Is the Xbox 360 going to launch with two SKUs? Piper Jaffray analyst Anthony Gikas believes it is. GameDAILY BIZ spoke with Gikas about his predictions for launch, 360 Live, and Microsoft subsidizing third party content.


Xbox 360 rumor and speculation has reached an all-time high this week, as reports of a leaked UK launch date continue to spread, supposed US pricing strategy resurfaced, and most recently, Piper Jaffray analyst Anthony Gikas released a note detailing his Xbox 360 launch thoughts, based on "many conversations" with Microsoft executives.

GameDAILY BIZ spoke with Gikas about why he is so confident the system will lauch with multiple SKUs, his prediction for 360 live pricing, and why it's smart for MS to help subsidize third party 360 launch title development.

The Great SKU Debate
Whether or not Microsoft will launch the Xbox 360 at multiple price points has given message boards across the internet plenty of chatter about since E3. Xbox representatives has been unusually coy, even when asked directly whether the system would launch with two SKUs or not.

[ "Microsoft has been very, very aggressive. They're coming at Sony at 110 miles per hour," Anthony Gikas, Analyst, Piper Jaffray ]

Gikas told GameDAILY BIZ that he knew with a "high degree of certainty" that the 360 would indeed launch with two SKUs, although he refused to speculate on the all-important question of whether the low-end model would include a smaller hard drive (thereby making it standard) as opposed to not having one at all.

"Microsoft knows $299 is important," Gikas explained. "They know that historically that's been the launch sweet spot, but they also don't want to take such large hardware losses this time. Of the 1 million units Microsoft is expected to have available at launch, I expect 80% of them will probably be the more expensive SKU, because that's what early adopters are going to want."

As for the higher end model, Gikas conceded that it could come in as low as $350, but $399 seems like the most probably price point. He stressed that the model will likely include "all the additional peripherals gamers would want to buy anyway," as well.

360 Live Price Hike?
Gikas' initial note erroneously stated that he expected 360 Live's "Gold Level" price to be about $20 a month- confusingly said to be in line with current Xbox Live pricing. The current Xbox Live fee if $50 a year, or $6 a month.

Gikas quickly corrected the typo, stating "I do expect a small raise in the price of premium 'Live' service, but I expect it to fall in line with the $50 a year they are charging currently," he said. "I certainly do not expect a $20/month fee. That would be far too prohibitive for too many prospective owners."

The biggest innovation the 360 brings to Microsoft's Live system is the addition of a free "Silver" package to download free (or otherwise) content for their games, and to have access to a friends list. Gikas noted that Microsoft's goal for 360 Live is to have an impressive 50% of owners connected via the system. The hope is that offering a stripped-down free online service will go a long way towards realizing that goal.

Eating Developer Cost
Perhaps the most interesting aspect of Gikas' research note was news of Microsoft's heavy use of incentives for third parties to support the 360 100%, and to secure exclusive titles for the system.

"Microsoft has set up a fund (of sorts) to be utilized for subsidizing game development and promotion for the XBX360. We think the Company will provide financial incentives in the form of development dollars, sales and promotions, and reduced royalty structures. At the end of the day, expensive third-party product development (on key IP) could be subsidized in part by Microsoft's balance sheet," Gikas stated.

Gikas explained to GameDAILY BIZ, why Microsoft would try to save money on hardware, only to turn around and spend to support some third party development efforts. "Microsoft has been very, very aggressive. They're coming at Sony at 110 miles per hour, and they feel it's very important for those key games to be there at launch," he said.

Gikas also pointed to the 360's lead-off position as another big reason why Microsoft felt it necessary to lend developers a helping (financial) hand. "Xbox 360 games will potentially cost upwards of 50% more than current-gen titles, and those 360 assets can't be reused in other versions to help spread that cost. The 360 version can't be ported" he said. "Microsoft wants to cushion that initial R&D blow as much as they can to ensure that publishers are behind the 360 100% right from the start." ...

“Electronic Arts announced today Wayne Rooney and Ronaldinho as cover stars for EA SPORTS' FIFA 06, due for release this fall. These partnerships build on the success of EA SPORTS' FIFA, Europe's best selling sports game franchise ever. EA also today announced major enhancements to the gameplay and management modes aimed at making FIFA 06 the total football game.

"I'm a big fan of EA's FIFA series and I'm really looking forward to getting my hands on the final version. The game is very popular with many other players, especially when we travel together for away matches, and it's a great honour for a young player like myself to be chosen to be featured on the cover of FIFA," said Wayne Rooney.

Wayne Rooney, current PFA Young Player of the Year, is one of the most exciting young football stars ever, having scored his first Premiership goal at 16. He became England's youngest ever player to score for his country at 17, and enjoyed a spectacular Euro 2004 tournament. Still only 19, he is a key striker for Manchester United and England.

"I feel very privileged to be asked to feature in another FIFA release. The game gives me the opportunity to play the matches I want to play every day of the week – even while away from the field," said Ronaldinho.

Ronaldinho, FIFA World Player of the Year in 2004, was also noticed for his football wizardry at a very young age. At 19 he was part of the Brazil's 1999 Copa America winning team, and now 25, he has gone on to captain the Brazilian team and is also a star player for FC Barcelona.

For Rooney and Ronaldinho this is an exciting extension of previous collaborations with EA. Rooney has already worked on EA's FIFA 05 in the UK while Ronaldinho appeared on the packs of FIFA Street and FIFA Football 04. Both players have been valuable consultants in the development of the game. Under the new agreement Rooney and Ronaldinho will now both become global celebrity endorsers and appear on merchandising and advertising for FIFA 06. ...

Three entirely self-funded software developers formerly of S2 Games (Savage: The Battle of Newerth) are currently using their apartment as the staging ground for a brand new PC (and newly-revealed possible PlayStation 3 and Xbox 360) game known as "Project Offset." Named after the development team itself (which is simply called Offset), the upcoming actioner is being hailed as "unlike no other first-person shooter to date."

Set in a fantasy world similar to those found in most PC RPGs, Project Offset allows players to select from among several different character classes while forming clans to combat over ranked mission-based objectives. There will be a heavy emphasis on game mode flexibility and users can participate in solo, co-op, team, and deathmatch-style showdowns. Interested parties can also expect both long-range and melee combat as well as a throng of vehicles, creatures, and dragons to ride and drive.

In the team's latest update on its official website, further bits of information regarding the game's multiplayer aspects were described in higher detail. Of the several elements mentioned, the co-op components were listed as Project Offset's main design goal. Moreover, the typical player limit is expected to fall somewhere around 64 or higher, and the ability to gain experience points to customize and improve any one of the five available character classes has also been confirmed.

Speaking of character classes, the team shed some light on what those can be used for too. Human Warriors, for example, are the default "all purpose" units that just about anyone can pick up and use. The stealthy Elvin Marksmen, on the other hand, are meant specifically as sneak attack and ranged snipers, while Dwarven builders (used to repair and construct objects), Healers (pretty self explanatory), and Wizards (area damage experts) were also touched on.

Vehicles were glossed over a bit as well and seem to be the great equalizers in terms of game balancing. Horses, catapults, dragons, giant trolls, and battleships all provide a number of unique advantages to those that use them (increased speed, the ability to fly, mass group movement, etc), and when taken in tandem with the aforementioned character classes begin to describe something reminiscent of Battlefield 1942 in the Middle Ages. Other interesting morsels of info, like multiple battles that form overarching war scenarios and castle sieges have also been hinted at, while destructible environments, dynamically simulated deaths, and various other physics-based goodies were revealed. ...

According to AppleInsider, a patent filed in 2002 by a Microsoft researcher has prompted the US Patent and Trademark Office to reject an Apple application to patent its iPod user interface.

But leave the black helicopters grounded for a moment: the conspiracy theories may not be flightworthy.

The AppleInsider story says the Apple application "to patent the menu-based software interface of its popular iPod digital music player has ultimately proved unsuccessful."

However that isn't the case. The story is coy about the patents it discusses, doesn't mention the Microsoft connection and upon further research, it's clear that several key aspects of the iPod are adequately covered by separate Apple IP applications. Both patents discussed have weathered multiple rejections by the USPTO.

The story reports that last month an iPod-related patent application for "rotational user inputs" by Apple was rejected, with the examiner citing an earlier 2002 application filed by John Platt. A Microsoft Research scientist who used to work for touch pad vendor Synaptics, Platt filed a claim for "playlist generation based on seed items" on May 30 2002, some seven months after the iPod was unveiled.

Comparing the two applications, it's hard to see how they overlap. AppleInsider claims "the process by which the iPod's software displays its own menu-based interface is very similar to the process Platt's filing goes on to describe." Such a similarity eluded us, although you can judge for yourselves - the links are at the end of this report.

Apple's application, assigned to iTunes engineer Jeffrey Robbins, Apple CEO Steve Jobs and VP of marketing Phil Schiller, was made on September 26 2002, and describes rotating an input device to navigate in a linear fashion through a user interface. "Although the type of computing device can vary, the improved approaches are particularly well-suited for use with a portable media player," according to the filing.

AppleInsider reports that the rotational patent has been rejected by the USPTO. However, this isn't as final as the statement suggests. "Non-Final Rejections" (NFR) of this kind aren't unusual. Patents are frequently bounced back to the inventor, and many successful patents are accepted only after several NFRs. For example, an Amazon.com e-commerce patent we wrote about recently succeeded at the fifth attempt in four years.

Apple's rotation application, we discover, received its first NFR on September 29, 2004 and was bounced again on June 13 this year.

But Platt's playlist application also has a rejection history. It received an NFR on 17 November 2002, and a more serious Final Rejection on 14 June 2004. After further documentation was received, and extension granted, the application received another NFR on 11 December last year.

Apple has filed a number of applications to protect the iPod and iTunes user interfaces, including 60/359,551 ("Touch Pad for Handheld Device") and 60/387,692 ("Method and Apparatus for Use of Rotational User Inputs").

Apple is facing two infringement suits claiming the iPod violates existing IP ...

According to AppleInsider, a patent filed in 2002 by a Microsoft researcher has prompted the US Patent and Trademark Office to reject an Apple application to patent its iPod user interface.

But leave the black helicopters grounded for a moment: the conspiracy theories may not be flightworthy.

The AppleInsider story says the Apple application "to patent the menu-based software interface of its popular iPod digital music player has ultimately proved unsuccessful."

However that isn't the case. The story is coy about the patents it discusses, doesn't mention the Microsoft connection and upon further research, it's clear that several key aspects of the iPod are adequately covered by separate Apple IP applications. Both patents discussed have weathered multiple rejections by the USPTO.

The story reports that last month an iPod-related patent application for "rotational user inputs" by Apple was rejected, with the examiner citing an earlier 2002 application filed by John Platt. A Microsoft Research scientist who used to work for touch pad vendor Synaptics, Platt filed a claim for "playlist generation based on seed items" on May 30 2002, some seven months after the iPod was unveiled.

Comparing the two applications, it's hard to see how they overlap. AppleInsider claims "the process by which the iPod's software displays its own menu-based interface is very similar to the process Platt's filing goes on to describe." Such a similarity eluded us, although you can judge for yourselves - the links are at the end of this report.

Apple's application, assigned to iTunes engineer Jeffrey Robbins, Apple CEO Steve Jobs and VP of marketing Phil Schiller, was made on September 26 2002, and describes rotating an input device to navigate in a linear fashion through a user interface. "Although the type of computing device can vary, the improved approaches are particularly well-suited for use with a portable media player," according to the filing.

AppleInsider reports that the rotational patent has been rejected by the USPTO. However, this isn't as final as the statement suggests. "Non-Final Rejections" (NFR) of this kind aren't unusual. Patents are frequently bounced back to the inventor, and many successful patents are accepted only after several NFRs. For example, an Amazon.com e-commerce patent we wrote about recently succeeded at the fifth attempt in four years.

Apple's rotation application, we discover, received its first NFR on September 29, 2004 and was bounced again on June 13 this year.

But Platt's playlist application also has a rejection history. It received an NFR on 17 November 2002, and a more serious Final Rejection on 14 June 2004. After further documentation was received, and extension granted, the application received another NFR on 11 December last year.

Apple has filed a number of applications to protect the iPod and iTunes user interfaces, including 60/359,551 ("Touch Pad for Handheld Device") and 60/387,692 ("Method and Apparatus for Use of Rotational User Inputs").

Apple is facing two infringement suits claiming the iPod violates existing IP ...

Speculation over the price of Microsoft's forthcoming Xbox 360 console was fuelled today by new reports from the continent mooting a 349 Euro figure, supporting reports that the system will come in at UKP 249 in Britain.

The figure, reported by German website GameFront, reportedly originates with Austrian distributors who describe it as a "noncommittal" figure received from Microsoft - but implied that the trade price provides enough leeway that some retailers may offer the console at 299 Euro.

The 349 Euro figure would translate almost directly to the UKP 249 price point which is currently expected in the UK, although persistent rumours suggest that Microsoft may see itself has having a little more leeway in its pricing since Ken Kutaragi began telling people at every opportunity that the PS3 is going to be very expensive.

The whole situation is made even more confusing by the fact that a number of US analysts now expect the console to roll out in multiple versions, with a basic model shipping at $299 and a more comprehensive bundle at $399.

Piper Jaffray analyst Tony Gikas yesterday mooted the dual-model strategy, saying that he expects the high-end model to boast a hard drive, additional controller and memory unit, among other things; while American Technology Research analyst PJ McNealy opined that the $299 model will not feature a hard drive, with a hard drive equipped bundle being sold for $60 to $99 more.

Both suggestions are slightly surprising, however, since Microsoft has included a 20Gb hard drive in the official specification for the system, which we would expect even the basic machine to meet.

What's perhaps more likely is that a more expensive bundle may be offered with a larger hard drive - perhaps 60Gb or 80Gb - and a bundle of extra components such as the wireless networking kit for the console. Microsoft has already indicated that higher capacity drives will be made available as accessories for Xbox 360 at some point. ...

More fallout over the Lik Sang case:

Popular online retailer Lik-Sang has announced that Sony Computer Entertainment has initiated legal action against it in the high court of Hong Kong for selling PSP consoles to UK and European customers.

The action, taken jointly by Sony Computer Entertainment Europe and its parent company, Sony Computer Entertainment Inc, alleges that Lik-Sang has breached its trademark rights regarding the PSP by offering it for sale to the UK.

Curiously, it also claims infringement and seeks damages for the reproduction of the PSP manual on Lik-Sang's site back in early June - a matter which was assumed settled when Lik-Sang removed the manual at Sony's request on June 14th.

Sony is seeking a court order against Lik-Sang which would prevent the retailer from selling the PSP, its games and its accessories to customers in the UK and the European Economic Area.

This is just the latest in a series of legal actions against importers of PSP hardware taken by Sony in the run up to the system's September 1st launch in this territory - but while the firm has had considerable success in cracking down on importers in the UK, Lik-Sang believes that it'll be a different story in Hong Kong.

"This lawsuit comes as a complete surprise to Lik-Sang.com, given that the laws of Hong Kong are clear when it comes to parallel trade," an official statement from the retailer reads.

"Hong Kong's legislation is based on the fact that allowing parallel and free trade will restore natural competition and benefit consumers with lower prices," it continues. "Hong Kong, one of the pioneering countries respecting worldwide exhaustion of trademark rights, allows free trade once an item entered the market for sale."

The retailer plans to fight the case in the courts, and says that it is currently looking into options to combat the action. It also plans to continue selling PSPs to customers overseas for the moment - having last month announced an offer which provides worldwide free shipping on PSP hardware until September 1st.

"This is the most aggressive move against its own customers that a console manufacturer has taken in the 30 year history of videogames," commented Lik-Sang marketing manager Pascal Clarysse. "Sony wants to completely cut hardcore gamers away from items released in Japan or anywhere else outside their own country. A very active part of the gaming community has been enjoying Japanese gaming culture for over two decades, and that's what the Empire is now willing to destroy." ...

Analysts at Piper Jaffray have released a set of estimates for the shipment figures of Microsoft's Xbox 360 when it launches at the end of this year, suggesting that Europe may get as few as 400,000 units by Janaury '06.

The figures, which were reported by Forbes Magazine, show 1 million Xbox 360s shipping in North America during 2005, with 400,000 units going to Europe and 200,000 to Japan.

Piper Jaffray belives that Microsoft will hit a November launch in the USA and Europe, with Japan following a few weeks later - but if their estimate of only 400,000 units in the channel for Europe is correct, the launch in this territory could be affected seriously by shortages.

In terms of software, the analysts believe that Xbox 360 will be accompanied by 15 titles at launch, with 25 to 40 games available by the end of the year - and expect North American software pricing to be $59.99, which almost certainly ties in with the UKP 45 price point suggested by senior sources here last week for Xbox 360 games.

Piper Jaffray also takes a stab at guessing the launch price for the system - coming down at a $299 price point for the standard console, with a $399 price point being suggested for an enhanced hardware pack including a number of additional components.

No pricing detail has yet been officially confirmed for the Xbox 360, with the only solid comment made on it so far being J Allard's observation that the price is unlikely to be very different to the last Xbox - which rolled out at $299 in North America.

However, some sources have hinted that since Ken Kutaragi has begun indicating that the PlayStation 3 may be extremely expensive, Microsoft has been considering higher price points for its system. ...

The Xbox-Linux team has up a new article about The Hidden Boot Code of the Xbox. The Xbox console contains a 'chain of trust' to allow only legit Microsoft signed code to run on the Xbox. The hidden 'MCP' boot ROM (just 512bytes) is the link between hardware and software in this chain of trust." From the wiki article: "The Xbox, having an external (reprogrammable) 1 MB Flash ROM chip (models since 2003 have only 256 KB), would normally start running code there as well, since this megabyte is also mapped into the uppermost area of the address space. But this would make it too easy for someone who wants to either replace the ROM image with a self-written one or patch it to break the chain of trust ("modchips"). The ROM image could be fully accessed, it would be easy to reverse-engineer the code; encryption and obfuscation would only slow down the hacking process a bit

http://www.xbox-linux.org/wiki/The_H...de_of_the_Xbox ...