MSFT's X-Box Strategy Microsoft's X-Box tanked at retail, so now the price wars begin. The Borg is hoping that online subscription services will revitalize this nascent franchise, and build a new division for the increasingly conglomerate like Beast of Redmond.

Greg Costikyan, whom I met when I lived in New York, wrote an extremely insightful analysis of the computer games industry (originally published by Creative Good, but now available for free at costik.com) outlining why the shrink-wrapped market was dying, and how distributed games, as well as modes of delivery, were going to become increasingly important. So Microsoft's multiplayer, networked strategy is a good one, but they're crippling themselves by insisting it all runs on .NET servers, a strategy that scared Electronic Arts into Sony's arms a few days ago.

Microsoft makes the usual arguments about walled gardens being safer and more pleasant than the wild internet, but given the treacherous and hostile landscape that is Windows 95, 98, ME, 2000, NT, and XP, I don't think Microsoft can add much value by integrating its offering. Also, I'm not sure how many customers they need to break even on this thing, but there aren't many hardcore gamers out there, and this isn't going to change anytime soon, no matter what industry hacks claim.

And on the topic of industry hacks, ignore cries about there being no broadband. Broadband grew at a healthy 90% last year, and I'm sure many broadband subscribers are also techie-gamers, suggesting good penetration in MSFT's target segment. I don't know whether these numbers are absolutely high enough, but they're pretty good relatively.