64 BITS OF MAGIC

By MICHAEL KRANTZ

It's been another hot year for consumer electronics, one that saw Toshiba release an impressive desktop PC, Sony take a first crack at a personal computer and a swarm of companies come out with hand-held devices, including the first really usable palm-top computer from U.S. Robotics. The year also included the nearly incessant squeal of Internet hype--and a stock market that couldn't get enough of hot-concept technology issues. It was all enough to send droves of Americans out to buy...a game machine?

Yes, a game machine. In this year of Internet-TV terminals, PDAs and cell phones, we've settled our prize for best machine on the new Nintendo 64, which has done to video-gaming what the 707 did to air travel. Since arriving on American shores in late September, the 64 has set records for sales, hype and, most important, slack jaws. The pure mix of art and technology implicit in the machine's design and the games that run on it help it transcend the category of mere amusement. It sets, our editors found, a whole new standard in electronic entertainment, smashing barriers that the bug-filled Internet and clumsy personal computers have yet to approach.

There are at least three strong reasons for picking the Nintendo, and we'll begin with the strongest: technology. The N64's greatest miracles come from a specially developed internal processing chip that does one thing--paint rich pictures on your TV--better than any other device in history. Called the Reality Co-Processor, the chip was designed by 3-D special-effects giant Silicon Graphics (of Jurassic Park fame) and built by Japanese chip monolith NEC. Even as computers do more in smaller spaces, there's something extraordinary here: SGI and NEC have stuffed the sophistication of a $10,000 workstation into a $200 box.

The second reason for our choice is in what all this bit power has been harnessed to achieve: simply the most realistic and compelling three-dimensional experience ever presented by a computer. The machines' first hit game, SuperMario 64, paints from an electronic palette so rich that using the game machine on your TV almost seems as amusing and entertaining as renting a movie or watching a ball game. The 3-D effects are what game pros call immersive, that is, real enough to make you forget the 4-ft. space between you and your TV. Nintendo's smart-chip technology, blended with terrific software, has created a virtual world so compelling that the plastic game box moves from novelty to full-fledged revelation.

No surprise then that the world--or at least the world's allowance-bearing teens--are beating a track to Nintendo. The 64-bit machines show every sign of being the over-the-top smash-hit consumer-electronics item of the year. Released on Sept. 29, the machine has sold half a million units in just over a month; in its first week alone, it sold as many units as its competitors combined did in all of September.

Despite the 64's outstanding debut, Nintendo is in for a fierce fight against Sony's PlayStation and Sega's Saturn. While Nintendo has produced just five games for the 64, Sony boasts 150 and Sega close to 200. As a result, the product's full market reception won't be clear until after the holidays, when the mass consumer audience, as opposed to the perpetually tech-starved early adopters, decides whether to offer Mario's latest incarnation an honored place beneath the collective American Christmas tree, or whether he'll be supplanted by titles for PlayStation. "It depends whether you want quality or quantity," says Jeff Lundrigan of gaming magazine Next Generation. "Nintendo's betting on quality."

Whoever wins, though, the Nintendo 64 appears to have served one great purpose, at least temporarily reversing the market trend away from game machines and thereby rescuing this industry from the dustbin of entertainment history. Retail video-gaming sales for the calendar year 1995, including hardware and software, were $3.1 billion, down 13% from 1994, according to Ed Roth of New York's NPD Group.

Through September, by contrast, the industry was up 9.3% for 1996, with September alone accounting for a 40% gain from last year--a trend Roth expects only to accelerate in '97: "Interest in video games has seemed to be waning, and some of it was going over to the PC." Nintendo has helped change all that; while early figures this year had finally shown a 50-50 market-share split between entertainment software for game machines and that for PCs, the dawn of the 64 appears to have returned the numbers to a 65-35 video-game lead. "The video game," concludes Roth, "is still the No. 1 platform for entertainment software."

What's more important, this new boon is being delivered not by a $3,500 PC but by a $200 game player. Yet another suite of machines that's getting a lot of press this year is the "network computer," a stripped-down, sub-$1,000 "information appliance" that will, in theory, bring the wonders of the Net home to millions of users who either can't afford a PC or simply don't want to assume the headaches of actually using one. NCs, according to the hype from its promoters, are computers for the two-thirds of all American homes that have refused to join the PC revolution. Which leaves Nintendo...where, exactly? Just getting itself installed into hundreds of thousands of homes, precisely the families NC makers want so badly to reach.

Which means that for the next few years, during the countdown to the 21st century, Nintendo's marquee product will be the machine that most fully influences our children's introduction to the mind-boggling potential of digital technology. What matters most about the 64--what ultimately demanded our vote for Machine of the Year--is its potential as a tool for turning on the next generation to the wonders of cyberspace. Despite all the doubts about marketing and title support, what is decidedly not at issue is the fact that the 64 represents a major technology breakthrough: the first game machine to offer fully immersive 3-D environments. "It's a beautiful machine," Lundrigan gushes. "As far as technology goes, this is the machine to beat." And though someone will beat the 64--next year or next month--the book-size black box has already done its most significant work, by offering the first glimpse of a future where immensely powerful computing will be as common and easy to use as our televisions.

--By Michael Krantz. With reporting by Daniel Eisenberg/New York

With reporting by DANIEL EISENBERG/NEW YORK