News & Rumors: Xbox One (codename Durango)

[DuckThor Evil]

Simply put, yes, because you don't know what the plan was. Even falling behind [the plan] on individual months may still be ahead of the plan. Additionally, the plan will be looking into the cycle where the peaks tend to happen a few years in.

A plan is based on a TAM, your expectations on competitiveness and expectations on the size of the TAM at different price brackets, and often none of these are exact sciences, especially in a market that has such an infrequent refresh cycle by such a few vendors. Given the numbers that have sold for both consoles so far I'd say that the biggest surprise would be the TAM at launch for $399+ consoles, something that they couldn't fully gauge from 360 because they were supply constrained; that's how you can still be behind competitively yet potentially ahead of a sales / business plan.

So, yes, to me it is entirely conceivable that it is potentially ahead of their plan for this point in time if the original plan had more conservative numbers based on supply constrained 360 sales numbers and a higher console launch price.

I respect you Dave, but I'm not buying pretty much any of that.

Even if their first holiday numbers were above their expectations, which I don't believe to have been the case, it's logical to assume that isn't the only metric their plan is covering at this time period and if you are ahead in one sense, but behind in many others, it's not valid imo to speculate that they "could be ahead" Their market presence against their main rival is far worse than what it was last time. Prior to the launch I haven't seen any indication that their plan would put them at a significant deficit at the beginning of the gen, on the contrary actually, imo they were very bullish about their platform, even if one ignores that ridiculous Yusuf quote.

Imo there is nothing surprising about the size of the market at $399+, if anything the market looked weak, pulling a few million during a holiday/launch season after such a succesful product (360) is nothing to write home about. Even the PS4 performance is only looking ok in my eyes and the One looks much worse than that. Fixating on the 8 year old supply limited launch numbers as a measuring point serves no useful purpose. Beating those numbers means NOTHING today. It is only useful for a weak PR spin. Beating those numbers is as impressive as tearing a piece of paper in half. Lot's of stuff has changed in those 8 years, Xbox brand was still quite weak back then. The performance of One should rather be compared to later 360 years and the PS4. Let's see how the Kinectless $399 SKU has done after a couple of months, but I'm not expecting it to light the world on fire.

For the record just because I think it's looking terrible today, I'm not saying it can't get better, this console needs to drop to $299 ASAP and with more games maybe it can do at least something. I'm saying however that when we'll be viewing this period in retrospect, it won't be about how it performed above expectations, but how challenging the beginning was.

It only indicates that today's supply capacity is not limited.

Actually It indicates that demand is FAR less than expected and not just a little less. You plan and order production quantities based on expected sales. If you sell what you expected, the production runs on. If you sell little less, you adjust manufacturing. You stop production lines when you are harbouring clearly excess inventory, excess that you thought would be long gone by now. There is no point in manufacturing a shit ton of units just because you can. If you have to stop production due to excess inventory, things aren't going "ahead of the plan" that is for sure.

 

[Dave Baumann]

Their market presence against their main rival is far worse than what it was last time. Prior to the launch I haven't seen any indication that their plan would put them at a significant deficit at the beginning of the gen, on the contrary actually, imo they were very bullish about their platform, even if one ignores that ridiculous Yusuf quote.

To the point, nobody has seen their plan, nor have they made statements concerning the plan from a financials or targets perspective. Yes, they have sold fewer units than the competition, but from a financial perspective point of view, I'm just making the point that it possible to still be on plan even with that being the case if the assumptions on TAM size at this point were undercalled.

Personally I've no clue what their plan called for, estimated or expected, because I'm not privy to it and they've not commented. The only thing you can state is they have sold fewer units than their competition.

If you are a reactive business unit the competitive aspect alone can be enough of an impetuous to change course.

There is no point in manufacturing a shit ton of units just because you can. If you have to stop production due to excess inventory, things aren't going "ahead of the plan" that is for sure.

I'll point out again, the financial call made no comments as to which XBOX had leaned back on production.

 

[fehu]

I think the problem of the new consoles is software. The vendors have managed to figure out the hardware side relatively well, but they were unable to find ways to speed up software development. The games we've seen so far are little more than shinier versions of PS360 releases, also held back by cross platform limitations.

It's always been this way
the ps3 first lineup was even worst in comparison because this time at least we add some nice pc port

 

[steveOrino]

To the point, nobody has seen their plan, nor have they made statements concerning the plan from a financials or targets perspective. Yes, they have sold fewer units than the competition, but from a financial perspective point of view, I'm just making the point that it possible to still be on plan even with that being the case if the assumptions on TAM size at this point were undercalled.

Personally I've no clue what their plan called for, estimated or expected, because I'm not privy to it and they've not commented. The only thing you can state is they have sold fewer units than their competition.

A true statement. But I am going to argue anyway that it wasn't anywhere close to their projected plan.

When you have a gap this large with your rival, (especially non NA) you lose a lot of leverage. Why do you think their policies are so dramatically different then they were a year ago? This business is still about selling licenses and having the ability to dictate the terms. So if their plan was to give up that leverage then Xbox as a brand is totally screwed.

To me its really easy. They overestimated their brand and set it on fire. Now they have to spend more money then they would have liked to build it back up.

 

[DuckThor Evil]

I'll point out again, the financial call made no comments as to which XBOX had leaned back on production.

IMO all evidence pointed out that they were at least talking about the One, whether it was also about 360, I don't have a clue, but predicting the demand of those two consoles prior to the launch of One would have been quite straightforward WRT to 360, but tricky with the new console, therefore any misjudgements in order amounts are more likely to have been made there.

 

[imaxx]

You, as a big manager, dont count just the number of xbone sales.

You are interested in aggregate profits, aggregate sales, and more.

xbone came to the market at a price tag, and is getting fairly well for being +100$ over Sony.
Xbone is sold on profit, ps4 is sold not (slightly, as they said) loss.

Both companies are eroding their sales with their last-gen sales right now, since those buyers won't buy a next-gen for years. But it's ok, as it means revenues any way.

Both companies are called to be profitable soon - Xbone due to the fucking financial idiots, Sony due to the fucking idiotic TV management.

Actually, I find xbone sales pretty strong - they had been able to reap the market in positive while not leaving too much ground (20-30%). 1 year sale difference wont kill their market (it is not like PS3 not being on the market...).

Of course they could have had missed sales prediction. And so you have to pay stocking of XB1. Yet, they can be reasonably sure to sell them, no?

 

[Dave Baumann]

A true statement. But I am going to argue anyway that it wasn't anywhere close to their projected plan....

I'm not arguing opinions.

IMO all evidence pointed out that they were at least talking about the One, whether it was also about 360, I don't have a clue

Here is the statement:

Xbox One has sold in over 5 million units since launch and engagement has been high with users spending nearly 5 hours per day on their console. We will continue to extend the unique entertainment value proposition of Xbox One, particularly in markets outside of the U.S. where some services aren’t as mature. Xbox 360 sales exceeded our expectations this quarter. And across the platform, Xbox Live members continued to embrace the service with transactional revenue growing 17%. We do expect to work through some inventory in Q4.

 

[Cyan]

I respect you Dave, but I'm not buying pretty much any of that.

Even if their first holiday numbers were above their expectations, which I don't believe to have been the case, it's logical to assume that isn't the only metric their plan is covering at this time period and if you are ahead in one sense, but behind in many others, it's not valid imo to speculate that they "could be ahead" Their market presence against their main rival is far worse than what it was last time. Prior to the launch I haven't seen any indication that their plan would put them at a significant deficit at the beginning of the gen, on the contrary actually, imo they were very bullish about their platform, even if one ignores that ridiculous Yusuf quote.

Imo there is nothing surprising about the size of the market at $399+, if anything the market looked weak, pulling a few million during a holiday/launch season after such a succesful product (360) is nothing to write home about. Even the PS4 performance is only looking ok in my eyes and the One looks much worse than that. Fixating on the 8 year old supply limited launch numbers as a measuring point serves no useful purpose. Beating those numbers means NOTHING today. It is only useful for a weak PR spin. Beating those numbers is as impressive as tearing a piece of paper in half. Lot's of stuff has changed in those 8 years, Xbox brand was still quite weak back then. The performance of One should rather be compared to later 360 years and the PS4. Let's see how the Kinectless $399 SKU has done after a couple of months, but I'm not expecting it to light the world on fire.

For the record just because I think it's looking terrible today, I'm not saying it can't get better, this console needs to drop to $299 ASAP and with more games maybe it can do at least something. I'm saying however that when we'll be viewing this period in retrospect, it won't be about how it performed above expectations, but how challenging the beginning was.




Actually It indicates that demand is FAR less than expected and not just a little less. You plan and order production quantities based on expected sales. If you sell what you expected, the production runs on. If you sell little less, you adjust manufacturing. You stop production lines when you are harbouring clearly excess inventory, excess that you thought would be long gone by now. There is no point in manufacturing a shit ton of units just because you can. If you have to stop production due to excess inventory, things aren't going "ahead of the plan" that is for sure.

Actually, I kinda agree with this. People were *hungry* for a new generation of consoles after what I consider the lengthier console generation ever, and the good sales were to be expected.

At 500$ and lots of bad press, it could be worse though. But yes, I am not surprised with the sales at all. Not even with PS4 numbers, which are just okay, as you say.

People are smart though, they are waiting for either a price drop or a decent library of games to jump to the new generation.

I think the problem of the new consoles is software. The vendors have managed to figure out the hardware side relatively well, but they were unable to find ways to speed up software development. The games we've seen so far are little more than shinier versions of PS360 releases, also held back by cross platform limitations.

This is going to change in the holiday season and we've already seen very promising titles like ACU, Witcher 3 and COD AW. These are almost certainly going to move hardware much better than the current lineup. Then we're going to see a couple of truly nextgen exclusives like The Order and Quantum Break next spring, and the next E3 is going to show Halo 5 and Uncharted 4.
Also, these upcming games are probably going to be enough even with just a first gameplay demo to convince customers about the hardware's potential; and then we may even see some price cuts that could bring the consoles to the $300 level.

Then there's the room for technological innovation; Sebbi's points on compute based rendering opening new possibilities for titles with rewritten renderers suggests that such titles should be able to offer a more obvious step up from current games relying on previous gen approaches. And there's the possibility of VR, and whatever new tech may become available.

So this discussion is kinda premature IMHO. This generation will probably also last far more than 5 years, again, so there's plenty of time to build a customer base. As we all should know, console business is not about making money on the hardware, it's about the software sales.

Another statement I agree with.

The last generation was better in that sense. In March 2006 early adopters like me had a masterpiece called Oblivion in the lineup, AND it was a game which would be impossible to make in the 128 bits era. (PS2, Xbox, GC)

It made you proud to have a new X360 just to play it and feeling like you had a console that PC gamers could envy.

The Gears of War came out and it sorta "revolutionised" gaming with their cover system and was a system seller for core and casuals.

I learnt from this generation not to buy new hardware first day. X1's lineup is the most solid of the new generation, but I don't see timeless games in the list, and I have 16 games already...

If a future Xbox or any other console I might fancy (prefer not to put all my eggs in one basket) doesn't impress me as the X360 did before launch, it will be on the shelves.

Save it comes out with a new The Elder Scrolls or similar.

 

[pjbliverpool]

The last generation was better in that sense. In March 2006 early adopters like me had a masterpiece called Oblivion in the lineup, AND it was a game which would be impossible to make in the 128 bits era. (PS2, Xbox, GC)

It made you proud to have a new X360 just to play it and feeling like you had a console that PC gamers could envy.

True, there was plenty to admire about the 360 it its first few months even by top end PC owners (although we did have an even better version of Oblivion if you had the power to run it). Unfortunately I doubt there are very many PC gamers at all these days who are envious of the XB1's specs. Kinect 2 might have been cause for envy if MS hadn't effectively abandonded it a few months ago.

 

[DrJay24]

Oblivion was a POS. So buggy, I had to to quit playing due to a game ending bug with the last gate. Not that it was much fun before that, the mechanics were were also seriously bugged. I think I had 100% invisibility near the end. I'll take Second Son, Watch_dogs or ACIV over another Oblivion/Skyrim bug fest.

 

[SlimJim]

Since this seems fun...

Yeah, looks like 360 has some weak times ahead, in 2007.

Couple notes to keep in mind, 360 did not sell THAT much better than Xbox as the 80+million versus 25 million suggests. 360 had an 8 year lifespan, versus 4 for Xbox.

I guess to say, 360 sales are not just some stupendous bar to clear.

Another thing to keep in mind, over it's life, 360 worldwide shipped almost exactly twice as many as it NPD sold in the USA. ~84m shipped at ~42m NPD sold.

Although that ratio can vary for any given quarter, it ratio will probably roughly hold for X1, and it gives you an idea what X1 needs to be selling per NPD month to hit X360 ship numbers.

For example if X1 needs to ship 1.3 million to match 360 in a quarter, then it needs to sell about 650k in the USA in that time. Divided by 3 months, and average of 217k per month. So forth and so on.

Anyways yeah, the 360 numbers dont look tough. Really it's strongest year was 2011, which shows what a long haul this is.

ja-apr should be 1.1 million shipped, not 1.2, for 1 month less

 

[DuckThor Evil]

Here is the statement:

Xbox One has sold in over 5 million units since launch and engagement has been high with users spending nearly 5 hours per day on their console. We will continue to extend the unique entertainment value proposition of Xbox One, particularly in markets outside of the U.S. where some services aren’t as mature. Xbox 360 sales exceeded our expectations this quarter. And across the platform, Xbox Live members continued to embrace the service with transactional revenue growing 17%. We do expect to work through some inventory in Q4.

Yep and she also mentioned

"channel inventory drawdown for Xbox consoles"

I don't think there is any logical scenario where that doesn't include Xbox One, for one it would be terrible PR to leave that sort of assumption in the air, if really she was only talking about their aging less important platform. Many news sites rightly imo connected those comments to Xbox One. The wording "Xbox consoles" itself is plural, which in no way seems to exclude the One. 360 sales having been reportedly exceeding expectations puts it at a lesser chance of having the excess inventory + I previously mentioned that predicting the demand for One prior to its launch should have been harder of the two and they were bullish about it imo. The decision to drop Kinect is another strong evidence pointing at a lower than expected sales. It's not long ago when their message was "Kinect is Xbox One" etc. Xbox One was readily available everywhere quite soon after the launch and all the sales numbers of 2014 and analyses by people such as Rangers put the monthly WW rates to a less than stellar level and there has been all sort of semi official price drops and campaigns.

I mean I think there are a mountain of pretty strong things pointing out that One has had excess inventory in the channel, because sales after Christmas haven't been good. Evidence pointing out that they could be ahead or on par with their plan imo does not have a lot to support it. Yes the absolute numbers are better than what X360 did back then and MS hasn't flat out said that One is underperforming, but the situation looks clear enough to me.

 

[Dave Baumann]

I mean I think there are a mountain of pretty strong things pointing out that One has had excess inventory in the channel, because sales after Christmas haven't been good.

Again, there's no statements of fact around that. The comment about channel inventory was a XBOX hardware business statement, so while we can have assumptions, and "logical extrapolations" its not a fact.

The statement also makes no reference to manufacturing either. At the time of these comments they would have been gear up for the switch to non-Kinect versions and it is just as logical to assume that the inventory bleed statement is to swap Kinect stock for non-Kinect stock ready for the June launch.

 

[DuckThor Evil]

The statement also makes no reference to manufacturing either. At the time of these comments they would have been gear up for the switch to non-Kinect versions and it is just as logical to assume that the inventory bleed statement is to swap Kinect stock for non-Kinect stock ready for the June launch.

That's a fair point, however my stance of course is that the existence of the Kinectless version in the first place is due to previously mentioned issues, also Hood's comment:

in hardware, we expect revenue to be $1.3 billion to $1.5 billion in what is a seasonally slower hardware quarter.
This number also reflects channel inventory drawdown for Xbox consoles.

States that the drawdown is expected have a negative impact on the revenue figure. The focus shift toward the Kinectless version happened during the quarter so the channel drawdown would be matched with a restock. Kinectless Xbox One started to sell on June 9th and shipments of it naturally started prior to that, and you'd imagine these shipments would have to be large in number. The price drop plays a role here of course, but with the lower price volume should go up, therefore I believe that the drawdown comment wasn't about getting ready for the switch, but in general lowering the amount of units in the channel. A simple unit switch imo doesn't warrant such a comment, when it happens mid quarter and you have ample time to put what should be a faster moving product on to the shelves.

 

[Dave Baumann]

Again, the point of fact being discussed was whether they halted production - nowhere was that stated, it appears to have been assumed, and done so in a period when nobody knew about the change in plan.

 

[SlimJim]

They have already stockpiled millions of Xbox Ones for the tier2/3 country -releases.
So it's possible that they have not stopped Xbox One production.... yet

 

[DuckThor Evil]

Again, the point of fact being discussed was whether they halted production - nowhere was that stated, it appears to have been assumed, and done so in a period when nobody knew about the change in plan.

Heh I actually came in here only to state my opinion with regards to MS being possibly ahead of their plan with the sales of the One. Someone else brought up the manufacturing halt thing. Whether there was or wasn't a halt, it's not really that important for the arguments I was making. My response to Brit about manufacturing was more on a theoretical level. I do attribute the inventory drawdown to One in my arguments though.

 

[Cyan]

Microsoft are in talks to buy an Israel based company which created a security program called Security Startup Aorato.

http://microsoft-news.com/report-microsoft-is-in-talks-to-buy-israel-based-security-startup-aorato/

A new Kinect game called Wildfire, in which we control a demoniac arsonist with Kinect is expected to be released in the future.

http://www.totalxbox.com/79354/look-an-xbox-one-game-where-you-control-a-demon-arsonist-with-kinect/

 

[Cyan]

They have already stockpiled millions of Xbox Ones for the tier2/3 country -releases.
So it's possible that they have not stopped Xbox One production.... yet

That has to be accounted for, because the console hasn't been released in quite a few countries yet.

Still, pretty much like the PS3 and the Wii during the last generation -X360 did great-, it seems to me that the Xbox One is the ugly duckling of this generation.

It is going to be a long generation for Xbox.

 

[Sonic]

Microsoft are in talks to buy an Israel based company which created a security program called Security Startup Aorato.

http://microsoft-news.com/report-microsoft-is-in-talks-to-buy-israel-based-security-startup-aorato/

A new Kinect game called Wildfire, in which we control a demoniac arsonist with Kinect is expected to be released in the future.

http://www.totalxbox.com/79354/look-an-xbox-one-game-where-you-control-a-demon-arsonist-with-kinect/

What exactly does a security program developed by an Israeli company have to do with Xbox One? I'm just curious as to the relevance of it to this thread. Just because it's MS does not make it XB1 related.

The Kinect game on the other hand seems like it could be interesting. Seems like it could be an interesting local multiplayer game. Would definitely like to see it in action and test out being the fire beast.