Investors to Microsoft: Drop the Xbox

[Reasonable]

Smashchu2 said:

FaRmLaNd said:

Why would they get out of the xbox brand now?

They've just become profitable, and they've succedded in getting millions of people to pay money for their gold accounts.

All they need to do next gen is take a leaf out of Nintendos book and sell the console for a profit from day 1. This may mean advancing the hardware technology more slowly but I think thats a neccesary step next gen. As the cost of the industry to create hardware and software was simply too high in many segments of the market this gen.

I think the console company that will increase its hardware capabilities next gen might just be Nintendo, I wouldn't be surprised if Sony and Microsoft are far more cautious in comparison.

First, it may not be profitable if the consoles sell for a gain. This just means that sales are greater then the total variable cost. That division may still have higher fixed cost which will nulify any profit. Also, they could move resources from the video game sector to their PC sector. The point is that investors are tired of Microsoft playing in these markets with marginal profits.

Also, on the bold, no, Sony and Microsoft have to make the system stronger. They have forever put themselves in a shrinking box. The twop focus on their top market which demands better looking and sounding games. If Sony and Microsoft were to make system that were only marginally stronger, their consumer base will deny the system and their division will implode (they are too strong for lower consumers and not strong enough for their best consumers). If there isn't a noticable jump in power, the market will feel cheated.

It doesn't matter. This charade is about over. If it's not for the high cost and billions of loses it's going to be Nintendo disrupting them. There isn't much place to go from here.

Great post.  One point of - minor - disagreement.

I think MS are the company that has by far put itself into the position of needing to push the HW by linking itself so strongly to former PC genres, particularly FPS/TPS with all the graphical expectations that brings.

Sony does have the option to bail out more readily I think.  With the PS2 most of its install base certainly weren't worried about high end graphics, although obviously with the PS3 it has garnered a fair share of that crowd.

MS I believe would struggle to disentangle themselves so easily from the power race, although Natal may (or may not) change their position in that regard.

I get the feeling that both MS and Sony are wondering if they simply keep their consoles longer (after all a Wii2 looking at jump from Gamecube to Wii would probably only have similar power to PS3/360) by allowing costs to drop and matching Nintendo for motion controls.

Of course, the big unknown, as you point out, is what Nintendo do and whether they successfully disrupt again leaving Sony and MS with the choice of chasing the power crowd looking for the next big leap or with comparable base power in the consoles but behind in the experience.