The Next XBox

[amirnetz]

In another thread, Squilliam offered his vision to the lessons Microsoft should learn from Nintendo in designing its next gen console. While well written, I think Squilliam had missed several important points and eventually got to the wrong conclusions.

Here is a more detailed analysis of the lessons to be learned: 

• Low price is more important than capable hardware: Both Ninty and Sony proved it very clearly: Inexpensive consoles sells much more than expensive ones. Microsoft must aim to a $250 introduction point for its main console and should cap the hardware investments to make sure it does not exceed that point.
• HD is done: Most people cannot see the difference between 720p and 1080p. Minimize the investments in greater graphical capabilities. Instead learn from Ninty and invest in new experiences that could appeal to families. Capping HD where it is today makes sense because anyway the studios are struggling with the cost of HD game productions.
• Don't disrupt your existing base: Sony's biggest mistake is letting its huge install base go by introducing an incompatible console - it made the PS2 owners feel that they are owning an obsolete console and were force to choose a new one, mostly not Sony's. Microsoft new console must not feel very new. The new Xbox must be a "360 Mark II". This means that not only it would run all of the 360 titles but also every new game for the "Mark II" will run also on the 360. There will be a way for the 360 owners to upgrade their existing HW to get all of the new Mark II experiences.
• New gaming experiences: Ninty showed us that to reach larger population you must create a social experience and for this you need the right accessories. The 360 game controller must be joined with additional accessories that will allow these new experiences. Microsoft may choose to copy's Ninty's controllers or may come up with a new idea. No matter what - Microsoft must create a new, intuitive and broadly compelling experience. There has to be a Wow factor here.
• Beyond games: Both Sony and Microsoft (with Marketplace and now Netflix) are proving that the console functionality can go beyond gaming. Streaming videos and DVRs seems like the next logical extensions of the console. The next extension is toward the on-line social experience - living-room to living-room video communication may become the next killer app for the console.
• On-line is huge: Microsoft proves it again and again with its Live service. Continue to push it hard. Downloadable media and games may make the DVD and large HDD obsolete. For people who want significant storage allow networking with the home PC to store Xbox downloadable content there. Learn from Apple and offer an AppStore that holds all of the titles. Learn from NetFlix and allow a subscription rental service for a fixed cost.
• Hardcore is a money maker: Not only that hardcore gaming is the majority of the 360 installed base, but it is also critical to Microsoft's financial success. Microsoft's business model is based on making money by collecting royalties from publishers. The hardcore gamers are a repeat buyers. The attach rate is approaching 9 already and may be around 15 when this gen is over. This is a huge asset and money maker for Microsoft and while coveting the casual gamers it must not seem to abandon the hardcore ones.

 With that in mind, this is how Microsoft's next console need to look like: 

Name/Positioning	"Xbox 360 Mark II",.
Price	$250, One model. Simple.
Graphics	A bit more than 360 in graphical capabilities, but not much more.
Processors	Additional CPUs for background downloads and DVR capabilities that will not disrupt
Controllers	360 controllers + motion/gesture controllers + video camera + mics, 3D goggles.
Storage	40GB in Flash storage, automatic networking to home PC for additional storage
Additional Devices	DVD Drive + 250GB HDD optional for an extra $90
Game/Media distribution	On-line. Live subscription is required, premium subscription gets you game and video rental.
Design	slim, small, no-fan.
Backward Compatibility	Fully compatible with the 360.
Forward Compatibility	The 360 can run the Mark II titles (maybe with lower res). The 360 can be upgraded to the standard Mark II controllers (video, gestures, goggles).
Launch titles	Gears 3D to show commitment for the hardcore gamers, family fun games for the casuals bundled.

 Thoughts?