Business Approach Comparison Sony PS4 and Microsoft Xbox

[ramr]

We will see a new xbox in 2016 or ms leaving the market.

MS should release a new console as soon as they can stack 16 GB of HBM on a 5 TF GPU @$499. So, basically next year. Since everything is a VM forward compatibility shouldn't be an issue.

 

[Blazkowicz]

Kinect is a bit like the videophone. You have to be dressed up, clean, shaved, hair nicely put AND on top of that you need to clean the room thoroughly, change or move your furniture and rethink the decoration maybe.

People not all want to look at themselves and their run down shack constantly , nor broadcast it to other people or the world.

 

[AzBat]

Interesting interview with Yusuf Mehdi at Forbes...

http://www.forbes.com/sites/insertc...i-explains-the-xbox-ones-split-with-kinect-2/

Forbes: Can you say how long this unbundling announcement has been in the works?

Mehdi: Over the last couple months we’ve been having discussions about how we can continue to iterate on the program.

Does it have anything specifically to do with the recent change in leadership with Phil Spencer taking over?

Not really, for years now we’ve been trying to be very customer focused, looking to our fans and taking their feedback. You can track all the way back to E3, where after we got out we had a lot of good feedback about how you can play games, used games, and online connectivity. We’ve been very responsive, and this is consistent with that approach.

You do seem a lot more responsive to fan feedback than most. In doing that, how do you balance your own vision for the Xbox One with what fans want, which has proven to be quite different at times? Where do you draw the line?

Yeah, that’s a tough call. I think in general we prioritize listening to our customers and being fan-driven. I think that’s really the key. But look, a lot of times when you’re trying to pioneer a new system or new technology, it’s harder. You have to take some risks, outline your vision for the future and share it with customers. Hopefully when you do, they see [your vision]. The good thing about our fans is that they know their stuff, the games, the system, and they’re good guides as to how to take the system forward.

So now that Kinect is optional and there’s a $399 price point, there are a lot of comparisons to PS4. What do you view as your main differentiator now if someone’s buying a standalone Xbox One system compared to PS4? The consoles are starting to seem pretty similar these days, especially in the wake of this announcement.

I think there are four main areas in terms of how ours system is differentiated. First is that the reason people buy these consoles is to play games. We’ve got the best games line-up. We had the best games line-up this past holiday if you talk to most experts in the games industry. As we go into E3, you’re going to see an incredible games line-up. Knock on wood, I believe we’re going to have a great games line-up for this coming holiday as well.

Second thing is people buy games to play with their friends. We have had the best multiplayer gaming system in this space for many years with Xbox Live Gold. We’ve really set the standard. You get better matchmaking capability with SmartMatch, you get better protection against people who cheat. Xbox Live Gold is the best place to come play with your friends.

Third is the original vision we had for Xbox One, which is an all-in-one entertainment device, and it still is, even with the $399 SKU. You still get Xbox One as an input one device where you can still watch live TV, do two things at once, input switch. A lot of the things you do with entertainment you just can’t even do on other systems. We’re really built for the future.

And finally you can still add on Kinect to create all these additional experiences with voice commands, biometric recognition, recording gameplay and more.

Those four things make it very differentiated, and now that the price points are the same, and people looking at games and entertainment experiences are future-proofing, I feel that we have a very differentiated system.

Both the PS4 and Xbox One have sold very well, but there’s been a bit of a sales gap. Do you view that it’s mostly due to the cost, and now that the price is lower on the unbundled Xbox One, you’ll gain a bit of ground on Sony?

It’s hard to really assess the gap in sales. They’re in many more markets right now than we are. They’re in 40+ markets, we’re in 13. People have been more satisfied with the Xbox 360 than the PS3, so in that respect people have less of a need to upgrade in the short term due to regular updates for the Xbox 360. We could point to any number of things. That said, we’ve heard from a lot of our Xbox fans who say, “Hey look, I want an Xbox One, but at $499, I probably have to wait a little while before I can afford to get one.” I do think we’re going to get people now who move over, and then buy the Kinect later. So I do think the [price point] broadens the appeal and hopefully brings more people to Xbox One sooner.

In the wake of this, now that the price has been lowered and you’ve said people are waiting to buy it, do you think that at launch it was a mistake to bundle the Xbox One with the Kinect at a higher price?

No, I think it was the right call to bundle with Kinect. In the beginning of a new console generation, you’re trying to set the bar for a new experience, and I think we did that with Xbox One. The proof is really in the usage. 80% of people are using Kinect which is remarkable compared to the last generation. We’re doing 120 voice commands on average a month with over a billion commands issued. People who wanted the experience came and bought it. We were sold out all through the holidays. I think it was the right call, and now is a good time to offer more choice for people who haven’t been able to get that experience.

What do you see as the future of Kinect here going forward? Do you think that it’s lived up to its potential or struggled in some ways?

The way I look at it is that you should take a five year vision. I think in five years, we will laugh at any computing device you can’t walk up to and talk to. Voice is going to be there for all devices. We’re a pioneer with Kinect in the living room. And it’s not just voice, and it’s voice and biometric ID. The ability to pioneer that, and with the success we’ve had so far with five million people, it’s remarkable. We feel great about it. And look, we’re going to learn a lot, and our partners are going to learn a lot, and our customers are going to learn a lot, and we’re going to continue to shape it. But I think we’re breaking a lot of new ground and we’re delighted with the progress.

Do you worry that now that the Kinect is optional, there may be less developer support for it as they make games going forward?

One thing I should say is that we made this decision in conjunction with our games publishers and our entertainment partners. As you can imagine, we have really strong relationships. The two of us looked at the problem the same way. We love Kinect, we love the way it’s going and the possibilities. At the same time, we also wanted to have a broadened base of users. Some games are fully Kinect-based, and some are better when you use Kinect, but can also work fine without it. In each of those cases, this is still the right call.

A price cut for the Xbox One was rumored for a while and everyone was wondering how you’d do it. When you were devising ways knock the price down, was removing Kinect the only thing on the table, or were there other options considered?

The way we think about this is that the ability to offer more choice as to how you package these bundles is a no-brainer. This way we’re allowing more people to come and try it, and based on the feedback we’d gotten, that made sense. Certainly, it’s part of the general marketing of Xbox One. We’ve had promotional offers with games included with Xbox One. If you look back to Xbox 360, we’ve done temporary price reductions. We’re going to be doing those throughout the lifecycle of the console. The way I think about this is that you’re repackaging to allow you to have a better opening price.

Tommy McClain

 

[3dilettante]

MS should release a new console as soon as they can stack 16 GB of HBM on a 5 TF GPU @$499. So, basically next year. Since everything is a VM forward compatibility shouldn't be an issue.

Is this a facetious post?

In total, or just the chip and memory?
I'm skeptical of either being the case next year. Mass-manufacturing and likely prices aside, the stack density for HBM is not going to allow for 16GB for what would be considered a bleeding edge implementation. The necessary bus width to support that many stacks would actually be enough to exceed a 5 TF GCN GPU's ability to use it.

 

[London Geezer]

We will see a new xbox in 2016 or ms leaving the market.

Well we've seen them take some seriously big decisions lately about the very nature of the business, but all hell will freeze over before MS leaves a market they did so well in in the last few years. Everyone has hiccups along the way and X1 is a little hiccup. I don't see them leaving this market, whatever it takes. Spinning off the Xbox is an option, of course and could be considered as MS leaving the market. I think the Xbox brand will be around for a long time, in whatever shape or form it will need to be.

 

[zed]

They're also reversing policy on keeping Hulu and Netflix behind the paywall.

Total slinking away with tail between its legs.

I remember ppl saying a while ago, all they need to do is release a kinectless version and theyve basically done a reversal on all their major choices with the xbone

I guess we now know why it was called the xbox one (eighty)
Henceforth it shall be officially know as the xb180

80% of people are using Kinect which is remarkable compared to the last generation.

remarkable! WTF only 80% of ppl with the xb180 are using kinect at all, surely that cant be right. If anything this is the most remarkable bit of info theyve let slip. Fully 1 in 5 ppl have paid an extra $100 for something that they dont use

wagglewand wii usage = > 99%
pc keyboard usage = > 99%
etc
80% just shows how indispensable it was

 

[RancidLunchmeat]

remarkable! WTF only 80% of ppl with the xb180 are using kinect at all, surely that cant be right. If anything this is the most remarkable bit of info theyve let slip.

Oh, I agree, that can't possibly be correct. 20% of the people don't use Kinect at all? AT ALL? That brings a whole new meaning to word worthless if 20% of the people don't even bother hooking it up and using it to turn on and off or pause.

But I liked his "four main areas" of differentiation now that they are at the same price as the PS4:

1) Games! And MS has the best games line-up! Really? First, that's clearly subjective in terms of exclusives but secondly - no, actually the majority of games this generation will be multi-platform and for all of those the PS4 has the best.

So, strike one.

2) Friends! Through Live Gold. A service that is worse than it was on the 360, while the PS4 has a service that is much better than it was on the PS3. The quality and capability gaps have closed between the two services so this is pretty much down to - If we've already roped you in last generation, you're likely going to stay.

So, ehhh.. Is it a differentiator? Sure, but why not just paint the damn thing green and say that is different as well?

3) The Original Vision! Yes, that original vision that caused us to do all these things we've had to backtrack on and sell what is now a gimped console? It can still do some of that. Like, HDMI-IN is still there! Hurray!

Strike two.

4) You can still buy the Kinect for an extra premium to get those sub-par experiences that only the Kinect can offer without the foolish expectation there would be games or support for it by including it with every console!

Safety!

Forget strike three, we went from baseball to football because striking out isn't enough, you have to actually lose points for this to be your planned answer.

 

[Bagel seed]

Mehdi played the it's in less territories card. I guess they're just playing rope-a-dope

 

[Rangers]

Mehdi played the it's in less territories card. I guess they're just playing rope-a-dope

Well I did find it funny for a while it was like "PS4 will surely crush Xbox, it's in XXX territories vs 13!". And I was all "uhh, those additional territories dont actually matter too much". And now, oddly, everybody has come around to agreeing with my position all along

 

[Brad Grenz]

Mehdi played the it's in less territories card. I guess they're just playing rope-a-dope

That's not the worst spin:

People have been more satisfied with the Xbox 360 than the PS3, so in that respect people have less of a need to upgrade in the short term due to regular updates for the Xbox 360.

Yeah, totally. That would make sense if people switching from 360 last gen to PS4 this gen wasn't your biggest problem, Mehdi.

 

[AzBat]

That's not the worst spin:

People have been more satisfied with the Xbox 360 than the PS3, so in that respect people have less of a need to upgrade in the short term due to regular updates for the Xbox 360.

Yeah, totally. That would make sense if people switching from 360 last gen to PS4 this gen wasn't your biggest problem, Mehdi.

Yes, it's spin but my anecdotal evidence shows there might be a little truth to it. I'm pretty happy with my 360 right now that I don't feel the need to upgrade just yet. Whether or not there are more happy 360 owners than PS3 there's no way of knowing. So I was kind of surprised to see him say that. However, I could see how a PS3 owner would be happy to upgrade now, smaller slick looking box with the best hardware of this gen, showing off better multiplatform games all for something that's only at most $100 more than what they paid for their PS3. Remember there are only about 10-12 million next-gen console sales so far. A small fraction of the total 360/PS3 userbase. That's a lot of 360/PS3 owners that haven't upgraded.

Tommy McClain

 

[Rangers]

That's not the worst spin:



Yeah, totally. That would make sense if people switching from 360 last gen to PS4 this gen wasn't your biggest problem, Mehdi.

And you know this is the case, how?

We're at 7/4 million sold out vs 84/84. Even if it is the case, it really doesn't matter. It only matters how many are sold, not at all where they come from. It's likely the case 499 caused a lot more 360ers to blanch at upgrading than PS3'ers.

 

[wco81]

A lot of last gen owners bought at much lower prices so they'll probably wait until this generation drops to comparable prices at which they bought in.

 

[(((interference)))]

Ever single one of my four personally bought laptops was a Vaio. I've currently got no idea where I'd go when my current one gives up the ghost.

Lenovo Thinkpad (or Mac).

PS3 likely would have closed the gap a WHOLE lot faster, or their would have been no gap at all quickly, if it launched at $399 with a DVD instead of $599. Remember at that point Sony was dominant, and the Ps3's very high price point was a key factor in losing that dominance over the first 2-3 years of the generation.

I dunno about that, I basically got a PS3 because it was a cheap Bluray player and I'm sure a significant proportion of early PS3 sales would have been made to non-gamers looking for a cheap Bluray player.

MS have ditched Kinect with a Kinect-free SKU. What's their strategy now? They're offering a less powerful console to PS4 with little distinguishing USP. Short of exclusive games (the bane of gamers IMO), what's the reason to pick XB1 over PS4? With the recent game sites reporting Game X better on PS4, is there really a major market for XB1?

I honestly can't read the outcome here. On the one hand it's a smart move to offer a cheaper console, but objectively I don't really see the point of XB1 now. It's another console that plays games worse. Is the hope to just to ride XB360's brand strength? MS are clearly unsure what to do themselves (constant denial of Kinect-free SKU) so is there actually any strategy here or is it reactionary tactics?

Exactly my thoughts; Xbox leadership just seems so completely reactionary it's embarrassing.

You also have to wonder: if Sony managed to catch up with the 360, despite the PS3 launching a year later and costing significantly more for a large portion of its life, can the Xbox brand really compete with PS at the same price, with weaker hardware and (in all likelihood) weaker exclusives?

Especially given the clear negative sentiment that MS has managed to engender in core gamer circles during the last year.

 

[Brad Grenz]

And you know this is the case, how?

We're at 7/4 million sold out vs 84/84. Even if it is the case, it really doesn't matter. It only matters how many are sold, not at all where they come from. It's likely the case 499 caused a lot more 360ers to blanch at upgrading than PS3'ers.

Just a lot of self reporting by people online, plus it's the statistically obvious conclusion based on how the sales are going right now. I believe there was even a consumer survey recently that showed as much. Of course, why should I show my math is Mehdi doesn't have to show his? His was the extraordinary (and preposterous and self-serving) claim. People are just so satisfied with the way MS gave up on making games for the 360 over the last two years they just can't bear to upgrade!

 

[temesgen]

A lot of last gen owners bought at much lower prices so they'll probably wait until this generation drops to comparable prices at which they bought in.

Price drops and essentially free 360s when you bought laptops had to help MS's overall number.

IMO the move to 399 certainly makes the prospect of a XB1 for 99 dollars when buying a >$699.00 laptop in the US a possibility though. If they do drop the pay wall for streaming services and do an incentive program we'll own one sooner than I thought.

@Rangers - do you recall how many months MS typically ran the free 360 program for college students buying computers? And did those numbers show up on NPD? I know they did it back to back summers a couple years in a row but can't remember when it started.....

 

[Rangers]

Sonnyyyy loses a bunch more money, including in game which was a surprise

http://www.gamesindustry.biz/articles/2014-05-14-sonys-game-division-reports-full-year-loss

Sony Corp's Game division made a loss in the full fiscal year as it struggled to get clear of the cost of launching the PlayStation 4.

In the year ended March 31 2014, it earned ¥979.2 billion in revenue ($9.5 billion), up 38.5 per cent year-on-year thanks to strong sales of the PlayStation 4. But it still lost ¥8.1 billion ($78 million), which Sony attributed to PS4 launch costs and the closure of several Sony Online Entertainment games.

In the fourth quarter, revenue was ¥264 billion ($2.6 billion), a 38 per cent increase year-on-year. However, the division made a ¥11 billion Q4 loss ($108 million), larger than the ¥2 billion it lost in the prior year quarter

Once again they're predicting Game to have a (small) profit next FY, which I think they've done for about 5 years running as far as I remember. Like Nintendo their forecasts sometimes show a comical pattern.

 

[DieH@rd]

I don't think loosing money in a gaming division during console launch year is surprise to anyone, especially since PS4 is selling at a slight loss.

 

[Shifty Geezer]

Well I did find it funny for a while it was like "PS4 will surely crush Xbox, it's in XXX territories vs 13!". And I was all "uhh, those additional territories dont actually matter too much". And now, oddly, everybody has come around to agreeing with my position all along

I don't think those territories are as enthusiastic for MS as Sony, and so launching in them likely won't yield great sales. Going by chat here anyway, and peeps from those countries reporting on availability and disinterest.

 

[liolio]

I quit following news for a while and boom, a kinect less sku.

It is a good move, they have price parity now, they lose in games quality though they definitely have better services and it will only get better. It is tough match but it is playable whereas being 100$ more expensive was not. Fighting momentum and inertia is hard, reacting quickly is a good start.

I think MSFT needed to remove kinect to launch in more territories, voice recognition simply does not work great at all outside of a couple of languages.

The One is going to cost 349$ by next Christmas, that is how I read Medhi's interview. Not a price cut a temporary rebate in NA and EU.
Sony won't match that, it should help too.

Now they need to announce a bunch of games at E3.