Microsoft's chairman is setting the company on a course to provide software and tools that will allow different forms of entertainment to blend. Messaging will become a crucial part of Xenon, the code name for the next Xbox. Microsoft will also work with television outlets like the Discovery Channel and MTV Networks to create tools for delivering content, as well as advertising, into the home.
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Q: The industry's been talking about convergence for years. The first products have come out, so what's next? Interoperability--is that the next challenge?
A: Well, there's a lot of that going on. For us, the key convergence product is the Media Center PC, which is the idea of that single remote control giving you the best TV experience, music and photos but also the full power of the PC, and we've got lots of partners who keep signing on to Media Center and doing neat things. We'll show some Discovery Channel stuff in the keynote. We have a new relationship with MTV where they're using our rights management and formats, and we're connecting it to the Media Center.
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What changes does this mean for Microsoft? Do you see yourself becoming, let's say, more of a seller of content?
Well, the most explosive piece of content this holiday season was "Halo 2." We sold 6.3 million (Alstrong: holy moly!) copies, we've had 69 million hours of online game play. And so is Microsoft a content company? Well, I'd say "Master and Commander" is good--people have talked about how the story made them cry--that's content, but it's also software.
The boundary there has always been a bit gray. Our main role is to provide the platforms and the tools, and simply partner with the content companies like MTV and let them do what they're good at. It's mainly in this interactive realm that we need to come in and do some complete content ourselves.
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What are some of the primary goals with Xbox 2?
Broadening the market, having media capabilities that when there's a PC, we connect up to that. This whole story of the Windows Media Connect and how all the formats and rights management and that simple Media Center menu that's just got TV, photos, music right there--those are common elements we're bringing to all the home devices.
We didn't do Xbox just to do a video game; we did it to be part of our vision of the digital lifestyle, and with the next generation, we really get to go there. In the first generation, we had one simple goal, which was to establish credibility as a great video game platform. We've done that. Actually, the last few months in the United States, we outsold Sony with the PlayStation. So even though they have the biggest installed base, we are a very strong, credible No. 2 in that. As we go into this next generation, it's much broader.
Yes, great video gaming but videogaming for a broader set of people, more communications, more media, more connectivity. And at the same time, we move up to things like high-definition graphics and wireless that the chip breakthroughs allow us to get to.
So just for the games alone you'd go, wow, but the concept now of bringing in your music, your media, connecting to the PC, connecting Xbox Live to Messenger--that just makes it a very big deal.
It's a full entertainment center, basically.
That's right. So Media Center PC and Xbox become totally complementary. You've seen a bit of that, where we let you take music from PCs and put it into game titles, and we have this extender concept where the Media Center can project through the Xbox, but that's just the start of what we can do there.
One thing that's kind of intriguing in Xbox 2 is you're participating a little more on the design of the silicon.
Well, we have some key partners that we've announced. ATI and IBM are the key chip partners, and there are some others. But I'd say our sophistication is much higher in this second generation. So every level, what we're doing in tools, what we're doing in Live, the way we're working with the publishers, the way that we've gotten involved in the hardware design--we're being very coy about when and all that, but I'm certainly excited when it comes time to show at how much smarter we are getting to do it a second time with the team that's been built there.
