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[Sydle]

HP has been the biggest PC manufacturer for a few years they still want to get rip of the PC division.

Being the biggest seller in the console business doesn't mean anything.

Oh yeah HP tried to sell it to Samsung too.

Big difference is that video games/console sales grew generation over generation while the PC market is in decline.

Why exit a growing market? If anything, they make the division focus on Live and digital sales, pushing for an all-digital console to further subsidize hardware costs and push mobile/tablet gaming. Additionally, get a move on the digital trading and renting to increase digital revenue. With SteamOS coming there's more reason than ever to get aggressive on that front. I'm still in belief that in 7-10 years Xbox 4 will just be Kinect 3.0, able to stream anything entertainment related.

 

[IT Slave]

XB1 definitely being watched carefully.

Why wouldn't it? It's Microsoft's most successful hardware brand ever.

Surface was a huge flop--a $1 billion flop--and Microsoft literally doubled down and released Surface 2. And don't get me started on Bing...

Microsoft is in the hardware business for good, activist investors be damned.

 

[pestul]

Big difference is that video games/console sales grew generation over generation while the PC market is in decline.

And consoles game sales have been declining of recent (save for a few games).. but it will be interesting to see what the new generation brings. I suspect brisk sales out of the gate renewing confidence, followed by the same declining trend after Q2 2014.

 

[Sydle]

And consoles game sales have been declining of recent (save for a few games).. but it will be interesting to see what the new generation brings. I suspect brisk sales out of the gate renewing confidence, followed by the same declining trend after Q2 2014.

That's normal as a generation tales off -- happens every generation lifecycle.

You look at the industry generation over generation and it's growing.

 

[jcm]

Sure, if you just forget the whole "3 screens and a cloud strategy" they set in place nearly a decade ago and come up with your own.

That strategy was thought up by the guy who just got pushed out. The new ceo may very well come up with his own. That's what this whole gates thing is about. Who is he next ceo, and which direction will he push ms?

 

[pestul]

That's normal as a generation tales off -- happens every generation lifecycle.

You look at the industry generation over generation and it's growing.

Does it? I thought this was the only generation that showed signs of fatigue. If I recall, PS2 was doing pretty friggin' great at the start of this generation.

 

[pestul]

Also, this generation saw the rise of smartphone and tablet gaming. Next generation could face unforeseen competition from powerful smart devices (tvs/set top boxes/players). We really don't know.. they might not get the support of all the big devs, but it may still cut into traditional console growth.

 

[Sydle]

Does it? I thought this was the only generation that showed signs of fatigue. If I recall, PS2 was doing pretty friggin' great at the start of this generation.

Yes, console sales are already increased over the previous gen. Check it (scroll down to see more charts on growth). That said, I'm referring to the games industry including consoles, tablets, and mobile. It's huge.

Microsoft is behind the curve when it comes to tablet and mobile gaming, but if they push Xbox as a multi-screen, OS-agnostic entertainment platform, with great content worth using, they could make up the ground in a few years. Apple, Google, and Amazon are already making major progress on mobile and tablet, it's just a matter of time before they are on the TV as well.

It was a mistake for MS to focus on just the living room for so long, but it would be a mistake to ignore the living room all together.

That strategy was thought up by the guy who just got pushed out. The new ceo may very well come up with his own. That's what this whole gates thing is about. Who is he next ceo, and which direction will he push ms?

That wasn't just Ballmer calling the shots. He's had buy in from other execs, the board, and major investors for years.

And MS isn't going to exit mobile, tablet, OS, or cloud. I suppose they could change it to 2 screens and a cloud, lol. Just doesn't make sense when your biggest threats are on all three screens.

 

[TheBaronOfNA]

Does it? I thought this was the only generation that showed signs of fatigue. If I recall, PS2 was doing pretty friggin' great at the start of this generation.

Because it was the longest one.

 

[Bishop89]

wait, AND sell xbox division? Did title get changed because all i remember was them wanting to fire ballmer.

 

[Dougald]

This would actually be smart, the amount of money brought in by the entire entertainment arm is tiny compared to licensing

Basically the smart thing to do would be to sell xbox, etc, stop chasing the consumer market, shut up and listen to what the Office dev team says. Oh, and stop all the crazy infighting between depts.

Of course as a gamer I'd rather see the xbox keep going. But that's what I'd do if I were in charge..

 

[pestul]

Because it was the longest one.

I think the biggest thing that might cause the industry to grow the most this time is China tbh. Japan clearly could give two shits about traditional consoles anymore.. and in NA/Europe consoles might see fatigue earlier because of the insatiable appetite we're now seeing for yearly tech upgrades (iPhone/iPad/Nexus 7 etc). How will they even pull off a 5yr lifecycle? I'm just saying it is going to be tough to stay relevant going forward with everything changing..

That said, I wouldn't believe anyone's predictions now, because no one knows what will happen.

 

[Sydle]

This would actually be smart, the amount of money brought in by the entire entertainment arm is tiny compared to licensing

Basically the smart thing to do would be to sell xbox, etc, stop chasing the consumer market, shut up and listen to what the Office dev team says. Oh, and stop all the crazy infighting between depts.

Of course as a gamer I'd rather see the xbox keep going. But that's what I'd do if I were in charge..

Long term, how do you fend off productivity suite apps from Google and Apple if your OS market is shrinking in a dying PC world? If your OS and productivity apps are shrinking, how do you protect and grow your server and tools business from Google and Amazon?

Do you make it easy to let consumers grow into their Apple, Amazon, and Google device, apps, and services ecosystems?

 

[tino]

Also, this generation saw the rise of smartphone and tablet gaming. Next generation could face unforeseen competition from powerful smart devices (tvs/set top boxes/players). We really don't know.. they might not get the support of all the big devs, but it may still cut into traditional console growth.

Both Apple TV and Google TV can cut into the low end of the console market pretty easily like the way tablets are cutting into the PC market. This actually depends on the movies studios and how soon they are willing to let HBO/ESPN run on the Apple TV alone. I think traditional console market's Achilles' heel is the $50/60 per game price tag. Cheap set top boxes from Apple and google can still blow the market wide open.

 

[jcm]

That wasn't just Ballmer calling the shots. He's had buy in from other execs, the board, and major investors for years.

And now he's been pushed out, because major investors have had it. There's no reason to think that MS is just going to continue to implement the vision of a guy who was basically fired because he has allowed the stock to stagnate for a decade.

Three screens and a cloud has done absolutely nothing for the company, and it's been the motto for four years now.

 

[Imperfected]

I think the biggest thing that might cause the industry to grow the most this time is China tbh. Japan clearly could give two shits about traditional consoles anymore.. and in NA/Europe consoles might see fatigue earlier because of the insatiable appetite we're now seeing for yearly tech upgrades (iPhone/iPad/Nexus 7 etc). How will they even pull off a 5yr lifecycle? I'm just saying it is going to be tough to stay relevant going forward with everything changing..

That said, I wouldn't believe anyone's predictions now, because no one knows what will happen.

There's smart money on industry growth, with Latin America - Brazil, Mexico, and Argentina in particular - being obvious targets for expansion. The sheer size of China obviously makes it a major economic factor, though I have a feeling that it's going to follow along behind Japan and Korea in being a very non-traditional market with far more limited interest in home console gaming. I would definitely keep an eye on China in the PC space, though.

The problem is that there's also near-guaranteed retraction in graying markets. Microsoft's actually "lucky" in a sense that they never got a foothold into the Japanese market, so they're not really feeling the decline of console gaming there as keenly as Nintendo or even Sony. The American market is going to wither much more slowly due to high immigration rates and much of the country being rural. Britain is actually where I'm watching most closely for portents of the future: if the British market goes into decline or shifts to mobile like the Japanese did, we're likely looking at a grim inevitability for all first-world countries as they approach high degrees of urbanization.

 

[Biker19]

Why wouldn't it? It's Microsoft's most successful hardware brand ever.

No, it isn't. Not in terms of profitability.

Microsoft is in the hardware business for good, activist investors be damned.

If they want to get rid of the Xbox brand, they will, especially if they either get rid of Bill Gates as well or if Xbox One underperforms greatly in console sales or if it doesn't turn a huge investment for their investors. They could even have the Xbox division close up shop during the Xbox One's console lifecycle a few years into next gen.

 

[Sydle]

And now he's been pushed out, because major investors have had it. There's no reason to think that MS is just going to continue to implement the vision of a guy who was basically fired because he has allowed the stock to stagnate for a decade.

Three screens and a cloud has done absolutely nothing for the company, and it's been the motto for four years now.

There's nothing wrong with the strategy - Google, Apple, and Amazon are making their own inroads across all 3 screens in the consumer and business markets. The difference is in execution.

Ballmer made them late to the smartphone and tablet market, because he didn't believe they were as important as the PC and TV. Ballmer is the one who had leadership in place that didn't understand or embrace open source, but rather fought it. Ballmer is the one who allowed the inter-competition within Microsoft for so long. He made too many bad bets.

The 3 screens and a cloud strategy is just an obvious destination. You'd have to have been living under a rock if you're not aware business productivity and consumer entertainment services are rushing towards online services and multi-screen access. If those markets move to a different OS or platform provider then it threatens Microsoft's entire business.

If MS concedes the consumer market then they're only going to make it easier for Apple and Google to make more money and continue chipping away at their business side of things.

The short-sightedness of all this is just baffling. Games as a service is getting closer every year and MS is poised to be a leader in that growing segment, where they can back off of the hardware side of things when Xbox is just an app and they make a killing off of content sales, rentals, and trades. Getting rid of Xbox anytime within the next decade would be monumentally stupid.

 

[apana]

Meh, I still don't see this as a realistic possibility. If the Xbox One does a hard bomba, like original Xbox levels then possibly, but even then I doubt it. Too much work has gone in to it and it has just recently become a success, it's always easier to speculate about these sorts of things than it is to do it.

 

[Thorgal]

no real solid plan for the PS4 apart from "at least it's not the Xbox One!"

I agree with your post except this part .

If anything Sony has shown for the entire length of this year that they do have a solid plan in place.

 

[ironcreed]

Christ.. this really could happen couldn't it? Despite being boneheads for the past few years, I really don't want MS to exit the gaming space. If they do, I hope at least another suitable home console competitor arises from the ashes.

I would not even care at this point, given how they have handled the Xbox One situation and the direction they so obviously want to go in. I say let Nintendo come roaring back and maybe even the Steam Machine will gain some ground in the living room. There you go. Sony, a re-foucsed Nintendo and Valve sounds pretty good to me.

 

[miDnIghtEr20C]

For three whole years, eh?

Yep.. for 3 years. How many has Sony won this gen in the USA?

I'd say that's a hell of an accomplishment to come into Sony Championship territory and beat them in sales there. They also climbed the mountain that was the Wii and beat them too.

Not sure why you're trying to downplay MS outselling the other 2 consoles for almost 3 years in a row straight now.

Both products exist in their own vacuum, the success of the 360 doing little to lift the One

Not sure about that. The 360 and Live have been so great to me and my friends this gen that we didn't even hesitate to pre order our X1's after E3. I know many feel the same way. Just as much as I don't understand the investors minds, I doubt most all here don't either.

I don't see the Xbox going anywhere. It's here.

 

[jcm]

There's nothing wrong with the strategy - Google, Apple, and Amazon are making their own inroads across all 3 screens in the consumer and business markets. The difference is in execution.

Ballmer made them late to the smartphone and tablet market, because he didn't believe they were as important as the PC and TV. Ballmer is the one who had leadership in place that didn't understand or embrace open source, but rather fought it. Ballmer is the one who allowed the inter-competition within Microsoft for so long. He made too many bad bets.

The 3 screens and a cloud strategy is just an obvious destination. You'd have to have been living under a rock if you're not aware business productivity and consumer entertainment services are rushing towards online services and multi-screen access. If those markets move to a different OS or platform provider then it threatens Microsoft's entire business.

If MS concedes the consumer market then they're only going to make it easier for Apple and Google to make more money and continue chipping away at their business side of things.

The short-sightedness of all this is just baffling. Games as a service is getting closer every year and MS is poised to be a leader in that growing segment, where they can back off of the hardware side of things when Xbox is just an app and they make a killing off of content sales, rentals, and trades. Getting rid of Xbox anytime within the next decade would be monumentally stupid.

But your whole post is just handwaving away the main issue. It's not at all obvious that Ballmer's strategy offers the best ROI for MS. You can assert it, and argue for it, but let's not pretend that it's some inarguable fact. There are plenty of smart people who disagree with you and Ballmer.

Yep.. for 3 years. How many has Sony won this gen in the USA?

I'd say that's a hell of an accomplishment to come into Sony Championship territory and beat them in sales there. They also climbed the mountain that was the Wii and beat them too.

Not sure why you're trying to downplay MS outselling the other 2 consoles for almost 3 years in a row straight now.

Why are you only talking about US sales? Do you think they are worth extra points or something? The PS3 has consistently outsold the 360 worldwide since launch.

 

[Biker19]

Why are you only talking about US sales? Do you think they are worth extra points or something? The PS3 has consistently outsold the 360 worldwide since launch.

And that's despite the Xbox 360 having a 17+ million lead over the PS3 in the U.S.

Just because that the Xbox 360 was popular in the U.S. doesn't mean the same will repeat with Xbox One. Sony could easily take back the U.S. in which they were popular in both the PS1 & the PS2 days.

 

[Imperfected]

Why are you only talking about US sales? Do you think they are worth extra points or something? The PS3 has consistently outsold the 360 worldwide since launch.

Usually when I see it, it comes from (extremely dated) thinking that America is the model developing nations will follow. At this juncture we can actually look back and say that, in retrospect, that was only ever true of Australia and probably won't be true of any other country moving forward. The American culture hegemony of the 90's is, essentially, the Japanese corporate takeover of the 80's: something that seemed like a very real possibility at the time, but in hindsight seems ridiculous.

I'm pretty sure you don't even see 'American Globalization' as a theme in transhumanist fiction anymore. Pour out a forty for our dead dreams of (cultural) empire.

 

[skdoo]

The XB1, Surface, and other Windows gadgets are a drain on the company. They cost way too much to make a dent in the market, and they just aren't appealing to the mass market. Yes, I know Apple charges an arm and a leg for the iPad, but they can get away with it because the market dictates that they can. IOS is slowly losing its share to Android for many reasons, not the least of which is price.

The Surface is way too expensive compared to the cooler iPad and Android tablets. It's only chance at ANY decent market share is with businesses. And that isn't happening

The phones have zero chance of market penetration as well, which is too bad because Nokia made good phones once upon a time.

And the XB1 has zero chance at decent market penetration at its price point. Competitors for the TV space such as Rokku and AppleTV typically are around $100, though they can't do all the XB1 can. The product will be successful with tech junkies, but not the average household. Sorry, $500 is just WAY too much. Add a more powerful game machine at $100 less, and it is in serious trouble with casual fans. That doesn't even bring into account cheaper alternatives such as the 360 or Vita TV when it comes to gaming.

MS will probably write off the whole division in less than two years, unless the XB1 is a rip-roaring success. Enough to erase all the other disastrous products. And who is going to buy it from MS? The whole thing is predicated on the XBox Live service

 

[Sydle]

But your whole post is just handwaving away the main issue. It's not at all obvious that Ballmer's strategy offers the best ROI for MS. You can assert it, and argue for it, but let's not pretend that it's some inarguable fact. There are plenty of smart people who disagree with you and Ballmer.

A cloud services and device agnostic strategy is the only strategy for a company that wants a shot at surviving the OS, business productivity, and/or consumer entertainment markets.

Mobile and tablets on the rise, with PCs in decline, mean business productivity has to be ready to travel. Consumers picked mobile a long time ago. The mobile giants in OS are Apple and Google, each with productivity software. SaaS and content have high margins (when managed well). These are facts.

The more inroads Apple and Google make in their own multi-screen and cloud strategies the more they threaten EVERYTHING Microsoft has built. That's obvious.

The people who want Xbox out want Microsoft's value to increase in the short term to make a lot of money. It IS obvious it's a horrible long-term game.

 

[tino]

Usually when I see it, it comes from (extremely dated) thinking that America is the model developing nations will follow. At this juncture we can actually look back and say that, in retrospect, that was only ever true of Australia and probably won't be true of any other country moving forward. The American culture hegemony of the 90's is, essentially, the Japanese corporate takeover of the 80's: something that seemed like a very real possibility at the time, but in hindsight seems ridiculous.

I'm pretty sure you don't even see 'American Globalization' as a theme in transhumanist fiction anymore. Pour out a forty for our dead dreams of (cultural) empire.

To be fair, American market is still very important trend setter in a new-ish market. For example, a lot of popular smartphone hardware and software trends were set in the US first and happened to the rest of the developed countries 1-2 years later.

Kind of like how TV people are obessed with the New York market rating for new shows.

But I would argue console gaming market is not new market any more. It may never become big in the rest of the developing countries.

 

[SPDIF]

The XB1, Surface, and other Windows gadgets are a drain on the company. They cost way too much to make a dent in the market, and they just aren't appealing to the mass market. Yes, I know Apple charges an arm and a leg for the iPad, but they can get away with it because the market dictates that they can. IOS is slowly losing its share to Android for many reasons, not the least of which is price.

The Surface is way too expensive compared to the cooler iPad and Android tablets. It's only chance at ANY decent market share is with businesses. And that isn't happening

The phones have zero chance of market penetration as well, which is too bad because Nokia made good phones once upon a time.

And the XB1 has zero chance at decent market penetration at its price point. Competitors for the TV space such as Rokku and AppleTV typically are around $100, though they can't do all the XB1 can. The product will be successful with tech junkies, but not the average household. Sorry, $500 is just WAY too much. Add a more powerful game machine at $100 less, and it is in serious trouble with casual fans. That doesn't even bring into account cheaper alternatives such as the 360 or Vita TV when it comes to gaming.

MS will probably write off the whole division in less than two years, unless the XB1 is a rip-roaring success. Enough to erase all the other disastrous products. And who is going to buy it from MS? The whole thing is predicated on the XBox Live service

Quite a bit of hyperbole in this post.

 

[skdoo]

Other manufacturers have already learned this lesson, especially in networking. HP has pulled out of the home environment and focused all efforts on Infrastructure and services. Dell is doing the same. Even Cisco hacked off all consumer products to focus on core business and services, and has had to cut staff to compensate further.

Unless you are Apple or Google, you shouldn't even really bother with the space anymore. MS missed the mobile trend, and they are in danger of missing the Infrastructure trend as well. The living room fight is over - mobile tablets won this years ago. AppleTV is so entrenched that MS can't even get in the door.

Both MS and Sony misjudged this one. Sony adjusted their strategy to gaming as a focus, but MS still hasn't figured it out. They really need a change in leadership.

 

[nictron]

Nintendo should buy the Xbox division.

 

[SPDIF]

Other manufacturers have already learned this lesson, especially in networking. HP has pulled out of the home environment and focused all efforts on Infrastructure and services. Dell is doing the same. Even Cisco hacked off all consumer products to focus on core business and services, and has had to cut staff to compensate further.

Unless you are Apple or Google, you shouldn't even really bother with the space anymore. MS missed the mobile trend, and they are in danger of missing the Infrastructure trend as well. The living room fight is over - mobile tablets won this years ago. AppleTV is so entrenched that MS can't even get in the door.

Both MS and Sony misjudged this one. Sony adjusted their strategy to gaming as a focus, but MS still hasn't figured it out. They really need a change in leadership.

Just so I understand, what exactly do you mean by "Infrastructure trend"? As for the bolded, how can you describe a device that's sold around 13 - 15 million units as "entrenched"?

 

[gamechanger87]

The XB1, Surface, and other Windows gadgets are a drain on the company. They cost way too much to make a dent in the market, and they just aren't appealing to the mass market. Yes, I know Apple charges an arm and a leg for the iPad, but they can get away with it because the market dictates that they can. IOS is slowly losing its share to Android for many reasons, not the least of which is price.

The Surface is way too expensive compared to the cooler iPad and Android tablets. It's only chance at ANY decent market share is with businesses. And that isn't happening

The phones have zero chance of market penetration as well, which is too bad because Nokia made good phones once upon a time.

And the XB1 has zero chance at decent market penetration at its price point. Competitors for the TV space such as Rokku and AppleTV typically are around $100, though they can't do all the XB1 can. The product will be successful with tech junkies, but not the average household. Sorry, $500 is just WAY too much. Add a more powerful game machine at $100 less, and it is in serious trouble with casual fans. That doesn't even bring into account cheaper alternatives such as the 360 or Vita TV when it comes to gaming.

MS will probably write off the whole division in less than two years, unless the XB1 is a rip-roaring success. Enough to erase all the other disastrous products. And who is going to buy it from MS? The whole thing is predicated on the XBox Live service

Wow just wow. Xbox has been the one shining light in the division. Microsoft is focused on the profitability of the product. While selling the most systems gets forums all excited, the Company's only care if selling systems at BE lets them make money off the other products (Online paywall, high attach rates). If you don't believe that then you need to look at what Sony is doing. They could have kept online free to move more systems, but they realized they needed to find a way to monetize the system beyond the original sale and hope for a strong attach rate.

Xbox has been very profitable recently as Live significantly added to the bottom line. They have a larger strategy and they are going down that path. Getting rid of the Xbox makes their overarching W8 concept obsolete, thus the Company should shut down.

To your point about the price, how did PS3 do worldwide at a higher price point?

 

[tino]

Just so I understand, what exactly do you mean by "Infrastructure trend"? As for the bolded, how can you describe a device that's sold around 13 - 15 million units as "entrenched"?

Apple TV is nowhere as popular as Apple want it to be.

I think the content giants have learn their lesson with iTunes music, they will not any one single set top box from any of the IT company to become big in the living room.

 

[Biker19]

Other manufacturers have already learned this lesson, especially in networking. HP has pulled out of the home environment and focused all efforts on Infrastructure and services. Dell is doing the same. Even Cisco hacked off all consumer products to focus on core business and services, and has had to cut staff to compensate further.

Unless you are Apple or Google, you shouldn't even really bother with the space anymore. MS missed the mobile trend, and they are in danger of missing the Infrastructure trend as well. The living room fight is over - mobile tablets won this years ago. AppleTV is so entrenched that MS can't even get in the door.

Both MS and Sony misjudged this one. Sony adjusted their strategy to gaming as a focus, but MS still hasn't figured it out. They really need a change in leadership.

I agree. Microsoft's plan of trying to take over the living room is very outdated. Maybe if they did this back in 2009 or 2010 in which tablets, smartphones, etc. were in their infancy, then they might have stood a chance. Today, it's laughable. More & more people have chosen the tablets, smart TV's, etc. for their living room space.

 

[skdoo]

I am knee-deep in the technology space, and have watched these trends develop because of who I work for. My work, and all of my customers are moving to wireless infrastructure predicated on tablets, phones, and mobility. Of course there are still PC's, but most are simply "dumb" with all service virtualized and delivered remotely from server farms or the "cloud".

IT is changing, and MS has some good products. However, for the first time in the history of the company they are not the favorite. VMware leads this space, and many of the "old guard" including MS have to adapt to a changing market, and the needs of the consumer.

The XB1 can be a good gaming system, but it will never challenge for supremacy of the living room as MS wanted, unless they can get it down to $299 or less. Price is king, and the competitors for content delivery are MUCH cheaper (entertainment piece). On the gaming side of things, they will not enjoy the lead they had last time either, with Sony delivering a far more powerful device at a cheaper price, and at the same time. They don't have a year's head start.

That is why I believe that MS will whack the division. All efforts will be put into the server space, with HyperV, Azure, and Office leading the way. Everything else will be cut down as MS consolidates its resources, and revamps. Much the way another "giant" did recently - I'm talking about the once great Cisco Systems. It used to be these two were untouchable, which is not the case anymore.

 

[Possum]

I am knee-deep in the technology space, and have watched these trends develop because of who I work for. My work, and all of my customers are moving to wireless infrastructure predicated on tablets, phones, and mobility. Of course there are still PC's, but most are simply "dumb" with all service virtualized and delivered remotely from server farms or the "cloud".

IT is changing, and MS has some good products. However, for the first time in the history of the company they are not the favorite. VMware leads this space, and many of the "old guard" including MS have to adapt to a changing market, and the needs of the consumer.

The XB1 can be a good gaming system, but it will never challenge for supremacy of the living room as MS wanted, unless they can get it down to $299 or less. Price is king, and the competitors for content delivery are MUCH cheaper (entertainment piece). On the gaming side of things, they will not enjoy the lead they had last time either, with Sony delivering a far more powerful device at a cheaper price, and at the same time. They don't have a year's head start.

That is why I believe that MS will whack the division. All efforts will be put into the server space, with HyperV, Azure, and Office leading the way. Everything else will be cut down as MS consolidates its resources, and revamps. Much the way another "giant" did recently - I'm talking about the once great Cisco Systems. It used to be these two were untouchable, which is not the case anymore.

It's all just transitional. They have to stay relevant with the market today, and what it calls for. The thing is, just as you had previously stated, this isn't it. Nobody asked for what the Xbox One is doing, because no one needs it. There are already devices out there that do what it does, and they cost less. The amount of money Microsoft is spending on this thing is astronomical. I can't imagine a single situation where they can recoup their losses here, so I agree with you. The Xbox division is a money pool that can not be profitable. At least not like this.

 

[gamechanger87]

It's all just transitional. They have to stay relevant with the market today, and what it calls for. The thing is, just as you had previously stated, this isn't it. Nobody asked for what the Xbox One is doing, because no one needs it. There are already devices out there that do what it does, and they cost less. The amount of money Microsoft is spending on this thing is astronomical. I can't imagine a single situation where they can recoup their losses here, so I agree with you. The Xbox division is a money pool that can not be profitable. At least not like this.

Shouldn't Sony divest the PS division?

Its not like the PS4 is cheap.

 

[skdoo]

As a Jr who cannot make threads I will go one step further since I cannot make a new thread... this will be the last generation of consoles as we know them. Ironically, Nintendo started the trend toward mobile gaming, and iOS and Android have made it popular to the masses. What have the young grown up on? Consoles, or mobile?

Steam revolutionized PC gaming, and console gamers will probably go in two directions. The hardcore older gamers will migrate towards SteamOS and PC gaming, while the masses will migrate to the mobile domain. Would you have really thought the latest mobile phones were capable of rudimentary 360/PS3 graphics? Look at the latest mobile games... what will they look like in just five years time? Hell, just how advanced will PC graphic cards be? The PS4 and XB1 are already obsolete to PC enthusiasts, and they aren't even out yet.

In a way it is sad, because I grew up with Atari, and Nintendo, and of course Sega and Sony as well. But many of those companies have evolved, and the market has as well. Services? Those will be provided by Smart TV's, AppleTV, Rokku, and of course tablets. It should be interesting to see what happens, and how companies adapt.

 

[SPDIF]

It's all just transitional. They have to stay relevant with the market today, and what it calls for. The thing is, just as you had previously stated, this isn't it. Nobody asked for what the Xbox One is doing, because no one needs it. There are already devices out there that do what it does, and they cost less. The amount of money Microsoft is spending on this thing is astronomical. I can't imagine a single situation where they can recoup their losses here, so I agree with you. The Xbox division is a money pool that can not be profitable. At least not like this.

They're making a profit from day-one on every XB1 sold. Unless you think the XB1 is going to have its own RROD situation and/or sell < 20 million units I don't see how you can come to that conclusion.

 

[Possum]

Shouldn't Sony divest the PS division?

Its not like the PS4 is cheap.

Honestly, it's all so expensive. But it can be assumed that the PlayStation brand is more profitable than Xbox. The thing is, Sony isn't spilling $400 million into an exclusive deal like Microsoft is, and we can also deduce from Microsoft's advertising campaign that the Xbox division is spending more on marketing. And yet, here we are, with the PS4 still managing to pull ahead of the Xbox One.

I don't know. There's nothing wrong with being in second place here, and as we've learned repeatedly, gamers can be forgiving, just like with the PS3 launch. The difference here is that Microsoft has other issues as well. And these investors aren't playing around. When there's money on the line, that's all that matters.

They're making a profit from day-one on every XB1 sold.

Maybe on the console, but what about R&D? They can only recoup all of that money if people buy it.

 

[Skeff]

They're making a profit from day-one on every XB1 sold.

only when comparing to the BoM, shipping, manufacturing etc.

The day one profit does not take into account R+D costs. or warranty costs, or customer support...

 

[skdoo]

They aren't selling at cost... so how will they make a profit from day one?

 

[SPDIF]

only when comparing to the BoM, shipping, manufacturing etc.

The day one profit does not take into account R+D costs.

Well I thought that would go without saying. Has it ever been measured differently in the console market? Anyway I expanded a bit on my original post before you quoted me.

Honestly, it's all so expensive. But it can be assumed that the PlayStation brand is more profitable than Xbox. The thing is, Sony isn't spilling $400 million into an exclusive deal like Microsoft is, and we can also deduce from Microsoft's advertising campaign that the Xbox division is spending more on marketing. And yet, here we are, with the PS4 still managing to pull ahead of the Xbox One.

I don't know. There's nothing wrong with being in second place here, and as we've learned repeatedly, gamers can be forgiving, just like with the PS3 launch. The difference here is that Microsoft has other issues as well. And these investors aren't playing around. When there's money on the line, that's all that matters.



Maybe on the console, but what about R&D? They can only recoup all of that money if people buy it.

That's not something you can hold against the Xbox though. That deal is a Microsoft-deal, rather than just an Xbox-deal. In other words, Microsoft as a whole is investing $400 million dollars to not only advertise the Xbox One but to also provide Surface tablets to coaches etc... It's something for the whole company not just one particular product.

 

[KillerDark]

I can't see MS just ditching Xbox after how much they have invested into it

 

[Possum]

As a Jr who cannot make threads I will go one step further since I cannot make a new thread... this will be the last generation of consoles as we know them. Ironically, Nintendo started the trend toward mobile gaming, and iOS and Android have made it popular to the masses. What have the young grown up on? Consoles, or mobile?

Steam revolutionized PC gaming, and console gamers will probably go in two directions. The hardcore older gamers will migrate towards SteamOS and PC gaming, while the masses will migrate to the mobile domain. Would you have really thought the latest mobile phones were capable of rudimentary 360/PS3 graphics? Look at the latest mobile games... what will they look like in just five years time? Hell, just how advanced will PC graphic cards be? The PS4 and XB1 are already obsolete to PC enthusiasts, and they aren't even out yet.

In a way it is sad, because I grew up with Atari, and Nintendo, and of course Sega and Sony as well. But many of those companies have evolved, and the market has as well. Services? Those will be provided by Smart TV's, AppleTV, Rokku, and of course tablets. It should be interesting to see what happens, and how companies adapt.

There's a really interesting interview with Shuhei Yoshida from SCEWWS (source) where he talks about their future plans in turning PlayStation into a service. It seems to me like that's where a lot of this is going, and Sony is being very smart about their approach here. I'm sure you've already read it, but if not you'd definitely find it interesting as well.

 

[Sydle]

That is why I believe that MS will whack the division. All efforts will be put into the server space, with HyperV, Azure, and Office leading the way. Everything else will be cut down as MS consolidates its resources, and revamps. Much the way another "giant" did recently - I'm talking about the once great Cisco Systems. It used to be these two were untouchable, which is not the case anymore.

I'm also in the IT, but focused on the security side of things...

Did you forget to mention Windows? I really don't believe they will throw away their consumer-facing products such as Bing, Xbox, Windows Phone, Skype, Outlook.com, Skydrive, etc. There's so much invested and if they back off of those things then all those investments will be for naught as competitors iterate quickly and eat into those markets even further.

Cisco is a different case. They re-aligned resources to focus on growth opportunities, because their switches and routers business is on the decline with software-defined networking solutions emerging. Additionally, it's not as if they had a big consumer-market face, so they didn't have a lot of anything to lose there. It would have taken enormous investments to continue becoming a consumer brand, whereas Microsoft is already in incredibly deep.

Online services and interactive entertainment is a hot, growing market and MS is poised to take advantage of it. The big growth of the Xbox 360 over the original Xbox, as well as the large growth in Xbox Live proves they can grow in the market. Entertainment isn't going away. They just need better execution and to tune into what the consumers want, responding quickly and accurately.

 

[Biker19]

They're making a profit from day-one on every XB1 sold. Unless you think the XB1 is going to have its own RROD situation and/or sell < 20 million units I don't see how you can come to that conclusion.

I don't know about that. They may be making a profit off of each Xbox One system sold on day one, but if they miss their projection sales or lowers the price tag too early, it's going to go out the window.

 

[skdoo]

I didn't forget Windows... it's just a foregone conclusion. Noone has made an OS to compete with Windows. Thanks for the reminder

Paco - thanks for the link

 

[Lynn616]

Are you honestly inferring that the Xbox division made $4.1 BILLION back in 2 years?

Are you saying they have to make back previous years loses? The Xbox division is profitable right now and has been for a few years now.