View Full Version : Microsoft Working on Hybrid Xbox Project

06-25-2002, 03:51 AM
Microsoft Working on Hybrid Xbox Project
Tue Jun 25,12:09 AM ET

LOS ANGELES (Reuters) - Microsoft Corp. has been quietly working since last fall on a device combining its money-losing Xbox ( news - web sites) video game console and with its digital video recorder, technology magazine Red Herring reported on Tuesday.

The publication also cited a source as saying internal Microsoft estimates showed that the software giant would lose $750 million on the Xbox game console this fiscal year and $1.1 billion in the next fiscal year, ending June 2003.

That compares with an estimate given to Microsoft Chairman Bill Gates ( news - web sites) in 1999 that the Xbox project could lose $900 million over eight years, author Dean Takahashi said.

Takahashi recently released a book, "Opening the Xbox," about the early history of the Microsoft console, part of a broader strategy by the software maker to move away from its reliance on PC software into digital entertainment.

Representatives of Microsoft were not immediately available for comment.

At the Xbox's cost of about $325, Red Herring reported, Microsoft loses at least $150 on each box, which retails for $199 but is sold wholesale to stores for $175.

That $325 cost-of-goods will come down to $225 eventually, the magazine said, quoting an unnamed source, though it will likely take five years.

By comparison, the article said competitors Sony Corp ( news - web sites). and Nintendo ( news - web sites) Co. Ltd. were expected to lower the costs of their competing PlayStation 2 ( news - web sites) and GameCube, respectively, much faster, Red Herring said.

Meanwhile, Microsoft engineers have been at work for about nine months on a project combining the company's UltimateTV recorder with the Xbox, Red Herring said.

The magazine cited speculation that such a combined machine could be launched next year for a price of around $500, which factors in the added costs of a larger hard drive and TV tuning equipment.

The Xbox, PS2 and GameCube are competing for share in a global game market that is expected to top $30 billion in hardware and software sales this year.

All three companies make losses on their hardware products, but make up those losses with sales of higher- margin software.

06-25-2002, 11:40 AM
Looks like Sony and Microsoft are in a race to create the ultimate set-top box.

This is also ground being dabbled in by a company called Moxi, which combines PVR, CD/MP3 Jukebox, DVD, Hard Drive, and tv/satellite connections. The only media formats the Moxi Media Center does not support is videogaming and vhs. It is due out next year. Moxi has an interesting thought in distributing their products directly through cable/satellite companies. So instead of going to the store and buying it, you receive the Moxi Center as part of your subscription to cable/satellite.

Could MS cut a similar deal and put these new hybrid Xbox set-top boxes into homes via cable companies? It was a strategy that Sega looked into to get the Dreamcast into more homes but they never had a chance to try it out.

All in all, this is the direction that consoles are moving. Sony for years has been saying how they will allow downloads of movies, music, episodic game content and internet content through the Playstation platform. Obviously, they have yet to deliver on this promise for nearly two years now. They might be targeting the PS3 format to be their foray into true multi-media.

The only company who has no ambition to move into this level of hardware is Nintendo, who will most likely stick to creating game platforms and not media centers like Xbox, Xbox 2(in 2006), and PS2/PS3(05/06). This might be a brilliant strategy because it would leave Nintendo as the only console maker who offers a simplified, kid/teen friendly console where these consumers don't need PVR, CD, MP3, Internet functions (and expenses that come with it).

06-25-2002, 02:21 PM
That's great and all, for all the people who want simplified systems, and all-in-one packages. But I like having different components and picking and choosing what appeals to me out of each category. I think you'd lose something in all this move torward total entertainment packages. What happens when you need a new receiver? or a new DVD player? It's not a bad idea, but I will be sticking to buying each component separately, and replacing each as needed.

Perhaps just leaving it as a game console/set box/ with built-in DVD support wouldn't be bad- but having it become your whole entertainment center would be streching it, I think.

Sure it's be a lot easier to coordinate on the style, but I know you'd lose in the substance department.

It's more a case of giving me what I don't need- I bought the 'cube because it plays games, games that I like, I also have a DVD player- to watch DVDS. What next- built in consoles in the TVs?

06-25-2002, 05:03 PM
Sega did have Dreamcasts pre-installed into TV's as part of a promotion, but that didn't really go anywhere.

I also prefer the components to be seperate. In every case, the individual parts are superior to the all in one solutions. Even though I have the PS2 and Xbox, I have never used either one as a DVD player instead preferring the stand alone Toshiba.

I think that the market the new all in one consoles will be targeting at first is the consumer who doesn't want to hassle with individual components, doesn't care that much about the best sound and picture quality. Kind of the same group that buys home theater solutions that come in a box and includes everything you need. Also, for those customers who don't have a lot of space in the rooms, apts, dorm rooms an all in one is a good space saver.

06-26-2002, 06:00 AM
I don't know if the news article is a bit late or if I'm a bit confuse, but isn't the WEBTV officially dead already? I thought Microsoft considered it a dud and giveup support for it like WINME?

Anyway, I find it rather ironic how Microsoft touted their Xbox to be anything but a PC, and yet it's moving closer and closer to being a PC everyday. Ah well, good news is though Xbox hacking has already begun, an emulator in the works, and soon we'll see people using their Xboxes as a cheap internet server. Haha, I'll get an Xbox myself once this gets going.

06-26-2002, 10:58 AM
Web TV was killed.

Ultimate TV is like Tivo in that you record tv broadcasts onto a hard drive. The concept is to make a box that can play games, record tv like a Tivo (a market Sony and others are getting into), and act as your satellite/cable box tuner.

By the nature of the cable/satellite connections, it wouldn't take much to add internet browsing and online gaming to such a rig.