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

For once, I agree with Cybamerc. Mark your calendars everyone.

 

Well put cybermerc.

 

It's like you took a summary of MS's current situation from the financial press and just wrote the opposite.

MS has some 11 billion or so shares outstanding. MS is going to have to keep funneling cash to those 11 billion shares every year for the rest of the company's life now that they can no longer increase shareholder value through stock price growth. They are going to have to provide a return to those 11 billion shares at least as good as other investments in the market. Do the math.

And that is just assuming the best case scenario where MS's stock price does not continue to drop like it has over the past four to five years. And anyone who has bothered to follow the public statements from MS knows that they have been warning that their revenues will be falling from a combination of failure to get people/companies to upgrade existing products and the increasingly frequent price slashing they are having to do to try to stem the tide of defections to open source commodity versions of their software like Linux and OpenOffice.

The recent announcement of cost cutting going on at MS a month or two ago should be a reality check to every MS fan who loves to claim how X billions of dollars is nothing to MS.

 

I'm not saying it's nothing. I'm saying that if MS gets 40% of the market by 2010 it will essentially have all been completely worthwhile. $2.5 billion (or $4 billion, doesn't matter) is a lot of money. Make no mistake, but that's basically what it takes to break into the industry. If at the end of the day they fail, we can all laugh and go play our PS4's, but if they don't then this cost of entry will have been acceptable.

 

Just want to mention that the fact that its cost MS $4 billion to break into the industry does not mean it costs $4 billion to do so.

 

I'll bet you in this day and age it does. You're kidding yourself if you think any other company entering into the market for their frist time could be as far along as M$ is for significantly less money.

 

I don't know if it does or doesn't cost that amount to get into the console hardware market. I just don't think it can be automatically assumed.

 

prove it...

 

How much have the Phanton dudes spent so far...?

Ok, so they haven't quite broken in yet...

 

It's true, but it would require far more insight and experience than MS had. MS has paid dearly for getting experience and not dying out over the course of time.

 

http://www.scee.presscentre.com/content/detail.asp?ReleaseID=2472&NewsAreaID=2

That was easy.

 

It's unrelated, as far as I can tell.

The Xbox entered a significantly different market than the Playstation entered. Not only that, but I cannot find where in that link it details how much money Sony spent on either of their consoles.

So... you proved that the PS1 is a successful seller, but I'm not sure what that has to do with how much money it takes to break into the console market as much as MS has.

 

This is one of the many reasons why I have a lot of respect for Sony. They did a magnificent job with their first console (considering that they were up against Sega and Nintendo at the time).

What will they think of next? Hey, I can make up interesting theories too.

(1) Sega was a major player in the videogame industry and their Genesis console, at one point, outsold the SNES. NEC (makers of the world's most powerful supercomputer) is one of the largest companies in the world and is also many magnitudes larger than Nintendo. Matsushita is one of the largest companies in the world (bigger than Sony IIRC) and is also many magnitudes larger than Nintendo.

(2) NEC is now manufacturing the Flipper for Nintendo's Gamecube, Matsushita is now manufacturing the G.O.D. drive for Nintendo's Gamecube and Sega is now making games for Nintendo's Gamecube.

(3) As you can see, there is a noticable pattern here. All of the above companies (NEC/Matsushita/Sega) had one thing in common...... they made consoles that never made money.

(4) Therefore, at the rate at which Microsoft is going, they will likely be making games for Nintendo's Revolution 2.

 

You forget to mention that both Sega and Nintendo screwed up a bit that gen...especially Sega. Saturn was doomed from almost the start, thanks in part to both the poor design and, moreso, the craptastic launch and price by SoA. Not to take away from Sony's well-deserved success in that gen, but they didn't do it alone...their competitors helped a bit.

 

Matey, appleas to oranges...?

 

IIRC Saturn was sold better than PS for a year (in Japan, at least).
But eventually 3-D optimized PS outsold Saturn in their late lives, and Square nailed Saturn's coffin.

 

Once again, for the second time, I didn't say it does not cost that amount of money to get into the console market. I said it should not be assumed that is costs that amount just because it cost MS that amount. If anything needs to be proven its the assumption itself.

 

EA will at some point

 

Teasy,

...and I said prove it.

MS hasn't proven that assumption? Look at it this way, we have "proof" in what MS has done and how much money they spent to establish a brand/foothold from scratch. specifically when they had a really tough competitor (sony) to contend with. To uses your stance "if anything needs to be proven, it's the assumption it can be done with less money."

I'm certain sony spent into the billions doing the same thing, only the competition at the time was much weaker. Sega stumbled with a poorly designed sega saturn, and nintendo went with cartridges because they messed up a contract with sony. Sony clearly had a better chance to be successfull in the market compared to MS, and I'm sure they still spent billions. however they made money back faster than MS.

 

There's nothing to suggest Microsoft has executed even a near-perfect entrance strategy into the market with hardware so much more unprofitable than GameCube, a flop in Japan, and middling performance in Europe, so there's got to be places where significant money could've been saved.

However, there's nothing unfair about wealthier companies outspending others in this market. Microsoft is able to afford their "twenty-year plan" for console investment whereas Sony's lesser finances might require a return within eight years or so worst-case-scenario.

What should be really troubling here is the limited profitability Sony has seen from the whole PS2 endeavor after start-up costs (PlayStation 1 strategy had to start with zero market momentum and still showed better execution in making a cost efficient system and handling R&D) and has incredibly been managing to actually lose money recently in the PlayStation division while owning an almost 70% marketshare and being well into their second-generation cycle. These are the kind of problems SEGA had and Nintendo was never reckless enough to have.