grandmaster
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If Microsoft licensed Xbox 720 to other CE companies, would they be expected to shoulder the same sort of losses per console that Microsoft does?
Predict: The Next Generation Console Tech
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One reason why the though has stuck with me is because it was mentioned by MS on 1 or 2 occasions. For instance; http://www.gamesindustry.biz/articles/microsoft-may-license-xbox-360-software-to-third-parties
Years later, such an idea would actually be very practical. Xbox is a different animal to the music service you mentioned, and whether it is a range of consumer electronics devices or standalone consoles from 3rd parties, I think the IP Core/OS licensing idea could really work.
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That's a complex question really. One dependency would be the technological direction MS chooses for 720, how expensive is that tech in 2011/2012? Another would be the idea that companies such as Samsung or Toshiba can manufacture everything from the silicon chips (based on an IP core) to the disk drives and the very casing of the system. If you have close control over manufacturing, it could drive costs down further. It would also depend on how competitive the CE companies feel they need to be with pricing.
grandmaster
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Well, I'm sure Microsoft would love it as they would be coining it in from the games alone, and having the Xbox brand associated with the likes of Samsung, Toshiba - maybe even Panasonic, Pioneer etc - would have a massive positive impact.
tongue_of_colicab
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But if you do that its likely that either your console will be sold at a high price because no CE wants to lose money on it and we all know what a too high price will do for your console. If MS expects them to sell it at a resonable price and maybe take a loss im sure they want to get in on the game royalties but that is MS biggest income so they wont want that.
Also, whats the use? there is very little a CE can change to the box apart from the look at maybe intergrating some addons as stanard. Given that the console would always need to be at a competative price I dont think there is alot of money to be made on the box. And if there is, im sure MS is smart enough to not let others in and just take everything for themselves, which makes sense.
Also, whats the use? there is very little a CE can change to the box apart from the look at maybe intergrating some addons as stanard. Given that the console would always need to be at a competative price I dont think there is alot of money to be made on the box. And if there is, im sure MS is smart enough to not let others in and just take everything for themselves, which makes sense.
All very important considerations.
Its interesting you mentioned the 'taking everything' bit, because the reason I feel this direction is less likely than before, is because MS have realized they actually have a very successful proprietary system, and completely unexpected, one that is outselling its 'biggest rival'.
If you have Samsung (in example) making their own processor/GPU/Memory based on the defined 720 IP core; their own designs, own QA testing and such, it will reduce hardware shortages and offer potential for far more reliable hardware, and faster to market with cheaper costs as testing (and everything else) is essentially outsourced. If we start bringing in guys like Toshiba, PNY, Alienware and more, there are an infinite number of links to companies with the capacity to mass produce hardware (all in-house or a bit of both).
What I'm really getting at is, manufacturing capacity will be superior especially for companies that have all the technological assets in one place and liability for unreliable h/w will be put on respective CE companies (as opposed the fallout of one fatal error by one company).
Other than that, MS want to be successful in all regions, but Microsoft isn't highly renowned for their consumer electronics in huge markets like Japan and China, brand recognition in h/w can greatly push the software installed base and shift support.
Bear in mind, they are *totally opinions* and would have a lot of factors to consider; but I guess in the end it would be an ultimatum; choosing between dominating software or continue to try and do both (which is going pretty well).
Its interesting you mentioned the 'taking everything' bit, because the reason I feel this direction is less likely than before, is because MS have realized they actually have a very successful proprietary system, and completely unexpected, one that is outselling its 'biggest rival'.
I think there's a few really. I'm still not sure if MS are in their element making h/w. The original Xbox wasn't well designed as it really just had large embedded versions of current tech (well on the whole) in addition they failed to foresee costs related to not owning the IPs; and the 360 even with better design and more customized chips, has faced possibly the worst reliability seen.
If you have Samsung (in example) making their own processor/GPU/Memory based on the defined 720 IP core; their own designs, own QA testing and such, it will reduce hardware shortages and offer potential for far more reliable hardware, and faster to market with cheaper costs as testing (and everything else) is essentially outsourced. If we start bringing in guys like Toshiba, PNY, Alienware and more, there are an infinite number of links to companies with the capacity to mass produce hardware (all in-house or a bit of both).
What I'm really getting at is, manufacturing capacity will be superior especially for companies that have all the technological assets in one place and liability for unreliable h/w will be put on respective CE companies (as opposed the fallout of one fatal error by one company).
Other than that, MS want to be successful in all regions, but Microsoft isn't highly renowned for their consumer electronics in huge markets like Japan and China, brand recognition in h/w can greatly push the software installed base and shift support.
Bear in mind, they are *totally opinions* and would have a lot of factors to consider; but I guess in the end it would be an ultimatum; choosing between dominating software or continue to try and do both (which is going pretty well).
I think the Zune model may be the best indicator of MS possibly looking in that direction.
The service and software is MS, but the hardware is Toshiba (I think). Whether this would work in the console business remains to be seen.
MS has done vastly better from Xbox 1 to Xbox 360, with every new iteration I expect them to gain experience and avoid the same pitfalls. I fully expect MS to do a lot better at product testing the console for Next gen.
The consoles are getting very good at bringing all your entertainment into one box. Music, video, DVD, Blu Ray, games and pictures are already there. I would anticipate that next gen there should be at least IPTV, DVR, and web browsing. With all of the functionality that the console provides, why would you invest in a set top box like Roku or the Apple TV box if priced comparatively?
The service and software is MS, but the hardware is Toshiba (I think). Whether this would work in the console business remains to be seen.
MS has done vastly better from Xbox 1 to Xbox 360, with every new iteration I expect them to gain experience and avoid the same pitfalls. I fully expect MS to do a lot better at product testing the console for Next gen.
The consoles are getting very good at bringing all your entertainment into one box. Music, video, DVD, Blu Ray, games and pictures are already there. I would anticipate that next gen there should be at least IPTV, DVR, and web browsing. With all of the functionality that the console provides, why would you invest in a set top box like Roku or the Apple TV box if priced comparatively?
specwarGP2
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This argument doesn't work because Sony does exactly what you describe for PS3, and it makes little to no profit to this day, and Sony is a top tier CE. Bringing in other CEs would only make PS3 more expensive.
Doesnt MS already do this?
I think you guys got it the wrong way.
Its the 360 that will be made by other companys as ms moves to the xbox next.
Think of it this way. At 32nm you could most likely do a 360 on a chip setup. You put that in a box with a hardrive say 80 gigs or something and you sell it as a netflix box with a bluray drive and acess to 360 games and live / live arcade. You sell it for $200 or so or whatever that would be worth at the time. Ms on the other hand can just support an arcade bundle of the 360 at that time for $100 bucks. Make it bare bones and let others have higher end verisons.
They could then create and focus on the xbox next and launch it at a higher price point. I'm sure alot of people would love to buy a netflix streamer from netflix with acess to the 360 live arcade , xbox originals and xbox 360 games .
Its the 360 that will be made by other companys as ms moves to the xbox next.
Think of it this way. At 32nm you could most likely do a 360 on a chip setup. You put that in a box with a hardrive say 80 gigs or something and you sell it as a netflix box with a bluray drive and acess to 360 games and live / live arcade. You sell it for $200 or so or whatever that would be worth at the time. Ms on the other hand can just support an arcade bundle of the 360 at that time for $100 bucks. Make it bare bones and let others have higher end verisons.
They could then create and focus on the xbox next and launch it at a higher price point. I'm sure alot of people would love to buy a netflix streamer from netflix with acess to the 360 live arcade , xbox originals and xbox 360 games .
Yup, that's what I'm saying. I believe they went this route because of frustration with there partners. None seemed to be making any headway into the portable music player market. I guess one could argue that there is still little penetration with the new approach. I'm still on the fence with what I an going to replace my 3rd gen IPOD with. I like the IPOD touch, but I'm turned off the smallish capicity and was hoping for a similar type device for the Zune with a minimum of 60-120GB. Any suggestions???
When was the last time someone was prepared to pay £50 for a Cell phone game though? Who do you know with 30 to 40 games all bought for their phone? People keep talking about how Cell phones have such a huge user base, they do, but so do vacuum cleaners. Of course I'm exaggerating for comic effect before anyone shouts at me for comparing a phone to a vacuum cleaner
But my point is phones are used mostly for phoning people, playing music, or as a camera, gaming is way down the list of uses.
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This isn't quite correct.
PS2 and PSP were *almost* 100% proprietary (the opposite of what I propose). Sony have made a sea of change. with PS3 they have the force of nVIDIA and IBM for example, yet the console is still to a good extent in-house tech manufactured by them. As a sum of all parts PS3 is expensive, the extra force from 3rd parties was an attempt to realize the technical complexity of their vision.
360 isn't much different in the sense that they also have 3rd party input and purchased IPs for parts they can't design alone, but again like Sony they still take on the primary manufacturing task and have obligation for testing and taking any loss their own pricing strategies bring.
My idea of sorts is that 100% of the manufacturing is outsourced to 3rd parties, to the extent that MS only provide the IP (in other words the chips designs) & Software OS, right now they are manufacturing hardware as well with their chosen partners. MS would make money purely on OS licensing & games. CE companies make a profit on h/w (be it standalone console, or other devices like Integrated TVs or computers with the added attraction of XB support).
True. Something suddenly clicked for me though a month or two ago and (I wasn't a big fan of the ipod devices and such really), but All ipod touch' and iphones run the same platform and standardized specs (ARM11, VPU, MBX lite). In a sense they have a handheld console there where you could make some pretty amazing games with the same h/w expectations. Controls are a problem (although the touch screen and accelerometer helps), and the iphone side of things doesn't have a nearly as attractive price as the touch (around £165), but if Apple get a little more serious, I think they might be able to make something of this. Mobile gaming has potential, and Apple have both a strong digital distribution service & a pretty popular platform (even if it still needs some lessons in being a phoneTeasy said:
).Just a thought.
specwarGP2
Regular
MS doesn't manufacture 360s. It's all done by large OEMs (plantronics I think). For Sony, Asus is the OEM for PS3. MS and Sony's business model figures consoles selling for a loss for year(s). Unless that model changes, CEs will never get on board with the plan you're suggesting.
That's the point.
Old models can change, and for Microsoft (as their main goal is to drive software) it is a possibility to whatever degree. Especially in a time where companies will look to expand their business significantly whilst finding ways to modify the loss.
The idea I have suggested actually has a larger scope than I believe you've interpreted. I'll again emphasize that its only an idea, but for all the speculated changes in format that may happen in the future of consoles (platforms ever more resembling PCs and all in one multi-media systems), I think this is a realistic proposition, several 3rd party platforms - one common OS.
I'm quite sure there would be companies out there that wouldn't pass up the opportunity to cash in on the growing games industry (#1 or #2 entertainment industry depending on which country you look at) and to get millions of their own brand products in homes with the support of a strong, desirable brand in gaming. For MS, its software sales all the way by means of an OS, Online Service and Games development/publishing. The day when the console is as popular in the living room as a standalone movie player, or TV even could be much closer depending on what paths are taken.
When was the last time someone was prepared to pay £50 for a Cell phone game though? Who do you know with 30 to 40 games all bought for their phone? People keep talking about how Cell phones have such a huge user base, they do, but so do vacuum cleaners. Of course I'm exaggerating for comic effect before anyone shouts at me for comparing a phone to a vacuum cleaner
Just a few years ago phones were only used to make phone calls...until companies started adding cameras and music/video playing web browsing features to them.
I'm willing to bet that Apple will be the first company to make cellphone games common.
specwarGP2
Regular
After over 20 years, don't you think if there was a better model, someone would have figured it out by now?
But lets say that in the near future, there is a model where console hardware is profitable to manufacture from day 1 and therefore attractive to other CEs to license.
My question to you is: If hardware manufacturing is profitable enough to attract other CEs, why wouldn't the platform owner just manufacture all the hardware and keep all the profits for itself?
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Well, lets pick the Wii, if they go that (or something more like that) route there is a good chance for that to happen.
Well lets pick the Wii, again, this way they could finally produce enought units to keep up with the demand.
Anouther reasons may be that if the software income is enought, they may 1) not having the (or all the) problems of manufacturing, 2) have a, involuntarly, bigger market (imagine that many cosumer electronics came with a Wii implemented in it) faster 3) let others make the price war 4) give more options to the consumer...
Anyway I only see this possible if there is no loss right from the begining (unless MS/N/S sponsor them), so only with relatively low-mid end HW.
ShadowRunner
Veteran
... 5) Make a whole lot less money!
To counter those points:
1) Problems of manufacturing are not really problems if they are making you lots of money.
2) Install base and software sales do not grow in a linear fashion. Having a install base twice as big does not mean you sell twice as much software. The falloff would be effected even more if you had CE devices with wii integrated being sold to people with no intrest in gaming.
3) Dont know why there would be a price war to begin with if the product is selling well with nice profit margin. see Wii
4) Options to the consumer means nothing if it is not making you money.
Wii is a new model, that has worked for Nintendo and their philosophy.
And Microsoft is still only in its 2nd generation of consoles. This idea really only applies to them, as I don't think such a move was 'possible' before or viable with a distinct h/w company like Sony.
Furthermore, models change with the market. 4 years ago, who would have though this generation would look how it does? 8 years ago, who would have put MS as one of the major players in the GI? The 8th gen is the first I can't make any solid prediction, the previous 7 have been largely predictable.
I'll answer that with 2 further questions;
1. With 2-3 distinct platform owners, why have the games console still only found its way into <200M homes in any given generation? (last gen from memory I think it was 170m approx, less in each previous gen). It is now the biggest entertainment industry in the UK, second in most other countries, why will the potential of the consoles to be installed in the majority of homes still be held back?
2. Does a software company such as MS have more to gain by taking advantage of other CE's capacity and more importantly brand name (Panasonic, Samsung, Toshiba e.t.c) when trying to dominate the console market, moreover, the living room?
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