Microsoft Turns Up the Video Game Heat

May 13, 2005 — -- In this week's "Cybershake," we take a quick look at how Microsoft hopes to expand its hold in the home video game market. Plus, we note how America Online is finally joining the craze for free e-mail services.

Microsoft Unveils Xbox Successor

When it comes to the home video game market, it's not just about fun and games. With an estimated $10 billion in sales last year, video games have become big business -- surpassing even Hollywood's expectations. And the stakes are set to go even higher.

Last night, Microsoft lifted the covers off its next-generation video game system, the Xbox 360. The unveiling -- a half-hour special televised on the MTV television network -- confirmed what die-hard gamers speculated for months: The new Xbox will offer much more muscle than the previous version introduced over four years ago.

"What people are going to be excited about is how powerful the machine is -- meaning the graphics are sharper," said Dan Hsu, editor of Electronic Gaming Monthly magazine. "The most important thing you want to see out of your new gaming system is that it plays great games."

But more than just games, the Xbox 360 is designed to be the center of digital home entertainment. Using software similar to the Media Center Edition of Windows, the new Xbox will also play DVDs, access the Internet and e-mail, as well as store and play digital music and photos.

"It's going to allow you to connect to the Internet to interact with other gamers, play music, play DVD movies," says Hsu. "What Microsoft is trying to do is just create a nice package where you have to worry about fewer components in your home stereo setup."

Industry analysts say Sony is expected to announce similar plans for an advanced video game entertainment system next week at the Electronic Entertainment Expo, an annual industry gathering in Los Angeles. But the so-called "PlayStation 3" system isn't expected to be available in stores until sometime next year.

By unveiling the Xbox 360 early, analysts say Microsoft may be able to grab market share from rival Sony. However, there are still many unknown factors.

Although Microsoft plans to have the new system available in time for the year-end holiday season, pricing hasn't been set. It is also unclear how many new games designed specifically for the Xbox 360 will be ready by then.

-- Aaron Katersky, ABC News

AOL Joins the Free E-Mail Bandwagon

America Online, once a leader in online Internet access hasn't been faring well lately. AOL has lost more than 500,000 subscribers in the three months of this year. And since September 2002 when membership was at its peak of 26.7 million subscribers, about 5 million have defected to other service providers.

But one of the areas where AOL has remained champ is in its free instant messaging service called AIM. Over 27 million Internet surfers actively use its free chat service. So, to keep AIM on top, AOL is bolstering its online communication feature with free e-mail.

"By adding e-mail now we really give people a one-stop shop for all their communications needs online," said Chamath Palihapitiya, AOL's general manager for AIM.

Google, Microsoft, Yahoo and other online companies already offer free Web-based e-mail services. But AOL's service will offer features that aren't available from those competitors.

For example, AIM e-mail users will be able to check if a message sent to other AIM members has been open yet. Unread messages can even be deleted from recipient's inboxes.

According to Palihapitiya such distinctions will hopefully drive Net users to AIM. "So that as far as you communicating with someone, what you really have to say is 'Oh, I'm gonna AIM that person'," he said.

AIM e-mail will also offer 2 gigabytes of space for messages -- twice the amount of Yahoo's free e-mail service. But like other free Web-based e-mail services, the new service will display online ads when users sign in to retrieve their messages.

A test version of the e-mail service is available now to anyone who downloads and installs the latest version of AOL's AIM software. The final version, which will be accessible from any Web browser, won't be ready until June.

-- Jim Hickey, ABC News

Cybershake is produced for ABC News Radio by Andrea J. Smith.