[Console Edition] Satya Nadella: "We are going to make some difficult decisions"

Also it's not like PCs are a growing, lucrative business any more.

A $400 PC is going to produce a poor gaming experience compared to a console.

 

Modern apus are approaching xbox one teraflops level

 

They still have a memory subsystem problem though.
DDR4 will help a bit, Intels L4-cache helps a bit, HBM would help a lot. But without a memory subsystem that caters to the needs of graphics, dedicated solutions have a large advantage.
Turning that around though, a reasonably priced alternative memory system for PC APUs, would make large die size and power draw the only real areas where discrete GPUs could compete. We'll see how the dice fall.

 

If I were Microsoft, which I'm not, I would put my muscle behind Windows 10.
Microsoft entered the console business largely as a reaction on Ken Kutaragis vision for the playstation as a computer, and Microsoft moved to defend their personal computer business from an attack from the living room. And got blindsided by the mobile revolution. So their original purpose for competing in console space is gone, the media hub vision that was used to motivate the XBoxOne has largely evaporated when confronted with market realities, so just what is Microsoft doing playing second fiddle in a contracting console market?
I'm not sure an XBoxTwo makes much sense to Microsoft, they have bigger fish to fry.

 

They'll lay off all of Nokia staff and only keep the patents? Or have they done that already?

 

"Difficult decisions" is corporatese for firing lots of people.

They're going to fire the guys who never actually made any money or any measurable boost in Microsoft's recognition as a brand.
They're going to fire everyone who came with the Nokia acquisition, keeping the patents and leaving the development of Windows 10 phones for third-parties.

Stephen Elop was already fired a couple of weeks ago IIRC. Quite the turnaround, for someone who was supposedly being scouted for the position of CEO. (not that he wasn't terrible at whatever he was doing, though)

 

Yeah, I've been to so many general meetings where the CEO opens with the vague "difficult decisions" cliche, and it always meant firing people.

 

Elop probably walks away with an 8-figure payday though, for delivering Nokia on a platter and then axing all those jobs.

 

Just to clarify, this is respect of Microsoft's current situation which is having launched a console well under two years ago and having many future potential sales of hardware, peripherals and software in its future. Keeping the appearance of support (as long as this is not loss-inducing) is preferable than just coming out and saying they're getting out of the console business because that would likely deter some people from buying into the ecosystem.

However if Microsoft were looking to exit the console business and felt they could better redeploy those personnel and assets in a scaled down Xbox Division to turn a handsome profit doing something else then I have no doubt that Microsoft would do that. That's what businesses do; you shutter ventures which aren't working and seize opportunities before your competitor's do. Microsoft have dropped out of markets that aren't working, as have Sony and Apple. You have sentimentality in business.

I just don't see what is in the modern console business to keep Microsoft interested. Initially there was belief that the Xbox was a response to Sony but Microsoft's success with devices as is about as good as Sony's success with software. I don't get what Microsoft get out of Xbox. Accepting that the Xbox's finances are a mystery (but probably not great, otherwise they would be mentioned) and that games are a crazy profitable business if you get the formula right, but the profits seem mostly in the software whether as a developer or publisher unless you achieve that rare lightning strike that is something like PS2 which was the console equivalent to the Windows OS - what most people had, therefore the software royalties were a literal licence to print money.

I do wonder if Microsoft keep churning out consoles for this ethereal race to own/win the living room, or just to stop Sony, Apple or Google doing so but I don't think any of these companies can achieve this goal. The things most people want to put on their TV simply aren't owned by any of these companies, their involvement is as close as agnostic as to a user's choice of television. Most video (TV and movie) and music services will run on a variety of hardware. And I see content becoming more agnostic to platform and hardware, not more.

Nor does Xbox seem particularly vertically integrated into anything else Microsoft is doing. To me, the Xbox and why Microsoft continue to participate in the console market, remains one of the great mysteries of life. You can't deny their contributions to console gaming and I don't want to see them leave the console market but I just don't get why they're still here.

 

Branding seems to come to mind if at the very least. Games are the frontier of innovation and technology when it comes to the computer space. It's a good space to be in, even if it doesn't vertically align with every thing else.

If MS are to continue to push windows and be the owner of directX and indirectly have hands into what the future APIs are, they need a console out there to continually push that baseline forward.

 

As long as Xbox One is making money and selling well, which it seems to be, they can keep making them and funding development of key first party games.

But would they be investing in R&D now to develop a successor? That's the key question.

 

You sound like a Microsoft PR person (that's not an insult btw). Microsoft, by virtue of owning Windows and DirectX, are the owners of the potentially largest gaming platform on the planet: Windows. But how do you monetise branding exactly?

And that's the thing nobody knows. If Xbox were making Microsoft a moderate amount of money they would surely be accounting it differently. I would be surprised if Xbox is losing money but making money is relative to anything else you could be doing with the same resources. E.g. supposing Xbox is making $500m a year, what if those same resources could net Microsoft $2Bn a year? The choice is easy unless there is some other intangible benefit to keeping Xbox around.

If you look at Apple, their products and services have clear vertical and horizontal integration - everything connects together (not always well, but anyway) and then you look at Xbox in the Microsoft empire and you have to wonder, why are Microsoft still doing this? It's not like gaming is a market in its infancy with unknown potential, it's a mature market - it's been around longer than the personal operating system market, which Microsoft still own.

 

Because we don't live in a world driven by a monolithic computing market anymore. The market is diversifying with many devices/services and the behemoths of the computing space don't want to control or participate in just a subset of the market. MS is no difference than Apple or Google in this regard.

Windows as an OS that can possibly drive all the future computing devices in your life is a lot more valuable than a Windows OS that drives just your personal computer.

Windows restricted to areas of current strength for MS has limited growth potential and narrowing your areas of growth to the ones you can dominant also leads to reduce potential. Limited marketshare also doesn't discourage Apple, Amazon, Google and others from pushing Macs, Kindle Tabs and Chrome OS. Current market reality doesn't mean the landscape can't change.

 

Lol considering my love for Apple that comment surprised me a little. I mean we've been around since Matrox and Voodoo cards and when I came to pushing computer hardware gaming and graphics always seemed to be forefront. I remember when I spent $450 on my Annihilator Geforce DDR!
Branding is muscle, it allows a company to enter markets where they don't belong, and is worth more in future sales than any current day product could. People trust Apple, Microsoft, that trust allows them to continue to buy their product even if it isn't the best in class.

 

I've mentioned this before, but The Xbox Live Marketplace is the most successful digital media distribution platform that MS have and the *only* reason that this platform became a success is because the Xbox is locked into it. Unless/until they can somehow achieve comparable success with the Windows Store on the back of Windows Phone and the PC (which has support for many other digital storefronts) this may be enough reason to keep it around.

 

You're written a lot of words but absolutely no reason why Microsoft should continue to pursue the console market. Congrats. You also sound like a PR person - that is a insult btw, although not a serious one

So I can expect Windows on iPhone 6 and the Samsung Galaxy 5 when exactly? Microsoft missed the mobile boat despite owning it before they realised how important it during a period when they are actively ignoring mobile.

Except that you won't find the Microsoft branding on the Xbox. And branding is as valuable as current perception of that brand and I don't know what that is now. Last generation, it was certainly worth more.

So the Xbox Line marketplace is valuable to Microsoft. Having established it, why do they still need Xbox? Incidentally, Microsoft don't exactly have a lot of digital stores so it's not exactly a field of stiff competition.

 

They need Xbox because there is no certainty that the Xbox Live Marketplace continues to succeed without the Xbox lock-in. It's the only answer they have to the iTunes and Google Play stores. Windows Phone is just too small a player to incentivize people using the Windows Store and the PC works with everything.

 

That's pretty circular logic. Also, the Marketplace isn't in competition with Apple's App store or the Google Play store because none of these cater for the other platforms. You may as well say Apple's App Store does well because because it's the only option for iOS devices. That doesn't make it great (the App Store if fucking awful, truth be told), it means it's success only because of zero competition.

For things which are available in the Marketplace and elsewhere, how do usage and sales compare?

 

It *is* circular because the relationships are all reciprocal to varying degrees. Hardware lock-in drives people to the stores -> the stores make money and attract content -> The content sells more hardware. Of the three, iTunes is the only one I could see surviving without a hardware lock-in to drive people to it. I don't see either of the other two being able to stand on it's own.