The next-gen game-console wars are well under way, with the latest skirmishes being fought at the annual E3 conference in Los Angeles. That's where consumer-electronics giants Nintendo and Sony (SNE) are unveiling beefed-up new versions of their signature game players.
Nintendo's campaign to jam-pack its Wii gaming console with features has proved a boon to European chipmaker STMicroelectronics (STM), which will supply the motion-control chip for the console's controller. The newly named Wii was previewed at E3 (the Electronic Entertainment Expo) in Los Angeles on May 9 and will be available in the U.S. as of the fourth quarter of this year.
STMicro, the $8.8 billion (2005 sales) chipmaker headquartered in Geneva, says the chip will be able to detect the tilt, speed, and acceleration of a player's hand motions in three dimensions to give an added dimension to game play. The technology could turn an ordinary game controller into a virtual sword, a boxing glove, a baseball bat, or even a musical instrument, the company says.
MAGIC WAND. The chip is built around a technology known as Micro Electro-Mechanical Systems (MEMS). Essentially chips with tiny moving parts like gears, MEMS have become popular in recent years in notebook computers. IBM (IBM) put a MEMS chip known as an accelerometer, from Analog Devices (ADI), in its ThinkPad line of notebooks before selling that product line to China's Lenovo last year. By detecting sudden motion, the accelerometer chip helps the computer park the hard drive's heads to prevent damage if the machine is dropped or banged around.
STMicro's chip in the Nintendo controller -- which looks like a TV remote and has been described as a "wand" -- is based around similar principles. Players will hold the controller differently than those on Microsoft's (MSFT) Xbox 360 or the Sony PlayStation systems.
"By detecting movement, the game becomes more interactive," says Benedetto Vigna, STMicro's MEMS business unit director. The Wii controllers use embedded acceleration sensors to enable a player's wrist, arm, or hand movements to control and manipulate in-game characters and environments.
CHIP SHOT. Several games will be developed around the unique controller, Vigna says: "You might see it used for motorcycle racing games or flight simulators."
Nintendo won't have the only motion-sensitive controller on the market. Sony said it will have some similar technology in the controller for its PlayStation 3 system, set to hit North American shelves Nov. 17. At the outset, Sony will sell two versions of the console, one that boasts a 20-GB hard drive and costs $499, and one with a 60-GB drive for $599.
For STMicro, winning a slot in the Nintendo Wii will bring new attention to its MEMS business. MEMS technology is one part of the biggest business unit at STMicro, the Application Specific Product Group Segment, which brought in $4.9 billion in revenue, or about 56% of sales, last year. That business unit also supplies chips to wireless-phone manufacturers like Nokia (NOK) and also turns out imaging chips used in many camera phones.
STANDOUT STRATEGY. Nintendo has led the market in portable gaming with its GameBoy line of handheld games, and has in the last year been challenged on that front by Sony's PlayStation Portable. But Nintendo has generally lagged behind Sony and Microsoft in the console business in recent years.
"Nintendo's whole strategy is to focus on the youth segment, particularly in Japan," says iSuppli analyst Chris Crotty. "Nintendo is being really smart. They realize they are not going to compete head-on with Microsoft and Sony for the overall market. Their strategy is to focus on segments they can do very well in, and one way to do that is by being different, and this controller has something to do with that."
Gaining on Microsoft in the current iteration of consoles could prove particularly challenging, as Microsoft's Xbox 360, introduced in November, 2005, will have been on the market a full year before Nintendo's Wii. Doing something different with its controllers might help it recapture some of its prestige.