Faulty analysis. The original XBox was only a success in a limited sense. Was it true that Microsoft intentionally planned to lose 4 billion U.S. dollars on their first system? No one plans to lose that much money. Stockholders simply won't stand for it. Microsoft expected to make a breakthrough with the system the 1st time around but plans didn't work out that way. And any smart company has a backup plan just in case the frontline fails. This is why companies are working on their next system as soon as their current system is released.
Microsoft knew the original Xbox was going to lose a lot of money. However, that is the cost of getting into the game industry. There are only a few companies that are capable of doing what Microsoft did. They wanted to get in it for the long run and didn't expect to make a profit at first. In fact, the press release announcing the xbox didn't even mention any profit incentives, they just wanted to have a box under your TV.
Is it really? Depends on how you set up your business plan. Do you really think Nolan Bushnell started Atari for their system to fail financially just to get a foot in the door? Do you really think Nintendo's intention when entering the crashed North American market was to fail financially with the NES just to see how things would go for the next generation? Do you really think Sony's intention was to fail financially on the original PlayStation just to make the follow up PlayStation 2 a success?
I don't believe that & I don't think you do either. If Microsoft made the original XBox knowing it wasn't going to be a success then something is wrong with their business acumen which leads me to think that without their monopoly in the computer market they really couldn't be successful in any market. Which also leads me to think that they'll make similar bonehead moves for the next generation. Microsoft has the luxury of seemingly (but not actual) endless money to outlast a competitor but with this coming depression, the failure of Vista, & those recent layoffs of theirs I don't think they'll play around with funds so freely so much in the future. If they ever get disrupted in the computer world, their entire company could collapse.
Yes, their plan to get the XBox name embedded in buyer's minds worked which is why the 360 is more successful than the old XBox but the XBox 360 still is not as successful as it should be seeing what Microsoft put into it (the double dealing MS did to Sony with Cell really messed Sony up). They didn't really understand the business thinking Sony to be the boss & overlooking Nintendo as a minor nuisance not recognizing the origins of the PlayStation & that Nintendo's mistakes/Sony's capitalization on those mistakes created the Sony gaming empire which is now crumbling (as it always inevitably would). In order to get to the long run you need something in the short run. If you don't expect to make a profit, then what are you in business for? The Richie Rich way of doing business costs in the long run. They're not efficient & Nintendo's streamlined efficiency will make them pay in the long run. It's like asking Paris Hilton to be responsible with money compared to a thrift queen who cuts open the toothpaste tube to get more toothpaste.
We've been led to believe that home consoles are the "main platform" & handhelds are the "secondary platform" but in Japan it's pretty much the opposite now which is why Sony decided to even make the PSP hoping to run Nintendo off their last trump card. And remember that clip only showed Japan marketshare. Worldwide marketshare is a whole other thing. And looking at North American or even more narrowly U.S. marketshare you'd get a different picture again.
Seeing as how Microsoft is not in the handheld business, that really isn't a concern to them. I don't really understand why you posted this. Even if handhelds are the primary plaform in Japan, Microsoft is interested in having a device in your living room, not pocket. (I guess one could argue about the Zune and Windows mobile, but that is another topic)
And that's exactly the problem. They don't think they need to be in the handheld business! Hahahahaha! You ain't gonna get anywhere in Japan without handhelds & without Japan you can't rule the gaming world. The nature of the environment and culture of the people leans toward on-the-go portable lifestyle. That's why they love their cell phones so much. That's why they love iPods over there. That's why DSi has combined features of cell phones & iPods. That's why DS looks like the #1 compared to Wii. That's why PSP sells best there as a handheld alternative to DS. Their living spaces are smaller & Microsoft's console design is too bulky. That's one of many reasons why XBoxes don't do well over there. Also that dual market setup which Nintendo created & mastered makes a one hand washes other effect which benefit both platforms. Sony, best challenger to Nintendo's handheld empire yet, still hasn't quite grasped the concept.
You go where the people go. And let me tell you that ain't too far away from the U.S. or the rest of the world either. People live on cell phones & some don't even talk preferring to text everywhere. Nokia's N-Gage tried to get in on this phenomenon but didn't quite catch on. Apple, Microsoft's old rival, is looming. They are hanging around the game business playing with those iPod Touch applications. That's Nintendo's most visible threat right now, Apple. Microsoft sleeps on that fight & they'll end up like Sony in the gaming business losing that whole fight for the living room box in the process.
1) Nintendo, Ltd. as a whole since they primarily make videogames with toys & playing cards in the minority.
(2) Sony Corp.'s Sony Computer Entertainment, Inc. or in other words Sony's gaming branch since Sony Corp. is in so many businesses.
(3) Microsoft Corp.'s Entertainment and Devices Division specifically what holds XBox development on both hardware & software. Microsoft has no clear "gaming division" like Sony does since other products fall under this branch like Zune, Windows CE, not to mention computer game production, another portion of the whole digital electronic gaming market which is too vast to count.
That is because Microsoft is a much bigger company than Nintendo and Sony. I'm not talking about physical size, I am talking about market reach. Microsoft's interests range too widely for it to have a department for every single devision. If they did that, they would have a hundred devisions and it would be hell to manage. The name of the divisions is irrelevent.
No, I'm just highlighting who the competitors are. In fact, the structure of a company telltales its decision processes. This is why Sony, a vertical company who wants to produce on all parts of a line, bloated the PS3 with Cell & Blu-ray making such a overgrown price. Sony in the music business wants to make the physical media, own the radio stations, have the artists contracted, own the publishing rights, own the studios the artists sing in, own the video tech that the music videos are made with, own the players that play the physical media, and even own the batteries to play the players with! Their business DNA is a lot of the reason why they've had so much failure over the years.
Microsoft not with a clear gaming division is similarly unfocused on the needs of the gaming audience. And without gaming being their bread & butter they are content to toy around in the business to do something like a 3 generation plan for dominance on a goal unrelated to videogaming. This is why they spent so much for Rare with so little return. This is why they destroyed Ensemble Studios after completion of a single XBox identified game despite the company being successful. This is why they swim upstream in Japan not understanding the needs of that market. This is why they seem to be learning on the go instead of having a clear cut game plan. XBox to Microsoft is just a mere game itself to play Corporate Command & Conquer taking over market territories.
Nintendo's original business as a playing card maker has been supplanted by their videogaming endeavors & as such they put their all into it because their survival depends upon it. This is why they are most in tune with what needs to be in gaming & what should be. A relatively small company besting corporate giants solely on videogame products making money hand over fist comes from their focused company structure.
When looking towards the profitability of the 3, Nintendo always landed on top. Microsoft leveraged its muscle from its computer operating system monopoly to subsidize & sustain its XBox adventure. Any other company would have been bankrupt from the original XBox's financial failure. Of course some of that $4 billion was part Zune as well but it's no mistake that XBox 1 caused the grand majority of that waste. Sony with the record success of their PS1 & PS2 didn't profit as well in comparison to their sales success. The problems of the PS3 were inevitable based on how their business model was set up.
Exactly, any other company would have been bankrupt from what Microsoft did. They would have also taken 3X as long to get into the position Microsoft is in right now. Microsoft bought themselves into the console industry and in less than 7 years were able to go from "newcomer under the shadow of the 700 pound Japanese gorilla in the room(Sony)" to "The 500 pound American gorilla poking the 300 pound anorexic Japanese gorilla." They played to their strengths and it worked for them. The young Xbox is pretty much equal to the Playstation brand in the eyes of the consumer (Even with RROD).
Nintendo entered the U.S.A. on the homefront in 1985 & had it locked in 2. I trust Donkey Kong over that 500 pound American gorilla. In fact Microsoft's ignoring of that 800 pound barrel-throwing gorilla in the room will cost them plenty. Nice to be equal to the PlayStation brand in the eyes of the consumer, nicer to be equal to the Wii brand in the eyes of the consumer. And the PlayStation is a dying brand, never forget.
You have just exampled Microsoft's approach & thinking toward the industry. They think Sony was the threat. Sony was never the real champ. They sold the most systems of all time with the PS1 & PS2 and STILL did not profit in a way that reflected those unprecedented achievements. In their best times, they made a little money. They were never going to last. The PS3 has wiped out the PS2's success & is working on the PS1's. The only reason the PlayStation exists is because of Nintendo in both the positive sense & the negative sense. Nintendo's mistakes in the negative & Nintendo creating the idea for the platform in the positive. The PSP vs. DS fight exampled who truly ran this business.
You need to look at that YouTube video about Japanese VG marketshare (1996-2007) again. When people were saying Nintendo was about to pull a Sega in the face of the superior PlayStations a few years back, Nintendo hardly went below 40% of the Japanese market. You don't go out of business with 40% marketshare.
When Sony finally fades, Japan is all Nintendo without challenge. And even though XBox 360 had a couple of nice looks in Japan recently they are not a serious competitor. They will have to recognize Nintendo as formidable & you will see that this year. You're not supposed to take that long to make your mark. All is destined before the generation starts. The plans must be good before the beginning or you will not succeed.
You've made a grave mistake with this following view right here. I'll quote you:
-The line between console and PC is blurring. In the future consoles may
very well be underneath each TV, something which Microsoft definetly
wants.
This is the most fundamental MISUNDERSTANDING of what a console is supposed to be. Consoles in reality shouldn't exist. If not for the NES, we would all be playing games on the PC. You gotta understand the lessons of the North American VG market crash of 1983/1984. Videogaming suddenly went out of style as a business enterprise and if not for the NES, it would not have survived as a pastime in a broad sense. Certainly not enough able to influence & reshape the culture like it has. Home consoles from the very beginning were focused on families not technology. Technology was a tool not the driving reason for existence. It was the highway, the medium on how the game creators' ideas could influence how the families interacted with each other through the device.
This is the most fundamental misuderstanding of the industry. If in the next generation the Xbox 720 has a feature which allows it to give you a back massage while you play and the consumers LOVES it, then you better damn well bet that the next generations of consoles will also have this feature. Consoles are not just gaming devices anymore. If Nintendo wants to think that, then they are going to pay for it in the long run. What will happen when you have the Wii3 which can only play games and the PS5 and Xbox 1080 which can be used as your Comcast cable box, VOIP video phone, browser, media center, etc. The consumer will vote with their dollar and leave Nintendo in the dust. Even Nintendo added a web browser to their console because they know consoles are evolving.
Wow. Nobody has learned anything from the PSP. What we're seeing with Wii actually had already been done by them decades before in Japan with the Famicom. Wii was the second coming so to speak of the Famicom in just about every meaning you want to apply to it. Yes, Wii has an internet browser but does that browser stop people from using the ones on their desktops & laptops? No.
DS has already taught you this lesson. PSP already has a lot of that & it's failing as a platform in comparison. Nobody makes a lot of games for it & everybody uses it for everything else who does buy it. It's the bootleg system of choice. How many times will people understand that all-in-one media consolidation won't work. For design reasons and even location reasons people want certain things separate. Why do toasters, stoves & crockpots still sell when microwaves exist? Why are TVs still selling when monitors can provide a good picture? Why haven't cell phone cameras done away with digital cameras yet? Feature bloat can be a problem when you pack too much stuff into one device.
No, actually consoles ARE gaming devices & those who forget that lesson will be punished in the marketplace. For all that Microsoft does with XBox 360 they can't whoop the Wii. Can't even smell it. And Wii hasn't even really shown you yet what plans it has for the business. 2009 will be a rude awakening for Microsoft, I swear it. Yes, you can put in some nice bells & whistles but never forget the primary purpose of what your product is for. If anything, Nintendo's competition has paid for it in the long run by NOT remembering that crucial lesson. The 7th Gen is teaching you. Nintendo ultimately leaves the others in the dust.
The line between PC & console ain't blurring as much as you think. Else I would primarily use my Internet Channel on my Wii for all my web browsing needs instead of my desktop I'm typing to you on. Microsoft got into the business fighting Sony over this all-in-one media box ideal & while they have probably run Sony off from this fight, that ideal won't be happening anytime soon. The biggest reason it hasn't is simply the way people assign functionality to a certain device. Sure you CAN use this device to perform this function but you feel more comfortable using this one instead. Or they just find one device better than the other for their needs. It's why PSP's multimedia abilities didn't help it beat the DS with its touchscreen & microphone "gimmicks". Same reason why PS3's Blu-ray capabilities ain't increasing its sales in comparison to the standalone Blu-ray players that sell.
No, they are. The fact that your Wii has an internet channel is proof of that. NES and SNES had online capabilities in Japan but it wasn't that popular. Using your console for other things besides gaming will become more popular. "A gaming/multimedia device was essential for multimedia convergence in the new times" - Bill Gates People will adapt to devices with multiple use. Cell phones aren't just for making calls anymore. Heck, making calls represents less than 10% of what my phone does. Using a console to buy movies would have also seemed a little crazy a few years ago. However, that is where the industry is going. Consumers want for bang for their buck. More functionaliy in 1 device = less devices needed = less money spent. Also, the reason the PSP is getting its behind handed to it by the DS is because Sony is the leading force behind it. If Nintendo or Microsoft owned the DS, it would have been a hit due to Nintendo's solid handheld strategy and Microsoft's checkbook. Not too big of a hit since people need time to adapt to all the functionality, but a hit nontheless. Wait until the DS2 and PSP2. Those consoles will have more multimedia features and people will embrace them.
Dreamcast had a web browser. Still didn't save Dreamcast's bacon. There's nothing wrong with using a console for outside of gaming purposes but when the primary focus is not on playing games then you have defeated the purpose of your machine. Ah, Bill Gates' dreams of convergence. Not happ'nin' Cap'n. You need to read some Sean Malstrom. Listen to what you said: "People will adapt." Unh-unh. WRONG approach. You can't force the public to do what it doesn't want to do. You look at what they need and what they're already doing & then act. That doesn't necessarily mean ask them what they want & give it to them but actually check their habits & fulfill a need not fully recognized.
Buying movies on consoles is not replacing other services. It's a neat bell & whistle but it's not undoing other avenues to buy movies. Don't get lost in the tech, man. If you get too jazzed by the tech you will miss the forest for the trees. This is what has happened to Sony & what's happening to Microsoft. There are alarm clocks in every device you can think of (including my DS) but you know what? I'm still using that same old GE alarm clock/radio I had since 1982 to wake up.
It's a lesson in life. You can't be all things to all people. This is the problem of convergence. Some things simply need to be kept separated just for the accessibility factor. Only if the things are complementary should they be converged. But you & Microsoft will learn this lesson soon enough.
You seem to think Microsoft is the steward of this business but they're just a swabbie. Nintendo's manning the wheel of this ship & has done so for about 25 years. Don't take them lightly. So many have learned the hard way.
John Lucas
Words from the Official VGChartz Idiot
WE ARE THE NATION...OF DOMINATION!
