People arguing against the idea of a device-agnostic Xbox future haven't been paying attention very closely for the last 10 years, or forgot the all-digital future MS wanted NOW just a few months ago. Microsoft set their 3 screens and a cloud strategy into play a long, long time ago and made it clear that they were moving everything to the cloud.
IBM thought the personal PC wasn't the future back in the 90s, it was the cloud and the hardware that would power it (and they were a loser in the OS space), that's why they cut the personal PC ties and went for enterprise hardware and software that would be the necessary physical infrastructure to power the cloud. Adobe recently moved all their apps to the cloud as a service. Microsoft built out Azure, Server and Tools, and has been moving all their Business Apps (e.g., Office 365) to the cloud as a service, so it should come as no surprise they want the same for their entertainment division. Amazon, Sony, Google...everything that can be moved is being moved to the cloud under single sign-on services. The future
is a devices and services future, where services are powered by the cloud and have a broader audience reach because the device specs don't matter as much. It's not outlandish, far fetched, or even all that distant.
If the Xbox vision does get complete, inside of the next 15 years "Xbox" will be more of an app for all media entertainment types. I wouldn't be surprised if the Xbox "TV" device is just Kinect 3.0 packaged with the Xbox controller, allowing you unlimited cloud storage, with your tablet or phone (Smart Glass) as alternative input methods. Or, MS could enter a deal where Kinect is built into TVs. Then you just need to buy an Xbox controller and Xbox service subscription, a service where in you buy games, movies, and a la carte TV. That has really high margin potential. But that service doesn't mean much if competing services have more compelling content, which is why MS must continue adding value across games, movies, TV, and music, thus their heavy expenditures. And they will start branching out into more development of cross-platform games, for web and mobile devices (tablet, phone).
If anyone at MS was serious about exiting the console business it would have been more easy to rationalize 10 years ago. Today it's just a stupid idea. When the market is growing and moving towards a software as a service model, where your company (MS) shines, where the margins could be significantly higher than they are today, and especially where the division is not losing money, you keep investing.
Like I said PS/Xbox would lose to Apple/Google in the cheap console game
MS skipping a bunch of countries speak for volume of the uncertainty of their console's long term goal. I don't think the game console business model itself is not sound. Look even Valve want to get into this business. The question is do you want to good high end a la Steambox or lowend ala Oura level of cheap box.
I think thats the reason both Sony and Microsoft are getting out of console R&D this generation. Both of them are using off the shell PC solution because there is no point to R&D a faster box with minimal performance gain.
I don't want to derail this discussion into the "future of console gaming" but I think next generation we will see multiple tier of hardware options for both home and mobile, playing similar content in multiple tiers of graphic output. So in other words, even more like PC gaming.
Now back to the topic. 10+ years ago Bill Gates got into game console business because at that time gaming console aea is where the battle of living room computer were fought; but right now, the battlefield has long changed to something else. That "something else" right now that decide the future of smart home is being fought in smartphone world and will probably shift to "ecosystem" a few years down the road. MS should accept they have lost this battle. Or withdraw the resource from home console world and double down on smartphone if they want to.
MS and Sony wouldn't lose if their apps/devices were the only ones you could access their exclusive content, respectively. It's going to be all about the content. With the high margins on a software service they could more easily subsidize their hardware, or go the mobile-phone route and let you have it free or cheap for a service contract.
The living room isn't going anywhere - the battlefield expanded. Withdrawing resources from being an entertainment source across all 3 screens would not be smart, because that's where Sony, Google, and Amazon are going to be. People still want experiences on a big screen, and that ain't phone or tablet.
