://www.digitalmediathoughts.com/images/xbox360.jpg" /> <br /><br />I'm trying to think of how companies will license the Xbox, any ideas?

[Felix Torres]

How?
Or what for?

I've seen several different sources discussing this and it is not wholy clear just *which* xbox the licensing would apply to; the original or 360.

If the original, then the likely outcome would be clone/hybrid first-gen xbox-compatible devices, probably running off the latest via cpus.

If the latter, it could be just about anything that needs to process HD video.

The first thing that comes to mind is HD video playback, probably off HD DVD. (MS and Toshiba just announced a partnership centered on MS software for HD DVD and Toshiba is pushing for an even stronger endorsement from MS.)

Second, Media Center Extenders and streamers.
Third, HD PVRs.
Fourth, standalone media centers.
Fifth, cable and IP-TV set-top boxes.
Sixth, and least likely, 360 clone consoles.
(Not impossible though; remember, the hardware is a loss-leader; the money is in software. So, if somebody else can figure out how to make money off mutant 360 hardware that wil still play 360 games, then it is a big win for MS.)

The real interesting options come from exactly *what* MS licenses; the software itself is polished, flexible, and valuable, but there are several bits of 360 hardware worth licensing; namely the Xenon CPU itself.

The value to MS of licensing hardware comes from improving the economies of scale and driving their component prices down by having the same parts used in other devices. I don't think Sony would much enjoy seeing a few million extra Xenon cpus running around in Media devices, thereby allowing MS to price the 360 at say $199 for summer 06, just as the PS3 is trying to take off...

Personally, I think asian CE companies are looking for alternatives to Sony's Cell and Apple's Fairplay and ending up, hat in hand, at Microsoft's doorstep.

(Nobody *likes* to buy component/technology from their direct competitors, after all.)

That there are synergies is licensing xbox tech to be found there is no question, both in software and hardware. The 64 billion dollar question, though, is whether they are worth diluting the xbox 360's value proposition of next-gen gaming + next-gen media playback at the price of only one of the two.

I guess we'll learn soon enough what Mr Balmer thinks...

[Jason Eaton]

..."manufacturers, manufacturers, manufacturers!..."