http://news.com.com/Gates+considers+Xbox+clones/2100-1043_3-5770507.html


MS to possibly license Xbox 360 clones...

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From CNET news.



Gates considering Xbox clones?
Published: June 30, 2005, 2:30 PM PDT
By Michael Singer
Staff Writer, CNET News.com

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Microsoft Chairman Bill Gates is dropping hints that he may be ready to
license the brains of the Xbox gaming device to other companies. It's a
risky move to better compete with Sony's PlayStation, according to one
analyst.

In an interview with Nikkei Newspaper in Tokyo, Gates was asked whether
Microsoft would consider opening the manufacture of Xbox units to third
parties. Gates responded that "there is nothing concrete" but said the
company is always talking with partners about how to expand the Xbox
culture.

Gates declined to give details, such as which companies Microsoft might be
thinking about working with or if a license would be extended to the
underlying software of other electronics equipment, such as handheld
devices, PCs or home digital media centers.

Microsoft's Xbox currently plays second fiddle to Sony's PlayStation when it
comes to sales, with Nintendo's GameCube ranking third. The PlayStation
makes up more than 60 percent of the market, with the Xbox accounting for 29
percent of sales and the GameCube rounding out the top-tier players with 11
percent, according to the latest statistics from NTP Group.

All three console makers are preparing their next-generation gaming box.
Microsoft's Xbox 360 is expected to hit store shelves later this year, with
Sony's PlayStation 3 available soon after and Nintendo's Revolution console
expected in 2006.

Despite the suggestion that Microsoft's device could be cloned, Xbox
representative Molly O'Donnell reaffirmed the company's stance that the Xbox
is exclusively a Microsoft product.

"There's certainly a potential for other hardware companies to manufacture
Xbox some day in the future, but that is not something we're focused on
right now," she said.

Licensing the Xbox's underlying software to other manufacturers is, of
course, not outside the realm of Microsoft's capabilities. The company found
sterling success in licensing its Windows operating system to PC makers.

But breaking the traditional proprietary mold of the game console world is
something no one else has tried and something JupiterResearch analyst
Michael Gartenberg says would be a bold move on Microsoft's part.

"Clearly, everyone at Microsoft is thinking out of the box to increase
sales. I mean look at the nontraditional way of introducing the Xbox on
MTV," Gartenberg said. "It sounds like they are just testing the waters with
a hybrid of the (white box) PC model and the (proprietary hardware) video
game model."

Gartenberg said Microsoft's strategy may be centered on gaming software. The
majority of money made in the video game industry comes from the games
themselves, not from the hardware. Recently, both Microsoft and Sony
reported that the newer models of their devices will be priced far less than
the cost needed to make them.

Microsoft's reasoning, Gartenberg said, may be that the more Xbox-like
consoles there were on the market, the easier it would be to sell
Xbox-branded games. That would mean Microsoft would have a larger market for
the titles it published. And it could also put the squeeze on the
PlayStation by inspiring game developers to focus on titles for the Xbox and
its generic brethren.

"No one video game software developer just writes for Xbox," Gartenberg
said. "But what it would do is tell publishers, 'hey look how many more
consoles we are on.'

"Still," Gartenberg said, "Microsoft would have to make sure that all the
people who license their Xbox are up to their standards, and at the end of
the day they would still be competing with Xbox sales."