Xbox: It's All about the Games

The machine has buzz, but Microsoft and its partners will have to keep the hot titles coming

Microsoft (MSFT ) has finally demonstrated that it's not just a one-trick pony. With the release of the Xbox game console, the company has shown that there is life beyond Windows.

Of course, that's not a huge departure. The $299 Xbox is built around a Pentium III processor and shares the same Intel architecture as every PC that ever ran Windows. And the basic software is a Windows variant.

During the early stages of Xbox development, Microsoft talked about the product as a sort of alternative PC, with networking capabilities and other computerlike functions. What it produced is more limited: a game console aimed at the heart of Sony's PlayStation 2 market, namely teenagers and young men. (The equally new $199 Nintendo GameCube maintains the company's traditional appeal to a younger audience.)

Xbox's strong suit is graphics. With its 733-MHz processor and fast NVIDIA graphics system, it's capable of producing highly detailed, realistic images even in fast-action sequences. Under the most trying conditions--rapid motion close to walls in a racing game, for example--backgrounds hardly ever break down into blocky pixels. Microsoft says it can generate graphics with twice the detail of PlayStation 2. I can't verify the claim, but the frames look really good on a standard TV and dazzling on a high-definition display.

BORED AND CARSICK. Xbox has several distinctive hardware features. The standard 10-gigabyte hard drive has room for almost unlimited saves of games in progress. The unit comes with an Ethernet connection, but the only thing it can be used for now is linking two Xboxes with a cable. Online gaming through broadband connections isn't due until summer. Dolby Digital audio, when hooked up with appropriate amplifier and speakers, puts out thundering surround sound, although I found game sounds impressive in ordinary stereo. With a $30 accessory kit, Xbox plays DVDs through your television.

As any gamer will tell you, however, it isn't about the hardware, it's about the games. Since I haven't really mastered a game since Space Invaders, I'm hardly the best person to judge them. I lack the interest or patience to become fluent in the complicated controls games use, and I'm sure aging reflexes have cost me a virtual step or two. However, I put in a fair number of hours sampling some of the more than three dozen titles, all of which retail for $49.99.

Halo, developed by Bungie Software, seems to be the hottest one, and I have to admit that it sucked me in despite my distaste for Quake-type, shoot-everything-in-sight games. It has enough of a story line to keep it interesting, a varied assortment of weapons, and some clever, if tricky, vehicles. Once I learned how to move, look around, and shoot all at the same time, it became addictive.

There is an abundance of car-racing games, whose charm eludes me. I tried NASCAR Heat (Infogrames) and Project Gotham Racing (Monster Games). Both quickly bored me, although Project Gotham generated views realistic enough to cause car sickness. I think I would have liked them better if I had been using a steering-wheel controller, such as the $60 Mad Catz MC2 Racing Wheel, instead of the standard Xbox controller. (Note to Microsoft: The "force feedback" feature produces a gentle vibrating of the controller, a silly sensation when your virtual car just hit the wall at 150 mph.) I had more fun with Fuzion Frenzy (Blitz Games), a multiplayer game, and Munch's Oddysee (Oddworld Inhabitants), a sort of psychedelic version of Nintendo's Super Mario.

To turn a critical success into an economic one, Microsoft and its partners will have to sell a ton of games. Analysts who have studied the Xbox estimate that despite squeezing every penny of cost out of the design, Microsoft loses $100 to $125 on every unit it sells. The difference has to be made up on royalties and distribution revenues on games.

For a company used to being despised, Microsoft has an odd advantage: It enjoys good relations with developers, who have written games for Windows without paying royalties. This puts Microsoft in the unusual position of being hated less than its competitors, Nintendo (NTDOY ) and Sony (SNE ), which have been battling developers over royalties for a long time. If Microsoft can keep the hot games coming, Xbox could be its first big non-Windows winner.

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