Some rumors never die. Just think of the mythical GoogleOS, the much-desired Apple DVR, and the long-suspected Microsoft portable gaming system. Some rumors cling to life because they are a form of wish fulfillment (“If only Google would be build me an operating system, my computer would be trouble-free, my CPU would run twice as fast, and my social life would improve tremendously!”), while others persist because bits of information keep trickling out that suggest such products are real.
Such is the case for Microsoft’s rumored portable game console (PGC), currently dubbed the “Xplayer.” A new report out from the analysts at The Diffusion Group suggests that the Xplayer is not only real, but that it will challenge the Nintendo DS and Sony PSP for domination in the handheld gaming marketplace.
Our own reporting on the issue suggested that the Xplayer would primarily be a media device with some gaming functionality, but (if the new report is correct) it now looks as though Microsoft will market a device designed to both play video games and to consume media. The device is expected to leverage the Xbox brand name, but won’t launch until later 2007 or early 2008.
“Microsoft has been waiting on the sidelines until its gaming console and software business reached sustainability, all the while watching closely how Nintendo and consumers in general would respond to Sony’s PSP,” said Thomas Wolf, a portable media analyst and co-author of TDG’s latest report. “With global PGC revenues expected to reach $3 billion annually by 2008, and with only Sony and Nintendo active in the PGC space, Microsoft has before it an incredible opportunity. It has a critical brand presence in the console space, the breadth and depth of gaming titles, and the marketing clout necessary to enter this space and win decent market share.”
Two strategies are said to be in play: Microsoft might produce and market the device itself, or it could produce a reference design and allow other manufacturers to run with it. Certainly there are precedents for both approaches. Microsoft currently makes a number of well-regarded hardware products (keyboards, mice, and the Xbox 360), but it more often chooses to provide a platform that manufacturers can use to launch their own products. The Ultra Mobile PC is a good example of Microsoft’s platform approach, one also adopted by the company in the music player space. Rather than compete directly with Apple, Microsoft instead produces and promotes its own DRM schemes and backend software, and offers certification (“PlaysForSure”) for devices—and we all know how those attempts have turned out. Neither the UMPC nor PlaysForSure have yet found much success in the marketplace, though the Pocket PC has done quite well. As Apple continues its Atilla-like iPod rampage, Microsoft may well have decided that it needs to throw its massive cash reserves at the problem by taking on Apple (and Nintendo and Sony) with a single killer device that leverages the Xbox name.
