Business Approach Comparison Sony PS4 and Microsoft Xbox

[Deleted member 11852]

That's interesting. I wonder what's changed? After the last major Azure crash, all to do with very poor partitioning choices by MS, they must have made some very fundamental changes to the underlying architecture. Especially to overtake the S3 like that. Maybe Azure is finally becoming a practical solution just need to keep an eye on its stability now.

Microsoft deployed a lot of resources to further globalise and localise Azure in 2013, some of that was in preparation to support Xbox One and a lot of it was just to make it more competitive.

You can read the full report here but in summary the report states:

In our 2012 report, tests demonstrated that Amazon S3 and Microsoft Azure Blob Storage were the two strongest players in the market and that, although other offerings showed potential, they had not yet matured enough for use in enterprise storage solutions.

This year, our tests revealed that Microsoft Azure Blob Storage has taken a significant step ahead of last year’s leader, Amazon S3, to take the top spot. Across three primary tests (performance, scalability and stability), Microsoft emerged as a top performer in every category. Even though Azure has not been in the market as long as S3 and does not have nearly the same volume of storage under management, it is clear that Microsoft’s investments in Azure are starting to pay dividends and that the technology they are providing to the market is second to none.

So Microsoft is doing well with server performance, scalability and stability but a lot of companies choose Amazon S3 because of the API support and the cost. Your cloud storage doesn't always need to be the best, but good enough to do the job. Amazon build their business on razor-thin profit margins which makes competition tough.

When we considered a commercial cloud solution (a 'black box' solution - we're Government) in 2012/13 we looked at Amazon and Microsoft's offerings, among others, and Amazon was considerably cheaper for our needs.

 

[dobwal]

Having a lot of patents, and Microsoft do, doesn't make them valuable unless they are for a key technology or method that others can not work around. The only significant patent in gaming that I can recall was Nintendo's infamous d-pad patent which has since expired.


I don't see any evidence of this? Again I can only cite the Nintendo patent that Sony licensed and Microsoft did not - hence the much-maligned d-pad on the original Xbox and 360.

Unlike the mobile space the console space looks a lot more harmonious patent-wise and that's probably because there are three platform holders and those platforms are based on a limited pool of CPU and GPU technologies that belong to others, not the platform holders themselves. But again, if a patent can't be exerted over another party it's value is questionable - as Google found with they Motorola patent chest. Having 3,000 patents nobody needs makes them worth $0.

There is also a big difference between owning the IP (as I believe Microsoft do for the Xbox One APU) and owning the underlying patents which I'm sure AMD do, because far too much of the tech is shared with Sony's PS4 APU and AMD's line of APUs.


Microsoft haven't shown an inclination to just throw patents at the wall (the courts) to see what sticks. Maybe that will change with the new management but I would be surprised.

Google purchase of Motorola's patent portfolio wasn't a move to aggressively extract fees from non-Android handset manufacturers. Its was a defensive move because Google literally enter to space with no ability to deter others from suing it. No one knows the true value of Google mobile patents related to its purchase of Motorola.

MS has hardware patents, not as extensive as AMD, but it has tons of patents that cover just about every aspect of gaming. How software interact with the hardware, how a user interacts with the software and how software or hardware interacts with other software and hardware. The value isn't just the number of patents in MS portfolio, it the breadth in which it can affect the wider market.

A patent troll with a MS gaming related patent portfolio is not limited to major console manufacturers. It can attack the mobile space or just about any space where gaming technology is applicable. It can be used against publishers, small devs and third party harware accessories or service providers. In fact smaller companies are the easiest targets because they are more willing to pay to avoid litigation because they don't have the resources to engage in long protracted legal battles.

A patent troll can employ strategies that a manufacturer would never do directly. In fact both MS and Sony are patent trolls in the mobile space as they just do it by proxy. Nortel patents are being leverage by Apple, Sony and MS through a patent troll they basically all own together. Google bought Motorola shortly after it failed to outbid Rockstar for the Nortel patent portfolio.

Patents are used by most big companies like gov'ts use their nuclear weapon stocks as a deterrent, which doesn't really work when you got someone with a giant stock of nuclear weapons but no home country of its own.

 

[Deleted member 11852]

Ok I don't want to get into a debate about patents. My point was that patents aren't automatically of value and do you have any evidence that Microsoft's patents are of value. I think we've determined you don't so let's agree to disagree!

EDIT: And just to clarify, I'm not saying you're wrong I was just hoping you had some info or links to info that I would find interesting to read!

 

[Shortbread]

Microsoft Should Consider Getting Out of Gaming

http://www.forbes.com/sites/adamhartung/2014/02/18/microsoft-should-give-xbox-one-to-nintendo/

Amidst this organizational change, Xbox continues its long history of losing money – as much as $2 billion per year. And early 2014 results show that Xbox One is selling at only half the rate of Sony’s Playstation 4, with cumulative Xbox One sales at under 70% of PS4, leading Motley Fool to call Xbox One a “total failure.”

The old leader, Nintendo, watched sales crash in 2013, first quarter 2014 estimates reduced by 67% and the CEO now projecting the company will be unprofitable for the year. Nintendo stock declined by 2/3 between 2010 and 2012, then after some recovery in 2013 lost 17% on the January day of its disappointing sales expectation. Not a great market indicator.

The new sales leader is Sony, but that should give no one reason to cheer. Sony lost money for 4 straight years (2008-2012), and was barely able to squeak out a 2013 profit only because it took a massive $4.6B 2012 loss which cleared the way to show something slightly better than break-even. Now S&P has downgraded Sony’s debt to near junk status. While PS4 sales are better than Xbox One, in the fast shifting world of gaming this is no lock on future sales as game developers constantly jockey dollars between platforms.

 

[Brad Grenz]

Even if they had it I don't know that Nintendo would have any idea what to do with Xbox.

 

[Rangers]

Amidst this organizational change, Xbox continues its long history of losing money – as much as $2 billion per year.

These type of statements are totally inaccurate and make the entire article dismissible really. The guy obviously doesn't even know the basics of the Xbox business.

 

[-tkf-]

http://www.forbes.com/sites/adamhartung/2014/02/18/microsoft-should-give-xbox-one-to-nintendo/

So, that article contains the famous 2 billion loss explanation. I finally got to read the explanation. Which isn't there, just a claim that it's expensive to run a console business. Either I am incredibly naive. But it just doesn't make any sense. With what we know from companies that reveal more transparent numbers, the 360 would have a hard job losing Microsoft 2 billion dollars.

There is without any doubt a cost attached to developing the xb1 but it's hard to believe that it would soak up all profits and add a 2 billion loss.

The Nintendo suggestion is stolen directly from me, so that one is valid enough

Kidding a side, Microsoft and Nintendo would be a formidable force. A xb1 usb dongle that connects the wii controllers and wii u tablet, a license free agreement on Nintendo software on the xb1, a Nintendo branded white xb1 without Kinect and HDMI in, in a smaller box.

Nintendo moving to Azure.

All totally unbelievable but fun to imagine

 

[Florin]

Even if they had it I don't know that Nintendo would have any idea what to do with Xbox.

Mario Sports, Luigi Dance Party, Princess Peach's Petting Zoo.

Nintendo Kinect - a license to print moneyz.

 

[Brad Grenz]

I just mean I think they would fail spectacularly as they attempt to integrate their businesses.

 

[liolio]

I don't know where that 2 billions figures come from but it seems that quite a few investors are unhappy with MSFT choices so it is possible that numbers circulate "behind the door".
Anyway the article is bad, selling kinect is not an option, simply put Kinect looks like a way too costly piece of hardware to be a desirable piece of harware in the low end gaming world.

Ultimately thinking of MSFT yukon platform, rumours about a canned xbox tv /gaming set top box, my pov is that MSFT somehow killed the wrong product along with its matching business plan, the later being the most interesting part.
My belief is that MSFT should have release a potent gaming set top box running Windows RT along with a new direct x "Light" akin to mantle. The thing would have run on ARM CPU.
Pretty much like Google does (and could do if they decide to leverage gaming further): provide the software platform and apps store, cloud resources, / the overall environment and let the IHV do the race to the bottom in which they are already engaged.

Kinect should be optional, the most interesting part so far is voice recognition which doesn't not require the massive investment MSFT made on hardware both with Kinect and Durango inner parts, should be done from the cloud. If you are not connected well quite a few other functionality are unavailable anyway and I speak more relevant ones like: game updates, online ranking, cloud save, etc.

Wrt to hardware MSFT would have benefit from what could have been a stiff competition between a sane amount of actors and possibly kill in the womb possible efforts form either Apple or Google to steal the living room from them.
I would have gone with a really conservative lowest common denominator:
4+1 A15 running at high speed set-up and a Gk208 GPU or AMD Mars line on a SoC, 64bit bus, 2GB of GDDR5. Extremely conservative but should keep up in CPU power and actually the aforementioned GPUs can deliver the bulk of the experience next gen provide.
MSFT would valide platforms as it does with winphone and RT, all platforms would be SoC with a UMA architecture. An optical drive would not have been required though supported, obviously a HDD would have been mandatory.

From there you let Nvidia, AMD, and whoever can deliver compliant SoC compete. Having a pretty low entry bar would help a lot here as I expect only AMD and Nvidia to be able to deliver higher end systems.
The lowest end of that platform would have fit mostly in Mini PC form factor (think Intel NuC, Gigabyte Brick, etc.). For the ref Asus is to ship a 180$ mini PC running chrome powered by Haswell CPU, we speak seriously affordable hardware, intel's own nuc powered by baytrail starts at 149$.

imho they miss an opportunity to change "the deal" and undermine efforts form newcomers to enter the living room.

 

[Shifty Geezer]

Analysts suggestions - 1) Nintendo release software on other platforms. 2) MS give up. 3) Sony own the monopoly and the analysts' Sony shares skyrocket.

 

[Entropy]

I don't know where that 2 billions figures come from but it seems that quite a few investors are unhappy with MSFT choices so it is possible that numbers circulate "behind the door".

I can confirm that in financial circles, (which is waters I trawl in infrequently, and I shower for ages afterwards), Microsofts Xbox console business has been questioned for a long time.
Now, most folks understand that Microsoft needs to find new avenues of growth outside it's core money making monopoly. Thus failures like Kin, zune, bing, aQuantive ($6.2 billion!) and so on are tolerated. Up to a point though, these money-burning ventures are part of the reason Ballmer is no longer at the helm.

XBox, in the eyes of investors, belongs in this group of flops, not only due to lack of ROI, but with the added damning feature that the home game console business simply isn't assumed to have potential for growth. Which is probably why the XBoxOne had the profile it did at launch - trying to market it as a general media consumption hub for your TV. And the outlandish (desperate?) claims from Microsofts Xbox division about over one billon game console sold this generation. But while a firmly controlled hub for content providers is a nice idea in corporate boardrooms, it rather spectacularly failed to stir the loins of consumers.

Seriously, what is left to hope for now, if you're a Microsoft investor?
I've said from day one that it was a hare-brained, reactive, step to take to get into home consoles, and that by strengthening consoles, they would weaken their extremely profitable Windows platform. The idea always hinged on Microsoft first being wildly successful to the point of monopoly, and then being able to leverage that monopoly into content delivery profit. Neither of the two has materialized, and most people realize that the media ship has already sailed - it belongs to mobile platforms, allowing content to be consumed both at home and on the go.

All this is not to say that Microsoft will divest the Xbox division, only that there has been voices in financial circles saying it should be done. But I can't for the life of me believe that the disparity between "one billion" and the XBoxOne sales won't be glaring enough for a lot of voices internally and externally to claim that Microsoft should get out of this business. God knows, if I was the CEO of Microsoft, I would be happy to sell the division and recoup some money, show a good quarterly profit to investors, and breathe a deep sigh of relief getting rid of something that has no chance of developing into anything financially significant and, adding insult to injury, constitutes internal competition. It might even be good for Xbox, the game console.

 

[steveOrino]

Seriously, what is left to hope for now, if you're a Microsoft investor?
I've said from day one that it was a hare-brained, reactive, step to take to get into home consoles, and that by strengthening consoles, they would weaken their extremely profitable Windows platform. The idea always hinged on Microsoft first being wildly successful to the point of monopoly, and then being able to leverage that monopoly into content delivery profit. Neither of the two has materialized, and most people realize that the media ship has already sailed - it belongs to mobile platforms, allowing content to be consumed both at home and on the go.

I have always wondered why MS decided to turn the Xbox brand into an general media platform first with the X1 when years of market analysis has shown that people are "cord cutting", watching less network/cable TV, and buying fewer TVs in general.

Gaming software is the only advantage consoles have and when stepping outside that box you have to compete with many cheaper devices and services. Sony wants the same thing but as they learned with the PS3 its far better to sell the brand as a gaming console first then attract people wanting general media access as the platform matures.

Changing the brand like MS did with the xbox is very very risky. Past consumers are going to be confused and acquiring new consumers that were never interested in the brand is the equivalent to starting over.

 

[Phil]

Gaming software is the only advantage consoles have and when stepping outside that box you have to compete with many cheaper devices and services. Sony wants the same thing but as they learned with the PS3 its far better to sell the brand as a gaming console first then attract people wanting general media access as the platform matures.

What could they have learned though? The only thing that they learned IMO is invest in less risky, expensive and hard to produce tech. From a market perspective though, I though the PS3 was pretty 'perfect'. It was a good gaming console and the media capabilities were also executed nicely. The XMB was simple but intuitive. If the PS3 didn't have Bluray and its media capabilities going for it, i think it would have flopped quite a lot more. If the strategy had gone well, the PS3 might have been to market earlier and at a better price and I think we'd all be looking back at an even more successfull PS3. That it achieved parity with the X360 is no small feat IMO and shows how strong the PlayStation as a brand is.

IMO - in this area, the PS4 falls a bit short. It's a very good game console (probably one of the best they designed from a tech POV after the PSone), but IMO - the media capabilities are not good enough yet. Without any tech compromises, they could considerably make the media features better.

Changing the brand like MS did with the xbox is very very risky. Past consumers are going to be confused and acquiring new consumers that were never interested in the brand is the equivalent to starting over.

I agree completely. What I find is quite worrying is that there seems to be more X360 owners that are willing to jump into PS camp and less PS3 owners going into XB camp. In my eyes, this can only mean a shrinking userbase and the way the trend is pointing, I'd be surprised if they manage to get close to what the X360 sold. My guess would be considerably less at this point, even if they managed to sell at a record selling pace (thanks to huge supply).

 

[liolio]

It is really tough for either MSFT or Sony to provide what iOD or Android can deliver as far as non gaming functionnality are concerned, especially for the later.
Actually Sony plays it cards pretty well, MSFT I would say no.
Pushing RT along with an open platform would have been beneficial for MSFT in many ways if they had gained tractions, having a low entry bar means that they could have hope getting their OS into smart tv within a couples of years for example.
Now it is too late and my belief is that Google will do it sooner or later. It is getting too obvious now, Nvidia just said that the tegra K1 are intend at gaming stb and smart-tv, there are rumors about a google console, rumors about an asus Android handheld, Amazon, I expect Nvidia to make a move to aggressively promote its product if they fail to gain traction, it is only the beginning.

In the mean time RT is dying, MSFT takes massive losses on its surface, with the matching R&D and advertisement efforts, etc. In the Windows realm, they compromise the experience for power users and gamers alike... Even if Xbox is profitable I've a tough time seeing how it fits into MSFT agenda. Preventing Sony to take over the living room made sense even if it costed them deerly but sticking to that business model when the job is mostly done already and they have greater plan and products to push, no.
MSFT sells software, it has always been a fight for OS dominance how MSFT, the Windows company, could forget that? I don't know.

 

[Deleted member 11852]

Anyway the article is bad, selling kinect is not an option, simply put Kinect looks like a way too costly piece of hardware to be a desirable piece of harware in the low end gaming world.

Kinect is some very cool technology, it just has yet to prove it's worth (or R&D costs) in the gaming arena. The base technology has all sorts of applications in security, healthcare, caring etc.

 

[liolio]

Kinect is some very cool technology, it just has yet to prove it's worth (or R&D costs) in the gaming arena. The base technology has all sorts of applications in security, healthcare, caring etc.

I do not disagree with that but looking a tear down of the device makes it obvious that it is a quite advance piece of kit, then the magic is also in the software.

 

[Deleted member 11852]

I do not disagree with that but looking a tear down of the device makes it obvious that it is a quite advance piece of kit, then the magic is also in the software.

No doubt, but I also believe a fair amount of clever stuff is done onboard Kinect 2 itself - hence the 128mb RAM, controller and fans to keep it all cool.

It's not merely a sensor array dumping hundreds of meg to the attached device - at least I don't think so! The software libraries allowing application programmers to use kinect are already on Windows. So applications programmes shouldn't have to start from scratch to write an app to monitoring skeletal tracking, the APIs should (and I believe do) support this.

 

[temesgen]

IMO MS could have built a traditional console and used software to deliver all the other services if they want to diversify their business model. The VR can be done with a Bluetooth headset or running a wired mic from the controller. Its too early to say they wont be successful but I do think much of the backlash is due to their consumer expecting the best graphics experiences on the XBox platform and they have alienated that group by building a machine with a subpar GPU. Heck even if they had launched a 550 with more CUs and ROPs that would have been a better choice. Conceding the graphics talking point to Sony was a mistake no matter how you slice it. HDMI-IN I doubt will turn out to be very important, why keep that and lose GPU grunt in the process???

 

[liolio]

IMO MS could have built a traditional console and used software to deliver all the other services if they want to diversify their business model. The VR can be done with a Bluetooth headset or running a wired mic from the controller. Its too early to say they wont be successful but I do think much of the backlash is due to their consumer expecting the best graphics experiences on the XBox platform and they have alienated that group by building a machine with a subpar GPU. Heck even if they had launched a 550 with more CUs and ROPs that would have been a better choice. Conceding the graphics talking point to Sony was a mistake no matter how you slice it. HDMI-IN I doubt will turn out to be very important, why keep that and lose GPU grunt in the process???

Honestly I don't believe that it is the graphic superiority that hurts the XB1 the most, no matter the noise on the web.
It is the price, the fact they underdelivered on a lot of functionality, the tv integration is iffy, Kinect does ok only in few languages, I read complains about the UI, about the new party system, Sony seems to handle social interaction through facebook and that is a great choice,then there is form factor (that bulky PSu bothers me as the as 360 does), PSN+ offers more value and the paywall on online gaming has its loop holes, video uploading made it late, etc.
Performances are also important but it is far from summing the difference between both systems.
Foremost it is price, you are asked to pay more and the experience is not yet delivered from what I read mostly everywhere. People can buy a cheaper, compliant solution, the fact that it performs better is the icing on the cake, not the cake.
The best for msft to deliver on its vision was to push RT and an open platform in the living room with a business model akin to Google or SteamOS.
HDMI in is a good idea though impossible to implement in a lot of place (too fragmented market), it could still have provide an edge. Kinect is not necessary to that vision to point they just release a f****g remote... Neither are 8GB necessary. To extend their reach and the reach gaming and of their OS, first they need to ship a proper OS... and then make the price attractive...

Traditional consoles model might severely challenged before the end of this gen, I don't see how it would have been forward looking for MSFT to stick to it.
More about Kinect, it seems to that it's still too costly for prime. Again they rushed and decide to includde a tech that is functional but not ready for mass production /too costly.

Plenty of bad decisions imo. Performances only seal the deal for now at least.
EDIT bad decision or poor execution, trying to do too many things at the time and not really delivering any.