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Why The X-Box Network Will Fail
angkor wrote to us an article from The Register that looks at what Microsoft is planning for the X-Box Network. The factual information is educating on it's own - and the analysis of why they think it will fail is interesting as well.
They want you to get on the service and pay a fee per month. This way you are subscribed and you don't own the product. You are only "licensed to use it."
The thing is that this is a proven profitable model. Look at Ultima online. It's pulling in a cool US$million every month with no signs of stopping. And Everquest is delivering on similar dreams of avarice.
It seems to me like MSFT is trying to cash in in the same manner with using a proven business model.
This looks to me more like an end-run around the internet itself. It will essentially run in a tunnel through the existing infrastructure, but at some point in the future, there's no reason that they couldn't migrate on to something else, say a wireless network that had its own protocols, address scheme, etc. Bill Gates has been kicking himself in the ass for the last 10 years because he didn't discover the internet soon enough to dominate it, and he's got to be salivating at the idea of an essentially private user space that he controls lock stock and barrel. If he pursued this for all it was worth, he could do it with his other $39 billion... I wonder what kind of return on his investment he would eventually get?
To ensure perfect aim, shoot first and call whatever you hit the target
It might fail, or it might not...
Food for thought:
1) Which is the strongest driving force for Console/Console-Accessories/Console-Games:
a) Whinning kids.
b) Grownups buying presents.
This whole MS approach to selling a "clean" network for kids to play in will appeal to parents but not necessarily to the kids.
2) Can/Will Microsoft buy legislation forcing ISPs/GameNetworks/etc... to "protect" children?
If they get there first and then they buy the legislation, they will be first to market with a product designed to fit that legislation (actually it will be the legislation designed to fit the products, but in practice it's the same).
What are the most popular on line games?
First person shooters and RPGs.
Why would anyone want a forum for first person shooters and RPGs to be known as Disney-esque in any way? These games are mainly about killing stuff and in many cases have extreme graphic violence. I think someone got their focus group polls crossed up.
If the core of on-line gaming was 12 year olds they might have something, but if the core was 12 year olds then Nintendo would be the king of all gaming anyway.
I'm fairly sure they will be dropping this comparison in the future, or at least trying to explain how it was not taken the way it was intended.
Right, but what the Reg is trying to say is that Microsoft is failing in those attempts. And as for bad mouthing, even Nixon had the Washington Post
Step 1 - X Box - is costing the company more money than they were willing to spend, and just isn't making the inroads against Sony that the hoped, and Nintendo is managing to hold its own.
Step 2 - Live - I think the Reg did a good job detailing this. It looks like it'll cost the company even *more* money just to make people pick it up. It seems Microsofts hopes are pinned on a constant, viable, source of revenue. However, in the past these networks have failed, remeber MPlayer?
Step 3 - Try launching an all in one home media station with two heavy weights in the PVR business, two heavy weights in the game business, and two heavy weights trying to cut off any useful service you want to provide (the MPAA and RIAA). Mix that with a strategy thats already hemoraghing money, and you've got a situation that just doesn't look that great for success.
they don't want to believe?
Sure, on technical merits, gameplay, any "quality" issue, I'll grant you that it's probably a flop. But no one seems to understand, maybe they're blinded by love for the gamecube or ps2.
Microsoft is doing more than just trying to leverage into another hot market... this plan is so much bolder than that. They're out to chop the knees out from under Dell, HPaq, and Gateway.
Xbox2, most likely, but possibly xbox3 will be the "home computer". It will be marketed as such, a computer that is "so much simpler to use" and never has compatibility problems caused by all sorts of 3rd party drivers. It will be cheaper too, loaded with software and still well under then $700 price mark that consumer pc's are shooting for. This too, will look like a failure
But it will just be beginning. Next version will be the Xbox Corporrate edition, loaded with the new version of Office XP, cheaper, with no annoying expansion possibilities. Relatively nicer licensing... cheaper, easier for your bonhead MCSE's to administrate, and having the latest office software 6 months before it's released on the PC.
And linux won't run on it, ever. They'll find some way, even if it means adding chips with no purpose other than to thwart it. And no matter how good at reverse engineering you are, what happens when you recieve the DMCA cease and desist?
At this point, the Xbox family will be making serious inroads into the desktop PC market, without annoying competitor operating systems. Maybe 40% - 50%, which in an industry with razor thin profit margins, will kill Gateway. Hpaq will hold on, and Dell will license it... the Dellbox will debut. No, I'm not kidding.
Also, at this point, the price starts to rise on bare mobo's even more, as the taiwanese manufacturers see the advantages of high volume manufacturing evaporate. These are the same people that make mobo's for Dell, and if they aren't making those, the cost slightly rises on *ALL* their products. And as someone that builds your own box, you are further marginalized... people laugh at you for spending that much more on a system that can't run Halo 5.
Now, M$ starts to really drag ass with the PC versions of Office. Salesmen that arrange licensing with the Fortune 500 starrt pushing the Xbox 5: Professional Edition as the only real choice with a future, Microsoft may not be able to continue the cost of developing M$ Office PC edition, and you don't want to be stuck with 10,000 machines that won't be able to run the latest software.
Market, better than 70% at this point. All the industry rags coo and blush, telling how M$ cleaned things up when customer service was in the toilet. The PR campaign is heavy duty now. Prices continue to rise, and HPaq gets out of the consumer PC market, content to sell servers and laserjets. Dell is licensing Xbox, but still retaining the PC line... but prices rise due to no serious competition.
The DOJ initiates an investigation into further illegal monopoly practices, but this will take years, and M$ buys the right politicians. Whenever anyone important and unsilencable bitches, they hold up Dell like ventriloquists hold up the dummy and insist he really is real, and talking.
The market share of Xbox hits 80%, with %5 for mac zealots (no offense, I have 12 macs myself guys) that only leaves 15% for the do-it-your-selfers and linux zealots (no offense guys, I have 5 linux machines, including Amiga Linux, on a 2k). At this point, Dell does a press release how there really isn't enough market to support selling general purpose PC's. There are lots of little 2nd and 3rd tier vendors... but none that make any inroads into the corporate or even medium sized privately owned businesses. Plus, the cost for general purpose components is now through the roof, and taiwan is bleeding hardware manufacturers left and right.
I'm thinking Intel will be compelled to go along with it, knowing that they'll have exclusive for the Xbox cpu, and still retaining their server market. Places that need mid-range to high end rackmount servers, if they use x86, have always shrugged off paying $600 for a motherboard, $200 for a nic. They won't notice.
At about this point, M$ will quit supporting mac, which may be the only viable alternative.
And you thought it was just an ugly games machine.
It seems to me that the Register has a habit of badmouthing everyone more or less equally. Also, looking over from my side of the world, it seems that (with the execption of the UK government) people in Europe seem much more wary of Microsoft than people in the U.S. do. I don't think the Reg goes out of their way to bash Microsoft like we do here on /., but sometimes it just happens.
They don't realize that gaming isn't the only thing MS has planned for the XBox. MS, and many other companies, have always wanted an integrated home media box that does everything from check your email, to help you plan a grocery list, to play video games.
On the contrary, if you actually read the article you'd know that they have more planned, even if the Reg doesn't spell out what those plans might be -- they have more server capacity planned for Xbox Live than they currently do for microsoft.com, after all. Quotes from MS Execs indicate that Microsoft wants to serve the PG, sanitized, "Disneyland" version of Media on its network. The Reg's claim is that it's doomed to failure, because in order to do this with any effectiveness, you're going to have to build your own separate, parallel network, and populate it with your own sanitized content, which you then have to police for violations of your sanitization policies. When the inevitable violations occur, and occur frequently, people lose confidence in your sanitized network, and your main differentiating feature is now gone.
The only people who come close to pulling off a separate network is AOL, who built their "gated community" before the Internet caught on, and permits access to the Internet-at-large, so it isn't really a separate network. AOL can police its own content, but not the Internet-at-large.
You could debate with the Reg's claim, but it seems legitimate to me.
As far as kids tehy have their own credit cards these days and will be able to set up their own online accounts. So parents may be out of the picture in some households.
Setting up the online gaming infrastructure can be expensive. In the PC world there have been only a handful of success stories. Quake relied mostly on volunteers setting up servers. Blizzard is relying on sheer popularity of their boxed game sales to cover the cost. But others like UO, Everquest, and dozens of others charge $10/month to play.
t ml
So Sony is leaving it up to the developers. Which means some games may be free to play online, and others will cost money.
But the way game consoles work, a consumer buys many games and then might wish to play any given game at any time. This means that unless you are entirely committed to one game, you face the possibility of paying $10/month for half a dozen games, which is a signifigant cost. That means you probably only choose one game to play online, sort of a survival of the fittest. Everquest has become this way on the PC, whereas others like Subspace died from lack of subscribers.
On the other hand Microsoft is taking a different tactic. They'll provide the infrastructure for all games. The developer of the game sells their box, and then turns over the server code to MS to maintain. MS in turn charges one price to the consumer(this might be $50/year, maybe it's $10/month, not sure yet) to access all games online.
This means that popular games will drive XBox sales and sales of the online subscription. But less popular games will be able to share these infrastructure costs and as a result not disappear totally because they only have say 200 users instead of 200,000.
I see Microsoft's model as clearly superior from the customer perspective. The only question is how much, if anything, they charge the game producers. If it's little to nothing, MS will clearly be in a better partnership position.
BTW, Sony's model has been criticized by others a bit more knowledgeable and certainly less biased than the Register:
http://news.com.com/2100-1040-855039.h
And its the games that lost it, Sony just locked up GTA till 2004, and EA decided that its online components for its games will only work on PS2 (they had some problems with xbox live), and the FF series is only on ps2 (or pc for 11). Stick a fork in it, its done.
"My head hurts, My feet stink, and I dont love Jesus." -Jimmy Buffett
Xbox Live and You
20-MAY-02
Microsoft's Xbox team works the same way as the U.S. government--anything they do, they do big. Everything from the system and controller design to Microsoft's library of launch titles was specifically designed to make the Xbox the highest-selling system in the world. They haven't exactly had the commanding success they were hoping for, but even the undisputed king of the PC industry has to start somewhere.
Now their attention has turned towards online gaming, a field they're far from alone in. Sony is positioning its upcoming PlayStation 2 broadband service as the future of the system, and even Nintendo is making its first baby steps towards wiring up the GameCube. With its Xbox Live service, however, Microsoft has what is probably the biggest and most ambitious network project of them all. The only question: will it have anything interesting to play?
Question 1: What Do I Need?
The Xbox's built-in Ethernet port will make connecting to Xbox Live a fairly simple process. All you'll need is a working broadband connection and Microsoft's Xbox online kit, coming to retailers sometime this fall. The $49 kit contains the basic tools of Live navigation: the Xbox Communicator headset, 12 months of free service, and a disc or two with the online install software and some free games and demos. Microsoft hasn't decided on a service rate after the first year, but it's likely to be around $10 per month.
For most people, the main sticking point will be finding a broadband connection, whether it be via ADSL or cable modem. Xbox Live won't support 56K modems at all, and broadband service still runs over $50 a month in most places. Microsoft is working with major Internet service providers to create special deals for Live users, but until then, many Xbox owners could have a hard time finding their way online.
Online software will be sold in regular retail stores, right alongside offline Xbox games. You won't have to download them off the network and store them on your console's hard drive, as some net rumors have claimed. Some game publishers may charge an extra fee for online play or other extras (like downloadable levels), but the great majority of Xbox Live will be available for free once you pay the flat $49 for the online kit.
Question 2: How Do I Get On?
When you go on Xbox Live for the first time, you'll have to set up user account IDs for you and the rest of your family. This ID system works roughly the same as the one America Online and other ISPs use; your ID will serve as both your nickname and contact address for friend lists. All personal user information is stored on Microsoft's servers, and not your Xbox, so there's (hopefully) no need to worry about malicious hacker kiddies stealing your account.
You're free to try out Xbox Live at a friend's house without signing up, but a user account allows you to use the Xbox Communicator for voice chat. The Communicator headset is, without a doubt, the coolest feature of Xbox Live--it allows you to talk whenever you want, wherever you want, to fellow online players during games. Imagine playing some 4-player title with your friends on a big couch, laughing and trash-talking to each other, and you get the general idea of what this accessory has to offer. There's a half second delay between when you talk and when everyone hears you, but the voice quality is solid, and the system overall has the potential to take online play into a new stratosphere of addictiveness.
Of course, Microsoft isn't daft enough to believe that straight voice chat is for everyone. Players can use all kind of software effects to alter their voice if they want to protect their identity, and if you don't want to talk at all, you're free to do so. Annoying players can be muted temporarily or added to a permanent ignore list, and parental controls will allow concerned moms to keep their kids from talking or listening to strangers.
Before all this, though, you'll need to find someone to talk to. Xbox Live offers two basic matchmaker services--a "quick match" that finds someone for you instantly, and an "option match" that lets you customize your search based on the game you want to play. Gamers won't see any ping times and other PC-centric jargon during this process; Microsoft is trying to make the system as simple and transparent as possible to use.
Once you find some people to play with, you'll be able to store their names in a friend list similar to the ones used in instant-messenging software. The really cool part--you'll be able to contact friends on your list anytime they're online, no matter what game they're playing. For example, let's say you want to play Phantasy Star Online with your best bud, who's currently in the middle of an NFL Fever game. Send off an invitation to him, and he'll have the option of accepting or ignoring your message. If he decides to join your quest, all he has to do is switch game discs and he'll be teleported right next to you. Convenient, that.
Question 3: When's It All Happening?
Although Microsoft is busy organizing a "technical beta" to test out the effectiveness of their online system, the real Xbox Live beta test (with approximately 10,000 participants) will begin this summer. Microsoft is being very coy with the official consumer launch date; the Xbox team wants to make sure there are at least a dozen online-compatible titles out or coming soon when the online kit hits retailers. They promised us, however, that the system will be ready by Thanksgiving this year.
There's no doubt that Microsoft has its act together with the Xbox Live system. The network still suffers, though, from the curse the Xbox itself is fighting against: Where are the games? The only sure hits on the Live roster so far are Phantasy Star Online, the new Star Wars Galaxies, and the usual cavalcade of Microsoft and Sega sports titles. After that, gamers will be forced to take chances with Whacked! and other games of (to put it nicely) unknown quality. Still, Microsoft has repeatedly stated that they're ready to wait as long as it takes for some Halo-like breakaway title to spark a surge of online customers. With dreams of 10 million online users in five years, the company has set its sights straight for the skies. It'll be up to them to find the must-play title that'll take them there.
They are quite capable of losing millions of dollars, perhaps hundreds of millions of dollars a year for the next five or ten years, or more. All it would be for them is a tax-loss write off. I do not doubt that they would be willing to LOSE as much as Sony has ever made on the Playstation, if it meant that there was a "TV in every house, all running Microsoft Software" in 20 years time.
Give the devil their due, the Information Superhighway is littered with the corpses of companies and products that were technically superior but underestimated Gates and Co. Who *EVER* thought that Word stood a chance against WordPerfect? How many of us laughed at Runtime Windows 1.0, or 2.0? And of course Novell had a much better product and was earlier to market to boot.
I'm no real fan of Microsoft, but IMHO nearly everyone is seriously underestimating the amount of money and effort they will put into this; I also bet that they are currently 'playing nice' due to being under a lot of legal scrutiny; once the various attorney generals' attention is elsewhere, the gloves will come off and people who do NOT release for Xbox first, or exclusively will find their "air supply choked off".
"Everyone is entitled to their own opinion, but not their own facts."