The Microsoft Entertainment and Devices Division was able to start the year by telling the world that they are three times more profitable than they were a year ago. Q4 ‘09 profits from the division were $375 million, compared with $130 million for Q4 ‘08. The increase comes from Moore’s law bringing down hardware manufacturing costs and from the ever increasing user base buying proportionately more software and Live services, which are a lot more profitable than hardware.
How does Moores law become relevant when the hardware is identical in almost every significant way between the end of 2008 and the start of 2010? Granted everything else is accurate.
The Xbox 360 also currently heads the game sales chart with Mass Effect 2 and are by far the most popular platform for the monster hit that is Modern Warfare 2. This presages a year in which there will be a succession of huge titles that are not available on the other consoles. Halo: Reach, Fable III, Tom Clancy’s Splinter Cell Conviction, Alan Wake, Crackdown 2 and Scrap Metal for starters. For any game enthusiast these make owning a 360 essential, even if it is in addition to owning other consoles.
Most popular console for MW2 = higher sales, especially in America. The PS3 has far higher sales in Japan where they don't care so much for the title. In addition to this, Sony has popular games coming too. Pretty much every game slated for release on the Xbox 360 this year has an equally popular PS3 game on the other side of the fence, if not in the same genre. Reach = GT5 and continue until you reach the bottom. I can't be bothered listing more PS3 games, but they are there.
On the hardware side Microsoft are starting to roll out 250GB hard drives. And this autumn we have the much anticipated release of Project Natal. Microsoft have changed the design slightly to reduce the hardware by doing more in software (using 10-15% of the 360s cpu resources), this is to keep to the $50 price target and to increase the flexibility of the device. At this price Microsoft expect to sell several million units in the ‘10 holiday season and so there is impressive game support coming from publishers. Pretty soon around half of all 360 owners will probably buy Natal and they will want Natal enabled games to play on it. Expect a surge in more family friendly titles, which will take the 360 to new demographics, further enhancing its success.
Quite bullish, however not much to say other than 'wait and see'.
All is not sweetness and light at the Microsoft Entertainment and Devices Division, though. Their mobile strategy has been an unmitigated disaster with Google and Apple trampling all over them. This is the biggest possible problem for Microsoft as mobile devices are set to dominate computing and the internet. Even if they continue to dominate the office and grow to dominate the living room they could still be beaten by the owners of the mobile space.
Yep. Though there are always good rumours abounding about Win Mobile 7. If anything its their game to lose because of the great positive reception of Windows 7 on home computers and office PCs. Much of this positive mindshare ought to transfer to a product sharing the same name.
Finally let’s risk making a prediction for the next generation of Microsoft home console, the Xbox 720, Xbox 3 or Xbox Phoenix. It is inevitable that Microsoft must do this because Moores law will leave the Xbox 360 looking less and less powerful. They will produce a scaled Xbox 360, so it will be backwards compatible. The new machine will have many more features and benefits such as 3D. It will be announced, probably at E3, in Q2 ‘11 and will be available at retail Q4 ‘11. Expect it to be 8 times the power of an Xbox 360 (Moores law says it will be) and expect the 360 to stay in production as the junior model in a two model range, retailing for $100.
It'd be easier to update the new revision hardware to support 3D ala Gameboy vs Gameboy Colour. Announcing a new game console 6 months after a relaunch is problematic at best. At worst its down right cynical. In addition to this, we got rumours of Xbox next hardware years before release, where are these rumours now? If the console is coming in 2012 then we ought to be in the window for rumours to pop up. On Beyond3d.com we had some pretty accurate rumours on the Wii and Xbox 360 more than two years out and some quite frankly outrageous ones. We have no rumours and no indications of serious ramping up of development here. In addition to this, they would need 3 years to produce new I.P. for games to be released on the next generation of consoles. They have most of their studios releasing this year.
