Microsoft are very, very, very determined to win the console wars. And they have both the money and the brains to do it. They have even dragged the Xbox side of the company into profit (despite RRoD). One day it will be their most profitable division.
As the 360 matures into the middle of this current cycle Microsoft are working very hard to ensure that they get as much of the cake as possible when sales volumes are at their highest. With E3 coming up and senior Microsoft executives getting very excited we are obviously going to get some very big news. Here is some of what is going on:
1) Following the lead of the Wii, Microsoft are implementing a gesture interface. This is especially valuable for casual gaming and thus for reaching new demographics. Rare in England have been doing some of the software work on the new interface but one of the driving forces appears to be Dale Herigstad who was largely responsible for the gesture interface in the film Minority Report. This leads to the possibility that there may well be two motion controllers involved, one for each hand.
2) Microsoft want to drop the price of the 360 to $199 or even $149 (in staged decreases) so as to massively increase volumes and put the boot into the opposition. They are aided by the very elegant design of the machine and the fact that they own the IP rights for the GPU and CPU. Already several hardware redesigns have reduced costs significantly. However putting the CPU and GPU together on one chip will be important, as will significantly reducing the size of the whole machine. It is obvious that Microsoft are gearing up to have the 360 as the junior model of a two model range with the upcoming 720 as a premium console.
3) The big hard drives are coming. Up to one terabyte are already rumoured to be in the pipeline. This is essential as Microsoft develop the 360 into being a home media centre and as they move away from physical distribution of content. The 360 uses laptop style hard drives so as these become bigger and cheaper for laptops they will be adopted for the console. As we move into the 720 generation we can expect drives with several terabytes. The more the better.
4) Banjo-Kazooie: Nuts & Bolts will be the first 360 game to feature some of the new software developments including the gesture interface. Hardly surprising since it comes from Rare, who worked on those developments. Here is a video of the game with Ken Lobb.
5) Virtual user creation system (avatars). Something like the Miis on the Wii or Home on the PS3. Of course Microsoft are a software company and have been able to learn from what their competitors have done so expect a more comprehensive implementation of the concept. This feature is rumoured to have slipped a lot from it’s original street date and has been largely put together by Rare.
6) Social networking on Xbox Live. About time Microsoft fixed this glaring omission and caught up with services like Steam. If they get this right it could become just about compulsory for every keen gamer to own a $149 Xbox 360 just to be part of the gaming community. Even Sony enthusiasts!
7) 3D Dashboard. Once again this is about time too. Integrated with the gesture interface and avatars this will change the look and feel of using an Xbox 360 enormously. Although Live is by far the most popular online console service, at the moment it is looking a bit clunky compare with Home or Second Life. Microsoft aim to leapfrog these other environments with something that will really be state of the art.
If (as seems increasingly likely) this is all true it will give Microsoft and the Xbox 360 a massive leap forward in the marketplace. With an unremitting game release schedule they are providing the content to back this up. (Too Human, Halo 4, Alan Wake, Forza Motorsport 3, Gears of War 2 etc) I can see many industry analysts being wrong again. The only potential blot in the ointment is the upcoming economic downturn. But then people give up entertainment last.