Let's get serious. Microsoft is going to manufacture this thing themselves (well, contract it out anyway). Their entire recent hardware experience is contracting out the manufacture of keyboards and mice. I don't see any problem here, do you?

Microsoft has no expertise whatever in designing such a thing, so they are going to depend on Intel to do the design work - for free - just so they can sell a whole slew of chips at a loss. Microsoft originally announced the chip vendor would be AMD, but probably just to leverage Intel, as AMD has no board design capability.

The CPU chip to be used has not yet been defined, but will probably be a special version of the Pentium III, which should be nicely obsolete by then.

The operating system will be a special version of Windows that hasn't been designed yet. We know it will be ready well before Q4 2001 - Microsoft never misses a Windows delivery date, do they?

So, just like the corporate bozos who will do without a desperately needed product for years waiting for Microsoft to come out with their "almost as good" version, children will tell their parents not to buy them a Playstation because "Microsoft will have something nearly is good in less than 2 years". Yeah, Riiight.

And Sony, just like their software counterparts, will stand paralyzed, trembling with fear, and cancel all their plans to come out with Playstation 3 (currently scheduled for 2002). Yeah, Riiiight.

So why would Microsoft, even in a fit of megalomania, do something so off the wall? They are trying to convince game developers to not develop for the Playstation, but wait for the X Box so they don't have to learn anything really new. It's worked before (see OS/2). If they can starve the Playstation for software, they can hold it off.

Microsoft will pull out all stops to fight Playstation. They see it making the home PC irrelevant, and taking most of the set top box business too. Loss of the home market would also affect Microsoft's leverage in the business market. And besides, it isn't going to cost them that much. They'll get their "partners" to foot all the development bills just to be "in on the ground floor".