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How IBM Out-foxed Intel With The Xbox 360
xcaverx writes "Learning from failure is a hallmark of the technology business. Nick Baker, a 37-year-old system architect at Microsoft, knows that well. A British transplant at the software giant's Silicon Valley campus, he went from failed project to failed project in his career. He worked on such dogs as Apple Computer's defunct video card business, 3DO's failed game consoles, a chip startup that screwed up a deal with Nintendo, the never successful WebTV and Microsoft's canceled Ultimate TV satellite TV recorder.
But Baker finally has a hot seller with the Xbox 360, Microsoft's video game console launched worldwide last holiday season."
successful X360 launch may be stretching it a bit neh?
I always chuckle when my company brings on someone that's been directly responsible (at the executive level) for busines decisions in other companies that have failed misserably. Often, they recite all their past experiences, and the only thing I can think of is "Why did we hire them, and how much are we spending?"
"It is a miracle that curiosity survives formal education." -Albert Einstein
I think the jury is still out on the success of the 360. This guy could be batting 1000.
...the never successful WebTV... But Baker finally has a hot seller with the Xbox 360, Microsoft's video game console launched worldwide last holiday season."
Shouldn't we wait until the 360 has outsold WebTV before we make that declaration?
Wow! With a record like that he was destined to work for Microsoft.
This guy's the limit!
Only people who count market share instead of dollars when judging success would call the Xbox anything but a failure.
only Linux monkeys would call the original XBox a failure.
I agree, if by "Linux monkeys" you mean "accountants and businessmen."
Holy crap...all you Xbox employees better get your resumes ready!
Turning failures into successes since Windows 95. *laugh people*
"Some days you just can't get rid of a bomb."
I realize you were joking, but just to give this numbers:
Apple's entire value of "Goodwill" as of Sept '05 (last number I could easily find and yes they actually have to value these things though it certainly isn't easy to come to a precise number): 69,000,000
IBM's market cap: 127,630,000,000
IBM's Cash And Cash Equivalents (as of Dec '05) 12,568,000,000
"reality has a well-known liberal bias" - Steven Colbert
Site apperas to be going down.
Mirror
I am inspired- inspired!- by this man's ability to keep his chin up through it all, shoulder all the adversity, and successfully move from a series of abysmal failures to merely a catastrophic failure!
My hat, sir, is off to you!
Apple may not count for a huge amount in sales, but the amount of hype Apple fan's created for PPC is worth more money then IBM has ;-)
Delusional. "Hype" for one product that accounts for maybe 10% of IBM's business is worth more than the net worth of the company? I'll bet IBM's calculation here is that a)the "hype" generated by Mac PPC sales was worth little to nothing, given that the sales they care about are to large corporate buyers; b)console sales will generate hype themselves which will likely be similarly (read: not very) powerful; c)the console market requires chip volumes a couple of orders of magnitude higher than Apple; d)the new partnering fits better with future plans for Cell, which mostly involve consumer-electronics embedding.
Hype is not better than money. Companies that fail to recognize this don't last. Your nick and post are well-coordinated.
Given a choice between free speech and free beer, most people will take the beer.
Microsoft went with IBM because they didn't want to get embarrassed by Sony and Nintendo with the uncompetitive chips from Intel and AMD.
A very senior engineer at NVidia I know is talking more and more about how they see Intel and AMD's x86 chips as dead weight dragging them down and how they would like to make x86 irrelevant by moving all application and OS functionality onto their boards.
The winners ended up being:
IBM
Sony
Nintendo
Microsoft
And the losers ended up being:
Intel - The big loser in all of this
AMD - Less so
Apple - Once IBM won all three console contracts they decided Apple was no longer worth the hassle for only 4% of their chips sales - buh bye!
If you love sitting around playing with SPEC and Intel's marketing compiler or hangout at aceshardware or other x86 fanboy sites you probably see things differently. Heh.
But the fact that a company sees there is a viable market for another 2-300 performance add on for x86 gaming systems in the PhysX boards should be as clear an indication as anyone needs to how far x86 is falling behind.
... getting to market a year+ before your competition, selling your devices as quickly as you can produce them, considering that Microsoft is only on their second generation device whereas Sony is on their third (not to count portable devices) and Nintendo is on... uh... fifth? Microsoft is doing well. They cracked a market.
Your nick and post are well-coordinated.
:-)
/. with this handle)
Thanks
(I am single handedly trying to save
There are shills on slashdot. Apparently, I'm one of them.
Larry Yang-all dictated what Microsoft needed this time around.
They couldn't be late. They had to make hardware that could become much cheaper over time and had to pack as much performance into a game console as they could without overheating the box.
"Unfortunately, Larry Yang did not explicitly forbid overheating the power supply"
Check post history.
Known paid for Microsoft astroturfer using multiple accounts to self mod up posts.
Actually, I thought Linux monkeys loved the Xbox! Cheap server, media PC, etc...
Learning from failure is easy. The tough part is learning from success. When a project succeeds, there's no pressure to make searching analyses of the reasons for success. The upper-level managers involved begin to think they're innately cool and have all the answers... the success of their product line proves it.
Think Netscape... think Digital Equipment Corporation (I date their decline from the day when a salesperson apologized for being slow to return a call but added "After all, we're a billion dollar corporation." Think Ashton-Tate. Think Quark...
"How to Do Nothing," kids activities, back in print!
"Microsoft couldn't care less about losing a few million/tens of million/even hundred million on the first run of XBOX."
The XBox has lost upwards of $4 billion. I think the XBox either qualifies as a failure or a disaster. If the 360 doesn't turn a profit in a couple years I think they are going to throw the towel in.
Hard to say it wasn't a success.
That's like saying George Mason had a successful run in this year's NCAA basketball tournament. Yes, they posted a lot of wins that no one expected them to, but they still ended up with fewer points than Florida in their Final Four game. They failed to win the tournament.
Like Mason, Microsoft's Xbox division may be a success by some measures, but if they're in the red on the accounting ledgers, they're still a failure in some way.
Apple's entire value of "Goodwill" as of Sept '05 (last number I could easily find and yes they actually have to value these things though it certainly isn't easy to come to a precise number): 69,000,000
Your description of Goodwill is incorrect.
Goodwill is a very specific number used to define an intangable asset that was aquired.
So, lets say I buy a company for 5 million dollars. On the books, the company has materials and property worth 1.5 million dollars.
For accounting, I say that I spent 5 million dollars on 1.5 million of assets, and 3.5 million of "Goodwill" Every year (at least) I evaluate the 3.5 million dollars worth of Goodwill and make sure it is worth as much as I think it is.
The accountants don't get together and say: "People really, really like us. Lets call it 69 million dollars worth of "like"!"
Have numbers to back that up? Given the number of ipods/itunes users out there (was it 8.5 million units this quarter?) compared to the number of xbox360 users I find your downloads a day statement a little far-fetched. Plus I imagine that xbox live downloads might be priced higher than the $0.99 that most itunes stuff goes for.
Blame his management for his failures. He was probably subordinate to many in key decisions. I would praise his for going after such diverse and technically challenging projects as he has.
What's the alternative? He slept with the right people? Come on. Each of his "failures" has been really high profile for each of the company's he's worked with. I think it's shortsighted to simply blame him.
... they would shut down the factories and stop manufacturing them. Fact is they have a game plan, fact is they are still flying off the shelves, fact is they are gaining market share... that's all that matters. People with consoles buy games. The more colsoles you have out there the more games you potentially sell. You have to spend money to make money.
this article states Microsoft expects to make money in 2007. Also note that all figures on how much microsoft is "actually losing" is speculation by industry analysts. No one actually knows precisely how much Microsoft is paying for what component.
If you want to crack a market you have to pull out the checkbook and take a hit. You can't go in timid. Microsoft has shown that and look at the market share they have gained. They have a good percentage of gamers hooked, now on the third generation consoles they don't have to take as big a hit on the console price.
I'm glad someone else caught that. Goodwill != Market Capitalization, and any such comparison between the two between companies (X Goodwill to Y Market Cap) is meaningless.
I have bought two consoles in the last six months. I tend to use a PC for gaming.
I got a Gamecube for my wife for Christmas. I was shocked. The games on it are really fun.
I then got a PS2 so I could play Tourist Trophy. It is pretty nice, I have gotten a few more games for the PS2 and for the GameCube since then. From what I can see the GameCube games are more fun. The PS2 games are better simulations. I thought about picking up an XBox360 but why? None of the games seem that great and it is really expensive.
I might get one after they have been out for a while and the price has come down, if they have any games I just must have.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
Couldn't you also read Nick Baker's track record as proof positive the XBOX 360 will fail? That is an impressive list of failures and I don't want the XBOX 360 to ruin his average. Real quick question: is this guy old? Did he perhaps work on the design team for the titanic, too?
1.) not understand the whole "monthly fee" part of it and return it or
2.) Get confused anyway, and return it.
We had stacks, and stacks, and stacks of unsellable returned Web TV's that no one wanted. If Web TV shipped a million units, I'd be amazed if more than half actually stayed in homes once purchased.I'd have been nice, but since you were an asshole... Let's apply some reading comprehension to your post so we can show how much of an idiot you made yourself out to be just so you could sling a cheap insult.
the console market requires chip volumes a couple of orders of magnitude higher than Apple
Apple sells 5-8 million macs a quarter. The PS2, at it's peak, sold 25 million units per year. The Xbox hit 8. We won't count Nintendo since they already used IBM chips. 8 million/quarter vs 8.25 million per quarter... Where's the order of magnitude again? Forget plural... There isn't even close to one.
And about Apple putting 2 IBM chips in each box...don't the XBox and PS3 each ship with more than 2 IBM chips? Isn't it 3 per XB360 and like 8 for the PS3?
No.
Oh, and while I'm at it, aren't the bulk of Apple's quarterly unit-volume sales ipods?
Clearly, I was talking about Macintosh sales. iPod sales would make this no-contest.
OK... I'll bite.
What _are_ his successes?
By this logic, life is always a failure. You die in the end. Until we create an immortal, every life is a failure.
Often we determine success or failure by the original expectations of the project. The Xbox was meant to carve a segment into the market. I'm sure they hoped to make money, but most didn't expect so much on the first iteration. The Xbox 360 is a continuation of the original goals to have a main stay in the living room, feed into other Microsoft services and eventually make money. They're still on the journey. In some sense they're still on target, in others they've fallen behind. It's premature to call it a failure or success.
In times like these, it is helpful to remember that there have always been times like these. - Paul Harvey
The IBM PowerPC is chasing the embedded device market which in terms of unit volume (and profit) is much larger than the entire Apple computer market. The gaming console market is well suited for an embedded device as are automobiles. Designing custom chips for Apple, for what I assume is a difficult customer, is not necessary a profitable venture.
Networking. The top level executive pool is an exlusive club, but once you get in you're pretty much set for life, no matter how much of a screwup you are. The best way to get in is to be the son of an existing high level executive, although there are occasional chances for other people to squeeze in. It helps a lot to already be rich too.
I read the internet for the articles.
"He worked on such dogs as Apple Computer's defunct video card business, 3DO's failed game consoles, a chip startup that screwed up a deal with Nintendo, the never successful WebTV and Microsoft's canceled Ultimate TV satellite TV recorder." Generally a record like this indicates an aptitude in government.
"I have neither the wit, nor words, nor worth to stir mens blood, I speak only right on". Billy Shakespeare
"MS is in dire need of a Halo for the 360 to sell on"
But they will; they're saving that for when the PS3 launches.
They learned this trick from Sony, who launched Final Fantasy VIII on the day the Dreamcast launched to take the shine off Sega.
You were mistaken. Which is odd, since memory shouldn't be a problem for you
I'm not a big MS fan, but before you all go sticking your feet in your respective mouths:
From the article:
My lack of God, it's Trotsky!
OK, now that I am in my 30s and I have no clue what is going on in the gaming world, I have a simple question. Should I buy an XBox 360 or is the Playstation 3 going to blow it away? I don't really want two systems, so if the Playstation is going to be vastly more popular, superior, or have a better game selection, I'd rather have that. I would have bought the Xbox 6 months ago, but it wasn't available. Now the playstation will be out soon enough that I am willing to wait. Thanks!
Nice to see the XBox doomsayers are still hanging around Slashdot.
All the 360 flames would be a lot more compelling if they weren't coming from people who already hate Microsoft. If Redmond came out with a motor that ran on water and gave the cars away for free, I would fully expect a series of comments about how the interior only comes in three colors and there are too few cup holders.
Slashdot should just refrain from posting anything about the 360 - this forum is so heavily biased against any Microsoft product that Slashdot readers will find any reason they can to pick it apart.
The irony is how worshipful XBox haters are towards the Playstation - a product of an equally evil corporation that also wants to take over the galaxy. But they're not after Linux at the moment, so I guess that makes Sony Ok.
I am reminded of the South Park episode where the local boys are playing baseball but want to lose because they don't want to play anymore because they find the game ruthlessly boring. Unfortunately for them all the other teams also want to lose for the same reason, and South Park keeps winning games and ends up having to play all summer to the delight of the parents, but not to the kids.
Stockholders = parents. Kids = Intel. A contract with Microsoft sounds great for a company, until you start reading into it. By the way that Microsoft does things, if the xbox 360 flops at any point Microsoft would be protected from losing capita by Intel and other contracted companies. The way they do it is that say they estimate 5M units to be sold in X time, they order that many units. If only 1M sells and they don't think they can sell the rest, by their contracts they do not have to, the contractors have to keep the parts that MS didn't sell and sell it themselves or take it as a loss. So if Intel took up the task and the 360 undersold (a very real worry if I was Intel), they would be at a loss of hundreds of millions to billions of dollars, while Microsoft would shrug it off and make an xbox 720 or something. Intel put the numbers in a calculator with some estimate of probability, and it came up sour. Microsoft wasn't willing to budge. To the best of my knowledge, this is what happened.
Signing a contract with Microsoft is like arguing on the Internet....
Also, a marginal cost of $800 per unit, even if they purchase ALL the parts from outside vendors seems awfully high considering what that $800 will be able to buy *retail* when the PS3 comes out.
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