MS Seeks Entrance Fee to XBox Accessory Market

pwnage writes "According to CNET, Microsoft's newest licensing model for the next-generation XBox will effectively lock out 3rd-party accessory manufacturers who don't enroll in Microsoft's licensing and royalty program. The new console will employ hardware security mechanisms to ensure that only products created by developers willing to fork over cash to Microsoft can connect to and work with the console. Is Microsoft shooting itself in the foot by making traditional 'approved product' licensing mandatory for 3rd-party developers? Or will companies line up by the dozens to tithe to King Bill? Finally, will Sony follow a similar strategy to eke additional revenues out of its PlayStation 3?"

Comments

I'll take hidden answer #4

[ZakuSage]

It'll probably be more reason for cash straped people will opt for the Nintendo Revolution rather then the more expensive options that are PS3 and X360.

Re:I'll take hidden answer #4

[Skim123]

Yeah, I don't think most businesses wanting to make an assload of money really are targetting the 'cash strapped' demographic. Rather, they are aiming for the pudgy middleclass, those will money to burn (or at least willing to go seriously into consumer debt to have their toys).

Re:I'll take hidden answer #4

[Skim123]

I should have been more specific. Sure, you can make an assload of money selling to the poor, but only if what you're selling can be obtained cheaply (i.e., food, soap, clothes, etc.). Clearly there's a certain cost that Microsoft or Sony (or Nintendo) incur to develop the console, produce it, ship it, market it, etc. That, along with projected sales, tells them what the minimum they could sell it for and break even. And that dollar figure is quite a bit higher than the break even point for buying tomatos and selling them to folks. Sorry, but they can't afford to sell an XBOX for $25, no matter how many 'cash strapped' folks would buy it.

In any event, why is anyone surprised at the 'high' prices of 'next generation' consoles? For electronics companies the formula is pretty well-established:

1. Invest serious $$$ into R&D and make a 'next generation' product
2. Spend big on marketing/advertising
3. Give it a price tag that may be a bit high, but one that early adopters will happily swallow
4. Over time lower prices to capture a larger market share

That's what you see with virtually every electronic toy out there.

Re:I'll take hidden answer #4

[Mr. Flibble]

You are very wrong. Companies that target the poor make big bucks. Wal-Mart is an excellent example. There's even a saying to go along with it: "If you want to be rich, sell to the poor. If you want to be poor, sell to the rich."

This is a good point, but it is slightly off base. Note, I am not saying that your point is not valid, only that it plays out a little differently than the saying.

This Excellent Book goes into great detail as to who the rich actually are, and what they actually wear, and what they really buy. I would actually be surprised to find a rich person shopping at high end stores after having read that book. In fact, I would guess you would more likely find them at Wal-Mart doing their shopping. High income earners such as Doctors, Laywers and Accountants generally shop at the "luxury" shops and buy the Ferrari's and Handmade Gucci's. The rich got to be rich by shopping at places like Wal-Mart.

Now, as to your point, you are entirely correct on the selling... Selling to the masses rather. The economics of scale will benifit you. If you can sell millions of products that retail for $2.50 you are going to make more money than selling a few items that retail for $10,000. Provided you can survive Wal-Marts "supplier squeezing techniqes" you can make a good deal of money selling volumes to them.

I don't understand

[defile]

If console manufacturers could legally lock out third party accessories, wouldn't they have done it long ago? Nintendo sued Game Genie over patent violations but still couldn't keep them out of the market.

How is this any different from Lexmark's ink cartridge fiasco (a case they lost)? "We'll keep doing it in the face of all of this legal precedent that says we can't" doesn't seem like a sound long-term legal strategy.

Re:Hopefully including some sort of quality contro

[Samari711]

Yes, rather than have the free market determine which brand X controllers stay on the market and at what price point, lets have one company control it and keep prices exorbitant!

I'm not too concerned though, it's going to be the same type of situation as it was with the chips in pinter ink cartridges.
1)DRM-like scheme locks out competitor
2)competitor reverse engineers said scheme
3)???
4)Profit!!

MS would be best off not suing under the DMCA, seeing as the SCOTUS was pretty firm in the Lexmark case about the DMCA not extending to interaction between components.

Re:Making the PC world a better place...

[Saeed al-Sahaf]

It's steps like this (by Microsoft and previously Nintendo) that may lead developers to return to the PC development environment.

You're kidding, right? This is nonsense. Third party makers will pay up, and proliferate. There is no shortage of people willing to pay, and they aren't interested in PC games, they want consoles. If you can't afford one you're probably not the market MS is targeting anyway, and will have to wait for second hand equipment on eBay.

It's just supply and demand

[RealityProphet]

Moves like these are based solely on the expected demand from consumers for these consoles. If consumers are frothing at the mouth to get their hands on the new xbox 360, then peripheral manufacturers are going to be frothing at the mouth to supply them with whiz-bang accessories. MS wins: a good business decision.

However, the opposite was true of Nintendo after their fatal decision to stick with cartriges for N64. For years, Nintendo dominated the console market, and for that, they required that all games were authorized by them and I believe even manufactured at one of their own sites. They could do this solely because there was incredible demand for their consoles. When Sony entered the market and support for Nintendo waned, all of a sudden they needed to offer game producers incentives to keep making games for Nintendo consoles.

The only thing that this sort of decision by Microsoft is saying is that they believe very strongly that their next gaming platform is going to be massively successful. And to me, that isn't really such a bad thing.

Re:Bad idea

[TheGavster]

There's always been QA in the form of 'official' accessories. Forcing *everyone* to use the official accessory licensing program just means that those of us willing to accept a crappy headset at a reduced price are out of luck. Preventing a transaction that would otherwise generate a surplus is just bad economics.