Xbox-based home gateway a runner, says analyst

Launch this year?

The rumoured transformation of the Xbox into a home entertainment hub is real, and will launch this year, according to Prudential Securities analyst Hans Mosesmann. Speaking to EBN, Mosesmann claimed that he'd picked up sufficient information at CES to confirm that the device, the HomeStation, will be given the go-ahead.

HomeStation will be based on the Xbox, but will in effect be a cheap combination entertainment system and home gateway, including video recording and DVD. Adding the necessary capabilities to to Xbox isn't exactly going to be hard, given that it's a modified, closed, proprietary version of a PC anyway, so the only real constraints on launching it are manufacturing capacity and tactics.

Presuming that Microsoft successfully rolls out Xbox in Europe and Japan, and meets demand, then an announcement leading to a HomeStation launch around Q3 this year would make most sense.

If Xbox is a success, and if Microsoft can successfully transition it to HomeStation, then the company will have pulled off a spectacular and highly lucrative stunt. Many home users will be using closed boxes owned and specified by Microsoft for games, music, video, email, internet access etc, and Microsoft will be in a strong position to add "secure PC" features that will allow it to sell music and video, and to roll the .NET strategy out into the home.

Pricing for HomeStation will however be an interesting issue. Xbox follows the games console model whereby manufacturers make their money back out of games sales, but the use of HomeStation for other purposes as well will muddy matters. Does it get subsidised, and if so, how confident can Microsoft be that it can make money back from music and video companies, or other .NET partners? ®

Related links:
Microsoft preps 'Xbox 2' as home entertainment hub