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Black Ace
10-23-2002, 08:38 PM
http://icronic.com/modules.php?op=modload&name=Sections&file=index&req=viewarticle&artid=111&page=1

Microsoft's Xbox was one of the most anticipated gaming consoles in history. It received enormous press throughout it's development and launch. Microsoft spent billions designing and promoting it, and they lose money on every unit sold. This was all part of Microsoft's gamble. They anticipated huge Xbox and Xbox component sales. They also got the chance to get into the living rooms of people who otherwise wouldn't have any part of Microsoft. Microsoft's gamble failed, and the Microsoft's reputation has been tainted as a result.

Microsoft's first major mistake was to tout the Xbox as strictly a gaming console rather than a computer. We all know that the Xbox is made from computer components and could have easily been converted into a hybrid computer/gaming machine. Microsoft didn't want to do this because they were afraid people wouldn't purchase the unit for playing games if it was a computer as well. They had previous attempts at such a gaming/computer hybrid system to draw from as well, such as the Phillips CDi, which failed miserably. It was this decision, however, that doomed the Xbox to failure.

The decision to make the Xbox a strict gaming system put it into a different league. Gone are the buyers who would have bought the unit for a computer. These are the people who know Microsoft and their reputation, and are interested in performance of the unit. Instead, the demographic Microsoft got were gamers. They didn't care that the Xbox was faster than the Playstation 2. Playstation 2 has more games, and more importantly more good games. Microsoft made a nobel attempt at producing top-quality games to compete with Sony and Nintendo, but the "big two" had years of experience and relationships in the console business, something which Microsoft did not have the luxury of. The result is that the Playstation and GameCube had the games, and the Xbox did not. I like to compare this situation to that of Apple. Microsoft would be more successful if it simply had the software that everyone wanted, just like Apple. The folks at Microsoft aren't stupid, and the recent acquisitons of companies such as Rare show that they are trying to get the games the fans want.

We can see the effect of this with the Xbox sales numbers. The Xbox has consistently sold far less units than both the Playstation and the GameCube in all parts of the world. The Adrenaline Vault reports:

Sony's PS2 console is expected to account for 63 percent of sales, followed by Nintendo's GameCube with 21 percent and Microsoft's XBox with 16 percent. The research highlights the domination of the Sony system. By the end of this year, 72 percent of global cumulative shipments will be PS2 systems, compared to 16 percent GameCube and 12 percent Xbox.

These numbers fall far short of Microsoft's estimates for the console. Pity, it had so much potential.

Another facet of the Xbox that failed is its security. The Xbox was designed to be secure. However, that security was compromised, and the Xbox now has "mod chips" available for it to allow pirates to play pirated games. Considering this is Microsoft's first attempt at a console, they wanted to make it secure. You don't earn a very good reputation when your uncrackable console is cracked. Microsoft knows this, and they told nVidia to update the chip in the Xbox to foil hackers. This forced nVidia to throw out millions of dollars worth of chips to change the design, resulting in a quarter loss. Now, the Xbox "v1.1" is out with the new hardware, and it has again been compromised by hackers. This is a slap in the face for not only Microsoft, but nVidia, who bore the burden of switching hardware designs.

The ultimate goal for the Xbox may not be lost, however. Microsoft's long-term goal is to get their computer attached to every living room television in the world. They decided to start with the Xbox. Soon enough they will be releasing a new version of the Xbox that has TiVo like functions. Again, I reiterate the fact that Microsoft should have equipped the initial Xbox units with this functionality. If the next generation of Xbox PC/console hybrid machines do in fact sell, it will make no difference for the fate of the current Xbox, as it's still a failure. The new computer-like features of the next generation of Xbox's will appeal to many more consumers than a pure gaming machine. Believe it or not, you can have the best of both worlds.

Another problem in the Xbox is the design. Microsoft chose to put a 10GB hard drive in every Xbox unit. This is a very neat idea, as it allows users to store their own music on the Xbox and all the saved games they can muster. However, it also costs a lot to implement. For the average Xbox user, 99% of the space on the hard drive goes unused. Microsoft could have accomplished the same game-saving abilities of the 10GB hard drive if they bundled a $20 memory card with the console instead of a hard drive. This hard drive could be put to better use had Microsoft put PC-like features into the unit, however that will never occur with the current generation of Xbox consoles.

Microsoft gambled on the Xbox and they lost. The Xbox has not sold, and is completely dominated by the Playstation 2 and GameCube in every part of the world. Microsoft has invested billions in the development and production of the console, and they still are losing money with every console sold. The recent price cuts only further the dent in Microsoft's wallet. The Xbox is not a computer, and it's not a good gaming machine. What is it? I'm not quite sure.. but what we can be sure of is that it will never be anything, because Microsoft has not enabled the machine's software to be upgraded, although hackers have hacked full Linux distributions onto it.

After a year on the market, the Xbox is in the prime of its life, and frankly it isn't much of a prime. Microsoft bet the bank on this baby, and it will suffer because of it. Even the Xbox's own creator left Microsoft. Maybe Microsoft will get it right the second time around.

gabriel
10-23-2002, 08:53 PM
That's a poorly written article. They make it out like the system war has already ended, and the whole thing is filled with opinion and skewed facts.

After a year on the market, the Xbox is in the prime of its life, and frankly it isn't much of a prime.

No, it's not in its prime, and no one's said it is.

I dont feel like tearing this article apart, but it is pretty crappy.

Canton
10-23-2002, 10:08 PM
Interesting that he can predict the future. Why waste time on consoles? Shouldn't he be playing the stock market? His analysis is completely flawed.

Fault 1#: All consoles are derivatives of pc components. They all use ram, they all have processors - mostly custom made for the consoles but the result is that Nintendo, Sony, and MS have all partnered with different chip makers. They have far more in common with pc than ever before, printers, digital cameras, hardrives, keyboards, mouse, narrowband/broadband support - all peripherals for the PS2! Why didn't Sony pitch the PS2 as a pc solution for the tv?

Fault 2# No one wants a computer under thier tv. You would not use a pc under your tv for pc oriented tasks, like spreadsheets, word processing, etc. It is therefore quite a mistaken assumption that MS should even have tried to sell the Xbox like a pc for the tv. Even using the abysmal failure of Phillips CD-i should drive home that fact.

Fault 3# The Xbox isn't a failure. Like most American products, it will have a tough road ahead in Japan. They expected this and I think the author should learn what the definition of "trade deficit" and our trading history with Japan. In the US, it trails the PS2 but has only been on the market since last November, coming one year after the PS2. Only the very foolish would expect the Xbox to do two years of PS2 sales in less than one year.

In Europe, even less time on the market and there are more roll outs coming in Mexico, Korea, Tawaiin, etc. It is highly myopic to think that the video gaming world is centered strictly on Japanese consumer base. N. America is the world's largest market (and Mexico still has yet it's launch), Europe is huge as well. The impact of the rest of Asia (someone please remind the author that Japan is not all of Asia) on the sales of Xbox won't be seen for at least two years.

Fault 3: If one year is the prime of a consoles life, then that means the PS2 is past it's prime - March is the third year anniversary of the PS2 in Japan! I don't think anybody would make the claim that PS2 software is past it's prime currently...so it looks to me like the author has a double standard in place for his article. Why not give MS the same benefit of time that Sony has received? Maybe he should wait until summer 2004 ( 5 months shy of Xbox's domestic launch 3 yr. anniversary) to say that it has hit it's prime?

Drunken Savior
10-24-2002, 12:47 AM
The X-Box isn't a good gaming machine? Sorry, I disagree. It's much more powerful than both the PS2 and the GC. Sony has a firm hold on the market right now, due to Nintendo's blunderous N64 and failed promises of a 64DD. At that same time, the Sega Saturn was out, but the Playstation was just more powerful. Sony then wooed big names like Square and Capcom to their sides.(Again, a CD over cartridge issue) Their fanbase grew, and the name Sony was the name of videogames, period. Nintendo had it's hits (Zelda, Mario 64, Goldeneye) and survived largely in part to it's "loyal" fanbase. It's that same fanbase that put the GC ontop of the X-Box all over the world, especially in Japan.
Which brings me to my next point. I am very disappointed that it did poorly in Japan. The N64 failed largely in part that CDs held a significant advantage over cartridges. They were cheaper and larger. Look at all the developers who made stellar games on the SNES and then what they made for the PS. That is what SHOULD have happened with the N64. The Saturn failed because the Playstation was a much better machine. The decision was simple, especially with no Sonic game headlining Segas new system. So the term "SEGA!" was switched to "U R not e " and it has been ever since. Sega is gone, and now it's Sony versus Nintendo versus Microsoft. But the reason Microsoft is losing isn't an issue of a better system. Is it an issue of better games? Most likely. Nintendo has an all-star lineup that they have built ever since they left the playing cards business. But that isn't the whole reason.
People tend to want to slam Microsoft because of one reason: Microsoft. Microsoft is huge. I'm willing to bet that 99% of all houses have at least one Microsoft product. Microsoft is a monopoly. Microsoft's internet acronym is M$. But hey...how's your Sony Discman running? Or your Sony television? Or your Sony DVD player? Or Sony VCR? Get the picture? Microsoft may be huge, but Sony is large as well. But people don't write $ony on the internet, now do they?
For those thinking that the X-Box is a failure, I'm sorry, but the CD-i was a failure. X-Box is out there, and will be out there. It's building a fanbase and as long as Microsoft has money, it will continue to be out there. And last I checked....Microsoft has money. If you have a huge problem with that...then ditch yer PC and buy a Mac like myself. (Not that I have a problem with Windows or Microsoft) Rare is onboard; the Metal Gear series I THINK is onboard, I'm not 100% sure; Sega supports the X-Box; and Bungie is onboard. Those developers make good games and Microsoft will continue to support them as long as they make games for their system.
Most of the reasons you listed are wrong. The average gamer doesn't care about things like security. They care about entertainment. Sony does have the bulk of the games, but they also have been out the longest. Hell...they are already rolling out Greatest Hits, while Nintendo and MS are stuggling to make a lineup worthy of being called a "Greatest Hit's" Line.
While the X-Box did make some mistakes, I give it props. It's a good systems. Some of my favorite games are on the X-Box. As a sports game fan, I like Segas support on the X-Box, World Series Baseball is the best baseball game I've ever played. X-Box Live is comming, expect it to pick up when more Sports games are released, and peak at Halo 2.
And that brings me to my final point. Halo 2 is comming...and nothing Nintendo or Sony does will stop it. Hmph, a failure indeed.

Mav3r1ck
10-24-2002, 12:49 AM
It seems that those guys have a wierd idea of Microsoft and the Xbox. They haven't failed yet, they might have lost some money here and there. But for a company that has toliet paper made out of hundered dollars bills I think it means nothing. I say give them time to age and learn the tricks of the industry.

Havoc2049
10-24-2002, 02:06 AM
Ahhh...the famous icronic article has made it to these forums.
This article makes the people who run icronic look like a bunch of dorks. The writer of this article obviously has an axe to grind with Microsoft and his article is biased. The author also needs to do more research or he is lying, in order to prove a point.

Some of my favorite points in the article:

"They had previous attempts at such a gaming/computer hybrid system to draw from as well, such as the Phillips CDi, which failed miserably. It was this decision, however, that doomed the Xbox to failure."
-I didn't know the Phillips CDi was a computer also..lol. The author says that the Phillips CDi was a failure, but then he says the Xbox is doomed because it is not like the CDi. WTF?

"Microsoft would be more successful if it simply had the software that everyone wanted, just like Apple."
-LOL...The Mac is great and all, but almost everyone who owns a computer uses a Windows based PC. If Microsoft was more like Apple, then Bill Gates wouldn't be the richest man in the world.
You think the author just might be a Mac fanboy...just maybe?

"However, that security was compromised, and the Xbox now has "mod chips" available for it to allow pirates to play pirated games."
-Yep, the Xbox is just like the PS and PS2, you can put mod chips in them. But I guess this is only bad for Microsoft.

The authors whole hard drive argument is flawed and agian he contradicts himself.

"The Xbox has not sold, and is completely dominated by the Playstation 2 and GameCube in every part of the world."
-I guess that North America is not part of the world, where the Xbox has outsold the GC in both hardware and software sales.
Is the author lying or just misinformed?

"Microsoft bet the bank on this baby, and it will suffer because of it."
-When will Microsoft suffer for this? Microsoft just reported increased revenues and earnings and their stock price has skyrocketed recently.

"What is it? I'm not quite sure.."
Ya, we know.

Nindalf
10-24-2002, 04:18 AM
I heard that MS gets money from every xbox sold, not lose it
Im not sure do i believe this but who knows

xsarien
10-24-2002, 11:33 AM
Originally posted by NiN
I heard that MS gets money from every xbox sold, not lose it
Im not sure do i believe this but who knows

Nope, the XBox is still being sold at a loss. Microsoft makes a profit on all software sold for the system.

Nindalf
10-24-2002, 11:58 AM
Yes...everyone sais it is making loss from every sold Xbox but does anyone actually know how mutch it cost to make one Xbox?
If seen several articles saying things like "most likely" "probably" and "speculating" but none actually knows it.

Dont get me wrong here...im Nintendo Fanboy(Yes i am...who would have known?) and i would love to see Xbox loosing tons of money but there?s is a chance that they arent

xsarien
10-24-2002, 12:46 PM
Originally posted by NiN
Yes...everyone sais it is making loss from every sold Xbox but does anyone actually know how mutch it cost to make one Xbox?
If seen several articles saying things like "most likely" "probably" and "speculating" but none actually knows it.

Dont get me wrong here...im Nintendo Fanboy(Yes i am...who would have known?) and i would love to see Xbox loosing tons of money but there?s is a chance that they arent

Well, the problem is that companies rarely give exact numbers regarding this, but here are two C|Net articles from around the time the XBox launched:

http://news.com.com/2009-1040-275793.html?legacy=cnet&tag=xbox_nav
http://news.com.com/2100-1040-257996.html?tag=bplst

To sum it up, back in 5/2001, it was estimated that Microsoft was going to lose around $125 per XBox; Later, in 11/2001, it was estimated that it cost Microsoft $320-$400 to manufacture each XBox. You can assume that costs may have gone down a bit, but probably not by so much that they're making a profit on the thing. At best, it could possibly be breaking even.

Meanwhile, like the PS2, the GameCube is also very close to a break-even point, if not there already:

http://www.firstcoastnews.com/onyourside/articles/2002-05-21/gamecube.asp


And just because Google rules that much, this article on the economics of the XBox came up:

http://www.red-mercury.com/mmceo/mmceo_current.html

Now, I can't vouch for the authenticity of the last article's information (the others came from analysts or the Associated Press), but the writer hardly comes off as an idiot, like, say, the icronic.com guy.

-xsarien,
providing more reading material than a public library.

Nindalf
10-24-2002, 01:58 PM
Ya, your most likely correct but remember when analyst uses words like "estimated" its not known fact

But again...i believe it is loosing money but its damn annoying that they just dont say how mutch it it costs to make an Xbox

8 bit Orgy
10-25-2002, 12:01 AM
Microsoft will be alright. In reality, Microsoft only lost 3% of it's entire profit on the Xbox. They got many billions to go to make it right.

Considering the video game market eclipses Hollywood, the giant Microsoft isn't going to back away just yet.



So far, the Xbox is currently around the same area Microsoft predicted it would be.

Healin
10-26-2002, 12:58 PM
I don't care whether they are losing money or making money... jus churn out the games so I'll benefit!!! :P

Ha ha!! and i don't agree with the article... xbox will come up. ppl denouced win xp when its out and the very same ppl i know are using it. M$ isn't stupid. The xbox may jus be a stepping stone for them to get into the console world. They are learning from all these setbacks now. Jus watch the xbox. I don't tink it'll fail. Maybe not outstanding but not fail.

Havoc2049
10-26-2002, 02:09 PM
There is a rumor going around that the Xbox is outselling the PS2 in the US, ever since the Sega Xbox bundle was released. I know that this isn't scientific or anything, but when I recently bought The House of the Dead 3 at my local EB, the Manager said the Xbox was selling really well. I then had to buy some stuff from Target(national store chain in the US) and just out of curiosity I stoped buy the video game section and the section where the Xbox systems are stored was empty.

xsarien
10-26-2002, 04:14 PM
Originally posted by AtariX
There is a rumor going around that the Xbox is outselling the PS2 in the US, ever since the Sega Xbox bundle was released. I know that this isn't scientific or anything, but when I recently bought The House of the Dead 3 at my local EB, the Manager said the Xbox was selling really well. I then had to buy some stuff from Target(national store chain in the US) and just out of curiosity I stoped buy the video game section and the section where the Xbox systems are stored was empty.

I wouldn't put too much stock in what an EB employee says about the XBox and its sales right now; that's not to say that it may have some merit, but here's the thing: Like chicken nuggets, some of the dirty things you hear about retail are true.

For the month of October, EB's "Vendor of the month" is Microsoft and the XBox. While I'm not an employee of the company, one can extrapolate that this means that they should be saying all kinds of good things about to promote the product.**

Now, to play devil's advocate, it wouldn't be too much of a stretch to say that XBox sales are going up, a lot of people already [i]have PS2s. However, that ALSO has to be mitigated against PlayDate's recent survey of retailers about what video game hardware is selling the best:

http://www.playdateinc.com/playdate2002/videohw.asp

Now, the bundle will probably help move the XBox, sure. How much is anyone's guess given that it's a limited thing. Empty store shelves are deceptive: they can indiate strong sales OR low order numbers.

Nevermind that strong US numbers can't make up for what happened in Japan, and the even *closer* race in Europe with the GameCube than in the states.

What a tangled web we weave, huh?


(**I know this simply because my EB falls into the "Good kid, not too bright" school of managerial know-how. The sheets detailing VoM SKUs, promotional displays, etc. are often in plain sight.)