Microsoft's Kinect Is Under Pressure to Connect

Microsoft Corp. is betting a new product called Kinect will deliver a bigger audience for its Xbox 360 videogame console by letting people play games without a traditional controller. ugg boots for cheap

Eleven-year-old Michael McKoy, right, and Cameron White, 10, race while playing the Kinect for Xbox at a Gamestop store in Charlotte on Sunday.
.But Kinect, when it goes on sale Thursday, will also be the most visible test in years of whether Microsoft can churn out breakout consumer products from its huge investment in research and development.

Microsoft faces increasing pressure from investors to show a payoff from those investments, which amounted to $8.7 billion for the fiscal year ended June 30—bigger than the R&D budget for any other tech company. Microsoft has poured a chunk of that money into improving existing products and services like its Bing search engine, as well as more traditional franchises like Windows and Office.

Big Blue's R&D Machine Benefits Shareholders. Access thousands of business sources not available on the free web. Learn More .Kinect will be especially visible: an entirely new $150 device sold at retail outlets and aimed squarely at the consumer market, a field in which Microsoft has been more sluggish to respond to trends than Apple Inc. and other competitors. ugg australia boots

Craig Mundie, the chief research and strategy officer at Microsoft, said he believes the company's R&D investments have paid off well for Microsoft. "We kind of view ourselves as almost a pure intellectual property business, and as such one that requires a sustained investment to stay ahead and remain competitive," he said.

Although Kinect builds off an earlier motion-sensing game product—Nintendo Co.'s hugely successful Wii—some game industry executives believe Microsoft has taken the concept in an innovative new direction by completely eliminating the need to hold any hardware while playing. The device, which plugs into Xbox 360 consoles, includes a camera, microphone and an infrared depth sensor that can detect the movements of a players' entire body, rather than just the hand movements Wii responds to.

"There are high stakes for them to get this right," says Sandeep Aggarwal, an analyst at Caris & Co.

One Kinect game published by Microsoft aimed at youngsters, "Kinectimals," lets people play with a menagerie of baby tigers and other animals, scratching their chins by making a tickling motion with their hands or playing fetch by miming a throw. A game from MTV Networks' Harmonix called "Dance Central" scores players on their dance moves, including everything from fist pumps to side steps.ugg australia boots

"Kinect is what the future of gaming looks like," says Tony Key, senior vice president of sales and marketing at Ubisoft Entertainment, a games publisher that has announced five games that use Kinect, including a fitness title and a fighting game that go on sale this week. "This motion-sensing controller technology that they've created is absolutely a breakthrough."

Kinect includes sophisticated software and hardware that came out of Microsoft's research operations in China, the U.K. and company headquarters in Redmond, Wash. The different groups contributed "machine vision" technologies designed to map the skeletons of players as they stepped in front of a camera so that foot, hand and head movements quickly trigger like motions on screen. They also devised "beam forming" microphone technology that could focus on verbal commands coming from a player, ignoring the ambient noise likely to be occurring in a living room during game-playing sessions.

Mr. Mundie said the researchers also had to create software to solve what the Kinect development team called the "annoying little brother problem"—the phenomenon of a sibling sneaking up behind a player and trying to disrupt their game-playing by waving their arms in the air. The group created software that lets Kinect ignore such distracting motions, he said. uggs outlet

Mr. Mundie calls Kinect a "spectacular collaboration" between product and research groups that "took this thing that people thought was largely impossible, and it's shipping in the total elapsed time of about three years."

Microsoft, often criticized for copying the innovations of others, nearly took a different path in the games business several years ago by considering a plan for a Wii-like motion-sensing controller. The company's games group decided it needed to do something more original, though. "We said we're not going to have a Wii-derivative," says Matt Barlow, a general manager in the interactive-entertainment group.

Kinect could bomb if players decide the system isn't responsive enough to their body movements. Sony Corp. executives have said they considered controller-free systems for the PlayStation 3, but decided that approach didn't work broadly enough across game categories. Instead Sony recently began selling PlayStation Move, a motion-sensing, hand-held controller the company says offers more precision than the Wii controller. ugg boots on sale

To be successful, Microsoft needs Kinect to help it sell additional game systems as well as reach existing Xbox 360 users. Some 44.6 million of the consoles have been shipped so far. Sony says it has shipped 41.6 million PlayStation 3s, while Nintendo has shipped 75.9 million Wiis. Microsoft executives said they expect to sell about three million Kinect systems over the holiday season.

If Kinect is a hit, it could help Microsoft change the perception about the spotty track record of its investments in the consumer market. During its last fiscal year, Microsoft's $8.7 billion R&D budget amounted to about 14% of its revenue, much higher than Apple, whose $1.8 billion R&D budget was less than 3% of its $65 billion in revenue last year. ugg boots outlet