SAN FRANCISCO — Silicon Graphics Inc., which brought computerized dinosaurs to life in "Jurassic Park," and video game giant Nintendo Ltd. apparently are poised to enter the promising but unproven market for advanced video games.
The two companies plan a joint news conference here Monday, and neither was talking officially Friday about what their alliance plans to offer. Speculation was that the speedy microprocessors and three-dimensional computer images of Silicon Graphics, based in Mountain View, will be featured in Nintendo's next-generation game system.
By hooking up with Silicon Graphics, Nintendo hopes to maintain its edge as the lucrative industry moves to the next wave of systems. A new machine from 3DO Co., a Redwood City, Calif., start-up, will be powered by a 32-bit microprocessor, but a Silicon Graphics subsidiary, MIPS Technologies, has a family of 64-bit chips that will mean an even more significant leap beyond the current 16-bit industry standard.
"Nintendo recognized it was a technology they didn't have, so they went straight to Silicon Graphics," said Robert Herwick, a technology analyst with Hambrecht & Quist, a San Francisco investment firm. In turn, he noted, Nintendo offers the market dominance needed to have Silicon Graphics' technology become a standard for TV set-top devices in the home.
A Silicon Graphics/Nintendo system would compete with the much-touted $700 device made by 3DO, due in stores in October. That device is intended to capture what the industry hopes will be a huge market for "interactive multi-player" systems.
A black box about the size of a videocassette recorder, 3DO's machine hooks up to a television set and allows users to play video games stored on compact discs, as well as other audio, video and photo compact discs.
Nintendo, based in Japan with U.S. offices in Redmond, Wash., leads in the number of installed video game systems, although its big rival, Redwood City-based Sega, has had increasing success in recent years. Both companies wield enormous clout with software developers, who pay for the privilege of designing for the two systems.
As of June, nearly 59 million U.S. households, or 38%, had operating video game systems, according to Fairfield Research, a marketing research firm in Lincoln, Neb. Sales of video games are running at an annual rate of $6 billion to $8 billion.
Amid the swirl of rumors about Nintendo's plans with Silicon Graphics, skeptics noted that bringing a competing product to market will take time. For the coming holiday season, at least, 3DO appears to have a lock on the upper-end market, should it materialize.
"It has yet to be seen whether anybody's going to stand still for 3DO's $700 machine," said Ted Lannan, president of Fairfield Research.
A key to the success of any Nintendo/Silicon Graphics product will be its price, said Dick Larkin, vice president of Hudson Soft USA, a leading home entertainment software company based in South San Francisco.
"The technology exists to do unbelievable things," Larkin said. "The question is, at what price can you get it into consumers' hands?"
Larkin speculated that 3DO's suggested price could quickly be slashed by several hundred dollars as retailers pursue customers. Atari recently announced its 64-bit system, the Jaguar, priced at $200. Nintendo will have to price aggressively--not more than $300, Larkin said--to appeal to the mass market.