As retailers look toward the Christmas season, Microsoft has released a host of gaming software and begun generating hype for its highly anticipated X-Box console.
Under the marketing banner "The Game is On", the company has released 15 new games titles in preparation for the holiday rush, including MechWarrior 4, Links 2001 and Casino.
But the real interest lies in the X-Box - Microsoft's first foray into the highly competitive and lucrative console market. Based on DirectX technology, the machine will include an 8GB hard drive as well as separate CPU and graphics processing unit (GPU), DVD player, USB ports and broadband capability for online gaming.
Around 140 developers have already announced they will license titles for the console, with 40 of those coming from the Japanese development community.
Described by Microsoft as "a natural evolution from the PC to the console", the X-Box is still in its initial phases. Microsoft has yet to commit to a launch date - believed to be in about 12 months time - or pricing details, but it maintains the cost of the machine will be "competitive" with other market options. At this stage, the company is focusing on building product awareness amongst consumers and establishing regional sales hubs.
All Microsoft is prepared to divulge at this stage is that the product will be priced locally.
"There is a razor blade model set out there, but we know the importance of margin and we are committed to making sure the business economics are a winning formula for both the consumers and our partners," said Microsoft's vice president, South Pacific and Americas retail sales, Stephen Schiro.
Gaming is set to become a bigger market for the software giant, which already boasts three of the top 10 games sold in Australia last year and is the leading hardware and gaming peripherals vendor.
Schiro said the biggest difference between Australian and US retail markets is scale and the inherent challenges associated with that, in terms of integrated marketing efforts.
"We work very hard with that," Schiro said. "For example, we have worked to make sure the latest version of Encarta sold here is Australian specific."
Schiro sees the gaming industry as the "killer application" of the future.
"Now that PC penetration is near the US, the games platform is a commodity platform. One challenge associated with that is Internet connectivity, which is not as high as in other markets.
"The interesting thing," he adds, "is as markets become more consumer focused, technology is not so much a driving factor as a consumer benefit. So there are lots of retailers trying to figure out what the Internet means and how it will transform their business and the way they distribute content. The technical innovations are much faster and product life cycles much shorter."
Like so much of Microsoft's business model these days, the company's retail vision incorporates its .NET strategy. Schiro said as the Internet evolves, Microsoft was in a unique position to help retailers build their back office infrastructure on their own.
".NET is a set of technologies that, while integrated, will be able to deliver applications and services. We can help our retail partners evolve into that world."