1. Waging a Standards War Wonsoo Chang Petur Gislason Patrick Léger Joe Stamps

2. Overview • Game console industry • Launch of Xbox • Managing expectations • Market opportunities • Competitive outlook • Microsoft’s weaknesses • Discussion

3. Game Console Industry • $6.5B industry • Mature market • Increasingly competitive • Generally not reverse-compatible • Lack of interchangeability

4. Microsoft’s Xbox • Scheduled launch: Fall 2001 • Pentium III processor • Compatible with PC games • Evolutionary system • Proliferation of Windows platform in low-end devices

5. Managing Expectations • Vaporware strategy • Entice potential PlayStation 2 users to wait for Xbox • Solid track record in creating positive feedback • Windows 95

6. Market Opportunities • Sony’s failures create an opportunity for Microsoft: • Poor architecture hinders game development • Underestimation of demand weakened potential for positive feedback • Lack of uniform platform for game development (need for Pentium III)

7. Competitive Outlook • Lack of installed console user base • Existing base of game developers for PC market • Lower costs for game developers • Game availability increases value of game console

8. Weaknesses • PC games may not appeal to console users • Threat of low quality PC games • Lack of dominant console game developers • Answers/outcomes: • Market efficiency • Partnerships with key developers

9. Discussion • Will vaporware strategy work? • How should Sony respond? • What is the long-term outlook for Microsoft? • How will increased piracy affect game development?