Microsoft chairman and "Chief Software Architect" Bill Gates finally unveiled the company's long-secret X-Box video game console this week. Gates says that Microsoft will enter this lucrative market by late 2001, using a system that is based primarily on high-end PC components. As such, X-Box will feature a high-end Pentium III processor, hardware-accelerated 3D graphics, Internet connectivity, and the one feature that Microsoft hopes will set it apart from a crowded field: software compatibility with Windows. And because Windows is currently the largest single gaming market in the world, Gates hopes to see the X-Box have the same success in living rooms that the PC has had in other parts of the house.

"We're taking the best of the PC and putting it into a console," says Don Coyner, director of marketing in the newly formed Microsoft Games division.

Microsoft sees the X-Box as complimentary to the PC. Most PC games are more "cerebral," the company says, while console games tend to be more "visceral." The lure of the X-Box, potentially, is that software developers already know how to develop for it, while its hardware capabilities will outstrip any of its console competition, so users will want to own it.

"Building on our strengths as a software company, X-Box will offer game developers a powerful platform and game enthusiasts an incredible experience," said Gates. "We want X-Box to be the platform of choice for the best and most creative game developers in the world."

When pressed about its status as a newcomer to the game console market, Microsoft points to Sony Corporation, which entered the market itself for the first time in the mid-1990's with the PlayStation. Despite its technologically inferior product, Sony soon dominated a market that had ostensibly been sewn up already by Sega and Nintendo. And today, Sony is the biggest player.

But the biggest barrier to the X-Box may actually be its specifications, which the company revealed as well. The X-Box will feature a 600 MHz Intel Pentium III processor, a custom 3D graphics engine developed by nVidia, 64 MB RAM, an 8 GB hard drive a 4x DVD drive with hardware-backed movie playback, and an 8 MB memory card. Comparatively, this system blows away Sony's PlayStation 2, which falls short with a 300 MHz CPU, 38 MB RAM, half the memory bandwidth, a small fraction of the polygon performance (important for real-time 3D games), no hard drive, no Internet capabilities, and a 2x DVD drive that offers no built-in DVD movie playback unless a utility is loaded on an 8 MB memory card. However, the PlayStation 2 is already shipping in Japan and is expected in the U.S. late this summer; with a year or more lead-time, Sony will build up an impressive lead, and it has already been a market leader with a technologically inferior product. Additionally, Microsoft's machine may seem fairly impressive today, but how will it look a year or more from now? Intel is already planning to ship CPUs that will run 3-4 times as fast as the one in the X-Box by the end of this year.

Much about the X-Box is unclear at this time, though some of the more technical details will come to light Friday during the Game Developers Conference in San Jose. Chief among the unknowns is Internet connectivity, which will likely be cable modem-based: Microsoft's sole mention of the Internet capabilities of the system mentions only that it will be "broadband" access, suggesting that a 56K modem is thankfully not an option. Another question concerns developer support, which is key to the survival of any gaming platform. Microsoft trotted out a couple of names during the announcement that should be familiar to gamers, such as Electronic Arts and Konami. But Microsoft will face the same type of market its own competitors face in the PC industry: Some games might simply be unavailable on the X-Box due to muscling by the big players.

Microsoft, however, remains characteristically upbeat about the X-Box, despite its recently hardware failures with three generations of Windows CE and WebTV. A newly created Games Division will evangelize the platform and bring developers on-board over the course of the year.

"The PC has always been the design center for high-end entertainment because of the unlimited graphics power and the great tools that make programming easier," said Robbie Bach, vice president of the Games Division at Microsoft. "Our developer partners are excited to apply Hollywood design techniques to creating superior X-Box games.