All purpose Sales and Sales Rumours and Anecdotes [2021 Edition]

Yes, it's like graphics hardware. For many years the bulk of the profit was made on mid tier and lower GPUs while the rarified air of the enthusiast level GPUs generated relatively paltry revenue and profits (albeit at high profit margins). So, in theory ditching the enthusiast class of GPUs all together would seem to be a way to maximize revenue and profits since you can make multiple lower tier GPUs for each single enthusiast GPU.

However, that's not the case since you also need the enthusiast GPU as a "halo" product that generates word of mouth is an example of the state of the art quality of that particular product stack.

Of course, that GPU model has been turned on its head somewhat with the disappearance of the budget market due to "good enough" integrated graphics combined with enthusiasts now being willing to pay absolutely ridiculous prices for the halo products.

Xbox needs to be seen as at least on par with its competitor or it risks becoming irrelevant to console gamers. No halo product, no word of mouth, no casual gamers picking up the less capable product because they can't afford the more performant product that they want. Again like GPUs. Or home theater receivers. Or HDTVs. A relative of mine just bought their first ever LG TV purely because I gushed so much about the LG OLED that I have. The TV they bought? An approximately 500 USD LG LCD TV.

It's a psychological thing as well as a practical PR thing.

Regards,
SB

 

Why does this matter if the profit centre is GamePass subscriptions? Selling more cheaper all-you-can-eat game buffet boxes than less more-powerful boxes to sell more subscriptions is a win. Plus as people keep saying, if you want higher fidelity than the box can support, xCloud has you covered.

Right now the factor constraining sales is how much viable silicon you can squeeze out of a wafer and small ICs produce more viable ICs. They might even be able to out-manufacture PlayStation 5.

 

Yeah but if no-one is talking about your console (the main entry point to GP which has slightly different offerings from PC GP) or even worse constantly denigrating it because it's so much weaker than PlayStation, then consumers might be discouraged from getting an Xbox because it's total crap. And if people aren't getting an Xbox console, you've drastically reduced how many potential subscribers to GP you have.

The XBS-S console didn't change by removing the XBS-X from consideration, but the perception of it changes. That's why halo products are so important in many markets even if all the profits are made from lower priced cheaper products in the product stack.

It's like, well shit I can't afford an RTX 3090, but god damn I wish I could get one. I'll get an RTX 3060 instead since that's all I can afford. Well, if GPUs weren't being scalped left and right.

But would RTX 3060's sell that well if that's the only product in the product stack compared to AMD's full product stack?

Regards,
SB

 

I believe the console market has stayed pretty much the same since the xbox 360/ps3/wii generation with just shy of 300m consoles sold world wide. So for microsoft it may be that if they can get an xbox regardless of it being a series s or x it could ultimately end up being one less playstation sold.

Over the long haul with xcloud even series s will be able to play games at 4k and beyond. So for microsoft if they can get a console in your hand and then convince you to get game pass you might become a life long xbox gamer. After all if your series s pumps out 8k xcloud content in 5 years or 8 years do you really need to upgrade outside of it perhaps failing ?

Same with the media stick that is coming. If you can buy a $50 or whatever it ends up being media stick and just play your game pass games , is there a point of getting another consol;e ?

 

Not if your actual product isn't the physical box, but the software and services available. I don't think Microsoft cares as much if you buy an Xbox as it does that you subscribe to Xbox services (Live, Gamepass, etc), buy Xbox/Windows Store games, and buy/rent movies though their storefronts. That's where all the profit is anyway, hardware is sold at a loss.

 

Sure, but Xbox consoles, especially XBS-S remain the cheapest entry point into that ecosystem. Sure there's XCloud as well, but many people are still relatively skeptical of it and it requires a really good low latency internet connection for a decent experience.

So, while technically you don't need an Xbox to participate in Game Pass, without Xbox consoles existing you drastically reduce the number of people that are capable of and willing to subscribe to Game Pass.

Regards,
SB

 

Maybe, if they were able to manufacture more eg 5 million series s at launch vs 1 million of X and 1 million of S. Though I believe some hardcore Xbox players would jump ship to Sony, by having a much more powerful machine.

Would they sell more now?
Obviously not, as they are not selling out the series S they are making now. All what would happen is their would be more series S sitting on shelves

 

The bulk of the revenue? (profits?) are still traditional from what Phil said. So perhaps not quite at that point to be able to make this type of transition.

 

MS learned two things from last-gen: They must have the perceived more powerful console (debatable by some) and they have to be able to sell to the mass market at $300 or less to get GP boxes into as many hands as possible. The X|S is the means to those ends.

 

Only people chasing the higher-end performance will be put off buying the Series S. If performance was such a massive issue, nobody would have bought the original Xbox One at 1.2Tf costing more than PS4 at 1.8Tf. Surely it's accepted by now that that high performance has never sold the most consoles. Even when Sony and Microsoft offered a choice last generation, PS4 Pro and One X sold a fraction of the base consoles. Consoles and console gamers have put up with slow-loading, cruddy, ropey-framerate boxes of joy for generations. People bought the 1.2Tf Xbox One console in droves even when the competition was 1.8Tf and cheaper.

But "Phil" all said they are building a platform for the future. Consoles last 5+ years, so the business model is at least this long - longer with cross-generation migration. GamePass is where they're sticking their flag. And again, xCloud is the fall back. You can rely on the cloud. Really, this time.

 

Sure, but when they made Series consoles, that design was during a time in which Game Pass was _not_ full of all these acquired studios and xcloud wasn't really far along enough either. It was also during a time in which Xbox barely survived from being chopped from MS. If we're talking about the past, they had to make decisions to keep their user base before pushing their population elsewhere.

I think you make a reasonable point that this is a viable strategy for whatever generation comes after this, but I don't think this was a viable solution for them for this particular generation coming off Xbox One debacle.

 

xCloud is the fallback to capture the people who cannot be serviced by what the device itself can deliver. Like PSNow being the 'solution' for running PS3 games on PS4. I'm not seeing the relevance of Microsoft's lack of acquisitions before they happened. Again, this is about building a platform and capability for the future. The launch year of a console is almost irrelevant over the long haul - just look at the clusterf*** that was PS3 because you might as well write off the whole first 18 months of that mess.

Getting more users as fast as possible (Sony's exact messaging) and gaining market tractions, is still critical. Sony's financials show this. Ignoring RRoD Microsoft made a ton with 360 because lots of people bought it and every game sale was a licence fee for Microsoft. All games will never be in GamePass so you still want a big user base for non-GamePass people and people still buying games outside of your service, filling your coffers by purchases through your digital store and other licensing.

Sony's PlayStations are all been profitable because of the size of the user base.

 

Not having a powerful console like the XSX at launch would have been a PR nightmare for MS. Be serious.

 

Sure, I'm sure there is truth to this. Life time sales means a lot and the initial hardware cost is relatively minor in the grand scheme of things.
But there are different markets willing to pay different prices for different spec points, and we are also not entirely sure how many more Series S consoles could have been made.

It does not appear that demand for Series S is higher than Series X; forgoing Series X in favour of just Series S is unlikely to be more successful than the dual setup that they have currently.

At this point in time, they have 2 products serving 2 different customer bases. By reducing it to 1 product, they are only serving 1 customer base (assume all Series S or all Series X); and this doesn't necessarily indicate they would have more hardware sold than the 2 console setup serving 2 markets.

I think series x being constantly sold out is a sign that high end market is a bit underserved with respect to supply meeting demand. And Series S being largely stocked, means it's serving the value market adequately as well. S & X combined likely sells more than over stocking the Series S even more than it is today, and it's not likely that by removing Series S they could have built the same amount of Series X that they sold of Series S.

 

Bad PR has never been a barrier for Microsoft and who cares what a bunch of opinionated strangers on the internet say anyway? A good product at a good price will sell.

The question was, could Microsoft have sold more consoles? The premium product option for all products is niche. Some people who not have bought an Xbox S, but would those who did offset those who didn't. Last generation says is around 4:1 premium:base so surely the answer is probably yes.

What's the data supporting this?

 

I think I'm just using logic here.
Series S consoles are currently well stocked in every country, implying that supply has met demand.
If we increase supply of series S, there won't be any more additional sales beyond the optimum point because demand has not exceeded that supply level.

So you cannot technically obtain more sales by increasing supply in this case.

Series X consoles are not well stocked in every country, I think it would be fair to call it out of stock, meaning supply has not met demand.
If we increase the supply of Series X, there will be additional sales because supply has yet to catch up with demand.

So this means, if we increase Series S supply, no additional sales.
Increase Series X supply there will be additional sales.

If we never sold any Series X and made only Series S, there would not be more sales technically than the maximum of Series S and X combined.
If we never sold any Series S and made only Series X, there would be less sales because we could not make as many Series X additionally as much as we have sold Series S.

So a highly probable situation here is that they saturated their sales by releasing both.

 

Not everywhere, it doesn't appear to be in stock at Amazon UK for example.

Even if this were true, this is after more than a year. So let's spitball some numbers. suppose that for every 3 Series X consoles sold to date, instead Microsoft could be produced 5 Series S consoles, could Microsoft have been selling that more consoles for the past 14 months?

If not, why not? Because demand has very clearly eclipsed demand since launch.

 

Just because MS can more ably supply Series S units doesn't mean the demand for the Series X is greater. All it means it that MS does a better job meeting the demand for the S by providing an optimal supply. Optimal supply would require you placing enough products on the shelves to keep consumers from emptying them.

We know the S sells more than the X. More supply of the X doesn't mean its a given that the sales of the X would surpass the S.

 

https://www.amazon.co.uk/dp/B09LVSHS5M/?tag=b3d-21

Send to be in stock now for 250 quid

 

Yeah, it changes a lot over the course of the day. My understanding is the stock situation can depend on where you are and the stock local(ish) to you with Amazon's regional hubs being restocked dynamically. You can see this in action with this stock history here. The different bundles can complicate things but right now there are no non-bundle Series S consoles available on Amazon UK - only consoles bundled with specific games and/or extra controllers. I checked myself.

Amazon are one of the largest UK online retailers and try to keep all popular high-demand items in stock and are struggling a bit with Series S, which is good news for Microsoft.

So on that basis, and that lower-end models have always outsold higher end models, I'd say it's almost certain that'd Microsoft not begun producing Series X, enabling them to produce more Series S units, Microsoft could have sold more Xbox consoles since launch.