Major $ hype assault aimed at America's kids
   
By Gabriel Spitzer

   In coming months, as Microsoft and Sony prepare to square off in the gaming market, the impending ad barrage will leave no medium untouched.
   It’s being billed as a battle for the loyalties of America’s youngsters, with huge consequences for the way that next generations of technology users access the internet, watch television and even talk on the phone.
  Only one problem: it’s probably a bunch of hooey.
   Both Microsoft’s Xbox and Sony’s PlayStation 2 are being promoted as the all-things-entertainment console, equipped with a broadband internet connection, interactive television capability, telephony and a DVD player in addition to gaming software.
   But the one-box convergence, talked about for years, could fall short of the companies’ expectations.
   "There are going to be a few families that do all their PC-centric activities on the gaming console, but even in four to five years these devices won’t be used for browsing and other major online activities," says Schelley Olhava, senior analyst for International Data Corp.
   To begin with, the web is still engineered for PCs, not boxes operated with joystick-like controllers.
   "There really aren’t many online programs ready for game-console browsing. I also think that people see it as an entertainment device. The internet access for these devices will be used more for the gaming capabilities like playing against your friend or downloading new game levels," says Olhava.
   The machines may not be well-suited for some of the more important online activities such as shopping, email and chat.
    "Kids can handle the PlayStation consoles very well and very fast. But could they take that console and exploit it to get everything out of the net? I don’t think so. If their friends are chatting online, they’re going to be left out. And with shopping you need a pretty active medium. Frankly, computers with good monitors are better for shopping than iTV," says Rob Janes, a research editor at eMarketer.
   The thinking is that once one of these machines lands in the living room, it will be the last interactive device that family buys for the next few years. In one sense, the gaming capabilities (which are, by most accounts, awesome) just provide a toehold for the entire entertainment package.
    Microsoft, for its part, promises gamers that the Xbox is first and foremost a gaming console. But some observers have called it a "Trojan horse" designed to get interactive set-top boxes into homes.
   But many doubt that one box will satisfy the voracious appetites of young people.
    "For kids, teens and even on into college there is a very broad interest in a lot of different things. So I would expect teens and kids to be the last group to want a very defined usage for interactive devices," says Janes.
   That won’t stop the companies from going all out in their showdown.
   Microsoft has earmarked a rumored $500 million for the launch, far more than it spent promoting its Windows upgrades, or anything else for that matter. And it’s cranking up the buzz machine early; the Xbox will not hit shelves until late this year.
    Microsoft founder Bill Gates unveiled the machine last week at the Consumer Electronics Show in Las Vegas.
    The slim black box is basically a pared-down PC equipped with Microsoft’s gaming software, a hard drive and a speedy 733-MHz Intel processor.
   "The graphics capability is over three times greater than what's been available before," Gates proclaimed to a packed house. The Vegas version is not even a prototype; the real Xbox will be equipped with "a couple of chips that are so state-of-the-art they won't be done until we finish the manufacturing," Gates said.
   Gates was accompanied at the demonstration by WWF wrestler The Rock, who will be featured prominently in a forthcoming wrestling game.
   Microsoft will face an uphill battle to infiltrate the gaming culture, whereas Sony already has a massive customer base to draw upon—the company has sold 75 million gaming systems since 1994.
   "I think gamers identify the PlayStation brand with a great gaming experience. Microsoft has a lot of work to do to establish themselves as a gaming brand," says IDC’s Olhava.
   Veteran contenders Nintendo and Sega will also throw their own converged game console/internet appliances into the fray. Sega’s Dreamcast, currently on the market with a dial-up modem, recently introduced a broadband adapter. And Nintendo’s Gamecube, a direct competitor with PlayStation 2 and Xbox, will launch this coming fall.
   But Olhava foresees Sony and Microsoft, with all their technological and promotional muscle, elbowing the gaming-only companies into the periphery.
    "Sega and Nintendo will still weigh in. Sega actually has an online gaming center in place, and they have a wider library of games available than Sony or Microsoft. But I foresee Nintendo and Sega as niche players in the market, and battling for the number one spot will be Sony and Microsoft," she says.

-Gabriel Spitzer is a staff writer for Media Life.

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