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Dippo
Apr 26, 2004, 11:16 AM
Xbox cops another loss (http://www.theregister.co.uk/2004/04/26/xbox_loss/)

However, the operating loss at the division was a very substantial $209m - illustrating just how difficult Microsoft is finding it to make money out of the Xbox. Compare this with closest rival Nintendo, which made just shy of half a billion dollars profit in the year to 31 March - and expects a billion dollar profit in the current financial year

With losses on the Xbox running into multiple billions of dollars, and the company still owning a global market share of the home console market that's slightly behind Nintendo's (albeit certainly leading the GameCube in North America), the console may have been an important stepping stone for Microsoft's console ambitions, but the cost of building that stepping stone must surely have been enough to make even the cash-wallowing beancounters of Redmond blanch.

I feel for both Sony and Nintendo...how can they compete with a monopoly that throws billions against them?

g30ffr3y
Apr 26, 2004, 11:56 AM
Xbox cops another loss (http://www.theregister.co.uk/2004/04/26/xbox_loss/)





I feel for both Sony and Nintendo...how can they compete with a monopoly that throws billions against them?


don't feel bad for them... sony and nintendo will compete because they acutally make good game consoles with games that are fun to play...

xbox's make good boat anchors... if that...

stoid
Apr 26, 2004, 12:30 PM
So what's Microsoft's long term plans here?

Continue to through billions of dollars out for the next three years or until it finally crushes Nintendo and Sony's systems then jack their own price up so that with their new monopoly gamers are forced to take it up the ass to play their favorite games?

At this point, I don't think that Microsoft can feasibly even turn a profitable venture out of the gaming system anymore. I never knew that the xBox was doing THAT poorly. I think that it is some stubborn boss-man somewhere in MS that is the only thing keeping the xBox alive.

Savage Henry
Apr 26, 2004, 12:35 PM
xbox's make good boat anchors... if that...

As reluctant as I am to stoop to 'forumspeak' acronyms, but that did make me lol :D

Nevertheless, with the Redmond cashpile behind it the x-box will certainly last until at least v.3, whether it's a plop-slab or not.

srobert
Apr 26, 2004, 12:38 PM
Well, I own a Gamecube and a PS2 and I got to admit, I've been tempted more than once to purchase a XBox. There are some real good games that I'd like to play that are ontly available on XBox: KOTOR, Crimsom Skies and Mechwarrior to name a few.

LethalWolfe
Apr 26, 2004, 12:41 PM
I if the next Xbox doesn't do well I think MS will bow out of the console market. Or maybe make some all-in-one home entertainment set-top piece (console+DVD player+DVR kinda thing).

I would be surprised if MS planned on the Xbox being a success on paper. I think the Xbox is a success in terms of "mind share" though. It went from zero to hero basically. I remember when it was first announced it was getting slammed by everyone. When it first came out people had a field day because some of the units were duds and gave their owns the Green Screen of Death. Or because of the big controler. Or because Halo was the only good game. But now it's a few years later and most of the haters have gone away. MS has delivered a solid product in the Xbox. And when people talk about the upcoming "Xbox 2" (or whatever it's going to be called) it is a far cry from how people talked about the upcoming Xbox a few years ago.


Lethal

Stike
Apr 26, 2004, 01:01 PM
Well, I own a Gamecube and a PS2 and I got to admit, I've been tempted more than once to purchase a XBox. There are some real good games that I'd like to play that are ontly available on XBox: KOTOR, Crimsom Skies and Mechwarrior to name a few.
Yeah, but I tell you why it is that way - because MS paid the developers to make exclusive games. Of course this is nothing new to Sony and Nintendo, but I bet some of those developers would love to port their games to PS2, since it is promising far more sold units due to its high market share.
All the money spent to keep some exclusives for the XBox lower the revenue, too. Or better said: MS increase the loss, hoping that it will find an end.
In my eyes the XBox is already dead, itīs just a question of time when Microsoft will admit it. It may also take 10 years, like they admit now that Windows 95 was shipped completely without security measures.

Mr. Anderson
Apr 26, 2004, 01:05 PM
You have to wonder how much of the loss is due to hardware vs. software costs....:D

Well, like what was said above - competition just makes things better for all of us....

D

Dippo
Apr 26, 2004, 01:09 PM
Well, like what was said above - competition just makes things better for all of us....

You got that right, we can all look forward to better consoles with more features and better games.

Microsoft doesn't have a monopoly on game consoles, so they can't just make crap and expect everyone to buy it. (like they do with the PC)

MorganX
Apr 26, 2004, 02:15 PM
So what's Microsoft's long term plans here?

Continue to through billions of dollars out for the next three years or until it finally crushes Nintendo and Sony's systems then jack their own price up so that with their new monopoly gamers are forced to take it up the ass to play their favorite games?

At this point, I don't think that Microsoft can feasibly even turn a profitable venture out of the gaming system anymore. I never knew that the xBox was doing THAT poorly. I think that it is some stubborn boss-man somewhere in MS that is the only thing keeping the xBox alive.

FWIW, Xbox sales are hot. They're the only console to increase year over year in both software and hardware sales. +30% I believe. The problem is the cost to manufacture the current Xbox. Microsoft has stated publicly that they will not be able to be profitable on the current Xbox. This would be why a Hard Disk will probably be optional in Xbox 2 (rumors that it will be a dockable MP3 player are interesting).

It is also why I believe MS will not wait for PS3 to launch Xbox 2. And remember, with +30% in hardware in software sales, Starcraft Ghost, Fable, Halo 2, Chronicles of Riddick, and Doom 3 will be arriving in the second half of the year, and maybe, Rebel X (about time). All consoles began this way, sold at a loss to establish market. Microsoft is probably ahead of where it thought it would be in software sales, but they're going to have to get Xbox 2 out ASAP to head towards the black.

1macker1
Apr 26, 2004, 02:16 PM
I own a XBOX and play a PS2, and hands down, the XBOX wins in almost every aspect. The PS2 has a huge collection of games to choose from, but the XBOX is catching up. I prefer the XBOX, cause it's simply the better of the 2 systems. MS idea is to sell games, and a report came out today that on average, every XBOX owner owns 6.8 games. Their earning was up more than 30% on the XBOX.

http://www.microsoft.com/msft/earnings/FY04/earn_rel_q3_04.mspx

DreaminDirector
Apr 26, 2004, 05:49 PM
I, too, have to admit that I like my xbox over my PS2. Xbox just feels more fluid. Maybe I've become so comfortable with my controller s that the PS2 controller feels like crap to me. The problem as I see it is that the xbox is much like the mac (please don't kill me....). There are some really quality games on the xbox that have amazing graphics, are fun to play and (unfortunately for me..) very addicting. PS2 has some great games as well, but I see more crap games for PS2 than the xbox. Hence, this correlation between Macs and xboxs. There a small loyal following of addicted gamers.

All of us hardcore mac users (again, I may be speaking for myself) who love the mac know that it's because of the experience and quality. I think xbox is a solid gaming machine and delivers an amazing experience 99% of the time.

I can see more developers jumping on the xbox platform when xbox 2 comes out. It'll prove to alot of people that the xbox can be the gamer's choice. However, I quite possibly fall back in love with playstation when the PS3 is released. Who knows....

flyfish29
Apr 26, 2004, 09:17 PM
So what's Microsoft's long term plans here?

Continue to through billions of dollars out for the next three years or until it finally crushes Nintendo and Sony's systems then jack their own price up so that with their new monopoly gamers are forced to take it up the ass to play their favorite games?

At this point, I don't think that Microsoft can feasibly even turn a profitable venture out of the gaming system anymore. I never knew that the xBox was doing THAT poorly. I think that it is some stubborn boss-man somewhere in MS that is the only thing keeping the xBox alive.

M$ will continue to try to buy game companies as they have in the past to own the best games. There was talk that they were going to buy Sega when Sega was struggling and even mild rumors of trying to buy EASPorts, but obvously neither happened.

Remember that the X-box is basically a PC as far as processing power goes and of course it is going to be a better machine as far as speed/graphics than the PS2...they are using $500 worth of materials (cost when Xbox was released) and selling it for less than $150(now...$300 when new) they have always intended on selling the Xbox at a big loss in hopes to make inroads to the gaming market.

But what do you think will happen if they do take over the console market from Sony...do you think they will give you hardware worth more than you are paying for like they are now? Not Do you think they will be the creative leader if they own the market? Not.

imac_japan
Apr 26, 2004, 10:27 PM
I own a XBOX and play a PS2, and hands down, the XBOX wins in almost every aspect.

The PS2 is what 2 -3 years older than the X-box...Its like comparing The dreamcast to a PS2 - (only two years apart). Consoles usually have about a 5 year life so the X-box is in the middle and the PS2 is an old man.

Basically, the X-box isn't even beating Nintendo ! and outside of the U.S - its doing poorly. Especially in Japan, The PS1 sells more units here...

Japanese people just won't buy it because they only really trust Japanese companies to give them Japanese style games ( I mean alot of American companies just make shooting, death match or sim games) - I admit that it has some good games and Ive thought about buying it because of KOTOR and Halo (and they've come out on the PC anyway). BUT the PS2 has alot more games and with the Gamecube - its really easy to play different region games on it.

Mircosoft should just focus on software ! they would make more money...

amyhre
Apr 26, 2004, 11:10 PM
Actually PS2 is only 20 month older than XBox but that still makes a difference when it comes to Moore's Law. Also, the XBox is designed to be much like a computer.

LethalWolfe
Apr 26, 2004, 11:36 PM
But what do you think will happen if they do take over the console market from Sony...do you think they will give you hardware worth more than you are paying for like they are now? Not Do you think they will be the creative leader if they own the market? Not.


What do you think will happen if Sony takes over the console market? Or if Nintendo takes over the console market? As another poster mentioned, competition is good (both competition from MS and against MS).


imac_japan,
It's funny you mention DC (which I still own and probably will never sell). The DC was released 1 year before the PS2 (which is part of the reason it's sales never took off as everyone was holding out for the PS2). And it's graphics, in general, were better than the first few generations of PS2 games. The PS2, IMO, has been a let down when it comes to visuals ( especially considering all the hype Sony was pumping out about how awesome the graphix would be).

Anyway, this whole non-Sega hardware reality has been kinda rough for me 'cause I've been a Sega fanboy sense day one. Until I got my Xbox for Xmas I'd only owned Sega hardware. But at least I still get to enjoy their killer games.


Lethal

zamyatin
Apr 27, 2004, 02:59 AM
What do you think will happen if Sony takes over the console market? Or if Nintendo takes over the console market? As another poster mentioned, competition is good (both competition from MS and against MS).

Lethal

Neither of those companies has the track record that MS has for abusing its market position. In fact, very few companies in history can compare to MS in terms of abusing their customers to reap unearthly profits. You have to go back to the early 1900s to find the few comparable circumstances (US Steel, Rockefeller's Standard Oil, and the railroad monopolies). MS is truly an historical anamoly, let's hope it is a short-lived one.

zamyatin
Apr 27, 2004, 03:02 AM
So, to put this into perspective, if MS had used the dollars it's lost since the beginning of the XBox project on the Apollo program instead, how much of the entire moon landing could it have financed?

LethalWolfe
Apr 27, 2004, 03:35 AM
Neither of those companies has the track record that MS has for abusing its market position. In fact, very few companies in history can compare to MS in terms of abusing their customers to reap unearthly profits. You have to go back to the early 1900s to find the few comparable circumstances (US Steel, Rockefeller's Standard Oil, and the railroad monopolies). MS is truly an historical anamoly, let's hope it is a short-lived one.


Neither of those companies do because they have always had competition. If Sony or Nintendo became the only, or only viable, console maker the hardware innovation and one-up-manship were are seeing would go right out the window. I agree that companies w/the size and power of MS rarely come to life, but that doesn't mean Sony and Nintendo are nicer companies. It just means they've never been in such a dominating position before. Looking at niche markets it is a bit easier to see top companies becoming lax because their is typically less competition in niche markets than there is in more mainstream markets.

Take Avid for example. For years Avid was the sole big dog in the film & TV editing world. Yes there were other companies but their markestshare, and impact, were tiny (and most no longer exist). Then comes Apple with FCP (especially versions 3 and 4). People start going, "well crap. This stuff from Apple is nearly as good as this stuff from Avid and it costs way, way, way less..." Suddenly Avid is coming out with new features and hardware left and right and prices have absolutely plummeted in the last 2 years. Coincidence? No. Avid finally has real competition again.

If Sony or Nintendo became the sole provider of console hardware would they be as "bad" as MS? I don't know. But I do know that w/o competition we'd pay more for less no matter what company (Sony, MS, or Nintendo) was selling it.


Lethal

Danrose1977
Apr 27, 2004, 07:36 AM
This has turned into a very interesting discussion.

I own all three consoles and believe that there are good points to all of them... though I do tend to play xbox more than others.

Regarding sales I don't think you can really look at the situation on a worldwide level. The markets in Japan, Europe and America are all very different. I personally think that Nintendo are the brand that is loosing their way while xbox becomes the major PS opposition (at least in Europe and the US).

Upcoming product lines from the companies show their focus:

MS:
Xbox2 - Aimed at the home console market

Sony:
PSP - Aimed at taking market share from nintendo and nokia portables
PSX - Aimed at the Home entertainment market
PS3 - Aimed at the home console market

Nintendo:
GC2 - Aimed at the home console market
Nintendo DS - Aimed???? into the middle of nowhere as far as I can see, there is nothing else quite like it on the market.

MorganX
Apr 27, 2004, 07:51 AM
Neither of those companies has the track record that MS has for abusing its market position. In fact, very few companies in history can compare to MS in terms of abusing their customers to reap unearthly profits. You have to go back to the early 1900s to find the few comparable circumstances (US Steel, Rockefeller's Standard Oil, and the railroad monopolies). MS is truly an historical anamoly, let's hope it is a short-lived one.


I think you're confusing being a monopoly with abusing customers for unearthly profits. I think Apple is more guilty of that. That's basically their business model. MS tends to abuse their competitors.

MorganX
Apr 27, 2004, 07:54 AM
So, to put this into perspective, if MS had used the dollars it's lost since the beginning of the XBox project on the Apollo program instead, how much of the entire moon landing could it have financed?

Now put Steve's Learjet in perspective...

Apple's years of bloated profit margins because they won't allow clones...

This is a silly notion.

flyfish29
Apr 27, 2004, 08:16 AM
What do you think will happen if Sony takes over the console market? Or if Nintendo takes over the console market? As another poster mentioned, competition is good (both competition from MS and against MS).



Sony prettymuch owns the market, but they don't try to buy all the game companies like MS. they own 989 but their games suck. Sony has much different practices when it comes to business ethics. Sony innovates and always has no matter what market share they have. M$ is known to do the opposite. Competition is good, but if M$ gets a hold of a market they end up destroying innovation.

flyfish29
Apr 27, 2004, 08:22 AM
I think you're confusing being a monopoly with abusing customers for unearthly profits. I think Apple is more guilty of that. That's basically their business model. MS tends to abuse their competitors.

You both are right! M$ abuses both their competitors and their customers. M$ abuses their customers directly as well as indirectly(by destroying their competition). They abuse their customers directly by providing software that is inferior, overpriced, and limiting in the ability to use other software programs instead of M$ products.

Here is a link Stoid has in his sig. This pretty sums up how M$ abuses their CUSTOMERS! It is things like this that M$ does that pisses me off!

http://www.macdailynews.com/comments.php?id=P2555_0_1_0

:mad:

1macker1
Apr 27, 2004, 08:46 AM
No offense, but I dont care about the Japan market. The XBOX is doing well here in America. Many game publishers are announcing that they are stopping game development for the GameCube. The XBOX has tons of good games, but i guess that all depends on the individual's taste. I'd never buy a GameCube because it's a console for the kiddies.
The PS2 is what 2 -3 years older than the X-box...Its like comparing The dreamcast to a PS2 - (only two years apart). Consoles usually have about a 5 year life so the X-box is in the middle and the PS2 is an old man.

Basically, the X-box isn't even beating Nintendo ! and outside of the U.S - its doing poorly. Especially in Japan, The PS1 sells more units here...

Japanese people just won't buy it because they only really trust Japanese companies to give them Japanese style games ( I mean alot of American companies just make shooting, death match or sim games) - I admit that it has some good games and Ive thought about buying it because of KOTOR and Halo (and they've come out on the PC anyway). BUT the PS2 has alot more games and with the Gamecube - its really easy to play different region games on it.

Mircosoft should just focus on software ! they would make more money...

Sol
Apr 27, 2004, 09:09 AM
The PS2 is what 2 -3 years older than the X-box...Its like comparing The dreamcast to a PS2 - (only two years apart).

Man, you just insulted the DreamCast. There were areas in the features where the DreamCast was superior to the PS2, like amount of video memory for example. Graphics on the PS2 did not look better than what the DC could do, just different. If developers were still working on DreamCast games I am certain that they would look just as impressive as the current generation of PS2 games.

Stike
Apr 27, 2004, 09:44 AM
I'd never buy a GameCube because it's a console for the kiddies.
No offense, but I do not care about your short-sighted criticism here. Metal Gear Twin Snakes and Resident Evil are kiddie-games, for sure... :rolleyes:

MorganX
Apr 27, 2004, 09:54 AM
Not to get too far off topic but :

>> M$ abuses their customers directly as well as indirectly(by destroying their competition).<<

There's more competition on the PC platform than any other. Hmm..

>>They abuse their customers directly by providing software that is inferior, overpriced,<<

I find XP to be the superior consumer desktop OS. No Office suite is comparible to Office, I find the price inline with comparable products, though I would like Office to be cheaper, there is Works for those who really don't need Office.

I find most competitors inferior (Netscape, Real, Linux)


>>and limiting in the ability to use other software programs instead of M$ products.<<

I think you can run more third part software and hardware on Wintel than any other platform.

LethalWolfe
Apr 27, 2004, 02:46 PM
Sony prettymuch owns the market, but they don't try to buy all the game companies like MS. they own 989 but their games suck. Sony has much different practices when it comes to business ethics. Sony innovates and always has no matter what market share they have. M$ is known to do the opposite. Competition is good, but if M$ gets a hold of a market they end up destroying innovation.


Sony has *never* dominated any consumer market the way MS dominates the consumer OS market. Windows is the only viable desktop OS choice you have for a PC. Sony is not the only choice you have if you want a video game console. Sony innovates the way they do because they have to. If they don't they would lose out to Nintendo and MS. Am I saying that Sony would be as bad as MS? No. What I am saying is that lack of competition leads to consumers paying more for less. Whether it's MS in the desktop OS world, Avid in the editing world, or Sony in aspects of the pro video world any time you have a company that is basically the only game in town you will pay higher prices for lesser products.

2-3 years ago before HD really started becoming a viable option Sony's DigiBeta format was the highest quality video format (and it still is the highest quality standard def video format). And since Sony invented the BetaSP, format which is the defact broadcast standard used, it was easy for them to leverage their DigiBeta format into the industry. Of course you can only buy DigiBeta cameras and decks (VCR's) from one company, Sony. Which meant you had to pay through the nose. Now that HD has become a viable option the DigiBeta equipment has droped nearly 1/3 in price. Gee. I wonder why.


Lethal

FriarTuck
Apr 27, 2004, 03:26 PM
I think the key question is backwards compatibility. If PS3 does not play PS2 games, and XBox2 comes out at the same time or about the same time as PS3, there's no reason XBox2 can't take a large chunk of Sony's market.

If, however, there is backward compatibility, XBox will never catch up to Sony and MSFT will find itself in an Apple-esque catch 22 situation (don't have the market share so can't get software so won't get more market share) which it can only combat by buying off developers or making a clearly superior product.

It's nice to have a company with such vast resources so willing to commit them to entertaining me for a pricetag lower than their cost.

1macker1
Apr 27, 2004, 04:03 PM
Look at the game selection, it's a console for kiddies.
No offense, but I do not care about your short-sighted criticism here. Metal Gear Twin Snakes and Resident Evil are kiddie-games, for sure... :rolleyes:
How u playing Metal Gear Twin Snakes, did you mommy buy it for u?

No offense of course.

MorganX
Apr 27, 2004, 04:12 PM
If, however, there is backward compatibility, XBox will never catch up to Sony and MSFT will find itself in an Apple-esque catch 22 situation (don't have the market share so can't get software so won't get more market share) which it can only combat by buying off developers or making a clearly superior product.


Xbox game sales have been consistently taking 40-50% of the top 10 monthly sales and 30-40% of top 10 rentals. Right now MS just needs to get the cost of the Xbox down, way down. I'm sure they're pretty PO's that they have the highest game attachment rate than any other console and can't realize any profit because of the hardware loss. They're also not happy that there are big titles (Fable, Halo 2, Galleon, Doom 3) with no real competition from Sony or Nintendo coming out and the cost of Xbox 1 will eat those sales too. Starcraft:Ghost is being developed for Xbox and ported to the others. Rebel X (still a Rumor) is supposed to release with the Trilogy DVD and will be huge. All that and it will get eaten by hardwrae cost. Def Jam Vendetta II finally coming to Xbox. A shame. Add to that the rumor is by Christmas Xbox 1 will be $99. That will guarantee Xbox 2 in 2005 and humongous software sales and marketshare increase.

Half-Life 2 won't be out this year, that tells me that's going to be the flagship title for Xbox 2.

edit: regarding backwards compatibility, more important for Xbox IMO. Currently Xbox titles are cutting edge, people will be very PO'd to give those up. I think Sony would have an easier, though still tough sell, time dropping compatibility, especially PS1.

Makosuke
Apr 27, 2004, 05:28 PM
This is the problem with monopolies. The discussions about whether it's a decent console are almost irrelevant, because it's not playing on the same field.

MS has, for the past decade, pulled in obscene profits from its OS and Office divisions, thanks to its monopoly status. Just look at the profit margins in their annual reports--they're on the order of 50%, meaning MS charges you twice as much for their product as it costs them to make. You can't do that if there's any competition. Contrast that to just about any company, who, even when successful generally only turn a profit of a few percent.

Now, there's only one tiny problem with this business model: everybody already owns Office and Windows, so sales are flat or even declining. MS tried to go with the pay-per-year licencing model, but that got people really riled, so they've backed off a bit. Where to find more revenue? Gaming, for one.

So, they head to the gaming market with their vast ill-gotten gains from selling overpriced Office and OS software (this isn't really even arguable; it is the definition of overpriced, and several government antitrust cases have very conclusively shown that it is). They throw this at making a console, and more importantly advertising the living crap out of it and buying every game company they can find just so they'll have exclusives.

They're not on a level playing field, because unlike Sony and Nintendo, they're giving you hardware that costs twice as much to build for the same price. They can also advertise with literally hundreds of millions of dollars, even if the return on that advertising is a tiny fraction of the investment. They can afford to buy game companies, even if the investment takes years to pay off or never does. More importantly, they can only afford to do these things because every person and business who owns a copy of Windows or Office paid too much for it--they're basically subsidising Xbox owners.

Yes, every business operates at a loss at first, but that's not usually a loss of a factor of two or more, and it's not usually on the order of a billion dollars a year--normal companies just can't afford that.

Sony, Nintendo, Sega, or Atari never reached this position, because none of those companies had billions to throw away in an attempt to obtain/maintain a monopoly. Even with the power of Sony (and its advanced technology at the time), they only barely managed to squeeze Sega out of the hardware market, and it took years--they sure didn't take losses like that on the PS1.

The question, then, as others here have raised, is what MS will do when they eventually drive Nintendo and probably even Sony out of the market (assuming they keep at it long enough): Will there be any other competition? How can you afford to break into the console arena if Microsoft already has shown that they're willing to spend billions to force competitors out of the market, and they already own half the decent game companies anyway? Where is the company that's going to be able to afford to compete with this?

And once MS owns the console market, do you honestly think they'll be selling you that $500 Xbox for $150? I don't think so. They'll do exactly what they've done in every other market they dominate--charge way to much, and give you less.

This is a textbook example of why monopolies are a bad thing.


Incidentally, the one saving grace for the world is that the Xbox has sold so miserably in Japan (where a whole lot of games get made, and two out of the three current consoles are developed) that MS has essentially given up on it there--they're just pandering to sex-starved geeks with more DOA games, as a recent article posted here mentioned. They sure tried, though--about two years ago, you couldn't turn on the TV there without seeing a shiny Xbox ad, but even with all the money they dumped into it, they still couldn't make any inroads. Now, absolutely nothing.

Dippo
Apr 27, 2004, 05:33 PM
Xbox game sales have been consistently taking 40-50% of the top 10 monthly sales and 30-40% of top 10 rentals. Right now MS just needs to get the cost of the Xbox down, way down. I'm sure they're pretty PO's that they have the highest game attachment rate than any other console and can't realize any profit because of the hardware loss. They're also not happy that there are big titles (Fable, Halo 2, Galleon, Doom 3) with no real competition from Sony or Nintendo coming out and the cost of Xbox 1 will eat those sales too. Starcraft:Ghost is being developed for Xbox and ported to the others. Rebel X (still a Rumor) is supposed to release with the Trilogy DVD and will be huge. All that and it will get eaten by hardwrae cost. Def Jam Vendetta II finally coming to Xbox. A shame. Add to that the rumor is by Christmas Xbox 1 will be $99. That will guarantee Xbox 2 in 2005 and humongous software sales and marketshare increase.

Half-Life 2 won't be out this year, that tells me that's going to be the flagship title for Xbox 2.

edit: regarding backwards compatibility, more important for Xbox IMO. Currently Xbox titles are cutting edge, people will be very PO'd to give those up. I think Sony would have an easier, though still tough sell, time dropping compatibility, especially PS1.


Your talking about two sides of the same coin. The XBox is probably the "best" system due to the expensive components (hard drive, built in ethernet, etc). Microsoft is not going to be able to have a "superior" system, still sell it at the prices of other systems, and expect to make a profit from the systems.

Makosuke's post does a good job of explaining this.

zamyatin
Apr 27, 2004, 09:43 PM
If Sony or Nintendo became the sole provider of console hardware would they be as "bad" as MS? I don't know. But I do know that w/o competition we'd pay more for less no matter what company (Sony, MS, or Nintendo) was selling it.

Absolutely correct -- every company has the potential to abuse a position of market power. Power corrupts, as they say.

But Microsoft already has two monopolies -- office suite and desktop OS (maybe more, like web browser, etc.) So if they could add another to that collection, it would be far worse overall than if Sony or Nintendo ended up with one monopoly.

Further, MS is using its outrageous income from existing monopolies to undercut Sony and Nintendo. It can potentially destroy both of them in the console business. Microsoft does not compete in its markets, it straps down its rivals and catheterizes their jugulars!

Neither Sony nor Nintendo could mount that sort of attack against the other, because they lack the monopoly income in other markets. They have to compete based on the income they each earn in the console market. That is how it is intended to work!

Microsoft, however, chooses to distort the system whenever they can! It must stop somewhere. I say draw the line here!

MorganX
Apr 27, 2004, 10:15 PM
>>Just look at the profit margins in their annual reports--they're on the order of 50%, meaning MS charges you twice as much for their product as it costs them to make. You can't do that if there's any competition. <<

What's Apple's profit margin on iPod? What's it been over the past decade on it entire line? What is it on OS X?

You can't have high profit margins if there's no demand. Regardless of competition. Intel has competition, but they're profit margins are still astronomical. There's free competition for Windows and Office, but the alternatives suck. So the demand for them remains. Sure the cost of software is high, but when you factor in piracy.... 90% of people I know who build their own PCs don't pay for Windows or Office. And I know a lot. Windows can usually be purchased somewhere for less than OS X.


>>Where to find more revenue?<<

That's what business do. Why is Apple in the MP3 business? Why did Sony get into the game business and basically lose the portable music market they created.

>>So, they head to the gaming market with their vast ill-gotten gains from selling overpriced Office and OS software (this isn't really even arguable; it is the definition of overpriced, and several government antitrust cases have very conclusively shown that it is).<<

Antitrust cases have shown that they have become a monopoly. When you become a monopoly your business practices are severely regulated. When you reach monopoly status you must, play fair. No one else has to but you do. That's the cost of being the top dog.

>>They throw this at making a console, and more importantly advertising the living crap out of it and buying every game company they can find just so they'll have exclusives.<<

This is a gross overstatement. And buying game developers and exclusivity is modus operandi in the game industry. Or did MS create that also?

>>They're not on a level playing field, because unlike Sony and Nintendo, they're giving you hardware that costs twice as much to build for the same price.<<

Actually both Sony and Nintendo subsidized their hardware until they established marketshare and were able to reach profitability on game sales and eventually hardware. This is standard for the game industry.

>>They can also advertise with literally hundreds of millions of dollars, even if the return on that advertising is a tiny fraction of the investment.<<

Sony has announced they will be spending over a billion dollars developing and promoting the PS 3.

>>They can afford to buy game companies, even if the investment takes years to pay off or never does.<<

Just like Sony and Nintendo.

>>More importantly, they can only afford to do these things because every person and business who owns a copy of Windows or Office paid too much for it<<

Unfortunately you don't get to decide what's too much. As long as there is demand at the current price. $129 for modest OS X upgrades is too much, but apparently there's demand.

I'm sure Sonys profits from consumer electronics and media helped them absorb the cost of subsidizing the playstation. Don't know much about Nintendo ill-gotten gains.

>>Yes, every business operates at a loss at first, but that's not usually a loss of a factor of two or more, and it's not usually on the order of a billion dollars a year--normal companies just can't afford that.<<

What's normal about Sony and Nintendo? No if you had said Sega just couldn't afford it, you might have an point.

>>Sony, Nintendo, Sega, or Atari never reached this position, because none of those companies had billions to throw away in an attempt to obtain/maintain a monopoly. Even with the power of Sony (and its advanced technology at the time), they only barely managed to squeeze Sega out of the hardware market, and it took years--they sure didn't take losses like that on the PS1.<<

I think you're just wrong here. Sony and Nintendo do have billions to throw away to obtain/maintain a monopoly. But guess what, when the demand for xbox games continues to outgrow the demand for PS2 games, developers will choose to develop for MS first and due to lack of demand, Sony will have to lower prices and buy more exclusives, etc. That's the business. Do you know what XNA is and what that means to developers? Probably not since this is one area that Microsoft excels at and everyone else (Sony, Apple) is miserable at. Developer relations and reducing developer costs.

>>How can you afford to break into the console arena if Microsoft already has shown that they're willing to spend billions to force competitors out of the market, and they already own half the decent game companies anyway?<<

How are they forcing competitors out of the business? By developing a better product? Well, welcome to America.

Half the best developers, please, Bungie has one excellent game. What's the last great game to come from Rare. In fact, I don't know that Bungie wasn't going broke, and Rare definitely got saved by being purchased. Furthermore, the development platform Microsoft is providing is making it easier for these creative companies to produce great games.

The best game developers:

id
Valve
Blizzard
LucasArts
TeamNinja

Microsoft owns none of them, but I wish they did. That would insure these companies could produce great games for a long time.

>>And once MS owns the console market, do you honestly think they'll be selling you that $500 Xbox for $150? <<

They won't, and they can't afford to do it now. They've made several changes to reduce the cost. I doubled my investment by buying Focus Ehancements because I knew Microsoft was going with them for a lower cost video scaler. Why do you think Microsoft is dropping the Hard drive or making it optional? Designing the chips themselves and having to deal with emulating NVidia? Because it cost too much. They're not selling them at $149 because they want to, they're doing it because they have to. And software developers want it even cheaper.

>>Incidentally, the one saving grace for the world is that the Xbox has sold so miserably in Japan (where a whole lot of games get made, and two out of the three current consoles are developed) that MS has essentially given up on it there--they're just pandering to sex-starved geeks with more DOA games, as a recent article posted here mentioned. They sure tried, though--about two years ago, you couldn't turn on the TV there without seeing a shiny Xbox ad, but even with all the money they dumped into it, they still couldn't make any inroads. Now, absolutely nothing.<<

Nationalism at its best.

There's always going to be monopoly. Some is always going to be better, or richer than everyone else. And once an entity becomes a monopoly our great government will try to level the playing field. But it won't make much difference. Because most competitors who rely on regulation simply don't make a better product that is in demand.

Rio dominated MP3 players. Apple had 0 market. But now they're #1 because they made a better product.

Do you realize all the crybabies pushing the antitrust are all billionaires? Don't believe the hype.

MorganX
Apr 27, 2004, 10:28 PM
Neither Sony nor Nintendo could mount that sort of attack against the other, because they lack the monopoly income in other markets. They have to compete based on the income they each earn in the console market. That is how it is intended to work!

This is some sort of a joke right? Sony has to compete based o the income they each earn in the console market? ha, haha. How do you think Sony subsidizes minidisc? They're still pushing Atrac.

Nintendo owns 30% of Pokemon. Just how high do you think the profit margins on overpriced Pokemon trading cards are? In '99 Pokemon was 30% of Nintendo's revenues. Last year, 70% gameboy. If Nintendo had to live off Gamecube revenues it would be dead already.

These are all mega corporations. Nintendo better diversify or it will be in trouble. Sony, Sony just needs better games and a better console. If they don't do it, oh well.

LethalWolfe
Apr 27, 2004, 11:07 PM
Neither Sony nor Nintendo could mount that sort of attack against the other, because they lack the monopoly income in other markets. They have to compete based on the income they each earn in the console market. That is how it is intended to work!

Sony has plenty of other markets besides video games. Computers, digital still cameras, digital video cameras, home entertainment, prosumer video software (they recently purchased Sonic Foundry), as well as being a market leader in the pro video field (everything from broadcat to HD film making).


Lethal

m4rc
Apr 28, 2004, 02:47 AM
A little off topic, but a very interesting documentary on Nintendo shown in the UK last week. Overview Here (http://www.bbc.co.uk/bbcthree/tv/outrageous_fortunes/nintendo.shtml)

takao
Apr 28, 2004, 02:59 AM
actually i can't understand whats this fuss about the xbox is all about...

1.controller
2.size & price
3.games

in all points the xbox offers nothing for me ..

i buyed myself the gamecube ... and it's good enough for me

m4rc
Apr 28, 2004, 05:02 AM
actually i can't understand whats this fuss about the xbox is all about...

1.controller
2.size & price
3.games

in all points the xbox offers nothing for me ..

i buyed myself the gamecube ... and it's good enough for me

In most Countries the Xbox is cheaper than the PS2, and often the GameCube. It really is down to games though, as each console has a different look and feel and type of game. I own all 3, and have very different types of game for each console. I don't think anyone can rubbish any of the consoles, they are all very good at what they do. Sure, don't like one of them and don't buy it, but as Takao said, it is a personal thing and the Xbox offers him nothing. Personally I play the PS2 least even though I have more games for it, but that would be because of the games, rather than the console. For fun, when I have mates round, the GameCube with 4 controllers and MarioKart is great!

Dippo
Apr 28, 2004, 01:05 PM
You can't have high profit margins if there's no demand. Regardless of competition. Intel has competition, but they're profit margins are still astronomical. There's free competition for Windows and Office, but the alternatives suck. So the demand for them remains. Sure the cost of software is high, but when you factor in piracy.... 90% of people I know who build their own PCs don't pay for Windows or Office. And I know a lot. Windows can usually be purchased somewhere for less than OS X.

Intel has over 80% of the x86 market share. Intel is still a monopoly so they can charge whatever they want for their chips.
http://news.com.com/2100-7341_3-5101546.html


The best game developers:

id
Valve
Blizzard
LucasArts
TeamNinja

Microsoft owns none of them, but I wish they did. That would insure these companies could produce great games for a long time.

Are you kidding me??? Do you not remember what MS did to Halo. They took what could have been the best game ever and ruined it. MS only cares about the $$$ and they would sacrifice game quality to get it.

If MS bought those gaming companies, they would still produce games but they wouldn't be great games.

1macker1
Apr 28, 2004, 03:33 PM
How did they ruin halo? It's one of the best games of all time. They do care about the games, that's they only way they gonna make money. I mean, if they put out crappy games, people will stop buying them, thus they will stop making money.
[QUOTE=Dippo]
Are you kidding me??? Do you not remember what MS did to Halo. They took what could have been the best game ever and ruined it. [QUOTE]

mstecker
Apr 28, 2004, 03:53 PM
Now put Steve's Learjet in perspective...

Apple's years of bloated profit margins because they won't allow clones...

This is a silly notion.


First of all, Apple bought Steve a Gulfstream, not a Lear.

Secondly, had Apple allowed the clone market to continue, you'd be using XP now, and we never would have had the chance to have this fascinating discusssion.

imac_japan
Apr 28, 2004, 06:58 PM
No offense, but I dont care about the Japan market

Why ?? if it wasn't for Japan, you wouldn't have all the good games today !!! Japanese gaming companies developed most of the ideas that we see today. By the way its "the Japanese market"...

American companies are at last starting to make good games....

imac_japan
Apr 28, 2004, 07:07 PM
Man, you just insulted the DreamCast. There were areas in the features where the DreamCast was superior to the PS2, like amount of video memory for example. Graphics on the PS2 did not look better than what the DC could do, just different. If developers were still working on DreamCast games I am certain that they would look just as impressive as the current generation of PS2 games.

I was just using it as an example ! I love my dreamcast but to compare an older machine to a newer one is just pointless. The games are the most important thing - look at the gameboy, the games are fun for the kids but the graphics are terrible compared to a modern system and the gameboy sells well.

Dippo
Apr 28, 2004, 07:07 PM
How did they ruin halo? It's one of the best games of all time. They do care about the games, that's they only way they gonna make money.

Sure Halo was still good, but it wasn't the great game that it was supposed to be, and the single player was very rushed and highly repetitive.

It is a fact that MS rushed Halo, and thus it wasn't as good as it could have been.

I mean, if they put out crappy games, people will stop buying them, thus they will stop making money.

Yea, and their crappy OSes don't make any money and no one uses them :rolleyes:

Makosuke
Apr 29, 2004, 06:37 AM
>>How can you afford to break into the console arena if Microsoft already has shown that they're willing to spend billions to force competitors out of the market, and they already own half the decent game companies anyway?<<

How are they forcing competitors out of the business? By developing a better product? Well, welcome to America.

Half the best developers, please, Bungie has one excellent game....
That particular statement wasn't about now, it was about what the situation could theoretically be in a decade. One look at the PC industry, and you'll see something like the same picture. And my point stands; developing and promoting a competitive console is a very expensive proposition, costing literally billions of dollars. It takes a monumental company (Sony, MS) to cough up that kind of cash with the hopes of a payoff down the road. But the important difference is, if MS manages to kill off both Nintendo and Sony's consoles, the'll be no competition at all, and few if any companies in the world with both the financial wherewithall to attempt an inroad into a monopolized market (keep in mind that it's costing MS billions to break into a comeptitive market; the barrier is higher with a monopoly), and the confidence that they can effectively compete against a very rich monopolist that has in the past been willing to do whatever it takes (again, in this case could be buy up any game company in sight) to maintain its position.


As for the rest of your comments, you present a textbook case of the free-market capitalist's vision of commerece. Just about any economist will tell you that a monopoly is bad for a market, and MS is not only a bigtime monopoly trying to move into a new market, but one that has so far been largely unregulated and unrestricted (compared to, say, the breakup of the Bells or regulation of the electric industry).

And no, though Sony and Nintendo are huge companies, and any diversified company spreads its money around to try and leverage new businesses, none of those can do the sort of things MS can. Apple, even with iPod earnings, etc, isn't doing much more than breaking even, as is the case with most large corporations in competitive markets:

Apple posted profits of $60M or so on sales of $6.2 billion (less than 1% profit based on sales). Sony last year had about $63 billion gross income, with about $980M profit (1.6% profit). Nintendo did considerably better; $500M on gross of $4.2 billion (15%; clearly they're raking it in somewhere). Microsoft, in contrast, grossed $32 billion, and netted just shy of $10 billion after taxes (that would be profits of 31% on sales). If they were in a functioning competitive market that benefitted anybody but the people who own their stock, those numbers would be much, much, lower, in line with the profit margins of just about any other normal corporation, because some competitor would be able to offer a comperable or superior product at a much lower price--something that doesn't happen with a monopoly.

If you honestly think that Microsoft got where it is by doing nothing more than making a better product than every other company on the market, and furthermore continues to do so today, there's really no point in arguing, and I have no idea what you're doning posting in a Macintosh-centric forum. Being an MS-hater isn't a prerequisite to being a Mac fan or posting here, but I find it honestly surprising that anyone could believe that Windows couldn't be either a significantly better or cheaper product if they were in a functioning competitive market or regulated like a monopoly should be.

Even with their profits from other divisions, Neither Sony nor Nintendo has anywhere near the cash to throw around that MS does; the losses that MS incurred on the Xbox last year alone were almost $1 billion; that would've driven Sony or Nintendo into the red (with no current hopes of profit at all--losses are accelerating), and it's unlikely either company could handle that sort of investment on a single product launch in a single area--certainly not for any extended period of time.

1macker1
Apr 29, 2004, 10:11 AM
Which gaming companies are u talking about. Back in the day i'm sure the japanese developers had the hold on the good games, but not anymore. The point I getting at, is that the main games people like seems to be different from country to country. That's why i'm not interested in the Japanese market, it was not to say the Japanese market isnt important.
Why ?? if it wasn't for Japan, you wouldn't have all the good games today !!! Japanese gaming companies developed most of the ideas that we see today. By the way its "the Japanese market"...

American companies are at last starting to make good games....

Dippo
Apr 29, 2004, 02:48 PM
Which gaming companies are u talking about. Back in the day i'm sure the japanese developers had the hold on the good games, but not anymore. The point I getting at, is that the main games people like seems to be different from country to country. That's why i'm not interested in the Japanese market, it was not to say the Japanese market isnt important.


Yea, here is an article talking about just that.

Why most U.S. titles don?t fare well in Japan (and vice versa) (http://www.msnbc.msn.com/id/4780423/)

Despite the success of American music and movies in Japan, Western-made video games have never done well in the Japanese market. American-made consoles such as 3DO (released in Japan in 1994) and most recently the Microsoft Xbox (released in two years ago) never seem to attract consumers in large numbers. Games such as "Enter the Matrix" from Atari, and "The Lord of the Rings" by Electronic Arts, both released last year, often vanish from the Japanese market without leaving a trace.

The type of game makes a difference as well. "Doom 3," "Half-Life 2," and "Halo 2" are three of the most anticipated upcoming games among Western audiences. Don't expect them to do well in Japan, however. In fact, they will have two strikes against them even before they land on the docks. All three games are, in addition to being violent, played from the first-person perspective. Such first-person perspective shooters (FPS) are big in the West, but have never really caught on in Japan. And few violent games sell well there, either.

imac_japan
May 1, 2004, 07:49 AM
Yea, here is an article talking about just that.

Why most U.S. titles don?t fare well in Japan (and vice versa) (http://www.msnbc.msn.com/id/4780423/)

U.S titles don't do well in Japan because basically they are just kill kill kill titles with no story. Sure they are fun but FF 12 is a much better game with a story. Story is important here but U.S games usually have weak stories.

and with the X-box, they got alot of bad press because the first ones scatched the discs and the controller was too big. Microsoft didn't fix the problems fast enough - which in Japan is bad.