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Microsoft May Double Its Investment in Xbox | |
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| Time: 09:50 EST/14:50 GMT | News Source: Reuters | Posted By: Robert Stein | ||
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Software giant Microsoft Corp. MSFT.O said on Wednesday it would pour more resources into its efforts to carve out a position in the $10 billion video game market rather than cutting its losses and exiting from the venture. Microsoft's Chief Financial Officer John Connors, when asked if the world's number one software maker had an "exit strategy" for the year-old Xbox video game machine, said in a Web cast: "The fallback position is probably to double down and make it successful." | ||
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| #1 By 3653 (63.162.177.140) at 12/5/2002 10:06:09 AM |
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Was there ever any real doubt that MSFT would do whatever is necessary to be successful in this market? They aren't exactly known for moving in half-ass.
Nintendo is in the hot seat. |
| #2 By 665 (66.49.20.2) at 12/5/2002 1:08:39 PM |
| Too bad Apple couldn't bankroll such a product. I think MS will do well in this market. It doesn't need to buy Nintendo to win, they can let the Xbox bleed a lot longer than Nintendo can support it's GC. With Nintendo out, I think it will slowly gain ground on Sony, and eventually be king for a generation or two. That is the problem with this business, no machine has lasted in its prime for more than two generations. |
| #3 By 3339 (65.198.47.10) at 12/5/2002 1:26:27 PM |
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Todd, you presume that if MS can edge ahead of Nintendo they will be dead. Nintendo is happy with their position and never expected to be number one in this three way race. Apple isn't meant for the game market, but in many ways, Nintendo is the Apple of the game world--now a relatively small niche player with moderate success, a loyal fan base, great products, they aren't going any where, and within the market they are successful and profitable.
MS on the other hand has already sunk several billion, and I don't see how doubling that puts any additional pressure on Nintendo--they already have the smallest advertising budget of the three, but there consumer base remains real. Throwing money at the Box, doesn't change the value proposition for those buying GCs--those people want metroid, and the Mario franchise, and Zelda, et al... not to mention GBs. This post was edited by sodajerk on Thursday, December 05, 2002 at 13:33. |
| #4 By 665 (66.49.20.2) at 12/5/2002 1:32:48 PM |
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Jerk, that's not completely true. Nintendo used to sell quite a bit better than it is now. Maybe they can hang around, but that doesn't really play into MS becoming a major seller. Xboxes problem is that, while MS has tons of money to pump into it, Sony has lots to pump into theirs. Xbox has done very well for a first generations console. The PlayStation didn't sell well untill it had been out on the market for a while. I don't think the Xboxes sales will suddenly bloom after it has been on the market for two or three years, but I think with the Xbox 2, it has the potential to really take off.
Microsoft is finally getting the games it needs to be a leader, although they don't have exclusive deals on all of them (like Splinter Cell). Time will tell. |
| #5 By 3339 (65.198.47.10) at 12/5/2002 1:37:58 PM |
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Nintendo 64 sold substantially better? Not really, or are you going back to 1991? As I said, even with a decline, they are within their expectations and they are within their business plan to make money, and do.
It doesn't play into it? Your theory just a second ago was: if Nintendo is dead, XBox can make a bigger move against Sony. My theory is that Sony will maintain 10x more users than Xbox, and Nintendo will be right there or slightly behind MS. With a substantial push, they might get to the point where Sony only has 7x the userbase of the Box, and maybe twice as large as Nintendo--but Nintendo would still be profitable and the XBox won't. This post was edited by sodajerk on Thursday, December 05, 2002 at 13:38. |
| #6 By 3653 (63.162.177.140) at 12/5/2002 2:17:08 PM |
| ToddAW, you are right about Splinter Cell being exclusive for only a short time... but even that level of exclusivity is working wonderfully. Did you see the sales charts for last week? It shows Splinter Cell ranked #4 and Metroid at #5. Now, remember that nintendo reported that metroid had sold 250k in the first 7 days. Those two pieces of info, taken together... show just how many splinter cell games are selling on XBox. |
| #7 By 3339 (65.198.47.10) at 12/5/2002 2:21:53 PM |
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Pie in the sky, macross. You keep dreaming about price cuts--something Microsoft and Sony can't do alone without developer support... and it would hurt them as much as it would hurt Nintendo... probably more so since the most successful Nintendo games are from Nintendo. And now you are dreaming that Microsoft or Sony are getting into the handheld market? Those are two mighty dreams you are hanging on to.
As for why Sony "ignores" Nintendo: both of these companies have different strategies which will allow the coexistence of competitors... particularly in areas where they do not substantially overlap. You on the other hand are dependent on the notion that Microsoft can "KILL OFF" one or more of its competitors. |
| #8 By 665 (66.49.20.2) at 12/5/2002 2:26:25 PM |
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Sodajerk, I think your prediction is wrong. I was trying to say Nintendo didn't matter. A lot of people had said they were considering buying N or needed to in order to make money. They certainly don't. The GC isn't doing well at all. The GBA is, on the other hand, keeping Nintendo alive. Xbox doesn't in any way compete with GBA. My prediction is that Nindento will stop making consoles, produce games, but still run their handheld business.
As far as the PlayStation goes, I think it is only a matter of time, just based on history. As I have said, no console has done well after it's second generation. PS will probably do well with it's third, but Xbox2 will be right behind, and I think eventually overcome it. |
| #9 By 3339 (65.198.47.10) at 12/5/2002 3:01:47 PM |
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I didn't say you thought they would, macross, I said you were DREAMING!!
"that's pitiful for Nintendo not Microsoft." No, that's pitiful for MS--they just admitted that they aren't as happy with its success as they had hoped. Nintendo on the other hand has been rebutting rumors that they were getting out of the console business and have stated they are happy with their position. As I said, Nintendo knows its role as a niche player and as a much smaller company IS beating MS and is satisfied with their business performance. |
| #10 By 3339 (65.198.47.10) at 12/5/2002 3:14:11 PM |
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foobar, I appreciate your disclaiming the historical argument as well. Historically, there has been a big shift from one generation to the next... both in terms of processing and media. And it was also accompanied by shifts in the industry--the deaths and/or evolution of companies like Sega and Atari and even Nintendo's evolution.
Well, now they are all using DVDs and will be able to maintain generational compatibility. The processors are going to be fairly equal--at least in the respect that they are equal now (i.e. MS having a more powerful processor doesn't matter). And, anyway, Sony is the only one planning anything revolutionary on the processor front. So what is going to be new and killer about the next generation: internet? They'll all have it--maybe MS has an advantage with their network... maybe it's a disadvantage. Is the Box2 going to be an expanded IA/media device? Maybe, and maybe that'll help--maybe that'll hurt in being expensive and apppealing to a broader, less-defined market. There are still plenty of questions, but I think the historical argument is gone... or maybe never existed at all--and was actually the byproduct of very individual factors that appeared to produce a trend. Also, let's note the evolution of the game developers--more and more the developers have streamlined their processes so that they can get their titles onto every platform quickly and easily. You do not have as much exclusivity anymore. In the cases whre you do have exclusivity, I think both Sony and Nintendo still have the lead. And going forward, who would you release an exclusive title for: the console with 50 million users or the one with 5? The historical argument is a myth made up of individual, unique factors which are less present today if at all. If the historical argument isn't a myth, then it is likely to be irrelevant at present anyway. |
| #11 By 3339 (65.198.47.10) at 12/5/2002 3:18:21 PM |
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When did I say that a competitive handheld couldn't hurt Nintendo. I said you are dreaming to think that either Sony or MS could enter this market and easily provide Nintendo competition. It would be even riskier than trying to compete at the console-level, and could just result in as much damage to the company that tries as it does Nintendo.
I can admit that if theoretically someone were able to introduce and provide a competitive product to the GameBoy, it would affect Nintendo--but again, this is a dream, and as I have said, you keep talking about ways to hurt Nintendo. This is a pathetic strategy that won't reap any rewards so why are you so obsessed with the idea of hurting Nintendo? |
| #12 By 3339 (65.198.47.10) at 12/5/2002 3:27:00 PM |
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Todd, if you disagree with this:
"My theory is that Sony will maintain 10x more users than Xbox, and Nintendo will be right there or slightly behind MS. With a substantial push, they might get to the point where Sony only has 7x the userbase of the Box, and maybe twice as large as Nintendo--but Nintendo would still be profitable and the XBox won't." What do you see as where the market is going? I'd love to hear your prediction. This post was edited by sodajerk on Thursday, December 05, 2002 at 15:27. |
| #13 By 3339 (65.198.47.10) at 12/5/2002 3:43:50 PM |
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macross, you're obsession goes much deeper. ALl I have said is that Ninteno is profitable and happy. I'm not saying they are hugely successful, growing, or even kicking MS's ass. I'm saying you do not have any perspective on what is a success for one company and what is a failure for another company. As I have said, I think Nintendo is comparable to Apple--a company I sometimes go ga-ga for, but I wouldn't say they are a hugely successful competitor in the OS field--maybe I would in the personal computer OEM field, yes, but back to Nintendo... All I have said is that Nintendo is successful with its strategy and its profitable and that it can continue by being a niche player. We all know this isn't MS's strategy so they aren't happy with where they are at.
You still haven't explained why you want to see Nintendo hurt? Or how that helps Microsoft compete with Sony? And, err, Nintendo still has a slight lead over the Box, sorry. |
| #14 By 61 (65.32.170.1) at 12/5/2002 4:51:16 PM |
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jerk: Either you are incredibly arrogant, or incredibly stupid.
I guarentee you if it was ANY other company than Microsoft producing the X-Box you would be singing it's praise. You've got your head stuck so far up your ass you don't even know what you are saying anymore. "(i.e. MS having a more powerful processor doesn't matter)" Tell me, how does have the more powerful system not help? You wouldn't be able to run a game such as Splinter Cell on any of the other consoles at the same video quality without either dropping frames or slowing everything down. I don't know about you, but if I can buy a game that looks better on the X-Box than on either of the other two consoles, then I'm gonna buy it for the X-Box. In conclusion, I think you REALLY need to examine your thinking. You are a COMPLETE hypocrite. Brand loyalty is idiotic, it gets us absolutely nowhere. |
| #15 By 61 (65.32.170.1) at 12/5/2002 4:53:46 PM |
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ssfreitas:
The only competition I ever heard of during the time the product was actually around was Game Gear, which failed mostly because the batterly life was absolutely horrendous. |
| #16 By 3653 (63.162.177.140) at 12/5/2002 4:58:46 PM |
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jerk - "And, err, Nintendo still has a slight lead over the Box, sorry."
Please show us proof. From what I read, XBox leads by a good margin in the U.S., Australia, and Europe. Nintendo is whipping them in Japan. I don't think any of us wish harm on Nintendo, but X's success almost necessitates Nintendo becomes a third-party software vendor, and out of the console hardware business. Why? Its simple, because there isn't likely to be enough room for 3 consoles. History says only 2 will survive. |
| #17 By 665 (64.126.91.172) at 12/5/2002 5:12:29 PM |
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#20, I don't like making predictions, because I break them down myself much more than most other people do, but if you want to play this game, here we go.
Nintendo will either go Sega and sell games, or struggle along the bottom like they are now. Which ever they do, it doesn't really matter in the long-run. I think in Xbox's second incarnation, it will perform a lot better than its first, maybe not beating out PS3, but at least on it's heals. I think after a year or two, Xbox2 will overtake PS3 and Xbox3 will be MS's big break. Of course, that's really long term and there are tons of other factors that could come to play. I think sooner or later, Xbox will fall like the others, and MS will have garnered a huge successful software development group (between Bungie, its own in-house group, Rare, whoever else). BUT, while the money is largely in the software, MS wants to own the living room (hardware and software wise) so I think most likely MS will do something different than what I said. |
| #18 By 135 (209.180.28.6) at 12/5/2002 5:18:01 PM |
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sodajerk - Which market?
XBox is dominating Gamecube in American and European markets. It's not doing so well in the Asian markets, however that is to be expected given the protectionist attitudes of the Asian governments and distributors. I wouldn't be surprised to see XBox outsell the PS2 in the American markets this christmas. |
| #19 By 3339 (65.198.47.10) at 12/5/2002 5:36:39 PM |
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again, you are still just talking about threats to Nintendo, macross. And you're hopes for the Box are pipedreams.
You never specifically said "kill" or "hurt", but you said: "somebody needs to release a portable player to challenge Nintendo's money source." Why? "unfortunately they just sold 1 million GBA during the holiday week, so it's deseparate that somebody releases a competitor." Why is it desparate? "and it's that thinking that will run Nintendo out of business." What's good about this? Why are you so desparately pleading for someone to HURT Nintendo if you don't see them as a major player and if you don't think it will help Microsoft? I don't see my comment paralleling this situation at all. The market isn't saturated, and most people don't want to try to enter the market. And if someone did, that doesn't necessarily harm Nintendo's position; that puts pressure on the competitor to make their product entry successful. With OS software competing against MS's monopolies, it's different--there is little risk to those developing the alternatives. This post was edited by sodajerk on Thursday, December 05, 2002 at 17:48. |
| #20 By 3339 (65.198.47.10) at 12/5/2002 5:40:50 PM |
| Which market? Total market--why are you all piddling with regionalizations? The last set of numbers I saw showed like a half million lead for Nintendo. I'll see what I can dig up. |
| #21 By 3339 (65.198.47.10) at 12/5/2002 5:45:20 PM |
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Todd, we've heard that Sony wants to release PS3 in 2005. There's a chance MS will move to jump ahead with an XBox2 earlier. (Could be a good move or a bad one--if XBox2 doesn't have substantial advantages and doesn't get out well in advance people could actually wait during that lead time to compare the two.) My question would be by what year would you see Xbox getting to 10 million or 20 million or whatever number you want to pick. And what year do you see them drawing even? 2007? Is that your sweet spot? 15 million at the end of 2004, and somehow tripling that in three years after taking 3 years to get to 15? Uh, huh.
Nintendo has recently said they aren't getting out of the console biz and they are planning the follow up. There is even the potential that they are also somewhat involved with what Sony and IBM are developing for the chip since Sony will have some PowerPC-derived processor. This post was edited by sodajerk on Thursday, December 05, 2002 at 17:47. |
| #22 By 3339 (65.198.47.10) at 12/5/2002 5:50:03 PM |
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CPU, I'm arrogant or stupid? I'm just looking at the advantage in sale numbers vs. the so-called technological "advantage." Clearly, people aren't impressed with the better performance of the chip. This post was edited by sodajerk on Thursday, December 05, 2002 at 17:50. |
| #23 By 3339 (65.198.47.10) at 12/5/2002 5:57:12 PM |
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"and all you do is talk about threats to Macross jerk so what's the difference."
No, it's just that you are threatened by EVERYTHING. Stop being so paranoid and excitable. Ha, ha, ha! |
| #24 By 665 (64.126.91.172) at 12/5/2002 6:15:42 PM |
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I don't know about dates, there are too many factors involved... If you listen to MS you are either going to get something overly cautious or overly bullish. I think Xbox2 and PS3 will debut on the same year. The thing about that is, Xbox has a reputation for being quite a bit more powerful than anything else. If these two are released in the same year, the difference would probably a lot smaller. Now, PS2 games aren't looking as great as Xbox games... MS will really need to pump that quality, hyped games out in order to compete. Polygons won't matter as much, because they will be closer. I don't think Xbox will come out any sooner than PS3, and I doubt much later.
As far as profitability, it's anyone guess. I think once it starts selling, it will really get going. It will be the 'hot' thing. Now people are buying it because it is a better deal (two games, extra controller, same price). Once Halo 2 and a couple of the other sequals come out (and they develop more of their centerpieces), there is a better chance that will happen. They need to be based on THE GAMES, not the price or power. I think they will start to make that transition soon, but I'm not sure how long it will take to really pull that off. And anyways, PS2 has that 'hot' factor, right now. Those don't seam to transfer from console to console too well. My guess would probably be 2004-5 before things look good for Xbox, and 2007-8 before they start making the big bucks. |
| #25 By 3339 (65.198.47.10) at 12/5/2002 6:25:59 PM |
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God, Todd, I know you think you are defending XBox, but to me, you make it sound even worse.
You expect them to be about equal technologically and released about the same time? Ouch... and the PS3 you will be able to harness more power through the distributed system of the Cell chip. And you got to remember that compatibility is a huge factor. Those 50 million users with games already aren't going to switch to the Box because of Splinter Cell2. I too think it comes down to games and I don't see MS getting close to having an advantage. A few more "Blinx"s and we'll start to expect fluffy attempts to reproduce successful and original games. What are their centerpieces again? SC, Halo, and MechAssault? Any others? |
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