Business Approach Comparison Sony PS4 and Microsoft Xbox

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.
The tech looks pretty awesome and is for now unmatched.
But I don't think the tech was ready for mass production, I think it is still too costly.
May be with one extra year of work they could have released it at 99$ making a sane profit, and bundle it without impacting the retail price of the system that much.
 
Honestly I don't believe that it is the graphic superiority that hurts the XB1 the most, no matter the noise on the web.

I tend to agree with this, but on the other hand, I wouldn't downplay the graphic superiority (or better, lacking parity) either.

If we go back to 2006 and analyze X360 and PS3, I think some of the success of the X360 can be attributed to mistakes Sony made. PS3 launched very late, very expensive. At the same time though, many believed that the PS3 would be technically better/stronger and after the success of the PS2, a lot of existing consumers gave Sony the benefit of doubt. What probably also helped the PS3 was its included Bluray drive in a time when HD / HDready were the next big thing, not to mention online multiplayer for free. X360 shipped without Bluray and without HDMI initially and MP behind a Live subscription. In the end, I think for many the high price of the PS3 was "justified", even if history tought us that the two consoles were quite close - X360 being generally stronger in multiplatform games, but PS3 offering some very nice graphics thanks to strong 1st parties. Also, IMO, despite the mistakes Sony made, the PlayStation brand can still be attributed as very strong which I think results in that we effectively have parity with the X360 and PS3 neck at neck in worldwide sales.

Now fast forward to today and we have the Xbox One that is

- more expensive
- technically in practically all multiplatform games so far
- there's view that the One is very NA focused (the TV stuff) and offers some features at the expense of gaming features

Perhaps Microsoft overestimated their brandname and success with the X360 into thinking they could do the same as Sony, yet launch at the same time. If X360 had launched earlier, it may have came very differently - or later, with a significantly better speced (and focused) machine. This is the first time in history that both Microsoft and Sony have launched at the same time and in this situation, I think consumers (especially given both consoles are not backwards compatible) will be more critical which console they buy.
 
Honestly I don't believe that it is the graphic superiority that hurts the XB1 the most, no matter the noise on the web.

If the XB1 had loads of good things to counter the power issue it wouldn't be so bad. But now it's another stone it has to carry. I just don't think we can underestimate how it's perceived to buy a less powerful device vs it's competition.
 
At launch and for some time after Dreamcast was by far the most powerful 3D graphics device in console land, in PC land (including in $1000+ SLI rigs), or in the arcades where it actually doubled as the most powerful arcade chipset ever (and this was at a time where $5000+ arcade machines were commonplace).

Xbox One? ..... not so much.

Dreamcast: $200.
Xbox One: $500

Even adjusting for inflation that's a hell of a gap.
 
At launch and for some time after Dreamcast was by far the most powerful 3D graphics device in console land, in PC land (including in $1000+ SLI rigs), or in the arcades where it actually doubled as the most powerful arcade chipset ever (and this was at a time where $5000+ arcade machines were commonplace).

Xbox One? ..... not so much.

Dreamcast: $200.
Xbox One: $500

Even adjusting for inflation that's a hell of a gap.


The only console I ever bought at launch. VGA adapter, Soul Caliber, Sonic Adv, Power Stone. It was probably my age but at the time but nothing blew my mind graphically more than Soul Caliber. The texture fidelity/animation were beyond anything I had seen at the time.
 
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???

Yup. One could sell fine at $500 IF it had the muscle to back it up. Say a minimum of 2.4 teraflops, even up to 3.0. Then people would intuitively know it was the best machine, and future proof. Instead of a compromises machine even when compared to a cheaper competitor.

There's such a rub off effect from that. It's hard to overstate it's importance.
 
I tend to agree with this, but on the other hand, I wouldn't downplay the graphic superiority (or better, lacking parity) either.
I don't downplay it but I consider it relatively to the price and what the system offers.
If we go back to 2006 and analyze X360 and PS3, I think some of the success of the X360 can be attributed to mistakes Sony made. PS3 launched very late, very expensive. At the same time though, many believed that the PS3 would be technically better/stronger and after the success of the PS2, a lot of existing consumers gave Sony the benefit of doubt. What probably also helped the PS3 was its included Bluray drive in a time when HD / HDready were the next big thing, not to mention online multiplayer for free. X360 shipped without Bluray and without HDMI initially and MP behind a Live subscription. In the end, I think for many the high price of the PS3 was "justified", even if history tought us that the two consoles were quite close - X360 being generally stronger in multiplatform games, but PS3 offering some very nice graphics thanks to strong 1st parties. Also, IMO, despite the mistakes Sony made, the PlayStation brand can still be attributed as very strong which I think results in that we effectively have parity with the X360 and PS3 neck at neck in worldwide sales.
The playstation is quite strong but Sony also did somethings right, like free online and pushing AAA ovni type of games which are creating a nice halo around the brand.
I still wonder about the lasting impact of the paywall set on online gaming be it for Sony or MSFT whatever their respective successes are.
Now fast forward to today and we have the Xbox One that is

- more expensive
- technically in practically all multiplatform games so far
- there's view that the One is very NA focused (the TV stuff) and offers some features at the expense of gaming features
I agree, it is a severe issue and not one with an easy turn around, I think lots of people do not see the value in MSFT proposal. MSFT can lower the system price, but it is not easily sold to investors.
Perhaps Microsoft overestimated their brandname and success with the X360 into thinking they could do the same as Sony, yet launch at the same time. If X360 had launched earlier, it may have came very differently - or later, with a significantly better speced (and focused) machine. This is the first time in history that both Microsoft and Sony have launched at the same time and in this situation, I think consumers (especially given both consoles are not backwards compatible) will be more critical which console they buy.
I think the project got completely out of hand, too many goals, what did they want?
Impose Kinect and mimic the Wii success among casual?
Intercept the TV the TV so the Xbox is always on?
Having a system that runs the same apps as their mobile platform helping in return with the adoption of the aforementioned OS?
Obvious grow their share of the console markets and actually extend the reach of console in the demographic?

Killing 2 birds with one stone is quite a miracle already...

Somebody did not set the priorities for the project properly. If you have too many priorities it means that you have none or did not chose them well.

Looking at MSFT, the money they invest in mobile OS, I would think that one would for example blend the last two priorities. There are Set top box, their target is bigger than the console though they have a tough time gaining adoption, that market needs a spark.
To extend the market there is also indeed casuals, what are casual playing? Wii games? Kinect or move games? Mostly not they play mini games, social games, etc. Where are those available? Browser or Mobile OS. So back to priority number one, you want a gaming STB with an OS that has a greater reach the STB market on its own. As a side you need more open policies casuals won't pay a fee only to be able to play facebook games and you need to allow for cross platform gameplay.
To extend their reach they could also aim at kids, kids love the wii but also plenty of mobile and social games. Parents like to buy cheap toys for their kids, and cheap if not free games are great fro them.
As a side note, why 8GB of RAM?

Now intercepting the TV. Well that one is easy. it sounds like a good idea but it is not. One want to grow its market shares and actually extend the market, is intercepting TV doable in plenty of different territories? Simple answer.... a GIGANTIC NO :LOL:
It can be nice but it is a corner case...

Moving to Kinect. Kinect provides neat functionality though it still costs deerly it seems. Pretty much it may target are casuals, kids, etc. Do they like to spend big time for occasional entertainment? Another big NO.
Kinect should never have been a priority till the price of tech is affordable enough.

Then you have securing your core market and possibly growing it. It conflicts with priority number 1 which should have been presenting a gaming enable STB to the masses, leveraging gaming and the xbox brand and a positive feedback on MSFT (costly...) mobile operations. To achieve priority one you need a lower price, which mean conservative specs (more so than the XB1), that hurt your core market. That is the hardest part.

That is why I thought an open (no too the point of SteamOS or Android) platform was the way to go as cores would have buy an higher end rendition of the STB.
The big issue here is that there are not enough compelling parts (/SoC) if at all. Looking at Nvidia's plans as well as AMD's one there should be compelling SoC to fit the low end in the upcomgin years but for now.
For higher end, the highest performing SoC are not enough, even backed with GDDR5 Kaveri would fall short. Big issue in means pretty much like for Steam machine rely on discrete CPU and GPU, which costs more than custom solutions., consume more power, extremely diverse environment, etc.

Having to support both ARm and X86 presents a huge challenge, you could have games that runs on both most likely you will incur a perf penalty on both. I also means using both RT and vanilla windows 8 in some form.
Quite a headache, and extremely risky from a business pov the low end version would not have been ready for launch depending on the success of the higher end versions they may never have proven attractive to IHV, etc. That path presents many many issues.

At this point in time I think that it was impossible to conciliate those 2 objectives in any elegant and workable manner.
The low approach would have promise BC, and performances refresh in the future, the traditional approach meant that MSFT has to give up on some of the prioritary goals.

I tend to favor low end approach on average but it would have been a really tough sell, BC could have eased the deal a tad but it was not possible. The tech to support support the open platform model is not here yet and it has to be ARM there are too few actors in the X86 realm.

MSFT guys might have gotten there and faster then me... they vouched for the traditional console but at the same they gave up on none of their priorities and it shows: multiple OS through a virtual machine so at some point the system can run any mobile apps. We don't know if the virtual machine are portable, I would bet it is not the dedicated hardware might prevent them doing so /etc /durango as we know it.

It might have been a nightmare at MSFT headquarter. Though they have to be well aware about where the market is heading, the ARM based open platform type of approach is to be available within years to their real competitors (Google and Apple). Was waiting an option? I don't think so neither they did it seems. Did they prepare so their products will be flexible enough to cover all basis? No.


So? Well I was wrong I realize as I write this that the open platform model was not ready for prime. They should have prepared for it. How? Software, their forte.
They bind them-selves to X86 and that is big mistake. Develop plenty of specialized hardware? That was a mistake, it is not portable.
Even if no other hardware would have been available for may 1 or 2 years, the platform needed to be opened, an OS and the matching API, one with lower CPU performance overhead.
They could have done them-selves a favor and make the API available on both Windows RT/xbox and vanilla Windows, so an already open platform can more success try to make it into the living room too. That would also mean having their exclusive available on both PC and Xbox environment. Potent GPU with sane performance availability is only to get better, though it is not that true when it comes to the CPU. Intel can get there, AMD can't. Including in the vanilla Windows realm MSFT has to make so there is healthy competition.

So yes a lower end system running windows RT and a cross-platform API. It is risky but launching a less potent system which environment still need to be refined at pretty high price is every bit as much.
Enabling lower power X86 to run games may have allowed MSFT to promote Steam OS like type of machines. They don't need to do it at the exact same time the Xbox would have been released.

It would have been a great announcement imo. A unified API between Xbox and PC. Both environments are open, forward compatible, they runs the same metro apps.
No more shrink or being stuck on the wrong side of the technological evolution, when compliant solutions appear MSFT would have "simply" validate them.
MSFT could have stopped hindering PC gaming, if they wanted to hurt Steam they could have released Xbox exclusives only through the windows store.

MSFT could have bet both on ARM and X86, they let RT as an orphan and doubled down on the X86.
They have an issue they have to relearn who they are, what they do well.
Somebody on this board once said that the though that MSFT was an universally hated company thanks to its monopolistic back ground, etc. Their OS was buggy, etc.
Their image is not pristine, but they are doing lots of things right, even though not always from their own will, they usually provide excellent costumer support, my wife contacted them once as a free hotmail user, their service has proven awesome, it is a free service.
I worked a couples of month for an ISP, lots of people still runs XP, support is just ending, it is true with most of their product, when you buy anything MSFT you buy something that lasts (a couples of cluster fuck aside...). They don't really showcase that costumers that think it is a given but some start to complain with the subpart practices on that front in the Android realm.
Their main products (in the personal realm Windows) offers fantastic value. Costumers are clueless, it is not advertisement with people flapping a surface that will make the point...

It was a good time to accelerate the convergence between ARM and X86, the living room leveraging gaming was a good place to start. Focusing at gaming the message could have been quite powerful, the difference between console and PC gaming is defunct, Windows(s) provide gaming everywhere.
To get more the price of those windows 8 Stb more attractive, MSFt could have gave Windows to IHV and having the live subscription fee to cover for the expense of Windows. In the long run it is a good bet. As they do now giving up games or apps would not hurt adoption of the model.
For the ARM based device, they could have continued on what they did with the 360, sell the system either full price or at an heavy discount with a subscription.

I stop here, started this yesterday and finished today... it shows the post is not well structured, and indigestible already.
 
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We're 13 weeks into a ten year console generation.

It's a little early to call the end game yet, IMHO.

Cheers

MS still has live gold, which is a good way to keep over 20 million guys loyal to your console. But if PS4 continues to outsell the One 2:1 WW you get to the point where "hey if my friends have a PS4 i should buy one too", and then you a get a PS2 situation where you can't do nothing to stop it.
 
We're 13 weeks into a ten year console generation.

It's a little early to call the end game yet, IMHO.

Cheers
No end game, but they are in a sucky situation, I'm willing to bet on it ;)
Now money can cover lots of mistakes.
And imo they needed a re-org a while ago, they are too big, they need a more tyrannic management with a more global vision.
 
What's the estimated total size of the market in the next few years? 250 million consoles? 300? That would still be a lot of Ones even if PS4 outsells it 2:1, which is way too early to predict now anyway.
I don't understand all this doom and gloom for MS, and I'm a PS kind of boy.
The N64, GC and Xbox did just fine with much smaller user bases than the PS1 and PS2, in fact they were followed by extremely successful products in the following generations.
 
MS still has live gold, which is a good way to keep over 20 million guys loyal to your console. But if PS4 continues to outsell the One 2:1 WW you get to the point where "hey if my friends have a PS4 i should buy one too", and then you a get a PS2 situation where you can't do nothing to stop it.
Sorry bu those 20 millions users are not exactly jump on the systems. There are plenty of available XB1 everywhere it seems. The demand is not there at this price. It is worth harsh criticism if only after a couples of months after release they have to lose 100$ per units to get back in the game... with their fan base to begin with.

Now nobody speaks about EOLing the product.
 
We're 13 weeks into a ten year console generation.

It's a little early to call the end game yet, IMHO.
Though true, sometimes there's even evidence to jump to a probable outcome such as with Wii U. There were some suggesting the first 3/4/5/6 months of Wii U sales weren't enough to draw conclusions when they were if you combined the sales with the public attitudes towards Wii U prior to release. That same gamer apathy towards XB1 is playing out in the sales somewhat at the moment. This points to MS being unable to get a decent measure of the core gamer. Whether they can attract some other market or not is an unknown, but the deficit with PS4 performance now coupled with attitudes before the platform before release from its main launch market points strongly in favour of a prediction of a fairly weak number of sales relative to PS4.

To be clear, I'm not making a prediction. I'm only supporting the view that a decent prediction can be made. Unlike PS3's lacklustre sales which were simply a high pricepoint, I think issues affecting XB1 or more numerous and will only get worse over time. eg. Even if the low performance at launch is solved in year2+ with improved architecture understanding, 2 years underperformance in the eyes of the core gamer means they'll side heavily with PS4 and that platform will have all the momentum.

What's the estimated total size of the market in the next few years? 250 million consoles? 300? That would still be a lot of Ones even if PS4 outsells it 2:1, which is way too early to predict now anyway.
No-one knows, because no-one can tell if the console market is growing from more users or shrinking thanks to other devices.
 
MS still has live gold, which is a good way to keep over 20 million guys loyal to your console. But if PS4 continues to outsell the One 2:1 WW you get to the point where "hey if my friends have a PS4 i should buy one too", and then you a get a PS2 situation where you can't do nothing to stop it.

Last gen, the 360 had 30% of the hardware market which is 2.33:1.

During the first 3 years of the Wii selling like hotcakes, the ratio of Wiis/360s to PS3 probably reached over 5:1.

If the WiiU doesn't have a turnaround and total unit sales end up being close to last gen, 2:1 would be better than what the PS3 and the 360 achieved last gen.
 
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It seems that people really like to compare X1 situation with Gamecube/OX/Wii U or even Dreamcast. Xbox One is in far better situation compared to PS3 or original Xbox. Services, exclusives, design (without Kinect Xbox One could be sold at 350$, unlike PS3) and unlike original Xbox/Wii U it'll have all or most of 3rd party developers support.

But their situation right now isn't very suitable and they know this. Take a look at their 2013 E3 announcement and the date they changed their policy. Right know they are watching the market and reactions and will react properly in near future.
 
It seems that people really like to compare X1 situation with Gamecube/OX/Wii U or even Dreamcast. Xbox One is in far better situation compared to PS3 or original Xbox. Services, exclusives, design (without Kinect Xbox One could be sold at 350$, unlike PS3) and unlike original Xbox/Wii U it'll have all or most of 3rd party developers support.
I agree it is a bad comparison to make, every systems is different, competition is different, the times, the markets are different, the companies health and wealth, etc.
But their situation right now isn't very suitable and they know this. Take a look at their 2013 E3 announcement and the date they changed their policy. Right know they are watching the market and reactions and will react properly in near future.
Well don't take it meanly but I would hate you to be the CEO of any company, as by react accordingly you mean most likely selling at beefy loss, do exceptional rebates, offering games, more ads, etc.
That is a dreadful scenario for any business, losing money so you don't sink. Not too mention that their direct competitor could react, and that before considering the possible entry of other actors with unknown means and unknown success.

That is something MSFT can afford thanks to its deep pocket but it ain't trivial especially as investors seems to get bored of MSFT waste of money and mistakes.
MSFT has money because they make money. I'm not sure investors will react nicely to a new round of loses on a market that never delivered in ROI in the first place. The new CEO is going to be under a hell lot of pressure if the sale pattern is confirmed in the upcoming months.
 
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The new CEO is going to be under a hell lot of pressure if the sale pattern is confirmed in the upcoming months.

I'm not sure I really understand all of the arguments being made for MS or Nadella being under pressure to do something drastic after literally only a few months.

The PS3 trailed the XB360 and the Wii for the entirety of the last generational cycle in both hardware and software sales. No one was pressuring Sony to sell off the SCE division(at least not initially) , no one was demanding that the Bluray player be removed to lower costs. And most importantly no one counted the PS3 out as a competitive gaming platform.

But for some reason after just a few months people have already declared a winner, predicting platform failure and/or the removal of Kinect as a necessity.

I'm just wondering why everyone feels that the clock is running out on the X1 so soon and don't have the same patience they gave Sony last gen. If MS lowers the price of the console WITH Kinect, it becomes a greater value package than it ever would without it.

Part of having a strategy means sticking with it, even when it's long term benefits aren't immediately apparent.
 
I agree it is a bad comparison to make, every systems is different, competition is different, the times, the markets are different, the companies health and wealth, etc.

Well don't take it meanly but I would hate you to be the CEO of any company, as by react accordingly you mean most likely selling at beefy loss, do exceptional rebates, offering games, more ads, etc.
That is a dreadful scenario for any business, losing money so you don't sink. Not too mention that their direct competitor could react, and that before considering the possible entry of other actors with unknown means and unknown success.

That is something MSFT can afford thanks to its deep pocket but it ain't trivial especially as investors seems to get bored of MSFT waste of money and mistakes.
MSFT has money because they make money. I'm not sure investors will react nicely to a new round of loses on a market that never delivered in ROI in the first place. The new CEO is going to be under a hell lot of pressure if the sale pattern is confirmed in the upcoming months.

They should have a long term strategic plan for X1 (Xbox division as a whole) and every strategic plan needs to be up to date. Now they are collecting consumer responses, their rivals plan/operation and other factors (like other changes/trends in the market) and of course their original plan. At the end, they'll make short term decision about what to do next (in short period of time).

If they think by spending more money (or reducing Xbox division profit margin by applying price cut on hardware, gift cards, more exclusive games, cheaper digital games, ...) in a short period of time, their product will make profit at a long term of time, then they'll utilize this methods. They secured Titanfall for X1, changed X1 policy, added Headset to the box before the lunch and they will do other things to remain competitive.

They know X1 Hardware/Software and it's potential better than any other insider or developer, and they have good tools & manpower & budget to show it to the market before 3rd party developers can (Ryse and Forza 5 where their first massages to the market and the next massage will be Titanfall). They know when their new tools & SDK will be ready for developers to use (I heard many reports which indicate that their SW was 6 months behind the plan) and its impact on multiplatform games. They know their plan for tire 2, 3 markets and china. They know when X1 would be accessible as a devkit, or when it's media functionality would be perfect. They know X1's next revision plan and many other things ... . So they'll prepare new plans for coming months.

You can say everything that I said about Sony as well. They had/have their own strategic plan and their own powers and weakness. For example their wider lunch territory, lower price at lunch or better Multiplatform games (better SDK & tools at lunch alongside better HW) ... or this fact that Sony, as a whole company, isn't at a good situation right now. So maybe they can't be so competitive on their pricing in coming months.

And there is a big difference between being most successful, successful or being a loser. So let's be patient, at least for a while.
 
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