Microsoft picks Seagate

November 7, 2000: 9:24 a.m. ET

Disc drive maker to supply hardware for Microsoft's new Xbox video game

NEW YORK (CNNfn) - Disk drive maker Seagate Technology Inc. said Tuesday it signed a multi-year agreement with Microsoft Corp. to provide hard drives for its new Xbox video game, due to hit store shelves in 2001.

Xbox, the much-anticipated video game due out from Microsoft next fall, is expected to rival Sony's PlayStation 2 in terms of technology and capabilities. The Redmond, Wash.-based software maker has enlisted more than 150 video game developers for its project.

Seagate will produce the specialized disc drives that will go inside the console, giving the company a push toward the smaller, game-oriented disc drive market, according to Brian Dexheimer, Seagate's vice president of sales and marketing.

"As a category, games represent 50 percent of consumer PC software sales. This is an opportunity for volume growth in disc drive shipments as the Xbox attracts a large portion of this audience," Dexheimer said. Terms of the agreement weren't disclosed.

Seagate, based in Scotts Valley, Calif., designs, manufactures and markets products for storage, retrieval and management of data on computer and communications systems, including disc drives, disc drive components, tape drives and software. In March, the company announced a two-tiered plan to turn itself into a private company.

Microsoft's Xbox is expected to deliver a video game package with superior graphics and good quality audio -- helped along by a Pentium III, 733 MHz processor and a custom graphics chip. It also will have an 8GB hard drive, 64 MB of memory and broadband access to allow for online game play.

Shares of Seagate (SEG: Research, Estimates) ended the day Monday down 56 cents at $73.75. Microsoft (MSFT: Research, Estimates) stock gained $1.25 to $69.50.