Business Approach Comparison Sony PS4 and Microsoft Xbox

[Rangers]

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.

But for those of us who post on message boards it'll take forever. MS may not do anything until fall. Or at least E3?

They are falling behind very rapidly in Europe though, as those German charts show. Guess it's just a case of whether they care or not. As a practical matter they are still roughly close to 1:1 (life to date) with PS4 in the states and that's probably enough to guarantee third party support by itself.

I guess that's the question, will MS react now or a few months later? Is the situation tenable or tending to catastrophic?

 

[mosen]

But for those of us who post on message boards it'll take forever. MS may not do anything until fall. Or at least E3?

They are falling behind very rapidly in Europe though, as those German charts show. Guess it's just a case of whether they care or not. As a practical matter they are still roughly close to 1:1 (life to date) with PS4 in the states and that's probably enough to guarantee third party support by itself.

I guess that's the question, will MS react now or a few months later? Is the situation tenable or tending to catastrophic?

If you mean price cut, then I think there is 3 opportunity for them to chose:

1. X1 lunch on tier 2 countries.
2. Around E3.
3. X1 lunch at tier 3 countries sometime in October (according to ntkrnl china would be in their tier 3 countries list).

But there is a good chance to see some unofficial form of price cuts on various markets before a real price cut. They will hold official 500$ price tag as long as they can (knowingly), but lunching in china needs lowest price (as low as they can) for most impact.

 

[wco81]

Sony needs the PS4 to succeed more than MS does the X1.

Well MS hoped X1 would be the next big thing, the home run product after mobile to solve the living room.

But doubtful it was counting on it.

 

[liolio]

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've no love affair with Sony, MSFT or Google, I bet on the later to turn into the dominant force even though I like less and less their practices on Android, forcing one hand to use their services everytime they have the chance, etc.
Now I think that the XB1 is losing momemtum fast, the value proposal outside US is clearly lower, it was already true with the 360 it is just truer, it is expensive, it is less powerful.
You think they are going to do great, well I've no issue with that, I think they will have lower their price, now they won't do it tomorrow, they do it as late as possible , it is a business they are here to make money as every body else.
Now bringing the PS3 into the conversation is a bit misplaced, not only the situation is different but it sounds somehow personal, I don't base my argument whether I like a brand or not and whether I'm right or wrong is irrelevant to that matter of fact, what people did last gen while discussing the console market is also irrelvant to the topic at hand.
By the way just so you know I had quite a few fights against Sony FB claiming that MSFT was the impersonation of evil, that the ps3 was twice as powerful and more, etc, etc. Ultimately I was right the 360 pulled ahead in perf for a long while, I'm still convinced that the design error msft made cost them deerly, without the rrod its cost and the impact on mind share, as well as slowing down the path of the price cut. It is their mistake though but if it did not happen I think MSFT would have won instead of pulling a draw. I was wrong on that one, Sony did a lot better than I expected earlier last gen.
That was my personal bet and I discussed and defended my opinon on the matter. Thing is some people value their opinion too much. I'm fine being wrong, I'm fine disagreeing completely with somebody though I also like fair conversation bringing "what people did last blabla" is not fair what does it have to do with me and my post, I'm not Tyler Durden with an army of other Tyler Durden speaking for me, I'm just me.
Anyway I was a quite too naive and expected people on the net to be less partial, since then I only post here because people have real conversations.

To the point I've been holding my tongue ever since the price was known because pre-release even here can be "tense", it is easier to speak now, let see if the trend materialize or if it is just a hi-cup.

 

[liolio]

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).

They don't, the long term plan has been thrown out of the Windows (pun intended) and it involved always on, always online, more stuff done from the cloud, etc. At least it has been delayed sine die.

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 realized that their plan was not to work they have to react, it might not turn into the disaster some want it to be, but their close to 0% that the product will live up to its original profitability plan.
No matter how you look at it, for investors or the people that managed the project, the product will perform below their expectations.
They are doing money now by the way, so far so good.

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.

I do hope they know and is still irrelevant to the point, for now it seems that the major selling points of system may not found their audience as well as expected.

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.

I've been harsh enough with Sony already, I'm surprised K .Hirai managed to turn things around this well for the playstation business. I had few hope, but what you would expect I'm inclined to be pessimistic.
I still think that Sony aimed a tad too high with the hardware, and that matching the XB1 8GB was a mistake, they wanted to leave no PR win to MSFT. May be it is working, I value selling price here as promise for success than most people here, I think the prime reason for Sony is price, then XB1 was not ready for prime (the late change in plan explains that) then there is performance.
I think Sony should have aim lower and at lower price too:
-Price rules (that my biais I could be wrong)
-say the market changes or shrink or there is more competition, having a low price sure will help.
-the path toward price reduction is not as clear this gen as it was before, 20nm is late and late again but worse, moving to finer lithography no longer save as money as it used to, jumping cost deerly and it takes time to recoup the investment.
-If Msft decides to subzidies its xb1 business (say they have no choice), it is not a good business practice but they have deep pockets, can Sony react? Looking at their financial I would think no or not much.

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.

Patient for what? that is not fun you don't place bets when you already have the result.
By the way I make no long term bet, my bet now is that the system is too expensive they will need to shave more money than they would have wanted, earlier than they would have wanted, that is all.

No gloom and doom, it is a long race, but actually I did not expect such a start, I expected the ps4, foremost because of its lowest price, to pull ahead significantly in Europe and elsewhere, but the ps4 extend of the ps4 success in US surprised me (we all agree that we have for now only a couple of months worth of data and anecdotal evidence, still).

 

[zed]

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.

perhaps at the very begin (when 360 had a year headstart), but no never will of been > 5:1, prolly not even > 4:1

 

[Deleted member 11852]

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.

Microsoft make billions and billions but their long-term outlook is less than stellar so the board and investors want to see decisive correction action. Microsoft's tradition cash cows - Windows, Office, enterprise - are not growing, they are declining. Even Microsoft's biggest supporters are calling Windows 8 a "disaster", and if Windows long-term outlook is bad, that's not great for ancillaries like Office, nor it's enterprise offerings, nor are they setting the mobile space on fire; Microsoft are insignificant there and lack momentum.

The company aren't in any immediate trouble, they have cash reserves aplenty and businesses are still bringing in a lot of money but it's stagnant. Companies (and investors) want growing businesses, or at least stable, not declining business. I gather Azure is doing good, though.

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.

You can find investor dissent, mostly originating from Third Point and Daniel Loeb, asking Sony to consider spinning off SCE (the entertainment division where PlayStation lives) going back quite a few years. That kind of petered out last year tho where PlayStation received nothing but good press (thanks mostly to Microsoft).

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.

Both Sony and Microsoft released their consoles early, this is evident from the state of the experience on both. A year, almost to the day, Sony announced "immediacy" as being their focus for PlayStation 4 and that it would have suspend/sleep/resume operation like smartphones/tablets. A year after they announced PlayStation 4 and three months after launch, there's still no sign of it. Sony launched waaaaaay early. However I think Sony suspected, or knew, that Microsoft were further behind and thought they'd swing an early launch and start strong, just like Microsoft did with 360.

Now folks want to know Microsoft have a Plan B for lower (or outright poor) worldwide sales.

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.

Because in unscientific terms, they are losing the minds and hearts of gamers. The 360 was a sensational gaming device and the Xbox One misses the mark for so much, but particularly multiplayer and party functionality. Everybody knew it was the weaker device on paper, now it's proving to be the much weaker device in actual games and it's been mired in nothing but negative press for the last 9 months (their reveal was last May). Every game release, which is something to celebrate (new games!!!) is generally shadowed but the game being better on PlayStation 4. What is lacking, is a visible light at the end of the tunnel.

Part of having a strategy means sticking with it, even when it's long term benefits aren't immediately apparent.

Strategies also have to adapt to the unexpected. If you have a great long-term strategy and it's rolling out as expected, you keep with it but Microsoft's plan faltered before it got out of the gate when the initial ownership/DRM policies met with such a backlash.

Things clearly aren't going according to Plan A. And again, as I said above, folks want to know Microsoft have a Plan B.

 

[mosen]

They don't, the long term plan has been thrown out of the Windows (pun intended) and it involved always on, always online, more stuff done from the cloud, etc. At least it has been delayed sine die.

They realized that their plan was not to work they have to react, it might not turn into the disaster some want it to be, but their close to 0% that the product will live up to its original profitability plan.
No matter how you look at it, for investors or the people that managed the project, the product will perform below their expectations.
They are doing money now by the way, so far so good.

Always online was their fast and straight transition method to reach their visions like digital market, games, license and services on X1. I think they have only changed their transition method, not their goal.

I do hope they know and is still irrelevant to the point, for now it seems that the major selling points of system may not found their audience as well as expected.

I'm agree with you but those things aren't irrelevant to the point. they need to know and use those things to make their product more plausible.

Patient for what? that is not fun you don't place bets when you already have the result.
By the way I make no long term bet, my bet now is that the system is too expensive they will need to shave more money than they would have wanted, earlier than they would have wanted, that is all.

No gloom and doom, it is a long race, but actually I did not expect such a start, I expected the ps4, foremost because of its lowest price, to pull ahead significantly in Europe and elsewhere, but the ps4 extend of the ps4 success in US surprised me (we all agree that we have for now only a couple of months worth of data and anecdotal evidence, still).

Patient for what you already said, more meaningful results and reactions. I was expecting better result for PS4 right after E3 2013 in every territory. Pricing is a very important factor. PS brand was always ahead of Xbox in Europe and Asia even with higher entry price (except UK). Xbox One sold very well in it's first 2 months in US but their 3rd month result wasn't acceptable. Also I think US was PS2's biggest market as well.

 

[Deleted member 11852]

Patient for what you already said, more meaningful results and reactions.

Titanfall launches next month and will certainly create some positive buzz for the system, without any risk of the PS4 version being better. It would have helped if it wasn't also launching on 360 giving 360 owners less of an incentive to trade up so that's something to look forward too.

Also I think US was PS2's biggest market as well.

Second, PAL was largest, although it's seems like an odd include EMEA territories into what Sony traditionally reported only as Europe, but then France were SECAM not PAL so it probably balances out

 

[Rangers]

Titanfall launches next month and will certainly create some positive buzz for the system, without any risk of the PS4 version being better. It would have helped if it wasn't also launching on 360 giving 360 owners less of an incentive to trade up so that's something to look forward too.


Second, PAL was largest, although it's seems like an odd include EMEA territories into what Sony traditionally reported only as Europe, but then France were SECAM not PAL so it probably balances out

51 million vs 50 million though according to your link, shockingly little difference. I wonder where they put Latin America? Is that a "PAL region"? PS2 probably shifted a few down there.

Now I'd love to see a regional breakdown for PS3, too bad Sony stopped breaking out consoles separately! Anyways EU would be way ahead for PS3.

 

[Deleted member 11852]

From the Wikipedia article.

 

[Nesh]

Sony needs the PS4 to succeed more than MS does the X1.

Well MS hoped X1 would be the next big thing, the home run product after mobile to solve the living room.

But doubtful it was counting on it.

The only way to achieve this is to make the box itself a convenient, affordable TRUE ALL IN ONE device. But XB1 is not that, contrary to MS's marketing communication.
Its chunky to resemble a set top box player, ignoring that it doesnt get rid the necessity of other devices and hence it should have required less space, its expensive and does not provide alternative options, its applications are still undeveloped and not diversified enough unlike tablets and smartphones, not to mention the expanding popularity of cheaper XBMC devices that provide more content,etc

 

[blakjedi]

Microsoft make billions and billions but their long-term outlook is less than stellar so the board and investors want to see decisive correction action. Microsoft's tradition cash cows - Windows, Office, enterprise - are not growing, they are declining. Even Microsoft's biggest supporters are calling Windows 8 a "disaster", and if Windows long-term outlook is bad, that's not great for ancillaries like Office, nor it's enterprise offerings, nor are they setting the mobile space on fire; Microsoft are insignificant there and lack momentum.

The company aren't in any immediate trouble, they have cash reserves aplenty and businesses are still bringing in a lot of money but it's stagnant. Companies (and investors) want growing businesses, or at least stable, not declining business. I gather Azure is doing good, though.



You can find investor dissent, mostly originating from Third Point and Daniel Loeb, asking Sony to consider spinning off SCE (the entertainment division where PlayStation lives) going back quite a few years. That kind of petered out last year tho where PlayStation received nothing but good press (thanks mostly to Microsoft).


Both Sony and Microsoft released their consoles early, this is evident from the state of the experience on both. A year, almost to the day, Sony announced "immediacy" as being their focus for PlayStation 4 and that it would have suspend/sleep/resume operation like smartphones/tablets. A year after they announced PlayStation 4 and three months after launch, there's still no sign of it. Sony launched waaaaaay early. However I think Sony suspected, or knew, that Microsoft were further behind and thought they'd swing an early launch and start strong, just like Microsoft did with 360.

Now folks want to know Microsoft have a Plan B for lower (or outright poor) worldwide sales.


Because in unscientific terms, they are losing the minds and hearts of gamers. The 360 was a sensational gaming device and the Xbox One misses the mark for so much, but particularly multiplayer and party functionality. Everybody knew it was the weaker device on paper, now it's proving to be the much weaker device in actual games and it's been mired in nothing but negative press for the last 9 months (their reveal was last May). Every game release, which is something to celebrate (new games!!!) is generally shadowed but the game being better on PlayStation 4. What is lacking, is a visible light at the end of the tunnel.


Strategies also have to adapt to the unexpected. If you have a great long-term strategy and it's rolling out as expected, you keep with it but Microsoft's plan faltered before it got out of the gate when the initial ownership/DRM policies met with such a backlash.

Things clearly aren't going according to Plan A. And again, as I said above, folks want to know Microsoft have a Plan B.

Every single one of MS' business units except windows is growing. That includes mobile, , internet explorer, office/office 365 and even the devices unit. Azure is exploding and even Bing is gaining traction backend wise as it powers not only Ms device search but Siri, yahoo and Facebook search. Microsoft is posting yearly and quarterly records profits and has sold more than 200 million Windows 8 licenses in 16 months. This is retail and OEM licenses, not enterprise volume licenses or Windows 7 licenses. 8 being a disaster is technorati meme because it sold less quickly than 7 which at the same period in its life sold 240 million copies. The technorati are typically are apple MacBook users with android phones and for the life of them cannot understand why any else is still in the MS ecosystem.

 

[Deleted member 11852]

Every single one of MS' business units except windows is growing. That includes mobile, , internet explorer, office/office 365 and even the devices unit. Azure is exploding and even Bing is gaining traction backend wise as it powers not only Ms device search but Siri, yahoo and Facebook search.

So all of Microsoft's very small businesses are doing ok? Because I wouldn't call Bing, mobile or IE (I don't know how they monetise that?) doing well. Microsoft's cash cow, where produces more than 50% of their overall profits, comes from Windows and Windows licensing. And it it's being widely reported their cutting licensing fees by 70%.

Like I said, they aren't in immediate trouble, not even in the next five years, but they've got nothing with the prospects to replace the cash cow that is Windows. I am curious to see your sources for your claims in growth on Office/Office 365 though?

Oh and by the way, the searches that Siri in my iPhone and iPad falls back to the web for are served by Google, not Bing.

 

[blakjedi]

So all of Microsoft's very small businesses are doing ok? Because I wouldn't call Bing, mobile or IE (I don't know how they monetise that?) doing well. Microsoft's cash cow, where produces more than 50% of their overall profits, comes from Windows and Windows licensing. And it it's being widely reported their cutting licensing fees by 70%.

Like I said, they aren't in immediate trouble, not even in the next five years, but they've got nothing with the prospects to replace the cash cow that is Windows. I am curious to see your sources for your claims in growth on Office/Office 365 though?

Oh and by the way, the searches that Siri in my iPhone and iPad falls back to the web for are served by Google, not Bing.

Office365 by itself became a billion dollar business unit within 12 months of release. Your browser search on your iPhone is powered by google but a Siri search is powered by and through Bing. Windows is not 50% of MS profit base; it accounts for less than a third and actually closer to 25% of their profits. Office and server are larger profit centers. The same time office 365 became a billion dollar lob azure did too.

 

[Deleted member 11852]

Office365 by itself became a billion dollar business unit within 12 months of release.

I recall Microsoft saying last April that Office 365 was on the way to being a billion dollar revenue business, but I've seen no hard facts on actual profit, not where they came from (i.e., erosion from tradition Office).

Your browser search on your iPhone is powered by google but a Siri search is powered by and through Bing.

Checked and you're correct. A quick google shows this changed with iOS 7.

Windows is not 50% of MS profit base; it accounts for less than a third and actually closer to 25% of their profits. Office and server are larger profit centers. The same time office 365 became a billion dollar lob azure did too.

Can you point me to data which shows this? I've tried to browse Microsoft's financial statements but the hideous interactive metro-interface makes it unbelievably tedious. Office and Server ancillary businesses to Windows. Less Windows, less demand for both. Office 365 will run on anything but if equally so will alternatives. Ditto Windows Server and Exchange Server, which are very geared to support Windows clients, although.

Remember that Windows licenses are split in reporting, some go through Windows Division, others go through Microsoft Business Division. I'm assuming consumer and non-consumer options.

 

[blakjedi]

http://www.zdnet.com/microsofts-16-billion-dollar-businesses-an-updated-list-7000019346/

Earlier this year, Microsoft added Windows Azure and Office 365 to its billion-dollar roster.

So what's the full list look like now? Here what I believe to be on it, in no particular order:
•Windows (which also, up until now, included Surface, which contributed $853 million to the total in fiscal 2013)
•Windows Server
•Windows Azure
•Office (client)
•Xbox
•SQL Server
•System Center (client and server both, so includes Windows Intune)
•SharePoint
•Visual Studio
•Dynamics (CRM and ERP)
•Online Advertising (search and display both)
•Office 365
•Client-access license (CAL) suites (formerly known as desktop access)
•Enterprise Services (including consulting)
•Enterprise communication business (Exchange plus Lync)


http://www.microsoft.com/investor/EarningsAndFinancials/Financials/FY13/Q4/SegmentRevenues.aspx

You can do breakdowns inside that site.

 

[mosen]

Titanfall launches next month and will certainly create some positive buzz for the system, without any risk of the PS4 version being better. It would have helped if it wasn't also launching on 360 giving 360 owners less of an incentive to trade up so that's something to look forward too.


Second, PAL was largest, although it's seems like an odd include EMEA territories into what Sony traditionally reported only as Europe, but then France were SECAM not PAL so it probably balances out

http://vgsales.wikia.com/wiki/PlayStation_2

 

[Deleted member 11852]

http://www.zdnet.com/microsofts-16-billion-dollar-businesses-an-updated-list-7000019346/

Ok ZDNET. Well that's where I got my initial breakdown that you disputed, including the breakdown on where profit comes from:

http://www.microsoft.com/investor/EarningsAndFinancials/Financials/FY13/Q4/SegmentRevenues.aspx

You can do breakdowns inside that site.

You can't drill down into the level of detail to discern which products produce what profit. Like I said in my past post, Windows licensing gets reported under two divisions - Windows and Business (we know because Microsoft said explained this on earnings calls) - but the annual statements don't show it.

 

[blakjedi]

Ok ZDNET. Well that's where I got my initial breakdown that you disputed, including the breakdown on where profit comes from:

You can't drill down into the level of detail to discern which products produce what profit. Like I said in my past post, Windows licensing gets reported under two divisions - Windows and Business (we know because Microsoft said explained this on earnings calls) - but the annual statements don't show it.

Ok. Maybe I misunderstood what you asked for. Different companies breakout in different ways. Essentially whatever is your strength you break out so apple always breaks out iPhone revenue for example. Amazon doesn't breakout S3 revenue etc. You do have to do some stitching of product to corporate division to segment. It really depends on your level of interest. A lot of times analyst reports will do the heavy lifting although I wouldn't trust their financial guidance 100%

http://arstechnica.com/information-...d-microsoft-posts-record-revenue-for-q2-2014/