Xbox360 Uncloaked eBook

[Geo]

What's the story with this?:

Not everything was smooth sailing at the end. Raven Software’s [FONT=ZEAZHN+WarnockPro-It,Warnock Pro]Quake 4 [/FONT]team had to remove full-scene antialiasing – which removed jagged lines from images on the screen – because the software update never arrived to enable it. Todd Hollenshead, CEO of id Software, fretted that Microsoft had promised it early on. But when the team ran the game, they had to rejigger it and remove the antialiasing to hit the full 60 frames per second that they needed for an ultra-fast play experience.

That's a mixed message there. Did it get pulled because of the missing software update? Or was the 60fps decision made after said missing update did arrive?

 

[pipo]

As far as I know it doesn't run at 60FPS anyway...

And I guess it had to do with a promised tools update.

 

[chroniceyestrain]

I wonder how many of those $10 million bills they put on Halo 3?

 

[Geo]

Nearly done now. Near the end he notes that the first major cost reduction is planned for Nov 2006. Tho with Sony's launch price, I have to suspect MS will pocket the cost improvement initially rather than pass it on. Peter Moore suggested as much recently, and that seems reasonable to me. The pent up demand is there for PS3 and I suspect the demand of a worldwide launch will not be able to fully meet it initially anyway, so I don't think a price cut by MS in Nov 2006 is going to impact PS3 sales at all in the launch period. Spring '07 would be more likely for something like that, I think.

 

[Gubbi]

I wonder how many of those $10 million bills they put on Halo 3?

I'd imagine Bungie would be perfectly capable of financing the development themselves with the truckloads of money made off the Halo franchise.

Cheers

 

[TheChefO]

Nearly done now. Near the end he notes that the first major cost reduction is planned for Nov 2006. Tho with Sony's launch price, I have to suspect MS will pocket the cost improvement initially rather than pass it on. Peter Moore suggested as much recently, and that seems reasonable to me. The pent up demand is there for PS3 and I suspect the demand of a worldwide launch will not be able to fully meet it initially anyway, so I don't think a price cut by MS in Nov 2006 is going to impact PS3 sales at all in the launch period. Spring '07 would be more likely for something like that, I think.

potentially they could pocket the extra cash - I was thinking the exact same thing at e3 when Sony announced their price "well might as well get a 360 now as they sure won't drop the price after that announcement". However they might still be able to sneek additional sales by a price cut.

Example: Joe Sony Fan walks into walmart late november to get his new ps3. They're obviously sold out. He thinks to himself, I'll just wait I guess until I can buy one in a few months. In the meantime he checks out the game section. He notices there aren't a lot of games he's interested in on ps3 yet. While there, he checks out the 360 section and has heard a bit about gears of war so he checks it out on the video screen along with the other games that spark his interest when he sees something which makes him think twice:

"360 core for $199!"

Now he's thinking, "hmm I could just pick this system up with gears for now and perhaps I'll just hold off fon getting a ps3 until next year when they have a better selection. Afterall it is much cheaper than I was intending to pay and I can just save the rest until the ps3 price drops."

If MS has extra supply this Christmas and can afford to take the additional hit they could scoop this market up as I'm sure there are more than a handful that will find themselves in this very place come november.

 

[Geo]

Oh, I dunno that I think they can cut $100 out first go 'round, if Nov 2006 is the target. Tho whether that target is still the target is another question. Is 65nm the enabler there? If so, I'm thinking Nov might be a little early (tho may have looked more reasonable when the book was being written).

 

[TheChefO]

Oh, I dunno that I think they can cut $100 out first go 'round, if Nov 2006 is the target. Tho whether that target is still the target is another question. Is 65nm the enabler there? If so, I'm thinking Nov might be a little early (tho may have looked more reasonable when the book was being written).

True I don't think they will have the cost reductions in place at that time and they would have to bite the bullet early on that but if their priority is marketshare then it is something to consider for truly growing their userbase as this will become more difficult down the road. With everyday that passes the ps3 will be closer to becoming affordable to the people that desire one and the games library will become more attractive.

Strike while the iron is hot.

 

[wco81]

Their big money-making divisions are capped out, with over 90% market share.

So they need these new businesses to make money, not be subsidized. MSFT has been stagnant for 5 years or so.

So they have to try to get better returns to shareholders.

So far, they're not making money on consoles or phone software. It would be irresponsible of them to endure bigger losses than they need to.

I'm sure part of the reason they increase the RAM was for competitive reasons, not just to placate the developers.

 

[Acert93]

So far, they're not making money on consoles or phone software. It would be irresponsible of them to endure bigger losses than they need to.

Not all investments are for a direct monetary return, but instead for market presence. e.g. just a small reason why the Xbox is important: Gaming is important to the Windows OS. Yet sales are down, which harms developers. The Xbox allows developers to continue supporting PC gaming (and thus supporting the GPU IHVs) while porting to the Xbox which leads to larger sales. The Xbox gives MS a presence outside the PC that the average consumer can identify with, etc

Nearly done now. Near the end he notes that the first major cost reduction is planned for Nov 2006. Tho with Sony's launch price, I have to suspect MS will pocket the cost improvement initially rather than pass it on.

A cost reduction does not necessarily get a parallel consumer retail price reduction. And that may be off. Xenon wont be moving to 65nm until Q1 2007 and I am guessing Xenos will be in a similar time table.

But I agree on the $100 bit. 33% price drop in 1 year seems like a lot. Like Sony, price will be a reflection of demand. If MS can make 1M units a month and sell all 1M at $399/$299 then they are at the right price (even though my wallet disagrees!) If Sony is selling every unit they have at $599 there is no logical business reason to go down to $499.

Assuming MS hits their sales targets in 2006 I am not sure MS will even have a big price drop in early 2007. Q1 will see Bioshock (which won a ton of E3 2006 awards), Q2 will be seeing Mass Effect, Q3 will most like see Halo 3, and Q4 will have GTA4. Pepper in Medal of Honor: Airborn, Brother in Arms 3: Hell's Highway, and so forth the 360 will have a strong library of titles. If sales start to slow or MS misses their targets then a price cut will be in order. But I am of the camp software drives hardware sales.

MS's 2007 pricing strategy, I believe, will strongly depend on Sony's software strategy and library and their pricing. If Sony stays high and MS can compete in the US/Europe with Software to keep their sales brisk there probably will not be a significant price cut.

Then again the Wii could be screaming off shelves at $199 and Sony may move on price early in 2007 after RSX and Cell move to 65nm and thus leave MS with no choice. But right now MS is in the drivers seat. They can see how Nintendo and Sony impact the market and adjust accordingly.