Analyst: Xbox Business a 'Disastrous Endeavor' for Microsoft

[johnsobas]

HappySqurriel said:

jman8 said:
The lost-leader strategy can still work as long as the systems are on the market longer than before, which is what Sony and Microsoft are shooting for. I've said it a number of times, the 360 and PS3 are gonna be around for another 7-10 years. Sony has pretty much confirmed this all those times they've been claiming the PS3 is "futureproof." So if the 360 is around for a total of 8 years, and is selling at the same rate as the XBOX1, the 360 would sell 50 million units. Along with Live and all the other fees, microtransactions, and overpriced accessories, MS could conceivably make a profit this time around by the end of the 360's life.

But how often has a trailing console been able to survive 7 to 10 years?

Just because a company says that they see a long life in a console doesn't mean it will have a long life (Nintendo said they thought the Gamecube was going to be a good system for 8 years). There is a reason why consoles are a cyclic/generational market; after 5 or 6 years you can produce a system for $200 which is 10 times as powerful as a system which was $2000, consumers begin looking for new games (and new types of games), and interest in the market as a whole begins to decline. Part of the drive in the market is that there is always something new, if you're unwilling to produce the new product someone else will and they will become the dominant player.

In general you are right, the longer life (which dominant consoles get) is one of the ways to recover from the loss leader strategy; but this goes back to the only way the strategy works is if you're the dominant console.

no way 360 or PS3 has a life cycle of 7-10 years.  Life cycle has much, much more to do with userbase then it has to do with power or things like blu-ray.  PS2 is going on 7 years, and is the longest life cycle for any recent console and it is certainly nowhere near future proof.  PS1 also had one of the longest life cycles, and was far less powerful than n64.  What PS1 and PS2 have in common is they had huge install bases.