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Friday, November 25, 2005

Playing the Xbox Economy

As a follow up to discussing Microsoft's using the Xbox 360 (which has some glitches) as a marketing portal, here are a few thoughts on the ripple effect of the Xbox on hardware and entertainment.

Microsoft needs to make additional income from licensing, software and hardware sales just to break even on the $399 Xbox 360 according to this article. An obvious portion of paying back the estimated $153 shortfall per console will come from licensing revenue from the game companies.

Peripherals that will add to Microsoft's bottom line include headsets to enable trash talking as you frag your foes, memory cards for saving game play, and most importantly, wireless networking. But the big money could from networking the Xbox to Windows PCs to create a computing-gaming-video-music platform.

The wireless link enables you to stream content - be it download or broadcast -- from PC to TV via the Xbox 360. So instead of being limited to the storage on your TiVo, you can record away using your PC, and stream wirelessly to multiple TVs, which probably isn't making the cable companies or TV networks happy.

For example, Microsoft has locked in MTV to provide download content aimed at broadband users -- but it can only be viewed when using Internet Explorer (THE NERVE!!!). If the UI for controlling the PC is done well this could blow open interest in paying for video and music downloads.

I'm guessing that any MS entertainment success could push Apple to buy TiVo, which is making recorded programs available on iPods. TiVo needs to be the Rolls Royce of DVRs to survive, so becoming one with the premium PC maker is too logical. Do the deal already!

By John Gartner at 01:50 PM | Comments (0)

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