Ken Kutaragi:" I can produce the PS3 anytime"

[scooby_dooby]

To my knowledge, the laws on the books do not specifically mention monopolies--though indeed they are more likely to affect monopolies flexing their muscles. In fact, they mainly seem to come into play over concerns of international trade. (And there are obviously no monopoly concerns there... just concerns about imports undercutting home-grown products.)

Flexing economic muscle is flexing economic muscle, whether one exists as a "monopolistic entity"

So there are no limits--with any company--in any field--ever--as to what they can "invest" and for how long? After all, according to your beliefs, until a company BECOMES a monopoly, they cannot be leveraging such unfair influence. So if Microsoft feels it can burn a good $1 billion a quarter for the next 20 years--something they can easily do right now--no one should raise an eyebrow? What if Exxon decided that it wanted to branch out into the home entertainment field (teach kids the value of burning oil early!) and blow $3 billion a quarter, just because it can? I mean eventually they would be profitable, right? It's all investment.

We can hope that investors punish companies with stupid gameplans, but we all know the investors themselves can be more stupid and distracted by shinies (just look at Google's stock price... has there EVER been a company that big with a stock price remotely that high?!!) and that it doesn't always take that much to fell even a big contender in the field. (Consider Sega.)

So the question remains... at what point does something cease being "investment" and cross into "economic leverage" alone? Money is money, and there will always be people concerned with how it's spent and who it may be hurting unfairly. And NO company should be given a free pass.

And considering the convergence that's been happining--and will only continue to happen in years to come--among electronic devices, we certainly shouldn't turn a blind eye to any company, either.

That's the nature of a free market, you can't go and cry foul because one company has more dollars to invest than you do, improve your product if that's the case! Let the consumer decide. Also, your assertion that investment gaurantees profit is totally wrong, Exxon could invest 3billion and NEVER be profitable, everything is a risk, exxon would be risking 3BILLION dollars, and for more risk you are entitled to more reward.

This debate is ridiculous for one reason: MS is not even coming close to trying to 'buy' the marketplace, and they damn well could if they wanted to. If MS wanted to they could buy out almost every dev-house in the industry, but they aren't. So what's the problem?

In fact, since Day 1 they have been very prudent with the money they throw around, they haven't been throwing ridiculous amounts of money around, and even lost out on a # of exclusives last gen that they surely could have bought if they had REALLY wanted to. They've been pretty responsible as far as I can see.

Using some of the examples peole are tossing around, you make these nightmare scenarios where MS is just coming in and throwing money indiscriminantly around determined to kill Sony at all costs, and dominate the console industry, instituting a monopoly. In reality MS has not been very aggressive at all, they have been quite restrained in their spending, and created new developers like Mistwalker, handing them >$50million in seed money, MS is not the devil people.

Another reason this debate is ridiculous IMO is X360 is already poised to make huge profits this gen. The $2billion doillar investment in live(alleged) does not require major funding, they have eliminated any potential roadblocks to cost reduction, and they are making an absolute killing on the peripherals. Not to mention, their 1st party studios have expanded, they will have many more quality 1st party titles, they will undoubtably increase their userbase, developer support, and therefore make more money from licensing.

MS is going to be profitable this generation....so what's the problem again?

 

[seismologist]

I dont have any problem with how MS is handling business. I see them as the underdog. The whole purpose of being in videogames is to protect their PC business which is a smart considering moving forward Windows is becoming more and more unnecessary for the kinds of things people are using their PC for.

 

[Jabjabs]

About the only example we have of MS being a little loose with money was the Rare buyout but that's all. And who knows, in 5/10/15 years they could be making profits of them as well? Investment, you can't have buisness without it.

 

[Platon]

That's the nature of a free market, you can't go and cry foul because one company has more dollars to invest than you do, improve your product if that's the case! Let the consumer decide. Also, your assertion that investment gaurantees profit is totally wrong, Exxon could invest 3billion and NEVER be profitable, everything is a risk, exxon would be risking 3BILLION dollars, and for more risk you are entitled to more reward.

This debate is ridiculous for one reason: MS is not even coming close to trying to 'buy' the marketplace, and they damn well could if they wanted to. If MS wanted to they could buy out almost every dev-house in the industry, but they aren't. So what's the problem?

In fact, since Day 1 they have been very prudent with the money they throw around, they haven't been throwing ridiculous amounts of money around, and even lost out on a # of exclusives last gen that they surely could have bought if they had REALLY wanted to. They've been pretty responsible as far as I can see.

Using some of the examples peole are tossing around, you make these nightmare scenarios where MS is just coming in and throwing money indiscriminantly around determined to kill Sony at all costs, and dominate the console industry, instituting a monopoly. In reality MS has not been very aggressive at all, they have been quite restrained in their spending, and created new developers like Mistwalker, handing them >$50million in seed money, MS is not the devil people.

Another reason this debate is ridiculous IMO is X360 is already poised to make huge profits this gen. The $2billion doillar investment in live(alleged) does not require major funding, they have eliminated any potential roadblocks to cost reduction, and they are making an absolute killing on the peripherals. Not to mention, their 1st party studios have expanded, they will have many more quality 1st party titles, they will undoubtably increase their userbase, developer support, and therefore make more money from licensing.

MS is going to be profitable this generation....so what's the problem again?

I am a bit surprized that MS hasn't been more aggressive, I thought they would go and buy lots and lots of dev teams/houses, but that hasn't really happened. On the other hand they already have quite a few of them, they just need to make better use of some of them...

 

[Teasy]

Meh. I still think the best way to end the console war is to put Fils-Aime, Kutaragi and Moore in a locked room and let them solve it out until there is only one remaining

Not really a fair fight is it?, Reggie is freaking massive

Um, it's called an investment.

$1 billion was the investment, that's the amount they actually planned to lose. I seriously doubt they would ever have entered into the market if they thought it was going to cost them four times what they planned. As it is once they were in the market they decided they'd rather lose the extra then be seen to fail.

 

[Joe DeFuria]

As it is once they were in the market they decided they'd rather lose the extra then be seen to fail.

What kind of business sense is that?

 

[Powderkeg]

$1 billion was the investment, that's the amount they actually planned to lose. I seriously doubt they would ever have entered into the market if they thought it was going to cost them four times what they planned. As it is once they were in the market they decided they'd rather lose the extra then be seen to fail.

Umm, you are wrong.

Microsoft planned to invest $2 billion on Xbox Live alone.

http://news.bbc.co.uk/1/hi/technology/2283840.stm

And I don't believe they've ever announced how much they were expecting to lose on the entire Xbox project, but it seems to me that with a $2 billion planned investment in Xbox Live alone, a total of a $4 billion loss on everything Xbox related should be well within their expectations.

 

[Qroach]

That article or rather your post was wrong. When MS annouced 2 billion in backing, that was to cover xbox live and marketing expenses. Xbox live by itself did NOT cost 2 billion dollars.

 

[Shifty Geezer]

How can you spend $2 billion on an online service when you don't provide servers? How can you even spend million on an online service if you don't provide services to run the games? When the article talks of 4 servers, what are they referring to? Gateway only? I thought XB games were peer-to-peer.

 

[Powderkeg]

That article or rather your post was wrong. When MS annouced 2 billion in backing, that was to cover xbox live and marketing expenses. Xbox live by itself did NOT cost 2 billion dollars.

It was a $2 billion investment by the division into Xbox Live. (All aspects)

And are you trying to suggest that you subtract all of MS marketing expenses when you are talking about how much they lost too?

 

[Powderkeg]

How can you spend $2 billion on an online service when you don't provide servers? How can you even spend million on an online service if you don't provide services to run the games? When the article talks of 4 servers, what are they referring to? Gateway only? I thought XB games were peer-to-peer.

Most PC gamers who have never seen Live have think that Xbox Live is nothing but games, and all games are peer to peer. (Like FFXI, right?)

And I've found they tend to prefer hanging on to this belief, so I won't bother spoiling it.


In the mean time, I think I'll buy an Arcade game from the Xbox Live marketplace, and then maybe get a new Dashboard Theme, which I'm sure comes from some strange peer to peer network that requires no servers.

 

[expletive]

How can you spend $2 billion on an online service when you don't provide servers? How can you even spend million on an online service if you don't provide services to run the games? When the article talks of 4 servers, what are they referring to? Gateway only? I thought XB games were peer-to-peer.

The price does seem exorbitant even though theres a lot of software built into XBL at this point.

Youre right about the servers, the games are either P2P or they run on 3rd party servers (e.g. EA has their own servers). So the only hardware they have is the front end servers, some downloadeable content stuff on file servers, and the databases. They also run a 24/7 datacenter for support and monitoring of the service and the 3rd party servers that are connected to it.

 

[blakjedi]

XBL isnt [ahem] simply peer to peer...

 

[expletive]

Most PC gamers who have never seen Live have think that Xbox Live is nothing but games, and all games are peer to peer. (Like FFXI, right?)

And I've found they tend to prefer hanging on to this belief, so I won't bother spoiling it.


In the mean time, I think I'll buy an Arcade game from the Xbox Live marketplace, and then maybe get a new Dashboard Theme, which I'm sure comes from some strange peer to peer network that requires no servers.

Point taken but i think when you throw numbers around in the 'billions' of dollars, the natural assumption is that theres an army of servers in some room hosting all these online games.

 

[Bobbler]

Umm, you are wrong.

Microsoft planned to invest $2 billion on Xbox Live alone.

http://news.bbc.co.uk/1/hi/technology/2283840.stm

And I don't believe they've ever announced how much they were expecting to lose on the entire Xbox project, but it seems to me that with a $2 billion planned investment in Xbox Live alone, a total of a $4 billion loss on everything Xbox related should be well within their expectations.

Not this again...

There is no possible way MS could spend 2 billion on something like Xbox Live. It simply does not cost that much to get a service like that running. 2 Billion on any software/server infrastructure is a lot... Think about it for a bit.

If a service like Live cost 2 billion to make there would be no such thing as a profitable MMO -- WoW (probably the most profitable by miles) only brings in around ~40m a month... and if its servers (and software) cost anywhere near a billion it wouldn't exist (and if we're to believe to believe the 2b for Xblive, then WoW probably cost 3-4 times that to make, as it's much more complex and its servers are being hammered a lot more)

Anyways, that number seems to be from the Xbox platform itself (creating the xbox, producing it, xbox live, etc), and not just the Live service -- otherwise the number doesn't make sense. Additionally it seems like just a guess from BBC anyways, as I didn't see a source of the number (and only counting what was supposedly spent over the last few years on the Xbox project as a whole? - this was late 2002).

 

[blakjedi]

Not this again...

There is no possible way MS could spend 2 billion on something like Xbox Live. It simply does not cost that much to get a service like that running. 2 Billion on any software/server infrastructure is a lot... Think about it for a bit.

If a service like Live cost 2 billion to make there would be no such thing as a profitable MMO -- WoW (probably the most profitable by miles) only brings in around ~40m a month... and if its servers (and software) cost anywhere near a billion it wouldn't exist (and if we're to believe to believe the 2b for Xblive, then WoW probably cost 3-4 times that to make, as it's much more complex and its servers are being hammered a lot more)

Anyways, that number seems to be from the Xbox platform itself (creating the xbox, producing it, xbox live, etc), and not just the Live service -- otherwise the number doesn't make sense. Additionally it seems like just a guess from BBC anyways, as I didn't see a source of the number (and only counting what was supposedly spent over the last few years on the Xbox project as a whole? - this was late 2002).

Good points Bobbler. I have been asking to see the source of these "losses" that make up much the internet mythology related to xbox. We know that the console lost money but we dont know what the overall attach rate has been, the first party peripherals, cost or revenue of xbox live (2-3 million consistent users accounts X $50) = 100 - 150 million USD isnt bad and its annual so its between 50 million and 125 million USD since year 2 so to average lets say increasing live subscriptions year to year would look like

(50 mil + 90 mil +125 mil = 265/3) = roughly 88 million a year revenue on a software service alone...

R&D, manufacturing and ads, new IP/studio development for x360 are naturally all forward funded... In truth we HAVE NO IDEA what MS has spent to date on its xbox division... but we do know its is at a loss because they could not recoup savings in their manufacturing and assembly processes like everyone else did...

 

[scooby_dooby]

Not this again...

There is no possible way MS could spend 2 billion on something like Xbox Live. It simply does not cost that much to get a service like that running. 2 Billion on any software/server infrastructure is a lot... Think about it for a bit..

Think a bit? I suggest you think a bit longer, because the 2Billion for Live! # is from the same people that put forth the overall $4Billion figure.

So, if anyone needs correcting it's the people who insist on claiming that MS lost $4Billion on xbox, and IF we're going to toss that number around, then we must acknowledge that half of that figure is for an alleged investment in XBLive.

 

[Bobbler]

Think a bit? I suggest you think a bit longer, because the 2Billion for Live! # is from the same people that put forth the overall $4Billion figure.

So, if anyone needs correcting it's the people who insist on claiming that MS lost $4Billion on xbox, and IF we're going to toss that number around, then we must acknowledge that half of that figure is for an alleged investment in XBLive.

Except the 2 billion number is likely spent up til 2002 on the Xbox project as a whole (marketing, production, r&d, live, etc). It was stated strangely, but I don't think the intent was that the 2bn was for XbLive (because its simply not possible to spend that much on a Live-like service).

The 4bn number is likely a pretty good estimate of how much MS has put into the Xbox project (probably much higher now, since X360 is out)... how much they've actually lost is another story all together. I am not 100% sure, but I have a feeling, if you reread the 4 billion # article, you'll find it says something like "4 billion spent on Xbox" rather than "4 billion lost on Xbox." They mean two entirely different things. And if they say "lost" then it's likely they are just guessing anyways (although one can get a pretty good idea by looking at the spending of the Xbox division on those balance sheets).

Additionally, I'm not really sure I understand why you're asking me to "think a bit longer..."

 

[blakjedi]

Back on topic...

PS3 is a gamble in that it has so many components of Sony's lifeblood invested in its success that if it fails... well... lets say that Sony will have a lot of work to do and it will be Kutaragis head... on the other hand... all indications are that PS3 is complete and can and will succeed. There is nothing in the universe that I can think of that will cause PS3 to "fail" short of a broad based factory attack- which aint happening. PS3 will sell out continuously over its lifetime and will probabaly dominate the generation again, so no worries.

PS3 is complete. And can be produced at any time by Kutaragi.

 

[Bobbler]

Maybe Kutaragi is saying that he lost his job and is now working in one of the production factories? He can produce them any time now!