Curmudgeon Gamer
Curmudgeoning all games equally.
17 April 2007
Gates: No strategy for a console (in 1996)
While I'm recovering use of my thumb, I've been doing some reading. I ran across this fun bit in a Next Generation interview with Bill Gates from June 1996.
We don't have a strategy to do a $200 game console that is a direct competitor to what Nintendo, Sega, and Sony are doing, and our business model isn't to charge software developers money. So if you compare a Nintendo game, where you've got to have that big ROM that's very expensive and pay a royalty, versus a CD-ROM on the PC, where there's a zero royalty, it's quite different.
Just over a decade later and:
  • Microsoft has released two consoles, one of which essentially was a Windows PC.
  • Microsoft charges to develop for and publish on those consoles.
Not that there's anything wrong with that, mind you. I'm just noting how quickly things changed when Microsoft realized just how much money could be made doing those two things. Quite fitting, then, that earlier in the same interview we find this exchange:
NG: So are the games Microsoft is developing primarily designed to showcase Windows 95?

Bill: No, it's to make money.

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--Matt Matthews at 22:42
Comment [ 10 ]

Comments on this post:

Yes, but if you believe the spin, the Xbox crew operate almost as if they were a proverbially wholly-owned subsidiary of M$ rather than another branch micromanaged by The Gates.

For me, that raises a few questions with this post.

1.) How has the PC side of Windows changed their approach now that Xbox is part of the MS brand? I'd venture very little, past the sort of "plays for sure" remediation for games which is going so well.

2.) When MS has no console, why would you expect a salesman to do anything but talk up his stock?

The Xbox/console push from MS seems to me to be more a well-planned, tangentially related investment decision that, I assume, is panning out okay than any real gear shifting.

By Blogger rufbo, at 18 April, 2007 01:33  

By "plays for sure", do you mean the Games for Windows certification? Also does "PC side of Windows" mean "the Windows side of Microsoft"? I'm going to take it that way, but certainly correct me if I'm wrong.

These moves in Windows-land looks like more than a little, considering what existed before. Games have to install easily, without (or at least minimizing) reboots, recognize the Xbox 360 controller, respect user accounts, and more. The integration of Live into that system also seems pretty big, since it's probably going to push microtransactions and other digital distribution outside of the existing Steam and GameTap services. Heck, there's even a Games for Windows magazine which didn't exist a year ago.

As for how they should act when they don't have a console, I can see a shareholder being a bit dismayed at how things played out. In 1996, there are no plans for a console, and the focus is clearly given as Windows and Windows games. Sometime between then and 1999 when it becomes clear that thinking has changed inside Microsoft and a console will be forthcoming. Then between the official announcement and today, the entire Xbox venture has yet to turn a profit -- they've lost more money overall than they've gained. So in ten years we go from Gates saying that they have no strategy for making a console to making one and still not making money six years later.

I think in that sense -- that he said they weren't interested but then did it anyway and haven't done anything but lose money doing it -- it's important to note what he said.

Now, I should say that I fully expect Microsoft to get in the black very soon. They'll be slowed down a bit by the Wii, but I think the Xbox division will have been a net gain rather than a net loss by sometime next year, if not this year.

I guess they might announce their quarterly results soon, if they haven't already.

By Blogger jvm, at 18 April, 2007 11:18  

Plays For Sure is a brand name for DRM.

I'm sure he must be talking Games for Windows. GFW is now under the Microsoft Game Studios thing, and there's definitely cross pollination happening insofar as games go in the Windows environment.

However, when the Xbox was still an upstart group in Microsoft, there were debates on whether to have licensing fees or not. There were debates on whether to make a "console" or a stripped down PC. Ultimately even though Xbox uses PC components, it's a console.

And there were no plans in 1996. The "plans" were still barely taking shape and they didn't know what the hardware would be as of GDC 2001, when they had their demos and their big "unveiling."

Even though there wasn't a "Games for Windows" magazine, there were and still are several magazines about gaming on windows based pcs.

If you're even remotely interested in this stuff, you should definitely check out Dean Takahashi's books on the development and launch of the Xbox and 360. They're a lot more about management and marketing, backroom deals and spearheading of projects within a very large company, but they're great reads.

By Blogger Jeremy, at 18 April, 2007 19:30  

Microsoft is announcing Q3 2007 (March quarter) earnings after market close on April 26th, so you've got another week basically.

By Blogger Jeremy, at 18 April, 2007 19:32  

Yeah, "past the sort of 'plays for sure' remediation for games" meant fairly literally the re-mediation of that mentality into gaming.

These moves in Windows-land looks like more than a little, considering what existed before.

Yeah, but recall Q3T on Mac. Then zippo until iPod Tetris. This lines of retail space with Vista Gaming haven't played out like I was led to believe the great MS hope envisioned.

Didn't realize the Xbox controller compat, etc. That's neat, but essentially just a set of drivers, right? Better yet, this is just Mac's InputSprockets revisited [which I'll admit was a huge loss for Mac gaming when it didn't reappear in X].

Still, I'd be surprised if the Xbox mentality made it back onto the conventional Windows (and yes, Windows here == WinPC == MS PC == "PC") platform. That is, I hope it doesn't. I'd hate to think we're going to have to use Live as a replacement for simply UDP. My uninformed guess is that Live networking will be trivially more difficult to implement than plain jane networking, and that'll be barrier to entry enough to keep the Xbox mentality out of the WinPC tower.

So in ten years we go from Gates saying that they have no strategy for making a console to making one and still not making money six years later.

Like you say later, Xbox won. It did what they hoped. They're a huge brand. They'll be in the black soon. Windows-side Gates says no way. Xbox-group-as-subsidiary becomes successful. Gates isn't overly involved beyond deep pockets and a free license to borrow Windows code. Well, and to pimp away.

there were and still are several magazines about gaming on windows based pcs.

Guessing Matt meant MS's direct support of WinPC gaming is reflected by the magazine. I'll admit a push, and likely a hope to capitalize on Xbox resonance, but still can't imagine (perhaps because of my own naive bias) it changes in any huge way.

By Blogger rufbo, at 18 April, 2007 19:46  

All 360 peripherals work on PC.

The wireless ones need a dongle of some sort, but I believe that's available now.

The HDDVD drive works on PC.

PC and 360 are very closely integrated, particularly once you start talking about Vista PCs and the upcoming Spring update.

I mean, it's a lot of marketing and management spin, but they really do seem to be pursuing a kind of synchronicity strategy here. Another sign of that is probably Capcom's announcement of a couple 360 games to PC recently (DMC4 and Lost Planet).

Ironically, it could be Xbox's position with Japanese publishers that will make Games for Windows a success. Wouldn't that be funny?

By Blogger Jeremy, at 18 April, 2007 23:22  

I mean, it's a lot of marketing and management spin, but they really do seem to be pursuing a kind of synchronicity strategy here.

Ironically, it could be Xbox's position with Japanese publishers that will make Games for Windows a success.

I believe I'm slowly forcing my blockhead to understand the alternative view here. Here's my last (?) question...

If Games for Windows becomes successful because of the influence of the Xbox, is it that the Xbox platform has begun to colonize the WinPC rather than an internal change of Windows gaming? That is, are we seeing the Xbox platform extend to the WinPC where they will coexist (since there's no getting around that PCs are made to be flexible, multi-use machines)?

Certainly that means what I'll call "legacy/conventional WinPC gaming" will lose share on the PC, but what will the shift mean in praxis?

By Blogger rufbo, at 19 April, 2007 12:40  

What exactly is your alternative view?

I agreed with you that the Xbox has forced Microsoft's PC side, particularly insofar as Vista goes, to change what they are doing.

And I agreed that they had no console.

The only place that I can see we disagree is that apparently you think that in 1996, they had no console, but they did have some sort of grand plan to create a consolized PC.

That's not only not true, it's also not what happened. The Xbox used PC components because Microsoft mistakenly believed that PC component price drops over the life of the console would result in reduced cost of goods sold. What they found out was that PC parts prices drop because they become outdated, and that outdated products in the PC world are no longer produced. Therefore, PC vendors don't run down a cost curve, PC vendors run up a performance curve that keeps costs flat. Other than the shared components, the Xbox was in no way a PC. It didn't use a full version of Windows, it was locked down so that it was prevented from use as a general purpose computer (unless you hacked it), and it used the conventional video game industry licensing terms.

The problem of PC component price curves is the reason that their current console doesn't use conventional PC parts.

And nothing has changed from Microsoft's perspective. They make Xbox to make money. However, it's a strategic investment designed to keep Sony out of their backyard. That strategic investment is what is worth the money. If the product turns a profit, then that's not quite icing on the cake, but as long as they accomplish their primary objective, it's gravy.

The fact is that Games for Windows will be a success for the same reasons that a console is a success:

1. Software support.
2. The platform becomes dominant and ubiquitous and other publishers have no choice but to jump in.

Xbox was in part designed by the group that created DirectX after Windows 95 was released (although those same people hate 360 for some reason, probably because it isn't a PC, even vaguely, and they were unhappy with the ultimate Xbox produce for the same reason). Now, the Xbox people have fed all of their know-how back into DirectX 10, via a wholesale replacement of the DirectInput layer and a full court press on ATI's general purpose pipeline process, and focus on dynamic content generation with what is now called geometry shaders.

That's all normal. Microsoft isn't stupid anymore, they are directing good ideas back into other parts of the company that need them (unlike about 3 years ago when it was a massive clusterfuck).

The irony is that Xbox, which is not a success in Japan, might help make Games for Windows a success through software support because they have spent so much time courting Japanese developers (with success). The irony is not that a group of spunky upstarts changed the way Microsoft works. That change has come from the top. If Microsoft didn't want to do Xbox, it wouldn't have done it.

By Blogger Jeremy, at 19 April, 2007 21:01  

The only place that I can see we disagree is that apparently you think that in 1996, they had no console, but they did have some sort of grand plan to create a consolized PC.

Nope, didn't mean to suggest I thought that at all.

Where I was being boneheaded/uninformed for both your and Matt's comment(s) was the degree to which the Xbox has changed Windows gaming. I'm still simply wondering how much the extended Xbox platform is 1.) a reasonable way to conceive of this integration of Xbox into the conventional MS ivory tower and 2.) how this sharing will influence what I'll call "legacy PC gaming".

The PC wasn't meant to be a console; that's my point. I can still use OpenGL and friends to write a non-DirectX game on Windows, or could even rewrite those from scratch if I wanted. There are few barriers to entry to the WinPC like there are for the Xbox (as you/Jeremy have mentioned). How does the closed Xbox platform's land-grab onto the WinPC platform going to change things in ways DirectX hasn't already? etc etc

By Blogger rufbo, at 19 April, 2007 22:41  

I don't know how much of it is a direct effect of Xbox on Vista, and how much of it is an effect of moving the design of the gaming portions of Vista under the auspices of Microsoft Game Studios and the larger Microsoft Entertainment and Devices division.

Clearly, the things that are happening in Vista are a direct result of the realignment that occurred at Microsoft in September 2005. That's the point at which, publicly at least, the focus on Vista moved from the features that they were busy cutting so that they could get to a ship date to the gaming features such as DX10. There wasn't even a complete announced feature set for DX10 at that point.

In that respect, maybe it's more of a coincidence. Microsoft was having problems, and they realigned the organization to solve those problems, and the people who were regarded as most capable to walk in and solve those problems happened to be Peter Moore and company, who had built up substantial resources that both iterated and improved DirectX for use on consoles, had gone through the process of expending graphics processing unit design with ATI (who basically won the DirectX 10 technology concept battle, even though they've yet to ship a DX10 GPU), and had existing relationships with 2nd and 3rd party developers and publishers and control of Microsoft's first party games resources.

Vista as it exists today would not have happened if Xbox had not happened. It's all very funny because the guys who came out on top in the design and featureset of 360, and also in a lot of ways, Vista, are the guys who were regarded as the biggest failures in the industry. They're the smartest guys from WebTV, UltimateTV, from 3D0's M2 project, etc. Cast-offs from SEGA, guys who were pushed out of windows at major Japanese developers, and so forth.

A motley crew to be sure.

I'm just now realizing that you were talking about yourself with the blockhead comment. I don't think that's the case.

In a lot of ways, you're right. In respect to Windows, Xbox was on a totally different trajectory, and basically the guys who wanted to keep it from being a consolized PC won. Now, those same guys are working to turn the PC into a console :D

You have tight integration of console peripherals, the build out of the console gaming network to PC, community integration, unified publisher and developer support and tools on PC and 360, you have similar graphics architectures and you have processor architectures that are growing more similar as well (ten years ago, Be utterly failed to get dual processor systems off the ground. Before that, I remember when dual processor 486 machines were going to be the wave of the future...guess what? Now it's here, and games are what's pushing it, not productivity software).

Add to that the desire for "tray and play"'s interesting.

By Blogger Jeremy, at 20 April, 2007 11:09  

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