Originally created 05/28/98

Microsoft boldly steps into high-tech's Wild West

Hold onto your joysticks! Load the nuclear warheads!

Microsoft Corp., the computer software monolith, is coming to video games. But the company may find invading technology's Wild West is tougher than figuring out Myst.

In a move that is sure to raise eyebrows of some diehard game players, Microsoft has joined forces with Sega Enterprises Ltd. to make the underlying software on the game company's next video console.

The action indirectly pits the world's largest maker of personal computer software against the leading makers of video-game consoles, Sony and Nintendo. And Microsoft lands squarely in business that until now largely has stayed free of the Redmond, Wash. company's far-reaching influence.

On one hand, Microsoft already is one of the largest makers of software games, such as Flight Simulator, that run on its Windows operating system. Microsoft even makes joysticks to hook up to PCs.

But Microsoft and Sega have their work cut out for them expanding that legacy to games viewed on TV sets, at least judging by the buzz ahead of the Electronic Entertainment Expo, the giant video-game industry gathering that begins in Atlanta Thursday.

The question on some attendees' minds: What self-respecting gamer wants to decapitate aliens using an operating system originally created for personal computers?

"Having Microsoft on your team in the video-game space is a two-sided coin," said James Lin, an industry analyst with Wedbush Morgan Securities, based in Los Angeles.

"You have the Microsoft brand cache. On the other hand, Microsoft historically hasn't been accepted by the traditional gaming individual," he said.

To be fair, it could be more a question of user's pride than any radical difference in playing experience.

Historically, some hardcore players of $150 video consoles have wanted little to do with $1,200 computers with mice. Give 'em the bold TV-screen graphics of Sony's Playstation or Nintendo 64, consoles spread out on the living-room floor. Shoot-'em-up heros don't sit at desks.

Yet Sega's system isn't going to boot up with a big Windows logo, like home computers, says company spokeswoman Lee Caraher. In fact, Sega users probably wouldn't even notice that Microsoft created the underlying operating program. And the games that run on Sega's system will be more graphically sophisticated than those made for home computers, which have less processing power than video consoles.

Microsoft is using a modified version of Windows CE, an operating system it developed for consumer electronics products, that could run unobtrusively in the electronic background. The Dreamcast system, which first launches in Japan on Nov. 20, will use a 128-bit processor and a built-in modem to allow players to compete against one another over the Internet.

Sega has high hopes, expecting the game system to capture more than half the U.S. market for new video consoles after its introduction in November 1999, a year in which neither Sony or Nintendo are coming out with new systems.

"We don't look at Dreamcast as an operating system," Caraher said, noting it also contains new microprocessor chips. "We feel very confident Dreamcast has the staying power."

An official at Microsoft did not return a phone call seeking comment.

Sega, which just underwent a wrenching cost-cutting, needs all the aid it can get.

The video-game maker dominated the market in the early 1990s with its 16-bit Genesis machine. But its successor, the 32-bit Saturn console, was passed over by users after new consoles from Nintendo and Sony surpassed its graphics and 3-D realism.

In particular, the struggling Tokyo-based game maker could get some help if Microsoft's addition draws lots of software developers, analysts say.

By supplying the Windows operating system to run Sega's Dreamcast console, part of the idea is to prod some of the developers who write thousands of game titles for computers to also write for the Sega system.

For users, that could further cheapen video-game prices, which now cost about $30 for a Sony compact disk or $60 for a Nintendo cartridge.


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