Microsoft's New Clone War

Even though I prefer to deal in facts when it comes to investing, there are times when rumors are important. Here's one: Microsoft (Nasdaq: MSFT  ) might be opening the way to Xbox clones in the same way that the Windows operating system helped create Dell (Nasdaq: DELL  ) , Gateway (NYSE: GTW  ) , and numerous others.

According to News.com, Bill Gates refused to rule out a scenario under which third parties could make their own Xbox consoles, saying only that the company is always talking with partners about how to expand the so-called Xbox culture. I can appreciate Gates' need to be coy, but I'm soooooo hoping the rumor is true.

Think about how many Xbox clones there could be. Any game manufacturer is a potential customer. Think Sega would mind a shot at a comeback? Why not? It offers a full suite of games for Microsoft's console. Were Mr. Softy to open up the platform and offer agreeable licensing terms, making production relatively cheap, I see no reason why the company wouldn't offer a console bundled together with many of its popular games.

And then there's this scenario, suggested by a Foolish colleague this morning. What if Microsoft makes licensing so easy that the guts of the Xbox could be built right into your TV? You can bet good money that executives from Toshiba, Samsung, and Matsushita (NYSE: MC  ) , which makes Panasonic products, would be on the phone to Redmond to start negotiating in a heartbeat.

It's tempting to read this rumor and wonder whether Microsoft could do to Sony (NYSE: SNE  ) in gaming what it did to Apple (Nasdaq: AAPL  ) in PCs. But that's like having red wine with fish. Even if it tastes good, it still feels wrong. I doubt Microsoft is aiming for Sony. Instead, I think Gates is considering this move because he knows making boxes isn't what Microsoft does best. He just had to do it to create another home for Microsoft software products. Now that job is complete and Microsoft can get back to its roots. Let's hope -- for shareholders' sake, at least -- that happens soon.

Scratch your itch for more gaming news with this related Foolishness:

Bigger is often better, especially when it comes to stocks. See what our top Foolish analysts have selected as thebest blue-chip stocksto hold over the next decade. Or sign up for any of ourinvesting newsletterstoday and get the report free. Activision and Dell are selections of the Motley Fool Stock Advisor newsletter service.

Fool contributor Tim Beyers at one time held the high score for Super Punch Out at his local arcade. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile, which is here. The Motley Fool has an iron-clad disclosure policy.


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