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AGC: Michael Dell On The Future Of PC Gaming

Michael Dell, founder and chairman of Dell, Inc., sat for a relatively rare public Q&A session at the Austin Game Conference, and gave some intriguing views on how the PC could figure into the future of video games.

Mark Wallace, Blogger

September 11, 2006

12 Min Read

Michael Dell, founder and chairman of Dell, Inc., sat for a public Q&A session at the Austin Game Conference and gave his views of how the PC would figure into the future of gaming. From his point of view, it sounded like game developers needed to step up to create games and applications that take advantage of the increasing processing power of the PC. Interestingly, this concept was somewhat in contrast with the remarks of game developer Raph Koster earlier in the conference. A transcript of Dell's remarks below: Are you much of a gamer these days? I occasionally play a little World of Warcraft. What was first game you were playing, 10 or 20 years ago? We used to play games on the Apple II when I was in high school. Those were pretty simple, very very different from today's games. The truth is I don't have as much time to play as I'd like to. In WoW, is there any archetype you like playing more than any others? I guess more Alliance than Horde. How is Dell focusing on gaming? We have a brand at Dell called XPS, and XPS is really about performance and the enthusiast PC user, and what we've really done with XPS and earlier this year we acquired Alienware and helped them with parts and supply and capital to help that brand grow, is we've seen that particularly with online gaming, the high end of the gaming market really is a great way to take advantage of a lot of the features and performance that are evolving in the modern PC. If you look at games like WoW, a lot of the work that goes on here at this conference is talking about online gaming and PC gaming, those kind of applications are just perfect for the modern PC that we're always developing. We're also thinking about the ecosystem of gaming, we're also providing servers and storage support and the online network itself. We try to be part of the entire ecosystem, working with developers, explaining what's going on in terms of new features, hardware, how those work together to really take advantage of the latest features. In the coming years will we see Alienware remain a separate entity? Yes, Alienware is remaining a totally separate entity, it's developing its own products. We certainly can help them out with materials supply and cost, but that brand continues to thrive and will develop on its own. Alienware had been using AMD chips for a while. I guess last May we announced that we would be using AMD in certain server products, and then more recently we announced we'd also be using AMD in some additional server products and some desktop products, so we're broadening our product portfolio quite a bit and embracing AMD as a full supplier to us, so you'll see a variety of choices and options for customers up and down the product line. How is Dell working with game developers? We've got a group in our advanced technology group that is reaching out to leading developers and really trying to understand what their needs are, how can we make the PC the best platform for gaming, and how do we take advantage of all the sweet hardware. Some examples, for a long time the computer industry was on a single-core strategy, and clock rates kept running up. That game has really changed now with dual core and multicore processors. We need multi-threaded applications. We've got enhanced physics processors, all sorts of video performance that's coming. The rate of improvement has been just tremendous. Dell has also been a leader in displays, and in widescreen displays. When you look at gaming, how many games really take advantage of widescreen displays, of multiple displays? There's a lot to be done here to take advantage of all these new features. Also in the XPS notebooks, in the M1710, there's an LED light system, and we've created an API we're releasing to developers so that developers can enhance the gameplay by integrating the lights into the game action, so that's an example of the kind of thing we can do that's going to be very unique and enhance the gaming experience. What will Vista bring to gamers? With DirectX 10, Vista is a really great platform for gamers. It's the first Microsoft operating system to contemplate gaming in a serious way and Microsoft has done a lot to embrace gamers. We think that's going to be great. Vista does as an operating system take better advantage of a lot of the hardware features I mention, but we need developers to embrace that. Will Vista increase the use of widescreen and surround sound? Vista will accelerate the move to widescreen and improved display interfaces. Our notebook offerings, we have moved faster and more aggressively than anyone to widescreen displays. It's the same on desktop displays, we're a leader in both, we want to promote those and multiple displays. I recently got a demonstration of a three-screen system, with a flight simulator, it's an unbelievable experience. Now, you might say, Well, how many people have two or three displays. Well, actually more than you might imagine, as the cost of these thing keeps coming down, it's actually fairly common now to see more and more displays on the desktop. Vista takes much better advantage of that. With Vista, will we see cross-platform gaming become bigger? I'm not sure about that. We'll see if that happens or not, it certainly would be good for the PC. We think that both of these different kinds of products can exist, the video game market is a huge industry. But it raises fundamental questions: What is a PC? What's a console? To us a console is a fixed PC, locked down, all the video chips in consoles are the same as in PCs. The PC ships 240-250 million units a year. Consoles are not our business, we're focused on the PC and servers. Are there any gaming genres that are better on PC than on consoles? Certainly the online gaming and strategy titles, role-playing games, tend to work better on the PC. You see the most popular titles in that space, many of them aren't even available on consoles. Typically, I've noticed that the PC always makes a comeback when consoles are starting to show signs of age, but this time around at same time as the 360 is going to be a year old, the PS3 might ship, the Wii might ship. Will there be a four-way battle this time? It gets more interesting if you say, What kind of PC can you buy later this year? Today we're shipping dual-core machines that are incredibly powerful. It's not a great secret that the quad-core processors are coming really fast. Think about the amount of performance you get in a quad-core machine. These machines are just massively faster than consoles, particularly if you start putting in multiple video cards. The other issue is that for game developers who want to create their own online environment and persistent connections with customers, they don't have to do that within an economic system that's really controlled by the console makers, which has its pluses and minuses. What do you see as the next big thing in PC gaming? Taking advantage of multi-threaded microprocessors. We've got four cores coming very very soon, and it doesn't take very long before that's in fairly high volume. We've got widescreen displays, multiple screens, Webcams, all sorts of hardware acceleration, whether it's video, physics, artificial intelligence, networking DirectX 10. Is professional gaming going to be a viable sport in the future? It looks that way. I'm not expert on that topic, but what I've seen is strong development of these leagues and enthusiasts we see in the category. The video game industry is now larger than Hollywood box office business in revenue. I think it's going to continue to grow, especially as the richness of the experience is improving tremendously. Today a lot of people have broadband, or at least they think they have broadband because they have DSL or cable. Well, the real broadband is fiber, and when people start to get fiber, which is admittedly a couple of years out, it totally changes the experience in terms of the richness of the experience. Do you think the future of PC gaming is in a shared social experience? Will we see a shift away from single-player games? That's obviously for the gamers to decide more than us, but I think if you look at all computing, it's becoming more collaborative, more social, it's the power of the community effect, and so yeah, online gaming is definitely going to be the part that thrives. Also, a number of developers have figured out they can have this persistent connection with the customer for updates, new content, new features, feedback, and the community builds on itself. That's a fantastic thing, it also means that developers can speed their reaction time to essentially provide what their community wants. So where does Dell fit into the future of gaming? We want to be the leading company across the whole ecosystem of PC gaming, so obviously desktops, notebooks, servers, storage. We're working with developers to understand what requirements they have to enhance the platform, and we're thinking about how can we standardize on universal game controllers, how can we get some standards around updating, new releases, how to use various communities to make easier or more powerful experiences for all users. And about hardware, it's 15 years now since the CD-ROM, it's about nine years since the introduction of the DVD, but these things never really went anywhere as a killer app for the PC. Could BluRay or HD-DVD be the next killer app for gaming possibly? The amount of content you can convey via BluRay is 10 times what you can get on a DVD, it's incredible. You can do high-definition gaming, massive arrays of images. BluRay is going to be fantastic. The other offset, to be fair, is that broadband speed is improving, which will also be somewhat a competitor to that. If you have a fiber connection, optical media are essentially replacements for very high-speed connections of some kind, but if you really have persistent super high-speed connections, that lessens that need. Dell then took several questions from the audience: Was there ever moment in time when Dell considered launching a console? I go back to: What is a console? A console is fixed-function PC that has a different economic model, and the economic model is you sell it below cost and then you make the cost back by getting a royalty from the game developer. Could we do that? In principle we could, but we think we're far better off putting all our energies behind one gaming platform than two gaming platforms. What is Dell's strategy in countries like Bangladesh? We have some sales activities going on in Bangladesh. I wouldn't tell you it is a main strategic focus for the company right now. We are very focused on Asia, specifically on China and India. We have been growing very quickly, 60-70 percent in India, 30 percent or so in China. In Japan we recently became the #1 provider of desktop computers in Japan among all companies, which is something we're pretty proud of. Ten to 15 years ago there weren't supposed to be computer companies that weren't Japanese. What would [Austin technology entrepreneur, promoter and a mentor to Michael Dell] George Kozmetsky have thought of MMOs? I think he would have understood what's going on in the community and how the community effect is really changing and rapidly evolving the way the business is playing itself out -- and how that's creating a lot of value. About what percentage of overall sales are driven by customers buying PCs primarily for playing games? Dell's business is about 85 percent to businesses, institutions and the government, about 15 percent is to the consumer. Within the consumer segment, we have a little over 30 percent share in US, and the percent of our customers who play games is pretty similar to the broader market's. What incentive is there for the hardcore gamer to go with a PC instead of a cheaper console? The PC in terms of interactive ability, the ability to store and forward information, to have a persistent online profile, it's a very different experience. If you want to have the latest performance, you're always going to do it on the PC. The volume dynamics are very different, and that has economic implications, if you're creating an online community and that community is seconded in someone else's online community [as in the case of Xbox Live], that's very different than having a direct connection to your customers. Do you see developers going to console more because it's harder to pirate, and is Dell taking any steps in this arena? Actually, you might not know this, but when you buy a PC you actually get about 15 DRM systems in your PC whether you wanted them or not. They're all throughout the architecture of the PC, and there's a lot of effort across our industry to provide the right kind of protections of digital rights. Now, for every protection there's lots of creative people out there with ways of trying to avert it, but there is a lot of smart thinking being applied to this, and the lockdowns are getting a lot better. [Mark Wallace is the editor of 3pointD.com, a widely read blog covering virtual worlds. His freelance journalism on technology and culture has appeared in Wired, The New York Times, PC Gamer (UK) and many other publications.]

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