Microsoft's true goal

[Johnny Awesome]

I think sometimes we get caught up in the console wars and lose site of MS' main goal as it has always been:

- Prevent Sony from controlling your living room and instead make sure that Xbox is the digital entertainment delivery platform of the future

That's where MS believes the true money lies.

They're perfectly fine with Nintendo selling Wii's to grandma so she can play Wii Sports bowling.

Likewise they don't really care if Sony attracts all the people who don't want to pay for network services.

They really only care about that one market - people who might buy Xbox Live. Everything they do: content strategy, marketing, hardware configurations etc... basically boils down to trying to win over this demographic.

That's why MS cares about Rockband, they care about online FPS&TPS, Fable, Forza community, downloable content for Scene It! etc... but don't give a rats ass about Wii Sports people or anyone not interested in digital delivery of games, movies, and downloadable content.

Keep this in mind when discussing MS strategy.

Why in the world would they ever cut price aggressively to lose money to grab a PS3 casual gamer who doesn't care about Xbox Live?

People will of course wonder about the Core/Arcade system - MS sees these systems as entry points and plan to upsell hard drives and Live to these customers over time. Why do you think the Arcade comes with Live Arcade titles? MS hopes that these arcade customers will want to be connected to get more arcade games.

 

[ShaidarHaran]

I concur with your analysis. XBL has been Xbox's saving grace and is IMHO the reason we even have a 360 and shall likely have a followup in a few years.

 

[mrcorbo]

I think sometimes we get caught up in the console wars and lose site of MS' main goal as it has always been:

- Prevent Sony from controlling your living room and instead make sure that Xbox is the digital entertainment delivery platform of the future

That's where MS believes the true money lies.

They're perfectly fine with Nintendo selling Wii's to grandma so she can play Wii Sports bowling.

Likewise they don't really care if Sony attracts all the people who don't want to pay for network services.

They really only care about that one market - people who might buy Xbox Live. Everything they do: content strategy, marketing, hardware configurations etc... basically boils down to trying to win over this demographic.

That's why MS cares about Rockband, they care about online FPS&TPS, Fable, Forza community, downloable content for Scene It! etc... but don't give a rats ass about Wii Sports people or anyone not interested in digital delivery of games, movies, and downloadable content.

Keep this in mind when discussing MS strategy.

Why in the world would they ever cut price aggressively to lose money to grab a PS3 casual gamer who doesn't care about Xbox Live?

People will of course wonder about the Core/Arcade system - MS sees these systems as entry points and plan to upsell hard drives and Live to these customers over time. Why do you think the Arcade comes with Live Arcade titles? MS hopes that these arcade customers will want to be connected to get more arcade games.

I don't know if I agree with that characterization. You may be talking about their main goal, but I don't think it's their only one. When you invest in this much effort to launch and support a platform, smart buisness dictates that you leverage that platform in every way possible. I would expect that they would like to be able to make money on selling the hardware, eventually. And I don't think that the royalties they are receiving for retail disk sales are an afterthought, either.

I don't see how their goals and Sony's are really any different, TBH, with the obvious addition of promoting BluRay in Sony's case.

 

[DJ12]

And yet Sony is already distributing full priced software on PSN. Are Microsoft?

And if MS really wanted what you suggest, I would wager every 360 would have come with at least a 20gb HD.

 

[betan]

I think sometimes we get caught up in the console wars and lose site of MS' main goal as it has always been:

- Prevent Sony from controlling your living room and instead make sure that Xbox is the digital entertainment delivery platform of the future

That's where MS believes the true money lies.

They're perfectly fine with Nintendo selling Wii's to grandma so she can play Wii Sports bowling.

Likewise they don't really care if Sony attracts all the people who don't want to pay for network services.

They really only care about that one market - people who might buy Xbox Live. Everything they do: content strategy, marketing, hardware configurations etc... basically boils down to trying to win over this demographic.

What age group do you think fits best into this demographic?
What age group would you say Xbox Live ads are targeting mostly?
Just curious.

That's why MS cares about Rockband, they care about online FPS&TPS, Fable, Forza community, downloable content for Scene It! etc... but don't give a rats ass about Wii Sports people or anyone not interested in digital delivery of games, movies, and downloadable content.

I say your MS is pretty stupid if it doesn't see a Wii Sports equivalent as a better entry point attraction than Core/Arcade (referring to your last paragraph).

Keep this in mind when discussing MS strategy.

Ok.

Why in the world would they ever cut price aggressively to lose money to grab a PS3 casual gamer who doesn't care about Xbox Live?

People will of course wonder about the Core/Arcade system - MS sees these systems as entry points and plan to upsell hard drives and Live to these customers over time. Why do you think the Arcade comes with Live Arcade titles? MS hopes that these arcade customers will want to be connected to get more arcade games.

People may also wonder why that hard drive is so damn expensive.

 

[Teasy]

This "controlling the living room" cliche is possibly one of the most cringe worthy phrases of recent times. Its also quite often used as an excuse for whatever failure certain companies are dealing with at the time IMO.. Though incredibly I'm sure certain people do believe every word of it..

 

[Teasy]

They're perfectly fine with Nintendo selling Wii's to grandma so she can play Wii Sports bowling.

Are they also perfectly fine with the fact that I've bought 3 games for my Wii in the last week while I haven't so much as turned my 360 on in 2008? Are they fine with numerous articles and PR talking about how Nintendo have given them a beating in sales since release? One of the easiest ways to try to look succesful is to dismiss anything more successful then you as irrelivant, but the fact is MS would love to be selling more then Wii. They'd love everyone who owns a Wii to own a XBox instead.

 

[Dr. Nick]

They actually want the Wii people because among them there might be some willing to pay for Live content eventually. Wiiware, of course Microsoft would like any revenue Nintendo will be getting from that to go into their pockets instead. The same thing goes for people who have PS3s.

 

[fearsomepirate]

Remember that when we talk about "corporations" having goals, we're really talking about people at the corporation having those goals. And frankly, I'm not sure MS has a comprehensive "true goal" at all, if they ever did. I think the launch of the original Xbox was very simple: Rick Beluzzo saw a huge, multi-billion industry that he believed the Japanese were doing all wrong. He very much believed that if you squashed a PC into a black box and put MS's considerable software resources behind it, taking the console market would be like taking candy from a baby. I think it was that simple. At some point, other people at MS saw it as a possible Trojan horse to turn the Xbox game console into the definitive home media center. I don't think Beluzzo or Allard saw it or planned it that way.

I think the Xbox 360 had a rather singular goal: Beat the Playstation 3. Be the Playstation 2 of the next generation. Get out first, get out swinging, and be everything the PS3 could hope to be, capturing that massive software library that the OXbox largely only got hand-me-downs from. Have an online infrastructure that beats the living pants off anything Sony could hope to come up with. I don't think there's a grand, 20-year vision behind Xbox 360 motivating everything, some vision that some day, our children will be buying Xboxes instead of DVD players or home PCs. I think they were just going for the lion's share of that multi-billion dollar video game pie.

Gamers overidentify Microsoft with Xbox, forgetting that Windows licenses are measured in the hundreds of millions. Xbox is not the focus of MS's business or the center of its attention. It is not the keystone of the overall corporate scheme or the lynchpin of its business plan.

 

[betan]

A buddy of mine works at Microsoft, and don't tell anybody but apparently their secret true goal is making money.
Shocking, I know.

 

[mrcorbo]

A buddy of mine works at Microsoft, and don't tell anybody but apparently their secret true goal is making money.
Shocking, I know.

My moles at Sony and Nintendo say the same about those companies. It's a conspiracy!

 

[thatdude90210]

Are they also perfectly fine with the fact that I've bought 3 games for my Wii in the last week while I haven't so much as turned my 360 on in 2008?

I'm not jumping into this debate. I just want to point out that you're probably not grandma... though I don't know for sure.

The thing about the Wii is that I can picture any age group buying one for themselves. Yet somehow, I just can't picture grandma buying a 360 for herself.

 

[Miksu]

I think sometimes we get caught up in the console wars and lose site of MS' main goal as it has always been:

- Prevent Sony from controlling your living room and instead make sure that Xbox is the digital entertainment delivery platform of the future

I think that for Microsoft the most important thing is to be The Platform for living rooms. The platform doesn't have to be Xbox but it could be something as simple as Microsoft's own video format which is played with PS3 or something else. I think that if Microsoft could get their OS and video format into a future PlayStation, they would let go of Xbox.

Providing platforms has always been Microsoft's main thing. They offer Windows, over which billions of 3rd party software have been built. Nowadays Office is turning into a software platform too. I'm thinking that in the future, Xbox is going to be a software platform rather than a hardware platform.

 

[Shifty Geezer]

I think that for Microsoft the most important thing is to be The Platform for living rooms. The platform doesn't have to be Xbox but it could be something as simple as Microsoft's own video format which is played with PS3 or something else. I think that if Microsoft could get their OS and video format into a future PlayStation, they would let go of Xbox.

Absolutely. MS tried to get into consoles through the existing players, and only when they were turned down did they create their own console. If Sony or Nintendo said 'for our next console we want to run an MS OS and services' then the XB platform would be dropped and MS would let them hassle about the hardware and exclusive software, maybe creating a bit of software on it's own as a revenue source (Halo for example) and to promote the platform versus the rival.

This is not true of any other platform holder. Sony wouldn't throw in the hardware to turn their first-party companies onto creating MS or Nintendo console games (this was much truer when Kutaragi san was in charge, an engineer with a passion for hardware), and neither would Nintendo create software for someone else's machine (they view the hardware as a profitable product, and have been financially very successful with that POV!). The console itself is a product for these companies. For MS, it's seen more a necessary platform to run their product, IMO. If they didn't need a box to run their stuff on, they'd be a lot happier!

 

[acaeus]

I can think of two key long-term strategies (cause the xbox franchise hasn't made any money thus far - to my knowledge):
1. Game dev monopoly via DirectX
2. monopoly or heavy presence in the codecs business (via xbox and PC)

Having a monopoly helps in the business of making money. Microsoft knows that all too well.

IMHO, Sony's win with the Bluray format hurts #2, and (indirectly and not so much) #1 as well. Wii huge success hurts #1 a lot more.

 

[Zassk]

I think MS really did see Sony and its Playstation's success as a threat to MS's PC cash cows - Windows and Office. I don't think it's a priority for the XBox project to make money overall. I think the XBox project has been designed to mitigate the success of the Playstation as a multifunction device. Putting gaming aside, having 120-150 million PS3's in the wild by 2010 would have been a dire scenario for MS.

 

[Silent]

It has been years since I've read that article (it was an excerpt I think of a book from Dean takahashi) but wasn't the biggest reason that Microsoft went into this console business because of Sony ? That they felt threatened by the fact that the playstation platform was kinda a trojan horse in the livingroom and could have a big impact of what should become new (media) standards ?

But its kinda vague for me to remember the precise details.

 

[Scott_Arm]

long term goal

I would take bits and pieces from what everyone is saying. Microsoft really had no foothold in the entertainment industry. They wanted to extend their platform to take advantage of a booming industry. It's a long term goal. I don't think they really care exactly what % they hold in the short term, as long as they keep making headway. Even if the PS3 ends up outselling the 360, which I'm not sure it will, I think they'll view it as a success as long as it holds a larger portion of the business than the original Xbox had. Having people sign up to Xbox Live is how they're hoping to hang on to customers from one console to the next. Now Microsoft has the Zune, the 360 and the PC which can all work together to fill all of your entertainment needs. Next gen will be all about delivering more services, hanging onto and expanding the Xbox live subscriber base.

I would say Sony has basically the same goals and interests in the entertainment industry, but they started with hardware (tvs, stereos) and are moving into software, where Microsoft started with the software and had to start making the hardware to get in the door.

 

[assen]

1. Game dev monopoly via DirectX

A tiny sliver of game development has anything to do with DirectX; in our company of about 50 people there are 3 or 4 that work direcly with DirectX *ever*, and not on a daily basis. You are taking the "DirectX vs. OpenGL Wars" of 10 years ago a little too seriously

 

[NRP]

I can think of two key long-term strategies (cause the xbox franchise hasn't made any money thus far - to my knowledge):
1. Game dev monopoly via DirectX
2. monopoly or heavy presence in the codecs business (via xbox and PC)

Having a monopoly helps in the business of making money. Microsoft knows that all too well.

Wii huge success hurts #1 a lot more.

Is this really true though? Is any developer/publisher (other than Nintendo) making money off of the Wii? Looking at the previous monthly software sales threads seems to indicate that the Wii's fantastic hardware sales are really only benefitting Nintendo. On the other hand, it seems lots of developers/publishers are making money off of the 360.

I could be wrong though because I don't follow this stuff too closely.