From Xbox to Music Box: Game Console Expands Its Repertoire

REDMOND, Wash. -- Cameron Ferroni is belting out “Highway to Hell,” but Microsoft Corp. hopes the new path it’s forging for the Xbox video game console is a digital “Stairway to Heaven.”

Ferroni, a Microsoft general manager, sings the AC/DC anthem to demonstrate Music Mixer, which turns Xbox into a karaoke machine and represents the software giant’s latest attempt to inject itself into every aspect of home entertainment.

Music Mixer is version 1.0 of Microsoft’s plan to transform Xbox into an easy-to-use, secure hub that allows people to summon music, games and movies to any speaker or screen in the house.

Microsoft is not alone in its efforts. Sony Corp. wants to do the same thing with its rival PlayStation 2 console. And several other consumer electronics manufacturers and computer makers are exploring schemes to create simple home entertainment networks.

Although Music Mixer -- with its $40 retail price tag -- may seem like a modest vehicle for the future of digital entertainment, it attempts to solve a big problem. Digital music and movies delivered via the Internet today can easily find their way to computers, but not so easily to the stereos and televisions that people turn to for entertainment. By connecting the PC to the Xbox, Music Mixer opens a door to the living room.

“Microsoft is now saying they envision the Xbox as being much more than about just games,” said David Cole, president of DFC Intelligence, a market research firm in San Diego. “They see it as a full-fledged entertainment device.”

The approach is an about-face for Microsoft, which has insisted since the console debuted in 2001 that Xbox is all about video games.

“There’s an evolving role for consoles for things beyond video games,” acknowledged J Allard, vice president of Xbox for Microsoft. “At its core, the Xbox is still a video game console. But we want Xbox to be part of the glue that lets you combine all of your entertainment.”

More Than Games

Microsoft doesn’t expect Music Mixer to sell in big numbers; executives will ship just 200,000 units to stores this fall. Still, the company considers Music Mixer a step toward getting consumers used to the idea of doing things with their consoles other than playing games.

The first version of Music Mixer, which Microsoft will unveil next week at the Electronic Entertainment Expo in Los Angeles, will let users send digital music and photos on their PCs to their Xboxes. The Xbox, which comes with an 8-gigabyte hard drive for storing data, can then simultaneously project a slide show on a TV while playing music using Microsoft’s Windows Media 9 digital music playback software. It also can strip vocals from any song so that people can sing along to just a music track.

The evolution from console into broader entertainment box has been slow. Sony, whose PS2 dominates the console business, lets users play CDs on its original PlayStation machine, introduced in 1995. The PS2, which came to market in 2000, plays DVD movies. And the Xbox came with a hard drive so that people could copy their music on the console, while a built-in Ethernet port lets the machine hook up to the Internet. Not to be outdone, Sony last year introduced an Internet adapter that lets the PS2 access the Web.

About half of the 4 million Xbox owners in the United States have ripped music into the console, and more than 400,000 users worldwide go online with their Xboxes. Most go online to find game opponents but some also download additional game features and levels.

Microsoft has not charged for the downloads, but analysts expect that to change as more consumers use the feature.

Sony, which harbors parallel ambitions for the PlayStation platform, boasts similar statistics, having sold nearly 600,000 Internet adapters.

The numbers aren’t huge, indicating that these features have a long way to go before they gain mainstream acceptance. But for Sony and Microsoft, they are important markers in a larger effort to get consumers used to the idea of tapping the Internet to bring digital entertainment into their living rooms.

“What you’ll see is an evolving platform,” said Andrew House, Sony’s marketing chief for PlayStation. “For the first time in our history, we’ve reached a far more sophisticated audience than we have in the past. This consumer is more entertainment-oriented than the traditional pure video-game consumer.”

Digital Entertainment

The piecemeal enhancements also are a way for Sony and Microsoft to experiment and gather data about what consumers want before designing their next-generation video game consoles, expected to hit the market sometime after 2005.

“Step 1 is to make a broader social play,” said Microsoft’s Ferroni. “Let’s see if we can’t get Mom to use the Xbox to show photos at a family gathering. Step 2 is to get Hollywood excited about it as a target for their media. Step 3 is to design the next-generation platform.”

For now, Microsoft is still working on the first two steps. The company has been trying to impress upon Hollywood studios and music labels -- currently in the throes of combating Internet piracy -- that the Xbox is a safe place for their digital content. Though consumers can transfer music, pirated or not, to the Xbox, the console can’t send out those files over the Internet or burn them onto a disc.

The company says it has built the equivalent of a digital Ft. Knox around the Xbox.

Although the device can connect online, users can visit only places that Microsoft controls through hundreds of secured server computers installed in several high-security buildings throughout the world. The result: The Xbox can’t access Web sites such as Kazaa that offer file-sharing of bootleg music, movies and games. Each Xbox must go through three digital security checks before it’s allowed online access.

“This can be very appealing to the music and movie industries,” Ferroni said.

Microsoft has tried repeatedly to gain a toehold in home entertainment, spending heavily on projects designed to bring interactive programs, Web browsing, e-mail and digital pictures to the television set. Before Xbox, though, its most successful venture was WebTV, the Internet-on-TV product that attracted about 1 million customers at its peak.

Then Microsoft switched gears. Instead of trying to bring computer-like devices to the home entertainment center, it focused on turning the computer itself into the home entertainment hub.

The first product, released last year, was Windows XP Media Center Edition, a music- and video-oriented version of Microsoft’s operating system. It featured simplified menus that could be navigated with a remote control, enabling users to view digital photo albums, play DVDs, listen to music or replay recorded TV programs by pushing a few buttons.

Media Center PCs have a significant limitation, however: They’re designed to connect only to nearby TV sets and stereos. If a user’s computer isn’t in the same room as the TV, shows recorded on the PC will have to be played on the computer.

The next logical step for Microsoft is to link the computer with TVs and stereos in other rooms, so the PC can manage entertainment throughout the home.

That’s where the Xbox comes in. It’s already hooked into a TV. And as consumers increasingly purchase home theater systems, that TV should wind up being connected to surround-sound stereo systems.

“Moving content from the PC to the living room,” said P.J. McNealy, an analyst with GartnerG2, a market research firm in San Jose, “is going to require incremental steps such as this -- not quantum leaps.”