Microsoft, Gates at expo to pitch "anywhere" games

LOS ANGELES, May 10 (Reuters) Microsoft Corp. Chairman Bill Gates visited the world's largest video game expo on Tuesday to sell a new vision of ''anywhere'' gaming that would link video game consoles, cell phones and computers.

Gates introduced a plan called ''Live Anywhere'' that aims to capitalize on the success of Xbox Live online play to tap into a network of over 150 million users already playing games on computers that run the Windows operating system and more than one billion cell phones ready to play video games.

Microsoft leads the industry in online gaming with its Xbox Live service that lets people around the world play each other in real time, download new games and chat. A similar capability will be built into the upcoming version of Windows called Vista, effectively launching the new service.

''This is a vision of taking 'live' to the next level,'' said Gates at a Microsoft news conference. ''We're going from 'live' to 'live anywhere''' Microsoft entered the video game hardware business in 2001 with the original Xbox, creating a brand that appealed to serious gamers and keeping the Xbox business separate from other parts of the company, including its mainstay Windows unit.

Gates' debut appearance at the Xbox event ahead of the Electronic Entertainment Expo shows the growing importance of the nearly billion global video game industry to the company as whole and to its much-anticipated Windows Vista, which is expected to launch in early 2007.

However, launching a new console is expensive -- losses at Microsoft's home and entertainment division widened to 8 million in its fiscal third quarter from a 5 million loss a year ago.

Live Anywhere would allow participants to play certain games against each other regardless of whether the user was on a mobile phone, PC or Xbox console. It would also enable players to start a game on the Xbox 360 console and later pick it up on their mobile phone or PC.

Late to the video game wars with its original Xbox, Microsoft beat rival Sony Corp. to the market by debuting its high-definition Xbox 360 system last November. Sony said it plans to launch PlayStation 3 this November.

Gates said Microsoft estimates it will have 10 million Xbox 360 units out in the market before Sony or Nintendo Co. Ltd.

arrive with their own new game consoles.

Grabbing an early advantage has not been easy for Microsoft, which suffered from Xbox 360 supply constraints during its first holiday season and then saw production costs balloon in the past quarter as it ramped up shipments.

Sony executives played down Microsoft's head start with the Japanese company's U.S. game unit chief Kaz Hirai declaring on Monday that next-generation gaming would not start until Sony said so.

''I think it is a little audacious to say the next generation begins when they release, when 10 million customers have clearly voted with Xbox 360,'' Microsoft Game Studios General Manager Shane Kim told reporters.

Analysts said Sony, which holds nearly two-thirds of the current global console market, will face a challenge this time around.

''Microsoft is being one hell of a competitor to Sony. It needs to take Microsoft seriously,'' said Van Baker, research vice president at Gartner.

Redmond, Washington-based Microsoft also displayed a short video clip of ''Halo 3,'' the latest installment in the popular game series and said the game would be available in 2007.

The company also said the next game in the ''Grand Theft Auto'' series will be released in October 2007 at the same time for Microsoft as for Sony, which previously had been given exclusive first access to the hit title series.

REUTERS CS RN0919