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Microsoft's Rush To Xbox 2 A Danger?

Game Boy writes "Brit games business site Gamesindustry.biz has posted a fascinating editorial asking whether Microsoft is about to shoot itself in the foot over Xbox 2 by rushing to launch the console years ahead of its rivals' next-generation platforms. It's a pretty good analysis of how Microsoft is thinking about this marketplace, and why they could be pretty drastically wrong - I work at a major games publisher, and a lot of people here are worried about exactly the same things, but it's rare to see anyone actually discussing them openly. Xbox has done pretty well so far, but Microsoft could be heading for a disaster that even Bill's billions won't dig them out of..."

23 of 676 comments (clear)

  1. No, no, no by Mz6 · · Score: 5, Interesting
    "Xbox has done pretty well so far, but Microsoft could be heading for a disaster that even Bill's billions won't dig them out of..."

    You do realize that you are talking about a company that has almost $60 Billion (with a B) just in reserves alone. They are sitting on this money! Add into what they make in revenue and the profit off that.

    I know this is an editorial and all and very light on research findings but this paragraph right here struck me as odd:

    "The belief within Microsoft's top Xbox executives, according to company insiders, is that the main reason that Xbox has failed to seriously challenge the PlayStation 2 is because Sony had first mover advantage - a gap of a year in which to build up its installed base and convince consumers and industry alike that it was the key platform of the next generation. Hence the urgency around launching Xbox 2 well ahead of its competitors; if, as seems increasingly likely, PlayStation 3 doesn't arrive until late 2006 or even early 2007, Microsoft believes that it will have won a huge competitive advantage by being to market as much as two years earlier. This, the conventional wisdom says, is how Microsoft will crush Sony."

    Just because you release a platform before a competitor doesn't automatically make it better. The movie industry is notorious for this. Think back in 1999, The release of Armageddon was very hyped at this time, Hell, McDonalds had a friggin contest for it. However, before that release came this little movie called Deep Impact. It was an OK movie, but lacked some parts. It was rushed, designed to make it out before Armageddon and take a cut into it's sales. The movies had the same premise and theme, but Armageddon destroyed Deep Impact in both the box office and dvd/vhs sales. In this case, Microsfot doesn;t know when Sony will release the PS3. The PS3 is so highly anticipated right now, that developers are already writing games for it, studios have already put aside funds. The same cannot be said for a next generation Xbox.

    I am not totally sure on this, but has the Xbox managed to outsell the PS2 in any month except for when the Xbox was first released? When will companies learn that to make a market share, you have to be different. Playstation become popular back in the day because they were disc-based. They were able to hold more space, add better graphics, play music, play full-motion video. But most of all they had the game developers behind them.

    I would be very interested to see what Microsfot has to offer that will be different from the rest. It definitly wasn't a 40 GB hard drive. I think this will be great for Sony to see what they can enhance upon for their game system, considering the PS3 has been in development for what? 3-4 years now.. perhaps longer? I think they might have a slight advantage and a better product.

    Just my $0.02.

    --
    Hmmm.
    1. Re:No, no, no by 7Ghent · · Score: 5, Informative

      Gaming platforms != movies

      A gaming platform is an investment that you'll spend several hundred on, games, controllers, etc.. A movie is just a movie. Because I see a movie this weekend doesnt mean I won't see one next weekend, even if it's similar. However, if I buy a console this weekend, I'm definitely not buying one next weekend.

      Your analogy sucks.

    2. Re:No, no, no by Anonymous Coward · · Score: 5, Informative

      The XBox outsold the PS2 in April of this year due to the $150 pricing, that was rapidly reversed in May with the matching PS2 price cut.

    3. Re:No, no, no by Chiasmus_ · · Score: 5, Interesting

      The belief within Microsoft's top Xbox executives, according to company insiders, is that the main reason that Xbox has failed to seriously challenge the PlayStation 2 is because Sony had first mover advantage

      Isn't this obvious to everyone??! What the hell is wrong with these Xbox executives?

      The reason that the Xbox hasn't challenged the PlayStation 2 is that when you walk into a GameStop, there's an entire wall of PS2 games - plenty of good titles, at that - and three little rows of stuff that's either terrible (Outlaw Golf, anyone?) or available on PS2.

      The reason XBox hasn't challenged PlayStation 2 is the same reason the Sega Master System couldn't challenge the NES: Despite the fact that the former are superior pieces of hardware, the latter has the best, and most, contracts with game designers.

      I think the XBox is a fantastic machine. I've played GTA3 on both XBox and PS2, and it's simply more enjoyable for XBox.

      But, as an XBox owner, every time I think "You know, I'd like to play a strategy game.. or maybe an RPG..." all I can do is lament the fact that all the good titles are on the other wall.

      --
      "Beware he who would deny you access to information, for in his heart he deems himself your master."
    4. Re:No, no, no by Octagon+Most · · Score: 5, Insightful

      One serious danger in consoles is that if the product doesn't match up well against rivals then the manufacturer is stuck with it until the next generation. This isn't the case in the software world where Microsoft lives. Software is often rushed to market and then patched and upgraded "in place" while the consumer is using it. The early adopters suffer but that hasn't cooled the purchase of fresh new products, thus the practice continues. Microsoft could emulate this approach in the game console space by building a system that can be upgraded via software. If an Xbox 2 can be converted to an Xbox 2.1 with a CD that flash-upgrades the OS, then we have a new paradigm in game consoles. They become more like software and a much more familiar competitive environment for Microsoft.

    5. Re:No, no, no by vitaflo · · Score: 5, Informative

      The PS3 is so highly anticipated right now, that developers are already writing games for it, studios have already put aside funds. The same cannot be said for a next generation Xbox.

      There are no dev kits yet for PS3, nobody is writing anything for it, unless you mean writing design docs.

      MS has already given XNA to devs, and they very much are already developing games for Xbox2/Xenon.

      I am not totally sure on this, but has the Xbox managed to outsell the PS2 in any month except for when the Xbox was first released?

      Xbox outsold PS2 by over 100,000 units in April when it dropped its price to $150.

      I think this will be great for Sony to see what they can enhance upon for their game system, considering the PS3 has been in development for what? 3-4 years now.. perhaps longer? I think they might have a slight advantage and a better product.

      Xbox2/Xenon has been in devlopement for just as long, so has Nintendo's next console (Revolution). Who has the "better" product remains to be seen.

    6. Re:No, no, no by Crispin+Cowan · · Score: 5, Informative
      You compare Deep Impact to Armagedon, and claim that Armagedon "destroyed" Deep Impact in box office and rentals. Some data:
      • Deep Impact business
        • Box office: $140M
        • Rentals: $67M
        • Total revenue: $207M
        • Budget: $75M
        • Profit margin: (140+67)/75 = 176%
      • Armagedon business
        • Box office: $201M
        • Rentals: $104M
        • Budget: $140M
        • Total revenue: $305M
        • Profit margin: (201+104)/140 = 118%
      Deep Impact did 2/3 of the business, which is hardly "destroyed". It did it on 1/2 the money, which is arguably a better investment.

      And IMHO, Deep Impact was a much better movie; the plot was much more believable. IMDB somewhat concurs, in that the viewer rating for Deep Impact is 5.9 and Armagedon is 5.7. I cannot confirm or refute the claim of which film was rushed to market, but the Deep Impact people clearly did a better job.

      Back to video games: anyone have data on how much Sony spent developing PS/2 vs. what MS spent developing XBox?

      Crispin

    7. Re:No, no, no by gamgee5273 · · Score: 5, Insightful
      Remember: NEC tried this sort of thing with the TurboGrafx (add the CD drive to the TurboGrafx CD), Sega tried it with the SegaCD and the things bombed. Are upgrades for an upgradable console something people go after (think the PS2 HDD and the Network Adaptor)? Is it better business just to create a new console?

      If a console has no compelling exclusive games, people will not buy it. In terms of the TurboGrafx, it wasn't just compelling software, but also a question of mascots... and Bonk (the caveman) vs. Mario, Link, etc. (on the Nintendo side) vs. Sonic (on the Sega side of things) meant bad things for NEC.

      MS is in the same boat as NEC was. No, they don't need a mascot for the console - the PlayStation and PlayStation2 proved that wrong. Nowadays you need compelling franchises, and the Xbox only can build off of Halo and KOTOR right now... and both of those are available in other ways. Whereas you'll have to completely undress to count on your fingers, toes and nether regions to add up all of the compelling franchises the PS2 has on its platform.

      SO, using that as the argument's basis: an upgradable platform is nice, it's cool, all of us at /, would humbly approach it and fawn over it and its capability. But if it doesn't have the games that people buy, only the guys interesting in modding it are going to buy it.

    8. Re:No, no, no by ThosLives · · Score: 5, Informative
      That's not entirely correct:

      There actually is an OS on all the "disc based" systems. Xbox actually has a specialized version of Windows NT and runs DirectX. Sony's PSn boxes also have a kind of OS. What do you think manages disc reads, writing to/from hard disks/memory cards, and handles all the I/O scheduling and the like? The fact that you can change an XBox to run [Linux] means that you're changing the OS on the thing.

      Just because hardware doesn't change doesn't mean it doesn't have an operating system. You'd be surprised at how many things have an "operating system" - like cell phones for example. Even your automobile engine controller probably has an operating system...

      --
      "There are a dozen opinions on a matter until you know the truth. Then there is only one." - CS Lewis (paraprhase)
    9. Re:No, no, no by boosman · · Score: 5, Informative
      You do not realize that this $60 Billion is paper-money only, there is hardly any cash. All this money is stuck in other people's projects. It will probably take them 10 - 20 years to be able to cash all their assets if they can at all.
      Please check your figures before you post. According to Microsoft's 8-K filed 23 April 2004, as of 31 March 2004, they had $9.348 billion in cash and cash equivalents, and an additional $47.059 billion in short-term investments. (See FreeEdgar for the 8-K and other reports.)
  2. History says this is bad, mmmk. by schild · · Score: 5, Interesting

    Sega tried this. Remember the dreamcast erhmmm the 32x and THEN the dreamcast?

    Remember the CD-i?
    Remember the 3D0?
    Remember the Atari Jaguar?

    These weren't experimental systems. They were meant to beat the big guys to the punch, whether it was Nintendo or Sega back then.

    The Dreamcast (still my favorite recent gen system) got trashed by the ps1 and the n64. It keeps me up at night thinking about how much better games for the Dreamcast would have been.

    However, if I remember correctly, the PS2 was launched a year before the GC and the Xbox....Hmmmm, no one was naysaying when Sony was planning on doing that, and look at them now - on top by a large margin.

    XBox shooting themselves in the foot? Not if they have Ninja Gaiden, a Halo spinoff and other stuff coming out. Oh and backwards compatibility, they NEED backwards compatibility, no matter HOW HARD it is. I'd put some cash, money, hoes on that being the reason the PS2 succeeded as quickly as it did.

    --
    schild
    editor, f13.net
  3. xbox2 != Sega Dreamcast. by Anonymous Coward · · Score: 5, Insightful

    The Dreamcast bombed because sega screwed all their customers beforehand with their last 3 systems. Customers had no confidence in the Sega the company, and showed them that by not buying the dreamcast which was actually a pretty good system.

    Microsoft hasn't displayed the same hubris ( kind of a shock ) and it's probably a 50/50 chance of success. It would be made better with backwards compatibility, but i don't know if thats a feature of the xbox 2

  4. Pretty well? by metamatic · · Score: 5, Funny
    Xbox has done pretty well so far,

    Sure, if failing to make a single penny in profit is "pretty well"...

    ...if having only 1 game in any of the annual top ten sales charts, and that being "Halo" from back in 2001, is "pretty well"...

    ...if having sold even fewer units than Nintendo's GameCube is "pretty well"...

    ...if being outsold by the PSOne in Japan is "pretty well"...

    ...then yes, Xbox has done pretty well. And to think people accuse Slashdot of being anti-Microsoft!

    --
    GCHQ Quantum Insert installed. If only our tongues were made of glass, how much more careful we would be when we speak
  5. "First-Mover Advantage" Won't Help... by GTRacer · · Score: 5, Informative
    ...If PS3 is backwards-compatible. Follow me here - Sure, Xbox 2 (or Ybox, or why bother?) will have prettier graphics and a lot of "new-tech" cachet. But the fracture in the game-space of having two incompatible Xboxen might be the opening PS3 needs to keep Sony on top.

    Since PS2 dev won't have to stop for PS3, all the investment and tricks learned will still be valuable. Sure, some developers and publishers will stop PS2 coding, but look at how many PS1 games are still out there!

    Microsoft won't have that, and they're also asking gamers to keep two systems. Sony is effectively saying "Upgrade to the $350 PS3 by trading in the PS2 for $100, and keep all your games!".

    Much less risk to go Sony.

    I still want an X2, but I know who's getting my money first!

    GTRacer
    - Read the FA for once!

    --
    Defending IP by destroying access to it? That makes sense, RIAA/MPAA. Go to the corner until you can play nice!
  6. Backwards compatibility by Dark+Paladin · · Score: 5, Insightful

    *IF* the Xbox2 will be backwards compatible (and considering the architecture of a proposed PPC chip and all, that will be very surprising), then this will be a good move. New games that the article talks about that are multi-platform will still work with the Xbox 2, and new games will look "neato!" on the Xbox2's new hardware.

    BUT!

    If the Xbox2 is *not* backwards compatible, then yes, this could be a problem. If I have a choice between Xbox 1 with a library of games, or the Xbox2 with a few new games, or the PS2 with a ton of new and old games (with the promise that the upcoming PS3 will play all of my current games), then it's going to be a no-brainer for the majority of people out there. And all it will do is change the Xbox divivion from losing over $500 million to one losing more.

    Even Microsoft's investors can't stand a division losing money forever, no matter how much Windows and Office brings in.

    Of course, this is just my opinion. I could be wrong.

  7. Re:You don't understand the power of the Microsoft by RickHunter · · Score: 5, Insightful

    Because, with the XBox, the Microsoft has been screaming "JUMP!" at the games industry for over a year. The industry has remained unconcerned. Looks like Microsoft's treating an industry it's trying to dominate with one it's already dominated.

  8. Re:Halo 2? by Apocalypse111 · · Score: 5, Interesting

    Halo 2's release date is supposedly set in stone. The guy who announced it had it tatooed on his arm, and was showing it off at E3. After a publicity stunt like that, I don't think they're about to push it back any further - if I had an important event date tatooed on me, I'd make DAMN SURE that event happened on time.

    --
    There is no mod option "-1: Disagree" for a reason. "Overrated" is not an acceptable substitute. Post something instead.
  9. Re: you've got your consoles confused by mapmaker · · Score: 5, Informative
    It was the Sega Saturn that got trounced by the PS1 and N64. The Dreamcast got trounced by the PS2 and Xbox.

    But your point is right on. Sega proved it not once but twice!

  10. That might further cut into ... by burgburgburg · · Score: 5, Insightful

    their efforts to make this whole enterprise actually profitable. They do want that. Essentially subsidizing XBox2 developement would be a huge expense. Top that with the hardware discounts they'll continue and it starts costing real money. And while it won't seriously dent their cash reserves, it will look bad on spreadsheets and to investors and make the whole process more vulnerable to pressures to quit.

  11. Re:backfire, well we'll fire back! by swv3752 · · Score: 5, Insightful

    Actually I think the piracy was not a consideration at first. It was the final nail but the real problem was the PS2.

    The PS2 had two major things going for it at the time. It was backwards compatible with the very large PS1 game catalog. It was backward compatible with the PS1 controllers. And it could play DVD movies. When it came out, the PS2 cost as much as many low end DVD players.

    So I could either buy a Dreamcast. It will only play games. Or I could wait and buy a PS2 and have it do double duty as a DVD player.

    --
    Just a Tuna in the Sea of Life
  12. Console Life by vasqzr · · Score: 5, Informative


    I'd guess that the average game console life is probably around three years.

    You guessed wrong.

    1985 - NES released in the USA
    1991 - SNES released in the USA
    1996 - N64 released in the USA
    2001 - GCN released in the USA

    6, 5, and 5 years

    1994 - PSX released in the USA
    2000 - PS2 released in the USA

    6 years

    1. Re:Console Life by lukewarmfusion · · Score: 5, Informative

      I was trying to include the not-so-successful consoles in my estimate.

      1995 Sega Saturn
      1998 Dreamcast

      There are an awful lot that didn't last even three years.

      Playstation came out in 94, but by the time 1999 rolled around the popularity was waning; if PS2 didn't come out in 2000 they might have lost a lot of customers.

  13. Not waving but trolling by Tim+Browse · · Score: 5, Insightful

    I may be getting into a habit of replying to you (i.e. a well-known troll), but I saw your posting got "5, Informative", and I can't hold back. :-)

    It's not just the technology (i.e. engine/framework APIs) that's the problem. The problem is game production. And the problem is that game production is not just about technology. It's about game design, asset production, and so on.

    Producing assets that will work fine on a GC, PS2, but hey, also on an Xbox 2 (and take advantage of the Xbox 2) is not as easy as 're-exporting'.

    As for different tech capabilities limiting game design, look at the complaints about Thief: Deadly Shadows, where PC users feel the game (level design/size) was compromised to make it work ok on the XBox. I keep seeing comments on the web from people who feel that games out on PC and console suffer on the PC, because the levels expansiveness, draw distance, etc, have to be compromised to make it work on the consoles (which have much less RAM, and cpu/gfx hardware is for many tasks not as capable). These problems, despite what armchair developers like to think, are hard problems to solve in a real shipping game. That's why a lot of developers don't want to take them on. Making a game is hard enough already. Hence some of the views expressed in the article in question.

    However, your point about ease of programming of PS n versus Xbox n is right on the mark. (Presumably due to the same reason that a broken clock is right twice a day...)