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Apple Gets Serious About Games: It's iPad vs Xbox

Apple, which all but stumbled into the video game industry, is starting to get organized.

Apple iPad
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Apple iPad

Beginning this fall, iPhone, iPad and iPod Touch customers will have a new operating system for their devices that features a host of improvements, the company announced Thursday.

One of those is an increased focus on gaming, with social aspects mimicking those found on consoles from Microsoft and Sony .

Apple unveiled its new ‘Game Center’ network as one of the tent poles of its fourth-generation mobile operating system at a press event at its Cupertino, California, headquarters.

Among the features it will offer are automatic in-game matchmaking (allowing players to easily find others to play against), leaderboards (letting players compare high scores globally) and achievements (bragging rights that recognize certain in-game triumphs).

All of the features are core elements of the multiplayer systems on the Xbox 360 and PlayStation 3, and have proven quite successful and popular. While the addition of this functionality may not dramatically attract new players, it could give current iPhone and iPad gamers a reason to play more—and could help attract fence sitters.

“I don’t know if it brings in more people, but I suspect it will retain people,” says Colin Sebastian of Lazard Capital Markets. “It’s about user engagement and repeat usage and facilitating more cooperative play. I think as Apple adds functionality, it makes it easier for developers to put more compelling games on these platforms and makes the experience for users better. So it’s certainly healthy for the platform.”

Some analysts, though, are less convinced Game Center is the right move.

“I think it’s pretty stupid of Apple to do it,” says Michael Pachter, an analyst with Wedbush Securities. “They’re pre-supposing the average iPhone gamer is hardcore and she is not.”

While opinions diverge on whether it will be successful, analysts are unified in their opinion that the formation of the Game Center is a big move by Apple that signals the company is getting a lot more serious about the video game industry.

Apple, for years, has been a serious threat to handheld devices by Nintendo and Sony, despite rhetoric from those companies that dismiss the iPhone as a gaming device.

At present, there are 50,700 games available in the app store, according to Apple, and 85 million iPhones and iPod Touch devices in consumers' hands. The iPad seems to be on a similar trajectory, selling 450,000 units in just 5 days.

“I think they’re going to take the [Nintendo] DS on squarely,” says Pachter. “And I think they’re going to hurt the DS … because the all-in cost of an iPod Touch is less than that of a DS, if you factor in software costs.”

While there have been whispers for years that Apple might develop an in-home gaming device to compete with consoles like the Xbox 360 or PS3, nothing has materialized. Some industry observers feel the iPad has made such talk superfluous. Games may not appear on your living room’s 50-inch TV, but the clarity of the 9.7-inch iPad screen is striking enough to please people.

The ironic part about Thursday’s announcement is that Apple has historically never had a great interest in video games. When it opened the app store, however, it was games that garage developers began to produce at a rapid pace—and those apps proved the most popular to users.

The company has just recently acknowledged the industry, positioning its devices as game machines in advertising and making some key hires, including Bob Dreblin, the creator of Nintendo’s Game Cube CPU and 15-year Microsoft veteran Richard Teversham.

“I think they have become a lot more focused on games,” says Sebastian. “I’m not sure it’s a cornerstone of their overall content strategy, but it’s certainly a big part of it.”