THE BIGGEST EARTHQUAKE TO HIT SEATTLE IN HALF a century crashes through the Microsoft conference room, jarring the real world like a smash-'em-up video game. Ceiling tiles rattle angrily over the heads of the businessmen frozen around a polished oak table. Fluorescent lights, dangling by slender wires, swing wildly. Walls sway like computer programmers exhausted after a 72-hour coding binge.
Video-game developer Trip Hawkins, an industry legend and veteran of Silicon Valley earthquakes, drops to his knees and makes it under the table with an old hand's ease. The man he has come to see slouches in his chair and grimaces at the ceiling, annoyed that his meeting has been disrupted.
Damn, damn, damn. James "J" Allard, general manager of Microsoft's Xbox project, has no time for distractions as his company touts its estimated $10-billion bid to control the digital entertainment industry. Not from the Department of Justice. Not from a limping stock market. And certainly not from God.
Allard ducks under the table and maneuvers close to Hawkins, whose software company could be a powerful ally in Microsoft's transformation into an entertainment behemoth.
As the Juan de Fuca plate shakes Microsoft's offices, Allard leans forward on his elbows and grasps Hawkins' hands. "So, what do you think of our plan?" he asks, grinning. "Think we can kick Sony's ass?"
THE HALCYON DAYS OF THE PERSONAL COMPUTER ARE over, and Bill Gates knows it. Poised to take the PC's place is an array of digital machines and toys that talk to one another. Wristwatches that read e-mail. Cell phones that check the temperature of your hot tub. Video-game machines that turn the TV into a virtual garden of electronic delights.
This is the age of networks, where connection--to information, to profits, to people worldwide hungry for instant fun--is the driving force of innovation.
All of this is within Microsoft's grasp because of the Xbox. More than just a video-game machine, it is a Trojan horse designed to carry Microsoft's shock troops of entertainment into the living rooms of middle America and the world.
The Xbox, and rivals such as the Sony PlayStation 2 and Nintendo's upcoming GameCube, promise to be all-in-one entertainment centers. You may use them to watch DVD movies. You can turn them into high-tech stereos, playing music CDs and digital MP3 tunes. Someday you will wield a joystick and surf the Internet from a TV connected to such a box. Along the way--by charging a fee to download the hottest game, for example, or providing the digital backbone so that the Xbox will talk to both the Internet and your cell phone--Microsoft will be there, racking up the profits.
But today's focus--for Gates, for the Xbox 1,000-person team, for Microsoft's ultimate survival--is on games. Cool games. Kids adore games. College students gobble them up. Yuppies buy them for hipster cachet and the bragging rights that go along with owning the latest, sexiest gadget. Microsoft is betting that the technology in the Xbox--the brute force and all the music, movies and Internet fun the device could handle--will ultimately capture everyone else.
Striking into this new market, Microsoft plans to grab the public by its throat this week at E3, the world's largest digital entertainment trade show. Here, at the Los Angeles Convention Center, the company will unveil a wide range of games it hopes will catapult the Xbox into the must-have gift on everyone's holiday shopping list this fall. And Allard and his caffeine-chugging, T-shirt-wearing, thumbs-sore-from-punching-the-joystick team will blast their message to the masses.
Microsoft is here. And it's not playing around.
"We're either going to make the biggest crater on the planet, or we're going to get into entertainment big time," Allard says. "It's all or nothing."
It is an epochal shift for a company that built its $300-billion-plus empire out of the numbingly boring piece of software known as the operating system, those Windows programs that define what your computer can do. After all, Microsoft bet heavily in the past on other emerging markets and in the early '80s even tried to make a home PC that hooked up to a TV--only to fail. Now the company must make a Herculean wager the likes of which is rarely seen in these declining economic times.
Xbox has the money: The company is expected to spend an estimated $10 billion over five years just manufacturing the box itself (yes, that is greater than the gross national product of Bulgaria). In addition, Microsoft has set aside a half-billion dollars for advertising and marketing--for the first 18 months.