(FORTUNE Small Business) – Small firms are looking outside the software world for ways to participate in the video-game boom. In June, in an effort to combat muscle atrophy, Laurel, Md., startup POWERGRID FITNESS released the kiloWatt controller, a $700 steel rod that players push and pull to manipulate game action on screen.

Former Microsoft executive Kevin Bachus, one of the creators of the Xbox, now serves as president of INFINIUM LABS. Its $200 Phantom console, due to be released in November, will download games via a broadband connection--a cartridge- and disc-free experience. "This will be like DirecTV for video-games," Bachus says.

ALIENWARE, a Miami company, has since 1996 created high-performance PCs (with pricetags up to $5,000) made specifically to run processor-straining games such as Doom 3 or Half-Life 2. But in February, Alienware faced an imposing new challenger: Dell Computer rolled out its "gamer laptop," the Inspiron XPS, as well as the desktop Dimension XPS, to try to take a piece of this high-margin niche market. "We're really committed to the gaming space," says Lionel Menchaca, a Dell spokesperson. --K.P.