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We’re only twelve days into 2012 and already I’ve read several unconfirmed reports of the Xbox 720 being in the hands of developers. There were rumors of an Xbox 720 reveal at Microsoft’s CES keynote this week, and there’s been plenty of speculation that the 720 will premiere at E3 this year. I don’t understand what everyone’s hurry is! I’ve lived through every videogame console generation since the Atari 2600, and taking the next step up is always an expensive pain in the ass. The only way I can get excited about a new console generation is if it’s going to be upgradeable.

The lines between console gaming and PC gaming have blurred with this generation. Cross-platform development is the rule more often than the exception. No longer is the choice strictly between dependable consoles with lower visual fidelity and temperamental PCs with clearly superior performance. For the gamer who can afford multiple platforms, this is heaven. One can keep a PC for massively multiplayer online role playing games and real-time strategy games, i.e. the experiences that demand a keyboard and mouse setup for governing complicated control schemes, and run everything else on a console for ease and convenience.

I’m therefore always happy to read interviews where developers are quoted as saying they haven’t reached the limits of what the Xbox 360 and the PlayStation 3 can do. I’m only just beginning to see how consoles are falling behind in the hardware department, as exemplified by my experience with Battlefield 3. Even at low graphics settings, the PC version clearly outshines the Xbox 360 version. 64-player battles on the PC are a glorious exercise in chaos that make 24-player battles on the 360 feel tame.

On the other hand, online play on the 360 is much less of a hassle. I don’t have to sift through servers and worry about hackers and cheaters, and the Friend and Party integration is smooth and easy. What if I could give my Xbox 360 a better CPU, GPU and a little more memory?

There are three angles to the question: financial incentive, engineering feasibility, and developer buy-in. I asked Michael Pachter of Wedbush Associates to comment on the financial considerations. “[MicroSoft] could absolutely make [the Xbox 720] modular if they wanted to,” he said. “My guess is it will be a modular 360 which is launched at the same time as they offer you a faster CPU and a faster GPU if you choose.”

There’s a sound financial argument for modular consoles. This generation is in its seventh year, and Microsoft has no incentive to launch a new platform with the Xbox 360 selling 10 million units annually. Pachter also estimates that they’re making $150 per Xbox at this point. “They will not launch the 720 until sales levels decline pretty dramatically,” he said. “I’d say when they get down to 5 million a year.” That could take a while, and every year the potential power of a new default chipset for the next generation of consoles is greater, which could make for an even longer, new console cycle. The sale of GPU and CPU upgrades could become an entirely new revenue stream for console manufacturers, who could also skip the early years of an entirely new platform where they might be losing money on each unit.

There may be a financial opportunity, but is a modular console a feasible option in terms of the engineering challenges? I asked Lee Machen, Intel’s Director of Visual Computing Developer Relations. “Us hardware guys can build pretty much anything,” he said. The Xbox 360 Slim currently features an integrated CPU/GPU chipset. Could someone theoretically replace a single element in a videogame console that upgrades both processing and graphics power simultaneously?

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Matt Ployhar is a Senior Product Planner at Intel, and President of the PC Game Alliance. “I don’t think it’s impossible,” he said, but besides added cost, there’s the question of whether developers would embrace the idea of a game console with variable configurations. “One of the key reasons they like consoles is [they] provide a stable, known design target they can fine tune for.” Console modularity could also complicate the test/validation/certification process.

Josh Tsui is the President of Robomodo, a development studio with experience designing for both PCs and consoles. I asked him to speak to the idea of programming for a console with multiple configurations. “Obviously it’s possible to do as that’s what PC and Android developers have to deal with constantly. But as a developer, if we can develop for just one machine (maybe two) we will take that,” he said. “There are plenty of technical ways to scale the game for various levels of tech, for sure. So it’s not difficult to do, but if you’re trying to get very specific experiences, designers would rather not chance something diluting it.”

PC games feature a robust suite of graphics settings that players can adjust, so I asked Tsui why console developers couldn’t program for a more stable and limited set of potential chipsets. For example, the default chipset the Xbox 720 shipped with, and an upgrade chipset offered four or five years later. “Technically it can be programmed to do that. It just comes down to if changes are done by the computer or done by a designer/artist,” Tsui said. “If by computer, quality is sacrificed as computers are not perfect for choosing what stays and goes. If by human, that’s a schedule and scope issue.”

“The software has to be able to run at different levels, and the question then is, will the developer put the extra effort in?” Michael Pachter said. “They would if the console was similar to PC, if they didn’t have to do much to change the coding. I think it’s possible, but the only [company] who’ll do it is Microsoft. Sony won’t do it. The reason Microsoft will do it is because they have Windows 8.”

Pachter says he is correct about 50% of the time, and I hope his prediction of a Windows 8 compatible console falls in the win column. “By Windows 8 compatible I don’t mean it’s going to run Office,” he told me. “I mean you can make a game play on a PC, and the same game will very easily be ported to the Xbox 720, that runs Windows 8. I think that’s how [Microsoft is] going to do it. They’re going to try to do something to give developers an incentive to make their games work on PC and Xbox, and that’ll be a competitive advantage of the 720.”

If software blurs the line between PC and console this much, it’s entirely possible that hardware will follow suit. First-party development of games that can recognize varied chipsets could illustrate the value of such hardware, and given the choice between inferior and superior performance, gamers will choose superior every time if they can afford it. That might inspire third-party developers to program for a superior, upgrade chipset, and then we’d be one step closer to eliminating the dichotomy between the power of a PC and the stability of a console. We could all have both. That sounds worth putting up with the hassle of a new console generation!

First Person is a weekly column by Boston, MA-based freelancer Dennis Scimeca. You can read some of his other musings on his blog punchingsnakes.com, or follow his random excitations on Twitter: @DennisScimeca.

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