Was MS launching XBox a good idea? *spawn

[bomlat]

Actually the MS will realise slowly the hard fact:the XBOX is one of the dumbest idea that they aver had

Each sold copy of the Windows is a net increase in the bottom line : each sold XB decrease the bottom line ,due to the loss on each machine (lifetime),and due to the lost windows sale

If they have ever a sane moment then instead the hardware they push for the software/service side (XBlive for the PS3 / WII/PC platform,like the Steam)

Now they lost the first position on the PC,and they are in the deep swamp in the console business.

Of course for a nerd the PS3/xb360 the most beautiful things that ever been made by the mankind.

 

[Tahir2]

I don't think the Xbox360 is selling at a loss now.

And why would it be a lost Windows sale?
Tenuous connection at best...

 

[MarkoIt]

Actually the MS will realise slowly the hard fact:the XBOX is one of the dumbest idea that they aver had

.

They lost "money" from the Xbox project, but they made high revenues, and gained a positive image feedback that we cannot calculate.
Now 50 millions family have an Xbox, and Live is generating more profits every year...
I wouldn't call it a dumb move.

 

[Barso]

Of course MS are making profit, that's what Don Mattrick is trying to do.
I would imagine it was him that made sure kinect sold at a profit.
So surely he made sure the slim sold at a profit also.
It's funny that when sony brought the slim they cut features like touch sensitve on/off and eject and also extra USB ports but when MS bring out the slim this is the features they add.
I am sure that when the xbox360 successor arrives it will need less power and produce less heat.
The longer it takes for the nextgen consoles, the more impressive their performance will be and I am positive that they will arrive at break even or profit.
There's no way that sony or MS will take that chance again.
I cannot wait to hear the feature sets they will have.
MS have suddenly become a household name with the xbox and kinect, before it was the playstation that featured in movies and tv programmes and now it shares its space with the xbox. The brand has done more or the same in it's short years than playstation has ever done.
But I am curious to see how they will approach Japan with their next console or will they even bother at all considering the sales they get from the US and EU.

 

[MarkoIt]

If I were a Sony or MS CEO looking at this chart, I'd have a much better idea where those numbers actually come from, because all I really know is that it's not all consoles.

What does Nintendo produce other than consoles? I know that some of the loss of MS can be accounted for Zune and Kin, but still the profits made by Nintendo over the years are a order of magnitude larger than MS and Sony.
I'm not saying that they should copy Nintendo and go for an outdated hardware, but it would be hard to tell to the shareholders that you will sell again a console under the breakeven.

 

[Barso]

I think the main problem with selling a console under the break even is what will the competitor do?
If MS bring out a slightly updated hardware and sony bring out a 12 SPU CELL with monster GPU that produces ports of games that outshine the MS hardware then surely that's were most gamers will flock to. I know I would, I would drop MS like a brick.
It wouldn't take long for the internet facts to spread onto the street that the sony versions are far better performing than the MS versions. Look at call of duty for the wii.

 

[MarkoIt]

Edit: Add to the fact that in 2014-15 we may begin to see the shift to 4K screens all of a sudden we may be at square one again.

Before we see 4K in the consumer market it will be the end of this decade. We really not need it at small screen size. 4K and higher resolution will be used when we will replace our tv sets with digital walls. In 2014 we may start to have see 3D glasses-free display.

After trying kinect and finding it pretty much a waste of my time (not money cause it's been returned), I wonder whether the alternative forms of game interaction and handheld controllers are mutually exclusive--I tend to think they are.

The type of games that most gamers like, don't work too well (evidence so far) with these new alternative handsfree/move like controllers. I am honestly concerned that the big gaming companies, influenced by nintendo Wii's success, could go too far next gen.

They could even force some interaction like the PS3 did with sixaxis in a number of games making you move/shake the controller in a certain (awkward) manner which did not fit the gameplay at all. Nintendo did the same in certain games too, like Super Mario Galaxy.

I hope that they provide the different types of controllers/camera? One traditional handheld for RPG, arcade, adventure, etc and another alternative for, well alternative/party games. Trying to provide a common interface/controller that works for all games may not be feasible IMO.

We have yet to see hybrid gameplay, but it doesn't sound too bad. Controller + higher resolution Kinect would allow for some nice interaction.

What about feedback? Now we have visual, audio and a real basic tactile feedback...
Nintendo may go down this route: improved feedback from the game.
For example something like this:
http://www.youtube.com/watch?v=jXITjLurof0

 

[AlphaWolf]

What does Nintendo produce other than consoles? I know that some of the loss of MS can be accounted for Zune and Kin, but still the profits made by Nintendo over the years are a order of magnitude larger than MS and Sony.
I'm not saying that they should copy Nintendo and go for an outdated hardware, but it would be hard to tell to the shareholders that you will sell again a console under the breakeven.

That's the reason I never mentioned Nintendo.

Without the RROD mistake, the 360 is probably a success and would be profitable to date. It still probably will be a net money earner over the course of the generation. And Live now has increased value beyond the platform that started it.

Sony had the whole blu-ray and 15 different SKU's going, I don't think you'll see that again. But they also had the goal of winning an optical format war that I'm not sure they would have accomplished without the PS3.

Just because Nintendo was successful with a strategy doesn't mean that it would have worked for MS and Sony, in fact I think if Sony and MS had released with Wii level hardware the graph would be more lopsided for Nintendo. They wouldn't have been able to differentiate themselves with higher quality graphics. It's probably easier to sell shareholders on losing money for a while on hardware than it is to sell them on stagnating growth (or declining marketshare).

 

[bkilian]

Actually the MS will realise slowly the hard fact:the XBOX is one of the dumbest idea that they aver had

Each sold copy of the Windows is a net increase in the bottom line : each sold XB decrease the bottom line ,due to the loss on each machine (lifetime),and due to the lost windows sale

If they have ever a sane moment then instead the hardware they push for the software/service side (XBlive for the PS3 / WII/PC platform,like the Steam)

Now they lost the first position on the PC,and they are in the deep swamp in the console business.

Of course for a nerd the PS3/xb360 the most beautiful things that ever been made by the mankind.

You know, I'm not sure coming out with a new system that in 10 years is rivalling the Windows revenues which took 25 years to get where they are could be considered a "dumbest idea".
The problem with Windows is that once MS has sold it, that's it. MS gets X amount of dollars and we're done. (until the next version )
The XBox on the other hand, is genius. Not only do we get money when you buy it. We get ongoing revenue from live, We get ongoing revenue from ads and sponsors, we get ongoing revenue from digital purchases, and we get revenue for every game sold, even if we didn't create it. It's the holy grail of commerce to get paid for other people's work

It's how Apple went from has been (and needing a cash infusion from MS to survive) to rivalling and even exceeding our revenue in ten years. Every mp3 you buy for your ipod makes apple $0.30. And now with the iphone app store and the mac app store they've taken the idea to it's logical conclusion. Developers do the work, Apple makes the money.

As to your other points. We still have first place in the PC side. I think Apple's share is around 10%. We are making more in profit in the XBox division every quarter than a lot of successful companies make in _revenue_ in a year (Put it this way, I suspect the XBox division will post a larger profit this year than Amazon.com). I wouldn't call that "being in the deep swamp", unless it's a swamp made of money.

 

[NRP]

Stop it, bkilian. You're going to drive Mfa off the deep end.

 

[MfA]

As to your other points. We still have first place in the PC side. I think Apple's share is around 10%.

Not in all demographics ... you're in danger of just plain losing the college students.

But hey, you still have the Europeans right ... you can still flounder with windows for the consumer a little longer before even the German kids give up in disgust ...

IMHO Valve and Blizzard are more important to Microsoft and their future bottom line than Microsoft's XBOX division.

 

[ninelven]

Not in all demographics... you're in danger of just plain losing the college students.

Really, can we stop posting things we know to be factually incorrect?

 

[MfA]

An opinion about the future being factually incorrect? Speaking about factually incorrect, I missed the bit where he said Apple got where they are now by getting a cut on software sales ... that's just plain funny.

PS. not that I want their model to be emulated, still of course Apple makes most of it's money with it's ludicrous margins on it's hardware ... Valve is a better example of someone making a lot of money by getting a cut, that should have been Microsoft ... without the XBOX it would have been Microsoft.

 

[ninelven]

And you edited your post before your reply....

 

[bkilian]

An opinion about the future being factually incorrect? Speaking about factually incorrect, I missed the bit where he said Apple got where they are now by getting a cut on software sales ... that's just plain funny.

PS. not that I want their model to be emulated, still of course Apple makes most of it's money with it's ludicrous margins on it's hardware ... Valve is a better example of someone making a lot of money by getting a cut, that should have been Microsoft ... without the XBOX it would have been Microsoft.

It's funny? Sure, I suppose so. Exactly how much money does Valve make?

What I meant, to be more accurate is that apple controls their entire ecosystem. Buy an ipod case, apple gets a cut, buy speakers, apple gets a cut. They don't break out what percentage of their income is accessory and software and services from the actual hardware they make, but there's no way they could maintain a 40% margin on hardware alone.

But I take your meaning, it's not the sole reason apple managed such a meteoric rise.

So your next gen prediction is a PC/Mac with Steam?

 

[Shifty Geezer]

This was a painful enough derailment of a derailment, let alone for this thread to get derailed. Any more PC vs. Apple will just see this thread closed.

 

[Gubbi]

Back on topic.

According to the other thread regarding income for the three big console makers, Microsoft now makes over $1 billion per year from XBOX. To get there they had to sink $6 billion into building the brand. The bulk of the cost is from the first XBOX, a high BOM and the cost associated with building the brand, market share, and infrastructure (Live and the developer eco-system) are reasons the first iteration was never profitable.

The other big chunk of change was spent on RROD this gen. Microsoft inexperience as a hardware vendor was part of the reason of the high BOM of the first box. They learned an important lesson: Control the IP to ensure you are not at the mercy of a single supplier. Their inexperience in consumer electronics is to blame for the RROD. Making a piece of hardware that is guaranteed to fail, if not within the warranty period, then very shortly after is a mistake they probably won't be making again.

With income of over $1 billion /year, a solid userbase and great growth potential (re-invigorated by Kinect), how much is the XBOX business worth today ? A lot more than the $6B they have sunk into it, that is for sure.

Cheers

 

[MfA]

Exactly how much money does Valve make?

Not a public company, so who knows ... they didn't have a RROD recall though, so it's mostly profit.

What I meant, to be more accurate is that apple controls their entire ecosystem. Buy an ipod case, apple gets a cut, buy speakers, apple gets a cut. They don't break out what percentage of their income is accessory and software and services from the actual hardware they make, but there's no way they could maintain a 40% margin on hardware alone.

It's not the cut that helps them ... it's the relative amount of control, it's the ability to offer a relatively consistent user experience. The money they make is gravy. Now I wouldn't want a PC where I'm controlled to that extent ... but I think there is a huge market which does, which has been largely unserved by Microsoft as far as Windows is concerned. XBOX serves it, but that doesn't help Windows ... which is core business.

No matter if XBOX is profitable ... you can not go slow on improving Windows AND expanding into new markets because it might harm the XBOX and say "oh we still have 3/4s of college freshmen and trending down fast, so we're fine". On the one hand you risk losing a consumer generation which will impact your true bread and butter (losing even a couple percent in the business market makes XBOX irrelevant) on the other companies can step in and do what you won't ... Steam has harmed the XBOX (as Microsoft says, each PC game sold is one less XBOX game) while taking a cut. That could have been Microsoft.

I'm convinced that if Valve decides to build a type of Windows Light on top of normal Windows with more harshly certified hardware configurations, drivers/apps/games only coming from steam, on which they can guarantee a consistent user experience they can be successful with that. Now it's a huge gamble of course, so they probably won't do it ... but you better hope they do, because their help for Windows will be much more important than their harm to XBOX for Microsoft in the end.

So your next gen prediction is a PC/Mac with Steam?

That depends on Valve, I'm not particularly optimistic ... the fact they tied their fortune with Sony and worse Apple (iEmbrace, iExtend and iExtuingish) is not a sign that they are ready to make a big move on their own. Apple won't give up their fat hardware margins, so I don't see them being a huge threat as far as home gaming is concerned.

 

[acaeus]

Would the Xbox360 be as successful had Sony not been forced (for a number of reasons) to use the PS3 as an instrument of BD adoption?

I think that's a fair assumption.

Did Microsoft see the "opening" and went for the jugular? Did they know the 360 needed more time to be ready? (reading about RROD details I find it hard to believe they did not know about it)
Perhaps Microsoft came to the conclusion that taking the gaming market was much more important than any hardware problems they might have.

 

[Barso]

I have absolutely no doubts that MS knew about the RROD whe they released.
Making Christmas and beating sony was all that mattered but if they had known about sony's problems with the low yield of CELL chips and bluray diodes, they could have held off a bit longer.
But I think the biggest problem for MS was the form factor, the xbox360 comes across that the external design came first and then the engineers were told to make it all fit in the small shape with a low cost cooling system.
People seem to think that if sony launched first it would be a different matter but just remember the sony launch price and statements for Kutaragi, that if you can't afford it get a second job. I love it when arrogance brings a company down.