Xbox Business Update Podcast | Xbox Everywhere Direction Discussion

[Cyan]

I have a simple proof that this OEM idea is a bad one - rntongo, eastmen and I all agree on something for a change. This is a bad Xbox killing idea.

The ONLY way it can work is if MS subsidizes a top of the line machine (call it Next) at something like $599 (with X @ $399 and S @ 199) and then allow OEMs to make machines even better than the Next for enthusiasts for whatever they want to charge. I'd probably pay up to $999 for something better than a subsidized $599 Next, knowing that I'm only going to get $799 worth of hardware due to lack of economies of scale and OEM profit making. The problem is that I don't think many people are in the same boat as me. Once you go north of $999 you're into PC territory, which is where I'm headed btw if MS screws this up like it looks like they are about to.

taking into account the only detail that remains a mystery -'cos I really believe everything that insider said is true and I hope most of it becomes a reality-, is that Phil Spencer said they would create the most powerful hardware to date. I guess he meant console hardware. That's not incompatible with Windows OEMs, and OEMs would bring much needed fresh ideas to xbox.

 

[fehu]

I was thinking something like this: a pc xbox app that let you play all the ms store games, plus a thin compatibility layer to play xbox games purchased online.
This will work only on "good enough pcs", and the layer would be more to contrast piracy.
Xbox games would be programmed against a dx, or a subset of it.
Developers would share lot of code between console and pc.

 

[Shifty Geezer]

And what if the most significant basis of the whole OEM theory is software, games. Because what if they plan that there won't be a separate console version, but the PC game will be the Xbox game at the same time. This makes it easier for external marketplaces to become part of the Xbox ecosystem and, by the way, the development cost/time of games can be reduced.

Losing MS even more money? I don't understand the argument here regards the OEM hardware theory. If OEMs will be making hardware, they need high margins. MS makes money on the software. Only now you allow third party stores on these 'X boxes'? Then they are just PCs. What is MS's business in this case? They supply IHVs with a copy of Windows with an XBox branded wallpaper?

 

[iroboto]

MOD: tone down the hyperbolic commentary or heavier moderation will begin. Several commentators are driving this discussion into extremely low probability corner cases that have no actual proof or any real substance but is a perpetuating personal dissatisfaction that is completely de-railing any serious discussion about the Xbox strategy and business going forward.

this is not the thread for you to just share grievances. You can PM each other if you want to gang hate something.

Posts will be cleaned.

 

[QPlayer]

Losing MS even more money? I don't understand the argument here regards the OEM hardware theory. If OEMs will be making hardware, they need high margins. MS makes money on the software. Only now you allow third party stores on these 'X boxes'? Then they are just PCs. What is MS's business in this case? They supply IHVs with a copy of Windows with an XBox branded wallpaper?

If you look at how MS has made money with Xbox so far this generation, the answer comes from Gamepass subscriptions. They didn't make any money on the hardware, because the production cost was high, and it was sold cheaply, so far.

They can create their own mobile XboxPC hybrid and sell it as basic hardware. They can then add external, more powerful VGA options at different price points. Don't have to go to an OEM, they handle everything in-house. But the XboxPC console with the same games is likely to happen.

 

[Cyan]

Maybe that's the move altogether for an OEM model? MS designs a semi custom APU so they can secure economies of scale, and OEM's can change things like memory, cache, clockspeed, and cooling.

even on the software side there is a possibility that Microsoft may share profits in their store with OEM manufacturers if they want to, in order to offer better hardware prices. We still don't the what business model that Microsoft wants

 

[RDGoodla]

What hardware will you get in a $400 oem box ?

When is the OEM box released?

If it is released in 2025, then we can have 6~8 TF xbox, and it is still 2~3 years away from next gen PS.

You're very right. To add OEMs dont have the economies of scale that a console maker does. Sony can order for 10 million+ APUs from AMD in a single year because of the demand for their consoles. No individual OEM is going to come close to this scale building licensed Xboxes. So they'll mainly compete by providing a more expensive more powerful box than Sony or MS can make. Likely smaller than your average desktop but larger than a console.

Maybe another Steam Box. Very expensive console is hard to sell.

 

[XboxKING]

What if the hardware partners get a share of all sales on each device sold?

Maybe this is why Microsoft wants a 15% share for software sold so that they don’t have any more hardware risks and the hardware company can also get 5-10% on everything sold. That could be an incentive no?

 

[cheapchips]

What if the hardware partners get a share of all sales on each device sold?

I've said this several times. MS already do digital sale revenue split with some retail stores.

The questions are whether they'd offer that to OEMs, whether it's enticing to OEMs or enough for OEMs to lower their retail price.

 

[Tkumpathenurple]

I think the main problem with this concept is it's never worked before AFAIK. Where you have an open market selling compatible devices, like desktop IBM clones or DVD players, you have a cut-throat industry that sees most players lose money and you end up with just a couple of players. Steam Deck works because there's only one, so Valve is getting all the economies of sales. Now imagine that same market of a few million units is spread across 5 vendors - you need higher margins per unit. If Valve can sell Steam Deck at $400 knowing they get 30% on software, any OEM is going to have to charge notably more. Which is why Steam Deck alternatives like ASUS and Lenovo went with a $700 price point.

Aye, good point. It's certainly no silver bullet, and clearly has its own set of challenges - if it's even viable at all.

Some of the other suggestions here about sharing revenue from the store seems like part of the solution towards making this work.

Selling the APU to OEM's at cost would probably be vital.

When it comes to economies of scale though, won't the big OEM's already do fairly well there, given their involvement in e.g. the laptop market? That might not apply to every single component, but they're surely already buying pretty hefty amounts of memory, fans, heatsinks, PSU's etc right?

I've honestly no idea, having never looked into basically any aspect of OEM's at all.

 

[MfA]

I was thinking something like this: a pc xbox app that let you play all the ms store games, plus a thin compatibility layer to play xbox games purchased online.

I'd rather see Chromebook type certified hardware platforms with the xbox OS and a new VM. The two existing xbox VMs for console gaming and a new VM for normal windows (possibly with both PV and PCIE passthrough graphics, for passthrough switching between xbox and windows gaming will take longer).

 

[eastmen]

that xboy console is what the Series S should be. But not enough people bought the Series S. It lacked boys.

Except if xboy comes out or xbox m and its series s level specs then the series s will also get more popular .

I mean if MS did this

Zen5/6 + rdna5 in a 2025 handheld with the series s home console updated to the same soc (they could use some that don't perform as well at lower power levels by simply supplying more power in a home console vs mobile) and then replaced the xbox series x with zen5/6 + rdna 5 but higher clocks and more units + more ram they would have a complete generational upgrade.

series s and x could simply play those games with lower resolution effects or effects just turned off

When is the OEM box released?

If it is released in 2025, then we can have 6~8 TF xbox, and it is still 2~3 years away from next gen PS.


Maybe another Steam Box. Very expensive console is hard to sell.

Yea but a 6-8tflop xbox is weaker than the xbox series x.

You might be able to make the arguement that if they use rdna 4 and a newer zen you'd get better results from the same tflops as that isn't the most important thing. But It will still be a really tough sell unless Rdna4/5 is a major leap vs rdna 2.

 

[rntongo]

I have a simple proof that this OEM idea is a bad one - rntongo, shifty, eastmen and I all agree on something for a change. This is a bad Xbox killing idea.

The ONLY way it can work is if MS subsidizes a top of the line machine (call it Next) at something like $599 (with X @ $399 and S @ 199) and then allow OEMs to make machines even better than the Next for enthusiasts for whatever they want to charge. I'd probably pay up to $999 for something better than a subsidized $599 Next, knowing that I'm only going to get $799 worth of hardware due to lack of economies of scale and OEM profit making. The problem is that I don't think many people are in the same boat as me. Once you go north of $999 you're into PC territory, which is where I'm headed btw if MS screws this up like it looks like they are about to.

Glad we agree on something. Its a strategy which hasnt worked in the past. This is why my intuition tells me they're moving towards their core being a 3rd party publisher. Because a lot doesnt up with such a model. Indeed its just speculation at this time but from a source that's had impeccable track record. If they can make it work it would be impressive. But as you've noted OEMs need to sell well over the price of current gen consoles, at which point they will also be entering PC gaming sales if they go above $999. In all this it will require even greater execution than Sony's HW team has to put in because you have to deal with multiple OEMs and your software team has to ensure all these OEMs are building hw that meets requirements of the developers. So I think the combination of hardware will have to tightly regulated to ensure they can at least precompile shaders for each licensed Xbox, otherwise it will lower sales if consumers realize they have to do all sorts of configurations with shaders on their Xbox to get games running smoothly.

taking into account the only detail that remains a mystery -'cos I really believe everything that insider said is true and I hope most of it becomes a reality-, is that Phil Spencer said they would create the most powerful hardware to date. I guess he meant console hardware. That's not incompatible with Windows OEMs, and OEMs would bring much needed fresh ideas to xbox.

You bring up a valid point, I remember hearing that. But it also leads to a rabbit hole because if Xbox releases a very powerful piece of hw so soon, its going to be a tough sell as well with a lot of people who have already bought a Series X this gen. Which is most of the Xbox sales. AFAIK based on the FTC leaks, there was no such system in the works and such a console would require at least 3 years of work before launch. So Phil may have been meaning the next gen Xbox meant to launch closer to 2028(according to FTC leaks) or the rumoured OEM which provides multiple configs. I know MS is claiming the FTC leaks are outdated but this isnt entirely true for their console roadmap. They'd need to have had around 3 years of work on the machine. For reference Sony started working on the pro just after the launch of the PS5 and its not yet out, could even be delayed to next year.

Maybe another Steam Box. Very expensive console is hard to sell.

Yup its murky waters. I actually forgot this thing existed. Lesson for valve was to create their own single hw, MS seems to be moving in that direction.

I've said this several times. MS already do digital sale revenue split with some retail stores.

The questions are whether they'd offer that to OEMs, whether it's enticing to OEMs or enough for OEMs to lower their retail price.

Interesting detail, I wonder what the split is. But with the OEM model, I think the actual store is the gamestore which will be the MS Gamestore. So the split is between the game publisher and the online gamestore not the OEM. I think it would be similar to the ASUS ROG Ally, they just make the hw and a lot of people pirate titles on the ROG Ally. As you can watch here in the first 2 minutes. So the difference would be it would have the Xbox OS which prevents a lot of features you'd have with a device like the ROG Ally, but I dont see the OEM getting a cut or considerable one for online game store sales or disc sales for OEM models that have a disc drive.

Losing MS even more money? I don't understand the argument here regards the OEM hardware theory. If OEMs will be making hardware, they need high margins. MS makes money on the software. Only now you allow third party stores on these 'X boxes'? Then they are just PCs. What is MS's business in this case? They supply IHVs with a copy of Windows with an XBox branded wallpaper?

These are my questions as well tbh. A lot doesnt add up leading me to think they plan on becoming a third party publisher over the long term. As others have noted the OEM model hasnt had a good track record within this context. The way I can see it work is if they have OEMs produce $800-$1000 licensed models with strict guidelines on which processors to use so its easier for MS to have precompiled shaders for these licensed Xboxes. It cant be the same as the PC otherwise the sales will be even much lower. Why pay for a $1000 PC-Xbox which restricts you to the Xbox OS if its not almost seamless. You might as well build a PC.

 

[Nisaaru]

When is the OEM box released?

If it is released in 2025, then we can have 6~8 TF xbox, and it is still 2~3 years away from next gen PS.


Maybe another Steam Box. Very expensive console is hard to sell.

Strix Halo has 20WGP and 40CUs of RDNA3.5. PS5Pro has 30WGP.
Strix Point has 16WGP.

Both are faster than your numbers. I would assume that at least a Strix Point fits into that price range, if not even both.

 

[cheapchips]

Interesting detail, I wonder what the split is. But with the OEM model, I think the actual store is the gamestore which will be the MS Gamestore. So the split is between the game publisher and the online gamestore not the OEM. I think it would be similar to the ASUS ROG Ally, they just make the hw and a lot of people pirate titles on the ROG Ally. As you can watch here in the first 2 minutes. So the difference would be it would have the Xbox OS which prevents a lot of features you'd have with a device like the ROG Ally, but I dont see the OEM getting a cut or considerable one for online game store sales or disc sales for OEM models that have a disc drive.

Not sure if I wasn't clear to begin with or I misunderstood your playback - If you bought an Xbone SAD from some retailers, the retailer got a lifetime split of Microsoft's cut on digital sales from that console. This was to sweeten the fact that the shops were losing out on a lifetime of disk sales, but Microsoft still needed the devices in retail. On an OEM device, Microsoft can also chose to send some of it's cut from Xbox store purchases to the OEM. Or not! But it is a an option.

The 'Window mode' VM with the ability to run other stores or pirate games is a revenue risk that MS and OEM would have to stomach. Microsoft are betting that the XboxOS frontend has enough value that it's not a huge risk. Also that users are lazy/ignorant and since XboxOS is the first thing you'll see, users will just default to it. This works for SteamOS, so should work for them. Maybe the fact that a Window VM is easier to use than Steam Desktop mode presents a bigger issue to them.

 

[rntongo]

Not sure if I wasn't clear to begin with or I misunderstood your playback - If you bought an Xbone SAD from some retailers, the retailer got a lifetime split of Microsoft's cut on digital sales from that console. This was to sweeten the fact that the shops were losing out on a lifetime of disk sales, but Microsoft still needed the devices in retail. On an OEM device, Microsoft can also chose to send some of it's cut from Xbox store purchases to the OEM. Or not! But it is a an option.

The 'Window mode' VM with the ability to run other stores or pirate games is a revenue risk that MS and OEM would have to stomach. Microsoft are betting that the XboxOS frontend has enough value that it's not a huge risk. Also that users are lazy/ignorant and since XboxOS is the first thing you'll see, users will just default to it. This works for SteamOS, so should work for them. Maybe the fact that a Window VM is easier to use than Steam Desktop mode presents a bigger issue to them.

I did not know about this. Its a very interesting detail. To add I wonder what the split was. Because something similar could be arranged for OEMs selling licensed Xbox machines. So thanks for clarifying.

The 'Window mode' VM with the ability to run other stores or pirate games is a revenue risk that MS and OEM would have to stomach. Microsoft are betting that the XboxOS frontend has enough value that it's not a huge risk. Also that users are lazy/ignorant and since XboxOS is the first thing you'll see, users will just default to it. This works for SteamOS, so should work for them. Maybe the fact that a Window VM is easier to use than Steam Desktop mode presents a bigger issue to them.

Yeah because from what's been described by rumours is it will be a licensed Xbox so it will have the Xbox OS. But there are considerations to be able to have other game stores as well within that Xbox OS. But it wont be a Windows machine. So my question comes from the software/hardware issues with this approach. With the multiple configs of hw from OEMs, there could be compatibility issues that affect the experience for the consumer. How is MS going to ensure the experience is seamless like it is on consoles? I dont think consumers will be happy to buy an Xbox machine they have to load precompiled shaders for to play a game or any things of the sort. So MS needs to be strict on what kind of hw the OEMs can use and work with their in house compatibility team to ensure all OEM boxes work seamlessly. Otherwise it will be a niche product as consumers gravitate to traditional consoles and PC. People that like to configure their devices a lot will prefer PCs because of the total freedom they get instead of spending $800-$1000 on a licensed Xbox that doesnt let you run Windows unless you jailbreak it. And those that usually buy consoles may get thrown off with having compatibility issues with titles. So these are my questions really.

 

[cheapchips]

How is MS going to ensure the experience is seamless like it is on consoles? I dont think consumers will be happy to buy an Xbox machine they have to load precompiled shaders for to play a game or any things of the sort. So MS needs to be strict on what kind of hw the OEMs can use and work with their in house compatibility team to ensure all OEM boxes work seamlessly. Otherwise it will be a niche product as consumers gravitate to traditional consoles and PC. People that like to configure their devices a lot will prefer PCs because of the total freedom they get instead of spending $800-$1000 on a licensed Xbox that doesnt let you run Windows unless you jailbreak it. And those that usually buy consoles may get thrown off with having compatibility issues with titles. So these are my questions really.

The XboxOS/store games can be seamless. If OEMs provide different hardware configs, it still shouldn't be that much bother to create shade caches for those variants, similar to SteamOS.

As for the full PC side and other stores, there's a variety of ways they can run that virtual machine/experience. Think Heroic Launcher on the Deck, GeForce Now or Luna.

 

[rntongo]

The XboxOS/store games can be seamless. If OEMs provide different hardware configs, it still shouldn't be that much bother to create shade caches for those variants, similar to SteamOS.

As for the full PC side and other stores, there's a variety of ways they can run that virtual machine/experience. Think Heroic Launcher on the Deck or GeForce Now.

It will be interesting to see how this is implemented considering even the SteamDeck has quite some compatibility issues despite access to a fairly large library of precompiled shaders. I dont doubt MS has better resources they can put towards this if they implemented the OEM model but it would be a huge task regardless.

 

[cheapchips]

It will be interesting to see how this is implemented considering even the SteamDeck has quite some compatibility issues despite access to a fairly large library of precompiled shaders. I dont doubt MS has better resources they can put towards this if they implemented the OEM model but it would be a huge task regardless.

The XboxOS virtual machine Windows will boast better compatibility than Wine+Proton though. Or at least, it bloody should do!

 

[Johnny Awesome]

I wasn't aware that MS shared store revenue with big box stores. That's HUGE important information if true.

Btw, it's not that I think this OEM idea CAN'T work, it's that I believe it's so difficult to execute that MS likely can't navigate it properly. They wouldn't be in this jam had they executed their last 3 plans competently.