Slashdot Mirror
State of the Xbox
An anonymous reader writes "Xbox head-honcho Robbie Bach has written up a State of the Xbox in which he gloats about the continuing success of the console but fails to say a word about its evolution." From the article: "You may have seen the October Game Developers Magazine, which announced its top 20 Publishers of the Year. Microsoft Game Studios was named the number two publisher, just behind EA, based on revenue as well as use of third-party developers, average critical response to titles, percentage of original intellectual properties (IPs), and developer opinion."
http://alexalbrecht.typepad.com/alex/2005/01/xbox_ ii.html
So in my travels this weekend I came across a Microsoft employee and talked him up about Xbox II... here are the facts I found out.
1) Hard Drive... Yes! There was some speculation that MS was going to take the HD out to make it more difficult to Mod.
2) Flash based HD... Yes!!! It was told to me that the HD was going to be flash based... small size fast access... BAM!
3) No Stupid Dongle DVD playback... Yes!!! The reason that the first Xbox didn't have built in DVD playback is a simple one, Sony owns the Intellectual Property rights for DVD playback. Nuf said...
4) Xbox II at E3... Hell Yes!!! There will be an Xbox II maybe more at E3 this year...
5) Xbox II release date announced at E3... another Hell Yes!!! MS will be announcing a release date for Xbox II...
Now this is not like the "rumors" about IBM before these are hard cold facts from the horses mouth...
but I stopped when he started bragging about the "awards" xbox games won at Spike TV's second annual Video Game Awards. The award show I saw I wouldn't brag about to anyone.
Don't forget to tell Microsoft to fuck off for having the foresight to include a harddrive and broadband at the release of the product, or having four controller ports built in so you don't have to buy an adapter for your two extra friends.
OOOOOHHH, and all those low priced memory cards we ne.... wait, the built-in harddrive means no more goddamned memory cards too!
They weren't trying to get a stranglehold on the market. They were doing something that's called "entering a market." I will give you one million dollars (if I had that much anyway), and let you pick any existing industry. You then have five years to produce a return on my investment by doing business in that industry. Very unlikely in ANY industry. Getting recognized as a legitamate name costs a lot of money and a lot of advertising. Microsoft needed to get contracts and partnerships that it didn't have before and start doing things and hiring people that it hadn't done before.
It's pretty equatable to a store (just with a few extra 0's on the bankroll). The initial investment is huge. You need to purchase property, and either build a suitable structure or remodel the existing one to fit (or pay a likely higher price on an already fitting location), you need to invest in initial inventory, hardware and electronics, pay the connection or transfer fees on all the services, and then you need to hire a workstaff. At this point you have still not made a dime, but boy are you spending it.
Once you open for business, you have a mountain of debts, which turns off investors (this is one of the few areas where a pre-existing corporation entering a new market has an advantage. it can offest these costs with profits from other divisions. However, many major investors will see this new division as a big gaping black hole and will be more hesitant to invest), meaning odds are those debts aren't going anywhere just yet.
Most importantly, you're new. Few people know about you, and even those that do don't know wether it's worth doing business with you. You need to spend money to get people to do this by advertising, and it's usually neccessary to cut prices to razor-thing profit margins (or even temporary losses) so that people are more likely to gamble on a "test" purchase from you. Microsoft did this by selling the Xbox at a loss initially. Nintendo has done this, Sega did this, I'm pretty sure Sony does this, although I've never cared enough to look up the particulars, and Microsoft had to do it to keep up. I don't know if Atari ever did this, but if they did, then it would have hurt them far worse. Nintedo was an old and successful card and board game producer, Sony had a long line of successful electronics, and Microsoft has operating systems. They all had to take the initial entry pains to get into the video game market. The fact that Microsoft is dealing with those pains the same way Nintendo and Sony did should not be suprising. In fact, it should be [reassuring or troubling, depending on wether you want to be reasonable and open or simply want Microsoft to fail for failure's sake]. It worked for the the other consoles. That's not to say it'll work for the next one, but it does strongly suggest that it's a pretty good way to go.
About the only company that didn't take initial losses on entering the gaming system market is Nokia. They went and tried to sell their handheld system at $400 out of the gate (I can only hope they were trying to profit off of system sales without having to rely on game sales or gamble on continued future success, anyway. If they were selling below cost, then they have worse problems than I ever thought). Had they started out with the sort of prices they cut it down to, I still don't think they would have succeeded, but they would have had a decent shot at getting some impulse buyers on the hook.