[Geeforcer]

I was working my way through a huge pile of unorganized bookmarks and stumbled upon a article where Trip Hawkins, CEO of 3DO, gave his opinion on how Xbox was going to do (it was right about launch). I remember we were discussing his comments back then (on the old forum), so I though I'd bring this up.

Trip Hawkins on MS and Xbox, Fall 2001

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Microsoft's friendly relations with game developers can't compensate for a flawed concept, said Trip Hawkins, CEO of game publisher 3DO, which has no plans to make Xbox software. Microsoft got into the business too late and for the wrong reasons, Hawkins said.

"Microsoft saw the PS2 a couple of years ago, said, 'This thing is a serious computer without our operating system,' and decided they needed to take some kind of action," Hawkins said. "So they basically built a PC clone because that's what they could get to market quickly. Microsoft is basically taking a defensive strategy in a market where the only thing that works is offense."

The outcome will be evident in less than a year, Hawkins said.

"By spring, Microsoft will have worked their way through the couple million hard-core gamers who are going to be really jazzed by the Xbox hardware," he said. "Then they've got a situation where they have to expand their market either by taking kids away from Nintendo or taking casual gamers away from Sony. I don't think they have what it takes to do that because they came in too late for this cycle of the consoles.

"It won't be until next spring or summer they're going to realize this is a little like the Russian front, and they'll start asking, 'Why are we doing this again?'...I will not be at all surprised if they pull the plug before the year is over."
...

Console makers count on selling many games per console (known as the tie-in ratio) to subsidize hardware costs, and the Xbox lineup is way too shallow to pay off, he said.

"It looks like Xbox will have the worst tie-in ratio in the history of the games business," Hawkins said. "It'll have a couple of killer games for the hard-core gamers, and the rest of them will be rented."

[Glonk]

I think the industry collectively rolls its eyes whenever Trip speaks about anything.

If he knew what he was talking about, his company would do a little bit better.

[TTP]

Originally Posted by Glonk

I think the industry collectively rolls its eyes whenever Trip speaks about anything.

If he knew what he was talking about, his company would do a little bit better.

Well as far as I know his company is quite healthy. And this despite the shit stuff it produces. Which is amazing.

Army Man was even released in Japan lately.

[aaaaa00]

Originally Posted by TTP

Well as far as I know his company is quite healthy. And this despite the shit stuff it produces. Which is amazing.

Army Man was even released in Japan lately.

That's cause he just keeps pumping his personal cash into it.

http://biz.yahoo.com/rf/021227/media_3do_1.html

3DO hasn't turned a profit since 2000 (when it made a pitiful 0.4% profit).

Without Trip's personal funds proping it up, 3DO would have gone under ages ago.

[CaptainHowdy]

I think pretty much anyone at 3DO is a moron, did you read thier recent statements blaming the Gamecube for not meeting thier sales expectations this year(for anyone who doesnt get why that is so funny, there are no games from 3DO currently available for the system)

[Reznor007]

I will say that the Heroes of Might and Magic series is very fun...and Battletanx on N64 was somewhat fun, most 3d0 stuff isn't worth looking at.

[CaptainHowdy]

Battletanx rocked 4 player, I would like to see them get thier @#$% together and make another that lives up to todays graphics standards. Would make an excellent Xbox live compatible game.

[Fafalada]

And this despite the shit stuff it produces

Hush you.
HOMM is best fantasy strategy series, bar none.

Though I agree, they could stop making all their other products for all I care

[Geeforcer]

Actually, HOMM has gone downhill. HOMM 3 is one of my old-time faivorits while I never got into 4.

[CaptainHowdy]

yea, the older Heroes games rocked the most, the entire company has gone downhill lately, Hopefully with 4 horsemen they will get back to good.

[Geeforcer]

LOL, I think this thread deserves a bump in light of Trip's latest prophesy.

[Kolgar]

Trip's done his share of tripping, but I actually think his early predictions for Xbox were pretty good, educated guesses. Of course, NOBODY knew how gamers would greet Xbox, but at least he went out on a limb and gave an answer.

I especially liked his assessment of how Microsoft would either have to steal kids away from Nintendo or casual gamers away from Sony. He wasn't wrong; perhaps he just underestimated the ability of the market to sustain three consoles, one (Xbox) of which was kind of a "me-too" response to PS2.

[Shifty Geezer]

In a way Trip was right. He said consoles need to sell software to pay for the hardware and XB wouldn't manage this. XB doesn't manage this because MS lose bucket loads of cash. At some point I imagine MS did ask "why are we doing this?" seeing the huge drain on their bank balance. What Trip didn't estimate was MS's interest in the future and willingness to take such a huge (though small in regards their operating income) financial hit. Any other company would have bailed after the first year or two.

[Pozer]

He said consoles need to sell software to pay for the hardware and XB wouldn't manage this. XB doesn't manage this because MS lose bucket loads of cash.

You forget Halo2 had largest first day sales of any video game in history and Halo ranked in the top ten for longer than anyone expected. Some other MS games may have been flops but overall Xbox software sales are 2nd place this generation and larger than ps2 in number of consoles to software purchases per capita. That equals larger royalties for MS for every game sold. That and nobody knows how much xbox hardware costs MS to produce. Probably still more than ps2 and GC I'd guess. But Im sure their pulling a pretty profit now. Next gen I think they'll make more off the hardware than this gen. I think MS profits can only go up in this area, even if the hardware side flops and they have to compete EA style, they'll be fine.

[Evil_Cloud]

Originally Posted by Pozer

You forget Halo2 had largest first day sales of any video game in history and Halo ranked in the top ten for longer than anyone expected. Some other MS games may have been flops but overall Xbox software sales are 2nd place this generation and larger than ps2 in number of consoles to software purchases per capita. That equals larger royalties for MS for every game sold. That and nobody knows how much xbox hardware costs MS to produce. Probably still more than ps2 and GC I'd guess. But Im sure their pulling a pretty profit now. Next gen I think they'll make more off the hardware than this gen. I think MS profits can only go up in this area, even if the hardware side flops and they have to compete EA style, they'll be fine.

Don't make me laugh out loud, really.

Microsoft is over $3 billion in red with Xbox, did you know that? In three years time, they made a loss 1$ billion bigger than the loss Sega made in 8 years time!
Yes, Halo 2 made a nice profit, but not an overall one. It might look good on quarter financials, but it won't change the overal result, which is very bad for Xbox. If it weren't for Office and Windows...

[Shifty Geezer]

But Im sure their pulling a pretty profit now.
MS's gaming division loses something like $1 billion a year, with all that revenue from software sales and Live! subscriptions and hardware sales. I think last quarter was their first ever with a profit, fuelled by Halo2's success. They'd need 4 Halo 2's a year to maintain profitability (and a meagre profit at that!)

XBox will never make MS money. It was a sink. Whether from the off MS thought they could make money from it, or whether they knew it'd be a sink but went with it anyway with a view to future success, I don't know.

[max_cool]

first, Halo and Halo2 made huge, tremendous profit, however, those 2 games along with every other game MS and everyone else paying royalties sold on XBox so far has not been enough to make back what MS invested in XBox. But the individual games, they made fat stacks of cash.

second, the XBox does NOT have the highest games per console ratio, Sony does. Xbox has the 2nd highest.

[Lazy8s]

No matter how many difficulties his businesses have had in recent years, he's still credited with laying the publishing model groundwork for what's lead to the ultrasuccessful, monster machine that EA is today during his time there as head of the company.

His comments reflected the fundamental misconception many people had and still have about Microsoft's dedication to the Xbox sector: they're as committed to sticking around for victory as Nintendo and Sony are, and an "Xbox 2" was always going to happen regardless of how the first Xbox did.

[Sonic]

I was under the impression that MS could care elss about profits with the Xbox. It's with the Xbox 2 that they wish to start making a profit with.

[Lazy8s]

Microsoft won't require the next Xbox to turn a profit either. Like with MSN, they see the target market as a necessary position to hold for their future, so they'll continue to invest regardless of these losses, as they've done with MSN.

Even at their worst cash bleeds in these businesses, the whole company still takes in billions more than they know what to do with yearly. They'd be worse off without the Xbox investment, actually, because shareholders would go back to demanding that Microsoft try to grow the company instead of stagnating on huge piles of cash reserve.

[-tkf-]

Originally Posted by Pozer

but overall Xbox software sales

That would be Windows and Office

[Shifty Geezer]

Originally Posted by Sonic

I was under the impression that MS could care elss about profits with the Xbox. It's with the Xbox 2 that they wish to start making a profit with.

Which do people think was MS initial strategy?

1) MS expected to lose money on XB
2) They thought they'd be profitable but weren't though persevered
3) Didn't care either way and said they'd go with it regardless

[jvd]

I think ms wanted to make money on the xbox , I 'm pretty sure that they didn't expect it to make money till late in its life . Most likely around this point in time .. Obviously that didn't go the way they wanted it to . They feel though that there is profit to be made on a future box and are now willing to acept that they will never make money on the xbox

[Nick Laslett]

MS losses are more like $5m~$8m on the Xbox project.

Trip was right in one way, the Xbox has come too late and done too little.

A 14million installed user base worldwide after 3 years is pretty poor, when you consider the money they invested.

Just compare this to how the N64, PSOne, Saturn & GC performed.

But Trip was wrong to think that MS were being defensive. You don't spend this kind of money if you don't want too win.

The Xbox1 just had to demonstrate to developers, publishers and retail that MS were serious. The number of units sold was a bonus.

It is with Xbox360 that things will really take off. The $199 launch price and price drop to $150~$175/Halo 3 bundle when the PS3 launches in 2006 will really hit Sony.

The battle will be on next gen, unlike now where MS hardly turned up.

[hey69]

It is with Xbox360 that things will really take off. The $199 launch price and price drop to $150~$175/Halo 3 bundle when the PS3 launches in 2006 will really hit Sony

yeah right