Microsoft Xbox: How the software titan got into hardware

REDMOND, Washington (Reuters) -- What made Microsoft Corp., a software company, think it could make money by building a new video game machine, jumping into a crowded arena dominated by the likes of Nintendo, Sega and Sony?

Seamus Blackley did.

His tale highlights the intense, highly competitive world within the halls of Microsoft, where promotion of new ideas demands a quick wit, a determined will and some in-your-face confrontations that would be frowned upon elsewhere.

The red-haired, 32-year-old, who was a jazz pianist and high-energy nuclear physicist before he found his calling in video games, dreamed up the idea of a game console using PC technology in early 1999.

The idea sprouted while Blackley was toying with a new laptop computer on an airplane after visiting his girlfriend.

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"I was flying back from visiting her and I had just got a new laptop and I was trying it out on the plane and I was thinking about graphics cards and I realized that we could make a machine that had much higher performance than anything else in the industry," Blackley said in an interview.

Despite having been with Microsoft just a couple of months, Blackley said he set out to persuade a skeptical upper management that the company should throw its considerable weight behind such a device.

The story ironically echoes that of the technology Blackley was basing his device on, software called DirectX that was stealthily created by a handful of Microsoft engineers in the 1990s to enable PCs to run graphics-intense games.

Blackley enlisted three colleagues to help hammer out the details and build prototypes -- often little more than exposed cards with processors and graphics chips hooked to a monitor.

"At the same time, unbeknownst to us, Microsoft decided it wanted to make some kind of device," Blackley said.

Microsoft, which makes the Windows operating system for personal computers, wanted a consumer product that would help it extend its reach away from the desktop.

It looked at handheld computers, interactive television, and quasi-gaming machines that were more akin to stripped-down PCs than the supercharged graphics monster Blackley and his crew envisioned.

"It was a half-hearted effort before," recalled Ed Fries, vice president of Microsoft's games publishing division.

"People would come and say, 'I'm working on this and I want it to do games, too.' In all cases my attitude was that you can't really dip a toe in the games business. You have to build a machine that's going to be the best," Fries said.

Fries, who had transformed Microsoft's games unit from a small group cranking out a few dusty standbys into a rising powerhouse, found himself drawn into the fray.

"Things were going great and then these guys wanted to do this Xbox thing," Fries said.

For his part, Blackley fought for nearly a year, crashing at least one high-level pow-wow to make a pitch.

"A few weeks later we were meeting with (Microsoft co-founder and Chairman Bill) Gates. We had a little motherboard that would boot in three to four seconds, and we had Tomb Raider playing on it," Blackley said, referring to the popular game featuring busty heroine Lara Croft.

Still, it wasn't an easy sell.

"You'd meet with (Chief Executive) Steve Ballmer and say here's my idea and he'd say I don't understand this, explain it to me ... and he'd say this is stupid and this is stupid and this is stupid, go away and fix it," Blackley said.

The battle culminated after nearly a year in a meeting now known as the "Valentine's Day Massacre" where the final green light was finally given.

And in March, after months of speculation by the video game industry, Gates officially unveiled the Xbox. Executives later promised to spend $500 million promoting the console in what will be Microsoft's biggest product launch ever.

Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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