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Getting All 1,700 Parts of the Xbox 360 to Market
Carl Bialik from the WSJ writes "Microsoft is hoping its Xbox 360 will further the company's goal to 'link the Web and entertainment of all forms in consumers' living rooms,' the Wall Street Journal reports, but 'one manufacturing misstep -- a shortage of graphics chips or a recalled hard drive -- could derail those ambitions and drag Microsoft's unprofitable videogame business even deeper into the red.' The WSJ traces the 1,700 parts that go into the device through the supply chain -- from two southern China factories, Rotterdam, and on to Toledo, Memphis, and ultimately, retailers in the U.S. -- and looks at what could go wrong along the way."
OF #12 TORX SCREWS" sources at Micrsoft reveal...
Most things are only made of one or two parts with a very simple supply chain. In fact, the computer industry's previous champion of complexity was the Apple Macintosh which consisted of only two parts: 1 mouse button, and 1 everything else.
But doesn't this hold true for all cutting-edge devices that rely on a single configuration to work? Dell to a degree are lucky because their inventory is built from off the shelf components which can be interchanged at short notice to give working product, but if you look at shortages of devices such as the Sony PSP, you find that there's a trade-off between time-to-market and component availability.
The upshot of this initial position is that over time the component costs come down, meaning a larger profit margin (or in the case of the X-box, a smaller loss), eventually leading to a machine redesign to minimise component count (look at the original Playstation configurations for examples of that), and eventually reducing the physical plastics cost my changing the form factor (PS and PS2).
Microsoft have chosen an interesting path with the 360; a combination of off-the-shelf components that are almost obsolete in retail channels such as the 20GB drive combined with unique items such as the processor and GPU. It's a neat strategy that reminds me of the way the Commodore Amiga was designed; custom chips for the guts of the machine supported by OTS components to keep costs down. It should be an interesting machine to watch, my only hope being that they aren't daft enough to supercede it too quickly.
Actually they don't fully make up for all the costs, as TFA points out they've lost 4 billion dollars so far.
That's right, we got the rights to all the components. That includes the CPU, wireless hardware, the bridges and even the GPU. So, if anyone along the way in the supply chain screws up by providing flakey hardware or limiting supply, we get a new supplier.
If you look at the Anandtech review where they disassemble the 360, you'll notice every component is branded with the Microsoft logo!
Bill must really think videogames are super-important; they keep losing billions, but Microsoft just keeps on going back for more punishment.
..... with their natural advantages in productivity software.
So you think the XBox is about games? Hell no. It is about control of the living room. It plays movies, tranfers music from a PC/Mp3 player, plays them, you can send messages to people and maybe even more. It runs a custom Windows 2000 kernel too, for the Power architecture.
It seems so odd that they'd use their monopoly on desktop productivity software to try to build a videogame empire: history says that
So what do you gauge from this? It means the real intent is to be the centre of our digital lifestyle. They make the hardware and the software. Like Apple. Does it get better than that??
The device is pretty cheap, compared to a computer yet more powerful than any out there. Someday MS might decide it can also be used to write emails, create Word documents, play games, and anything you might use a computer today. (And who knows, they might already have word running on it!)
I dare you to disagree!
Life is just a conviction.