Ultra 64

 CHIBA, Japan -- Nintendo Co. demonstrated its new game player, Ultra 64, for the first time, and appears to have delivered on its promise to technologically leapfrog its two major competitors in the hard-fought video-game wars.

The player, unveiled at a trade show here over the weekend, basically uses a powerful microprocessor and new software from Silicon Graphics Inc. -- famous for the workstations used to create the animation in "Jurassic Park" -- to turbocharge an older cartridge-based technology with realistic 3-D imaging ability.

Separately, Nintendo said its unconsolidated pretax, or recurring, profit rose 25% in the first half ended Sept. 30, despite sluggish domestic demand that hurt sales in Japan and the strong yen, which undercut revenue earned abroad.

Pretax profit climbed to 63.87 billion yen ($628.8 million) from 51.05 billion yen a year earlier. Net profit rose 11% to 29.49 billion yen, while sales fell 19% to 135.19 billion yen.

Nintendo also said it revised downward its forecasts for parent and group pretax profit for the full year ending March 31. The company now expects to earn pretax profit of 121 billion yen on both group and parent bases, down 2.4% from September forecasts predicting 124 billion yen in pretax profit. Analysts said the downward revision likely reflects the later-than-expected release of the Ultra 64 game machine, which now is planned for April 1996.

Ultra 64 represents a big gamble for Nintendo. To develop enough games for the new machine, Nintendo was forced to delay its market launch from the Christmas season. Meanwhile, Sega Enterprises Ltd. and Sony Corp. already are offering advanced players that use CD-ROM drives and disks.

But many game developers and analysts at the show said Nintendo has won its technology bet and that the delays won't hurt the company. They say the Ultra 64, which processes information in 64-bit chunks, offers more horsepower and better 360-degree, 3-D effects and sound than Sega's Saturn and Sony's PlayStation, which are based on 32-bit technology. And because it uses the old cartridge format, the Ultra 64 will be priced around $250 in stores, compared with about $300 for Saturn and PlayStation, Nintendo says.

Angel Studios, a computer-animation firm in Carlsbad, California, which already has developed a game for Saturn, says it now plans to concentrate on a forthcoming Ultra 64 title, a "virtual" racing game called Buggie-Boogie. "Nothing can match the Nintendo machine, at least for a while," says Brad Hunt, chief technology officer for the firm, which produced special effects for the movie "Lawnmower Man." "We've been doing (special-effects) work on $250,000 SGI workstations," says Michael Limber, the firm's chief operating officer. "The Ultra 64 appears almost exactly the same."

Adds Jim Willcox, senior editor at Twice, a trade magazine in New York: "Nintendo is delivering a better system at a lower price than competitive systems on the market."

Nintendo still could trip up for reasons having little to do with technology. Sony's PlayStation, which gets high marks from game players, already has attracted a lot of game-developer support and is trouncing Sega in sales. Matsushita Electric Industrial Co. of Japan also is about to climb into the ring, with a line of 64-bit players expected to be launched in the U.S. next year using advanced technology it licensed from 3DO Co., a Redwood City, California, company.

Amid all this, many software developers have been abandoning the dated cartridge format for the CD-ROM technology used by Sony and Sega players, as well as personal-computer makers. CD-ROM games cost less to make, and can store more graphical material than cartridges. Potentially, developers could find larger markets and greater profits in the CD-ROM world. Without sufficient games, analysts say Ultra 64 sales would languish. Indeed, Nintendo's Virtual Boy, an advanced portable player, has gotten off to a shaky start because of what the company acknowledges was a dearth of compelling games at the launch last summer.

But Nintendo is a grizzled veteran with a few tricks up its sleeve and a $4 billion cash trove to boot. It has hedged its bets by relying on its own game-making talent and forging alliances with big independent developers to make titles. Those developers include three major producers: Acclaim Entertainment Inc., WMS Industries Inc. and Electronic Arts Inc.

"The developers would put their software on biscuits if biscuits were the largest-selling," says Howard Lincoln, chairman of Nintendo's big Nintendo of America unit in Redmond, Washington. "This is a battle for us to win or lose based on quality."

Nintendo is working on a new storage device for Ultra 64 to overcome the limit on the amount of information that can be crammed into a cartridge. The device is expected to be some kind of magnetic recording disk but won't be unveiled until perhaps late next year. And Nintendo officials say the cartridge games still run faster than CD-ROM games, which can bog down in tasks such as switching from one game level to the next.

Silicon Graphics' hardware and software technology, moreover, appears to elevate at least temporarily the cartridge games to a level beyond the existing competition. It allows players to zoom in and out of scenes without losing any image clarity, as now happens on the competing players. Also uniquely, it removes the fuzzy boundaries around objects that make them look artificial, and lets the computer create 3-D images on the fly rather than having them preprogrammed in a cumbersome manner, says George Zachary, manager of Silicon Graphics' consumer-electronics marketing.

That latter capability allowed Nintendo to attach a thumb-operated, 3-D joystick to the control pad so players can obtain different perspectives of the action from any direction. Toggle the joystick, and Nintendo's Super Mario character towers above. Toggle again, and there's a bird's-eye view of his red cap. "The goal of this system," Mr. Zachary says, "is to create realistic worlds."

Japanese youngsters, at least, are impressed. Over the weekend, lines of boys wearing sneakers and baseball caps waited to play Ultra 64s in a convention hall, including 12-year-old Makoto Ueda, who already has asked his mother to buy him one. "It's very, very cool," the boy said, mopping a sweaty brow after relinquishing a control pad.