1up.com - 4 page article on advice for Xbox Next

[Readykilowatt]

It is a failure if you look at it that way, but then again Microsoft never intended to profit from it for a long time.

But the CFO of Microsoft said this:
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The Chief Financial Officer of Microsoft told analysts earlier this week that the current Xbox console will never be profitable.
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And why did Mr. Bach say this:
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Mr. Bach at Microsoft firmly denies his company does not care about losses. "Microsoft does not go into businesses that make losses for five years. I have my own profit-and-loss account," he insists.

 

[one]

Then the gpu can drop to 65nm too thus saving money where as if the ps3 launches on 65nm and they use the advance process to out class the xenon's power it will end up costing more than the xenon hardware.

Unfortunately MS can't save money a lot for that because MS is still fabless dependent on the deal with TSMC.

I think Xbox is a really big advertisement campaign to sell Xbox 2. But, more important, it's one of MS's tactics to make PC gamers migrate to more uniform, more DRM-bound, higher-profit platform, so cutting into traditional console demographic is not big for MS. Gaming on PC is very hard to manage and thin in profit, and piracy is rampant. Then PC gamers are bound to Intel/AMD platforms and MS is also bound to current open hardware configuration of PC. It's not what MS want.

Halo was released on PC 2 years after its original release. Meanwhile, many casual PC gamers who don't buy high-end vidcard went to Xbox. Then MS can do every experiment about new locked-in Trusted Computing platform in Xbox, before making it incorporate into PC. When Xbox demographic get large enough, in PC arena, Intel/AMD no longer can oppose MS's control. Then, in the track of shepherding former PC gamers into console gaming (and eclipsing useless PC gaming), MS can build a stronghold against Sony in home media center arena. For MS, it is a win-win campaign to build and promote Xbox.

But in Japan, where console gaming is dominant and PC gaming has long been dead since NEC PC98XX series collapsed before IBM/PC-AT in the early '90s, current PC games in Japan are 95% filled with 18-over sex-oriented titles and only other 5% is MMORPG or Koei sim games or things like Doom, thus the above tactics of MS didn't work. If only MS permit adult titles on Xbox it might have won certain status as XXXbox

 

[Lazy8s]

Consumers don't buy a console for performance. Performance is simply an indicator that it'll be good for its assigned task, playing games. That sense can be fostered by other factors, too, some of which supersede performance: an attractive library of games, the image of getting cutting-edge content, the image that the console is becoming an industry standard and will be owned by everyone else and will get the most industry support.

 

[jvd]

Unfortunately MS can't save money a lot for that because MS is still fabless dependent on the deal with TSMC.

none of us know the deal , they are fabless which means they can go to whoever gives them the best deal. If tsmc gets stuck at 90nm they can go to ibm for 65 nm.

 

[one]

Unfortunately MS can't save money a lot for that because MS is still fabless dependent on the deal with TSMC.

none of us know the deal , they are fabless which means they can go to whoever gives them the best deal. If tsmc gets stuck at 90nm they can go to ibm for 65 nm.

I mean your comparison with PS3. The deal with TSMC should be way cheaper than IBM, but not cheaper than dealing with itself like in the case of SCE. SCE, instead, is in charge of filling fab lines and retrieving investment in fabs, contrary to risk-free MS.

 

[jvd]

Unfortunately MS can't save money a lot for that because MS is still fabless dependent on the deal with TSMC.

none of us know the deal , they are fabless which means they can go to whoever gives them the best deal. If tsmc gets stuck at 90nm they can go to ibm for 65 nm.

I mean your comparison with PS3. The deal with TSMC should be way cheaper than IBM, but not cheaper than dealing with itself like in the case of SCE. SCE, instead, is in charge of filling fab lines and retrieving investment in fabs, contrary to risk-free MS.

I dunno about that .

Ms only has to pay a royalty on each gpu made and most likely each cpu made. Then the cost of fabing the chips

Sony has to pay for the research for the cpu , the research for the gpu , the research for the fabs , the building of the fabs , the upkeep of the fabs , the fabing of the chips .

When u look at it that way it may not be as cheap. Also if there are problems with sonys fabs moving to lower micron processes it will cost sony alot of money , ms can just move on .

 

[one]

Ms only has to pay a royalty on each gpu made and most likely each cpu made. Then the cost of fabing the chips

Sony has to pay for the research for the cpu , the research for the gpu , the research for the fabs , the building of the fabs , the upkeep of the fabs , the fabing of the chips .

When u look at it that way it may not be as cheap. Also if there are problems with sonys fabs moving to lower micron processes it will cost sony alot of money , ms can just move on .

Well, before talking about total cost, your original argument confused who does process shrink benefit directly. In the case of Xbox 2, it's TSMC because they can get more chips from 1 wafer. Then, as a console has fixed spec, MS doesn't have to buy smaller chips until it gets way cheaper to get smaller process chips than bigger ones. Do you think for example 90nm chips are cheaper than 130nm chips in its beginning? Until TSMC can get all investment costs in 90nm lines back, 65nm chips will have premium cost. It's same for IBM. The difference with the previous Intel/Nvidia deal is, in this round MS has IP licensed in its hands, so they can switch fabs, but it only helps MS to be free from arbitrary price fixing done by Nvidia, not free from overall market pricing and reasonable fab investments in the side of TSMC.

 

[Teasy]

Heh how so. Is it not sony that pushed that they were more powerfull than the dreamcast ?

Playstation 2 was advertised as more powerful then DC yes. But that's quite different to XBox, which from the start and all through the generation has been billed as the biggest and most powerful system. XBox 2 will only have a short time as the most powerful console, and then it will likely be the least powerful for the rest of the generation, like PS2. With PS2 it wasn't so important, the Playstation name wasn't built on being the biggest and most powerful system after all. I think this kind of thing could be a far bigger problem for XBox 2. But as I said this could all end up as a advantage or disadvantage depending on the circumstances. Its certainly not definitely one or the other, surely you have to agree with that?

 

[V3]

ms can just move on

Well, there will be some binding contract, beside there aren't many choices of fabs with 90nm or 65nm by 2005 to begin with. Another word, supplies are low, when supplies are low, it will be expensive. And MS won't be the only buyer.

 

[-tkf-]

Xbox loses are only around $2.5 billion according to the loss figures from the Home Entertainment division in their financial reports. Any additional losses are merely conjecture.

I

I think the 4-5 billion includes developing the XBOX and setting up and running Live. Add to this the development of the XBOX2 and the needed time (losses?) to get the XBOX2 in the same "succesfull" position as the XBOX. It will surely take some time to earn that back.

If anything i think the new approach with weaker and cheaper hardware may be showing that MS will use the bruteforce method a little bit wiser and may be planning for a longer run than first expected.

If they really do ditch a HD-DVD/BLU-RAY drive in order to save money it will be very interesting how they plan on handling the future games and their size.

Same goes for Sony, a PS3 without any media that can store downloaded patches and extra content/file.$$$ would be handicapped, I'm hoping for a BLU-RAY media with a RW area...

In any case MS in the console scene is just as much a question of making sure that Sony doesn't own the living room.

 

[Johnny Awesome]

Anything above $2.5 billion is pure conjecture. Estimates don't really matter. It's the financial statements that tell the whole story.

In any case, MS may be planning tighter PC integration. Maybe the Xbox 2 will be capable of displaying HD content from a networked PC with 100Mbps speed ethernet. That way consumers who want the feature simply add an HD-DVD or BR drive to their PC and can still get the content on their HDTV via a networked Xbox 2. They can also use a networked PC as downloadable content space and for storing and backing up save game data.

Then they can have two classes of consumer - straight games from 9GB DVD media w/memory cards for the mass market at competitive prices. Then charge $50 for a Xbox2/PC integration service pack containing things like custom soundtrack support, HD content streaming, hard drive content storage, and other media center features.

That way they push the PC as the "media center" and the Xbox 2 as merely a delivery device. It would help to push Longhorn and is just the sort of thing MS would do.

Let's face the facts, a streamlined Xbox 2 with almost no built-in media features is going to have a really aggressive cost curve. There's no way Sony could match it cost wise. Admittedly they might not have to, but I'm thinking that HD content probably isn't going to be big until about 2008. If the Cube can get buy with only 1.5 GB storage now, then Xbox 2 should be able to get away with 9GB storage.

It's a risky strategy requiring a PC for media and goes completely against the idea of convergence, but it just might be a good move in the end.

 

[-tkf-]

Anything above $2.5 billion is pure conjecture. Estimates don't really matter. It's the financial statements that tell the whole story.

Someone will dig up the numbers, afaik the current division that handles the XBOX didn't include the XBOX from the start, that was added later so in any case the 2.5 Billion should not include development.

It's a risky strategy requiring a PC for media and goes completely against the idea of convergence, but it just might be a good move in the end.

I doubt it would ever work even if the average XBOX owner might be a PC "nerd".

And i think that the 1.5 GB media on the Gamecube is a problem or at least is becoming a problem now. If MS only provides a 9GB media on a platform where everything is going to take up more space it will prove a real challenge for the Developers.[/quote]

 

[wco81]

If MS only provides a 9GB media on a platform where everything is going to take up more space it will prove a real challenge for the Developers.

That could be like Square switching from Nintendo to Sony because of the greater storage media Sony introduced with the Playstation.

But apart from Square, are developers really ready to go way beyond 9 GB of content per game release?

Even if they have to support both HDTV and analog TV resolutions?

A lot of HT enthusiasts are calling for Blu-Ray and HD-DVD to support lossless audio. So that could eat up some space.

 

[pc999]

Just a question, for the way that next gen looks, will be easy to say wich one is more powerfull, I mean "general porposes VPUs", Altivec, very diferent and new architectures/disigns/methods etc... should be a lot harder to say than in this gen, right?

 

[thop]

Oh boy best flame thread since a while!

Unless MS gets the big games, they're lost. But they probably will get some cool games, they have lots of time apparently. MS will do everything they can do make sure that by the time PS3 comes out, the Xbox2 has a big enough userbase. It will take them a LOT of money to get there though.

Well MS needs to get really big games then. Because people will buy PS3 regardless of any launch games. Even if they just launch with Tekken6 and RR5 people will buy it like crazy. MS need sth. like Zelda or GTA. And some frikking good and revolutionary RPG (sth. like FF7 was on the PSX). And exclusive EA sports games. Halo3 won't do it, just not exciting enough. Then they'd have a chance against PS3.

Here's another question: how many people own an XBOX but no PS2?

 

[Qroach]

What many people fail to realize, is just how much money it costs to compete in the console biz. You can keep crying about MS spending billions of dollars and how evil they are for it, yet that's exactly what it costs to compete with established console manufacturers. It's exactly the same reason Panasonic, NEC, SEGA, Atari, and numerous other companies couldn't climb back into a postion even close to what MS has managed to do.

You can say MS is a failure, but how are they a faluire compared to all the other companies that were already in and/or tried while crashing and burning. The fact MS could take market share away from an established company like nintendo (and don't try and tell me nintendo didn't loose market share this generation, because sony certianly didn't and nintendo had sold twice as many console at this point of the N64's life.).

 

[Clashman]

Not to throw this too off topic, but has anyone else been recieving crap in their email from 1up.com for ages now? I've probably tried unsubscribing from the thing about a dozen times. How am I rewarded? They now send the thing to my email TWICE instead of just once. Grrr...

 

[Inane_Dork]

http://www.gamespot.com/news/2004/10/05/news_6109740.html

I'm not quite sure how you could objectively call the Xbox a failure after reading that. I'm sure I'll read several attempts, though.

 

[-tkf-]

http://www.gamespot.com/news/2004/10/05/news_6109740.html

I'm not quite sure how you could objectively call the Xbox a failure after reading that. I'm sure I'll read several attempts, though.

Hahaha.. you can read the thread from the start if you want as this doesn't change anything

Anyway here is an attempt:

Looks like Microsoft will be loosing even more money this quarter.

 

[Inane_Dork]

Hahaha.. you can read the thread from the start if you want as this doesn't change anything

Oh, I know that. I just thought the thread could use some more facts.

Looks like Microsoft will be loosing even more money this quarter.

You, sir, are the proud owner of attempt #1.