The tech giant is experimenting with next-gen video-gaming possibilities following the acquisition of Voodoo PC

It's been less than a month since Nintendo (NTDOY) and Sony (SNE) rolled out their latest generation of video-game consoles, and already tech execs are talking about what's next. But these days, it's not just coming from the usual suspects. The newest booster for the multibillion dollar gaming industry happens to be Hewlett-Packard (HPQ) Vice-President Philip McKinney. "Sitting in front of a TV is boring," says McKinney, in an interview. "Gaming is the new high-definition experience."

Since HP acquired Voodoo PC in September, McKinney's Personal Systems Group, which accounts for a third of the company's $90 billion business, has been busy trying to fit the tiny, Canada-based PC gaming hardware maker into its plans. On Dec. 4 at a major telco conference in Hong Kong, McKinney & Co. unveiled a provocative new video clip offering a glimpse of the future.

The video shows a bunch of kids playing a virtual scavenger hunt on portable gaming machines. But instead of sitting on the couch at home or the swings at a park, they're racing along alleyways and backstreets of the real world collecting clues posted on walls and other places to find the prize.

Testing Ground

Sound futuristic? You bet. Computer graphics were woven in to make the video look more realistic. But McKinney says it's not that far off: HP's labs scattered around the world have been experimenting with an open-source platform, called Mediascape, that lets programmers create games or teaching tools that wed the real and virtual worlds. It's based on a daring bet that in five to seven years advances in wireless broadband tech and satellite-based global positioning systems (GPS) will open up a new mobile medium that will redefine our notions of online gaming.

But this isn't just about games. HP execs realize that consoles and souped-up PCs coveted by gamers are often the testing ground for the latest cutting-edge tech in consumer electronics. And there's no other niche on the planet with as many tech-obsessed consumers that can give HP's engineers feedback before the company takes a product mass-market. Sony's PlayStation 3, for instance, is the first gizmo ever equipped with the ultrafast Cell microprocessor—which Sony developed jointly with IBM (IBM) and Toshiba—and it has a Blu-ray disc player for next-gen, high-definition DVDs. Eventually, Sony hopes to use those technologies to give its TVs, video recorders, mobile phones, and other gizmos an edge over the competition.

HP will take a similar approach, using Voodoo's gaming business to channel new concepts cooked up in the labs to market before going mainstream with them. "Voodoo offers HP what an F1 racing team does for a carmaker," says McKinney. Of course, HP isn't the first U.S. tech giant to pile into the gaming world. Microsoft (MSFT) entered with the Xbox in 2001, and Dell (DELL) added to its own gaming-PC business by absorbing Alienware Corp. in March.

Tied in the Net

HP has already held a number of trials for its "location immersive" mediascapes. In one recent trial, HP engineers and Historic Royal Palaces, an independent British charity that manages the Tower of London, hosted an adventure game in the Tower. Participants were given HP-made iPAQ devices and instructed to free the virtual prisoners. Depending on where they were in the tower, the participants would trigger images of prisoners such as Anne Boleyn, one of Henry VIII's wives, or music and other digital clues. In other trials, children have used similar devices to reenact animal life on the plains of Africa or gone on nature walks at Yosemite that recount the history of the national park. Each time, HP engineers have taken copious notes on how to improve the interactive experience.

So what do these types of games have to do with telcos? For starters, the two have the Internet in common. They're increasingly using the same broadband pipeline, as gaming shifts from solitary terminals to online multiplayer action, and telcos worldwide move away from their traditional dependence on voice traffic and into Net-based services.

Hunting the Killer App

But the most revolutionary changes are expected to come once telcos and cable companies build vast wireless broadband networks with licensed radio spectrum based on an emerging tech known as mobile WiMAX. Instead of being tethered to a short-range Wi-Fi portal, anyone with a WiMAX-equipped gizmo—whether it's cell phone, laptop, or portable gaming console—will be able to tap into a superfast wireless network whose antennas might be several miles away.

That's why HP's decision to make a statement about the future of video gaming at the world's biggest telco conference isn't that odd a choice. McKinney sees no contradiction. "Nobody knows what the killer app is," he says. That means plenty more experimenting with new wireless tech for HP's geek squad.

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