Microsoft Corporation reportedly intends to allow its next-generation WebTV device to compete with the Nintendo 64 and Sony Playstation game consoles. The story is rather complicated, but it goes something like this: A few years ago, a company called 3DO was working its own next-generation game console, which was dubbed the M2. The M2 contained three key technologies which were pretty impressive for their day: DVD playback, MPEG3 decoding, and a new chipset called MX. When it became clear that 3DO was going to have to exit the hardware market for financial reasons, it sold the M2 technology to Samsung, which created a division called CagEnt that had two years to make money with it.

CagEnt's MX chipset from the M2 technology utilized two PowerPC 602 microprocessors at the time: the same CPU that powers Apple Macintosh computers. In late 1997, Nintendo visited CagEnt in search of a new 3D chipset since its relationship with Silicon Graphics had fallen apart and sales of the Nintendo 64 were slower than expected. In early 1998, Nintendo officially terminated its relationship with ailing Silicon Graphics and offered to buy CagEnt outright.

While details of the sale continued, Nintendo worked with CagEnt to wrap its MX chipset around a MiPS processor, as the company's consoles use NEC MiPS CPUs, not PowerPC. The plan was for the new MX-based machine, complete with hardware 3D, DVD-ROM, and cartridge capabilities to be ready in time for Christmas 1999. Unfortunately for Nintendo, talks with Samsung broke down within a few months.

That's where Microsoft stepped in.

In Early April, the company bought CagEnt through its WebTV division, acquiring all of the assets of CagEnt and its key personnel. Microsoft's plan is to use the MX technology as the core of its next WebTV device, which will clearly be used for more than Email and Web browsing. In fact, Microsoft has quietly been gaining the knowledge it needs to compete in the game console market through its parternship with Sega and it's likely that a Microsoft-backed, Windows CE-based WebTV device could even be co-created with that company.

All this puts Nintendo in a bind, of course, and the company will be unable to create a new console in time for Christmas 1999 now. Its current plan is for the next device to reach stores in late 2000 instead, though its unclear who they will be able to partner with to make such a goal