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| quote: | Originally spoken by Bill Gates
Bill Gates spoke with a small group of reporters after his speech at the Consumer Electronics Show. I got to stand next to him at a cocktail table at Delmonico's restaurant in the Venetian Hotel. He didn't have his boyish face anymore, but he was in a good mood and talked for a surprisingly long time. We'll post some audio of that conversation a little later on the CES blog (www.mercextra.com/blogs/ces). The interview covered a lot of territory but I'll mention some highlights here on the Xbox 360.
It has always struck me how much Gates knows about the details of the Xbox 360 business. A year ago, I quizzed him about it in a small group and he offered an update on the strategy last night. He said that the strategy is working "amazingly well" in terms of the Xbox 360's sales, which have now topped 10.4 million units.
He said that this time Microsoft and Sony have switched positions. Microsoft has the high ground, he said, repeating an answer from last year. He said it has a small box, costs less, is visually compelling, has great games, does online superbly and offers all of the tools for game developers to make games easily. He said the Xbox 360 is out earlier and can ride a silicon cost-reduction curve faster than Sony can, which saddled every unit with Blu-ray and hard drive costs. At any given point, the Xbox 360's costs will be lower and more easily reduced.
I asked him about Nintendo. What if their graphics were good enough, their controller innovative enough, and the system cheap enough for a lot of gamers? He said that Sony was always the more direct competitor and that the novelty of the controller without good game graphics could wear off.
"Look at their experience with online," he said, noting Microsoft has the ability to create games where Xbox 360 gamers play with PC gamers.
He said that Sony had no advantage in graphics at all. He said Sony started earlier but "burned a year" trying to make the Cell processor do graphics functions. When it didn't work, Sony went to a fallback plan by tapping Nvidia for the graphics chip at the last minute. It also didn't have embedded DRAM or unified memory. The Xbox 360 game developers would always be a year ahead of Sony on the learning curve in taking advantage of the system. As a result, Gates said that Sony would never have games that look beter than Microsoft. He said that either system, limited to 512 megabytes of memory, would not likely exploit HD resolutions beyond 720p. If you go to 1080p, he said, you will have to give up something.
In his speech, Robbie Bach came on stage and talked about how the Xbox 360 was ready to go as a set-top box for IPTV, which phone companies are using to compete with cable by providing high-speed Internet, movies and TV, video on demand and digital video recording for subscribers. The service is expected to debut with the Xbox 360 sometime before the holidays this year. I asked Gates right off the bat if AT&T, which is a Microsoft IPTV customer already, could give away Xbox 360s for free to subscirbers. Gates said there are a lot of options available, but he wouldn't be able to talk about any customers until later.
He said there ought to be a great "win win" in new business models for the Xbox 360 and IPTV. Asked if the Xbox 360's small 20-gigabyte hard disk was a problem, he said that the Xbox 360 didn't need anything more than that to serve as a set-top. That's because with IPTV, so much is stored on the server and you can access it so quickly that you don't really care about storing things.
"We don't have to change the Xbox 360 at all," he said, holding a glass of red wine.
As far as figuring out an exact strategy with a customer, he said, "We have a year."
He said that the Xbox 360 has enough security built into it that the content players (HBO or what not) would be more comfortable allowing their content to be stored on the Xbox 360. And of course Microsoft announced in December that movie downloading is an option on the Xbox 360.
He said the Xbox 360 would be a high-end set-top and wouldn't really compete with Cisco or Motorola set-top boxes. And he noted that Apple doesn't necessarily have the best relationships with companies such as phone service providers as Microsoft does. So its iTV service may not be as expansive as anything Microsoft does with its partners.
"Jobs always says he doesn't like to go through someone else's orifice," he said. |
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