{May 14, 2007: For all the reddit visitors, this post is almost exactly two years old, so it’s a bit dated imo. I’m not entirely sure MS is on track, though they may be based on this Where 2.0 event scheduled for the end of this month (Link), or this one at the same conference (Link).}

I wrote the following prediction some weeks back and then bit my lip; didn’t want to look too “out there”. But having just read a news item over on PCWorld.com, Gates Unveils MSN Virtual Earth, I’m ready to own up to it since this marks the first in what I expect to be a series of moves. So here it is:

Prediction: Microsoft is building a virtual 3D world.

And I’m talking virtual world [actually a virtual “mirror” world] as in Snow Crash’s “Metaverse”. I’m making this prediction based on not just recent news, but on some very old things. Here’s the basic breakdown:

– MS purchases Groove (two days ago), software designed for virtual collaboration; good for real world product development, but possibly better for virtual world development [or even better, transreality development]
– MS announces Xbox 2 specs to include “Marketplace” and “Micro-payments”
– Xbox picks Unreal engine 3 as primary engine platform, by far the most realistic 3D on the RT block.
– Meqon unveils radically advanced physics module, also to be compatible with Xbox
– Rumors that MS is pulling out of MSNBC; MS learned the big media ropes and it’s now time to move on perhaps.
– Allegorithmic’s “procedural textures” – infinitely subdivided, efficient, and perfect for games and virtual worlds
– Valve’s creation of the STEAM distribution system, paving the way for online content delivery as well as upstream content creation/distribution/sales
– The emergence of “virtual economies” and studies of their real value
– Longstanding MS goal to be not just a software company, but a major media player
– MS’s ongoing purchases of high-quality game development houses such as Bungie, Ensemble, etc
– MS’s initial involvement with VRML, and then it’s move out and into gaming where the real advances were being made without the concessions and compromises of a consortium
– MS’s positioning of the Xbox as a home media device instead of a game console*
– MS’s attempt to kickstart content development in the mid-90’s by purchasing ultra-pricey SoftImage3D, porting it from the Unix OS to Windows NT, slashing retail prices, and then inexplicably selling it off – leading to a freefall in 3D software pricing
– MS’s seemingly odd practice of hiring artists and content creators (including people studying esoteric musical instruments and such as reported – I believe – in the Seattle press) since the early 1990’s

Note the * item. Seems we got alot of that message from MS during E3. And I’d now add to this list the following:

– the announcement of Will Wright’s Spore (posts here and here) videogame which uses both parametrics and procedurals to allow unprecedented consumer creative potential (it may someday mark the turning point in the deployment and eventual mass acceptance of virtual worlds, imo).
– Sony’s policy shift regarding virtual commerce and the announcement of their new Sony Exchange virtual marketplace (posted originally here).

I already said we should expect a run-up in MS stock here when they were trading $24.19 (March 29) and I see they’re now up to $25.82 barely 7 weeks later. Effectively meaningless, but not bad.