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Forums - Gaming Discussion - (Business Perspective) Does MS really need Xbox Hardware?

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Pemalite said:
Machiavellian said:

Even the One X was not that much more powerful than the PS4 pro.  The thing is, the margin above what Sony was shipping was not near enough of a lead in hardware to even make the most jaded PS owner blink.  It's the same today, on paper the Series X is considered the more powerful of the 2 this gen consoles but when it comes to games, we are not seeing enough of a headway from the Series X over the PS5 to make any real difference.

The Xbox One X was substantially more powerful than the Playstation 4 Pro, the games have absolutely proven that.

But it's also an irrelevant point to make, the extent of how much more powerful a console is doesn't change the fact a console is more powerful.

The amount of consoles being sold is the other irrelevant point to make, because the discussion isn't about sales or market-share.


Machiavellian said:

What I am saying is that MS can never let Sony get the lead on hardware as the 3rd place system because being the market leader and having the better hardware just makes any kind of run for marketshare that much harder for MS.  Unless MS could differentiate their hardware enough from Sony to carve out its own space like Nintendo, then it's always going to be a war for better faster hardware which MS either needs to win significantly or at least be on par but being on par really doesn't help.

Agreed.
It also helps if Microsoft doesn't make stupid hardware choices as well. I.E. eSRAM+DDR3 vs GDDR5.

Machiavellian said:

I really only believe MS ever had the most powerful system was the first Xbox, after that its been pretty much Sony all the way.

That is false.
You even stated as such in your previous paragraph where you stated the "Even the One X was not that much more powerful than the PS4 pro."

Machiavellian said:

I totally agree that there is immense pressure to release a game and we have seen it countless times especially on the PC with really subpar performance.  A delay of Redfall would have been a bitch for MS no matter what but the game really was not in a shippable state.  Even Phil knows this because he personally had to come out and apologize.  It could be that the information he was given was not correct, because I doubt, he has time to review every game coming out personally but in this instance with how bad 2022 was for output, the damage is huge with your first AAA game release.  I guess the expectation for Redfall were way to high but now every game will be given a bigger critical eye which will make it even worse to hit above weight for their remaining games this year.

I honestly had zero expectation in regards to Redfall as I personally wasn't interested in the title.

It's just a shame that it didn't do well technically or critically as I would like to see every competent developer do well.

I should have stated at the start of each console generation.

Still at no time during any generation outside of the first Xbox and mind you it came out what about a year after the PS2 that MS had the most powerful console.  Think about the PS3 era, MS has a year head start and when the PS3 hit and games were not performing at the same level as the 360, MS marketshare grew over the Sony big time.  The only thing that stopped the momentum was the RROD.  Then coming into the next generation MS came with the Xbox one which was a weaker system, performed weaker on all levels and was more expensive than the PS4.  The Xbox one did not only kill the momentum that the 360 created, but it also nuked just about everything MS was looking to do as far as gain marketshare.  By the time the One X arrived, the damage was already done, Sony marketshare was way to large at that point and the games from Sony was just hitting much harder than what was coming from MS.  Even this console generation I am not giving MS the edge because no matter what the paper says concerning which hardware is more powerful, only Sony has shone through their first party games that power while MS has been floundering.  Maybe that may change later in this generation but like the PS4 era, by the time that may happen it will be way to late.



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Shadow1980 said:

As someone who primaries on Xbox, the answer is obviously "no." Xbox Game Studios could go third-party tomorrow and it wouldn't matter much for MS's financials in the long run.

That being said, I'd prefer they didn't. I like their hardware, I vastly prefer their controllers (though the DualSense is Sony's best controller to date), and I think that competition is good for the industry.

Sony losing massive amounts of market share with the PS3, including getting trounced by the 360 in the U.S., caused Sony to make a system that was more affordable for players and easier to develop for.

The PS4's initial reception combined with MS making serious mistakes regarding used games, mandatory online, and forced Kinect caused the pendulum to swing back in Sony's favor, though not quite as hard, and as a result MS quickly abandoned their most controversial plans.

Now here in Gen 9, the only big mess-up either Sony or MS has made is the latter mistakenly thinking that producing more units of the Series S than of the Series X was a good move because it was cheaper and therefore a lower barrier to entry, when in reality it's become clear that in a "you get what you pay for" scenario, people will willingly pay more for the premium SKU.

Not sure if Series S can be considered an error on the metrics you are looking, since it seems to be about 50% of the sales of Series then it clearly have acception by userbase, but sure a stick to put on the TV with a controller for under 100 USD would be a lot better, but it didn't got ready in time.

Azzanation said:
DonFerrari said:

Actually we could even ignore all the details and margins and just ask, what would be the total profit on current situation and what he expect it to be doing what he suggest (won't even ask for justification, breakdown, etc). Because even if the profit margin were to increase with this move the total profit would certainly decrease (even if MS doesn't give the numbers).

Don, you would be the front running of seeing Xbox exit the market, so what brings you here? Clearly not to defend this forecast..?

I already gave my opinion on the subject and very much in topic, would be good to have OP also stay in topic.

And although MS doesn't release games that interest me directly a lot of my friends like and play on it so nope I have no desire for Xbox to leave the market, I have my resistance on them buying big publishers and some other aspects but nothing against they being on the market and competing.



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

Azzanation: "PS5 wouldn't sold out at launch without scalpers."

So let me get this straight. Azz when exactly do you believe MS should leave the hardware business. Looking at your reply to Ryuu none of that seems plausible anytime soon.

First you say that GP will negate what MS makes selling their own games on their own hardware. The license fees they make from 3rd party games published on their hardware and also the sales cut they received for games sold on their hardware. I mean that is a lot of faith in GP to be able to sustain such sales alone when you know other publishers also have not been able to make anywhere close to what MS makes currently.

Next you state that if Sony doesn't allow GP on their platform, someone else will which mind you seems pretty far fetch since there isn't anyone else. Nintendo, well there is no reason for Nintendo to support GP any more than Sony. If that was the case Nintendo would be support other cloud platforms on their system its not like they owe MS anything and if MS services directly compete with their cloud services it really doesn't make sense. So who else can MS go to allow their games on console.

So we come to MS putting GP on every device that can play games. Well you can already pretty much do that now with GP since MS allows you to run GP from a browser. What is the metric of GP growth since MS open GP up to the browser. That means pretty much everyone can run GP on Android and Iphone today.

You seem to have a lot of faith in GP which mind you so do I but GP currently isn't close to being a service that can stand alone. Even if every TV supports GP today, it still would not be close to enough to build GP up to the number of subs required to sustain the service without hardware. Even in the best of circumstances, running XCloud requires a really good internet connection. I know this for a fact because I have Gigabit internet and while much slower games run fine from GP, fast past games exhibit all kinds of micro blocking, artifacts and inconsistent fps.

Also everyone isn't paying for that Gigabit internet connection in the US so I doubt its that much supported around the world. With the best cloud platform today which is GeForce Now, how much is Nvidia raking in from their service. It just seems like you magic answer to everything is GP will make it all better. Also, no one is paying 15 bucks a month for GP with first party games only. The output would be way to small. Even 20 studios probably isn't hitting enough diversity to make GP a viable option. Also MS needs enough must have games just to get people to want GP on their own hardware let alone on any other platform.



Azzanation said:
Ryuu96 said:

See Post.

Cons

1) Xcloud can be available on everything (TVs etc)

2) The loss of Gold will be recovered with 2 major audiences.

3) You lose the Live revenue and gain it all back plus more with GP growing.

4) They will gain more money with GP subs increasing.

5) Sony don't have to accept GP. If they don't, someone else will and they will create competition for Sony because they give their potential Rival a phenomenal deal over them.

6) MS can easily fill GP with its own games. 20+ studios making games including their history of previous games.

7) MS won't need the 100% cut because they will gain 200m+ more gamers to potentially buy their digital games. The billions they make on relying on hardware also has to recover the billions they spent on creating the hardware. They can cut the loss completely.

8) They won't need to Port if PS is the main platform. XCloud will be on TVs just like GP. So if you cant play on your Xbox, go play on your TV.

9) Time will convert people over to PS. Also GP is a service not a console. GP will be accessible on all major tech products. Its pretty simple.

LudicrousSpeed said:

see post

10. MS will just sell their games separately on PS, they will sell more software than how it is now.

11. They wont care if they have 50m+ subs making them $3b every 6 months.

12. Its all about the subs.

  1. Xcloud can already be on every device, no need for MS to abandon the hardware for this, and as pointed out by Ryuu Xcloud does not solve MS RnD for hardware and is even worst now instead of a ~$100 loss on every device and then recouping through software it's now a 100% loss on every device that needs to be recouped by subscription.

  2. Xbox would still suffer the contraction of its gaming division for many years and lose all third-party revenue for selling software on its proprietary device. Also, one of those major audiences will require extensive work on ports and would probably act as a barrier to title ambitions in the long run.

  3. You don't know that, You seem to assume GamePass would remain the same and therefore have the same appeal on competing hardware, but as explained by others there's no way they would accept Game Pass on their devices with third-party titles they are themselves selling individually. And given Sony's stance, there's no way they accept day-one releases of even MS proprietary titles. Sony mentioned to the CMA they would likely need to respond to CoD on GamePass with day one release of their own which they don't want to do. If they accept GamePass on PS in its current form Sony would be even more obligated to do so, which again they don't want to do. So there is absolutely 0 chance GamePass gets to keep its current appeal if MS goes third-party.

  4. GP subs' growth rate is very much tied to Xbox hardware being sold right now and there are 0 indications they can successfully replace this.

  5. Someone else already has and is using it to compete with PlayStation with this phenomenal deal, it's called Xbox. Why do you think it'll give someone else a better chance than it gives Xbox?

  6. Many third parties are bigger than MS in studio count and worker count, if this was the case why is it that none can match Xbox revenue? EA has more studios and more than double the manpower, they have their own subscription business model and yet they don't even manage half of Xbox's revenue.

  7. This overlooks the reasons why MS is willingly absorbing those hardware losses in the first place. MS already reach the largest pool of gamers by caring for PC with all of their titles on day one, so by the same token of this argument, why are Sony and Nintendo not releasing 100% of their titles on PC on day 1, wouldn't they'll reach 200m+ more gamers?

  8. That's a big if, why would MS not revert to PC for their default configuration? Also, you seem to give Xcloud way too much maturity than it has, way more willingness from gamers to use the cloud, and completely miss that MS would still need to produce the same level of hardware and expand the same amount in RnD if not more, and they would not recoup most of the loss by selling them outright. 

  9. So Xbox will say to MS investors, start the wait yet again and have faith, we'll change our model once again, more than halves our own revenue, thrash our relations with 3rd parties, drop our 'buy once play anywhere proposition', and try to convert our own enthusiast users to PS and maybe profit from it in another 10-15 years. 

  10. They already do this with PC and with select titles on PS and Nintendo. Doing so does not require them to drop their Xbox divisions. If anything this is an argument for Sony and Nintendo to cater more to PC.

  11. MS is already on track to reach this level and more with their current strategy, why make such a drastic change and jeopardize it?

  12. Their current strategies are all about subs, the one you propose would have the unavoidable effect of decreasing the service offering and unnecessarily risking its current growth rate, potential, and current sub count.
Last edited by EpicRandy - on 09 May 2023

Azzanation said:

We have been running the Hardware business between AMD and Nvidia for GPUs and AMD and Intel for CPUs for decades, they have been the only two that really matter.

MacOS and Windows is the only thing that matters for home PCs and Android and iOS only matters in Mobile. You can throw all these random small names which literally mean little in the grand scheme of things for the main consumer.

The console business is a complete waste of money for the 3rd player. Just leave it up to Sony and Nintendo and focus on selling software.

False, AMD and nVidia were also competing with Intel in the graphics arena, there was a point where Intel had 80% of the PC graphics marketshare, albeit even if it was all integrated.

It forced AMD and nVidia to build GPU's that exceed that bar.

For CPU's, again... x86 doesn't exist in a vacuum, you have VIA.
You also have ARM, MIPS, PowerPC all competing for the same markets that AMD and Intel sell into. (I.E. Servers, Desktops, Laptops, Tablets, Phones, Consoles etc').

Name a platform that is dominated by Intel/AMD and I bet you there is an ARM alternative.

Competition keeps things progressing forwards... And anyone who tries to downplay/shove aside competition is actually damaging themselves and their position as a consumer.



--::{PC Gaming Master Race}::--

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Pemalite said:
Azzanation said:

We have been running the Hardware business between AMD and Nvidia for GPUs and AMD and Intel for CPUs for decades, they have been the only two that really matter.

MacOS and Windows is the only thing that matters for home PCs and Android and iOS only matters in Mobile. You can throw all these random small names which literally mean little in the grand scheme of things for the main consumer.

The console business is a complete waste of money for the 3rd player. Just leave it up to Sony and Nintendo and focus on selling software.

False, AMD and nVidia were also competing with Intel in the graphics arena, there was a point where Intel had 80% of the PC graphics marketshare, albeit even if it was all integrated.

It forced AMD and nVidia to build GPU's that exceed that bar.

For CPU's, again... x86 doesn't exist in a vacuum, you have VIA.
You also have ARM, MIPS, PowerPC all competing for the same markets that AMD and Intel sell into. (I.E. Servers, Desktops, Laptops, Tablets, Phones, Consoles etc').

Name a platform that is dominated by Intel/AMD and I bet you there is an ARM alternative.

Competition keeps things progressing forwards... And anyone who tries to downplay/shove aside competition is actually damaging themselves and their position as a consumer.

I would say that the integrated cards being such a big portion of the market (even with all the limitations on the result, but well it is budget option) also pushed AMD to have APU designs and perhaps even the NVidia was a result of this (and without it not even Switch would have been feasible, Nintendo likely got a good deal from the original project not reaching the goals projected initially).



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

Azzanation: "PS5 wouldn't sold out at launch without scalpers."

DonFerrari said:

Azzanation said:

Don, you would be the front running of seeing Xbox exit the market, so what brings you here? Clearly not to defend this forecast..?

I already gave my opinion on the subject and very much in topic, would be good to have OP also stay in topic.

And although MS doesn't release games that interest me directly a lot of my friends like and play on it so nope I have no desire for Xbox to leave the market, I have my resistance on them buying big publishers and some other aspects but nothing against they being on the market and competing.

I must have missed your post. What was your opinion on the matter?

Why do you want them on the market exactly?



Machiavellian said:

So let me get this straight. Azz when exactly do you believe MS should leave the hardware business. Looking at your reply to Ryuu none of that seems plausible anytime soon.

First you say that GP will negate what MS makes selling their own games on their own hardware. The license fees they make from 3rd party games published on their hardware and also the sales cut they received for games sold on their hardware. I mean that is a lot of faith in GP to be able to sustain such sales alone when you know other publishers also have not been able to make anywhere close to what MS makes currently.

Next you state that if Sony doesn't allow GP on their platform, someone else will which mind you seems pretty far fetch since there isn't anyone else. Nintendo, well there is no reason for Nintendo to support GP any more than Sony. If that was the case Nintendo would be support other cloud platforms on their system its not like they owe MS anything and if MS services directly compete with their cloud services it really doesn't make sense. So who else can MS go to allow their games on console.

So we come to MS putting GP on every device that can play games. Well you can already pretty much do that now with GP since MS allows you to run GP from a browser. What is the metric of GP growth since MS open GP up to the browser. That means pretty much everyone can run GP on Android and Iphone today.

You seem to have a lot of faith in GP which mind you so do I but GP currently isn't close to being a service that can stand alone. Even if every TV supports GP today, it still would not be close to enough to build GP up to the number of subs required to sustain the service without hardware. Even in the best of circumstances, running XCloud requires a really good internet connection. I know this for a fact because I have Gigabit internet and while much slower games run fine from GP, fast past games exhibit all kinds of micro blocking, artifacts and inconsistent fps.

Also everyone isn't paying for that Gigabit internet connection in the US so I doubt its that much supported around the world. With the best cloud platform today which is GeForce Now, how much is Nvidia raking in from their service. It just seems like you magic answer to everything is GP will make it all better. Also, no one is paying 15 bucks a month for GP with first party games only. The output would be way to small. Even 20 studios probably isn't hitting enough diversity to make GP a viable option. Also MS needs enough must have games just to get people to want GP on their own hardware let alone on any other platform.

Why would Nintendo and Sony say no to a 1st party GP subscribion like EA Play? Would make zero sense. The only reason they dont want GP is because it has 3rd party games that conflick with Nintendo and Sony stores. Also Sony wont accept GP aslong as Xbox hardware is available. Give Sony the Monopoly on high end Hardware and GP won't be an issue.

MS make billions and lose billions in the Hardware market. Subs are full profits and if they can double and triple their Sub counts, Xbox will be earning $1b a month instead of $1b every 6 months.

With more and more devices gaining access to GP, Xbox 1st party games will no doubt increase sales figures across the board. Instead of selling 3m copies they could be selling 10m copies. They be making more money overall and making that 30% cut obsolete in the grand scheme of things.

MS can start as early as next gen. Save the billions in manufacturing hardware and go full 3rd party which means they are already ahead. Those that don't want to move forward can stay on the Series X/S consoles until they lose full support. Its the nature of this buisness and industry.

100m GP subs will outweight anything their Hardware and Cuts they get from 3rd party games. $1b+ a month is the direction. Its all about Software and Subs, not hardware moving forward.



Pemalite said:

False, AMD and nVidia were also competing with Intel in the graphics arena, there was a point where Intel had 80% of the PC graphics marketshare, albeit even if it was all integrated.

It forced AMD and nVidia to build GPU's that exceed that bar.

For CPU's, again... x86 doesn't exist in a vacuum, you have VIA.
You also have ARM, MIPS, PowerPC all competing for the same markets that AMD and Intel sell into. (I.E. Servers, Desktops, Laptops, Tablets, Phones, Consoles etc').

Name a platform that is dominated by Intel/AMD and I bet you there is an ARM alternative.

Competition keeps things progressing forwards... And anyone who tries to downplay/shove aside competition is actually damaging themselves and their position as a consumer.

Disagree. Not all competition is good. You think Epic Games Store entering the PC space was great competition for Valve? It caused more of a problem with consumers than gains. Nintendo and Sega were doing quite well to before Sony entered, adding that 3rd player which ended up killing Sega.

I would rather see a healthy 2 platform console race than 3. Xbox is literally wasting resources in a industry they cant compete in. Set the full focus on making great games and remove the focus on hardware. Go back to full PC development and put games on the high selling consoles to increase overall sales and IP popularity.

This also doesnt damage me the slightest as a consumer. Only benefits me. It means MS can focus solely on building the best games again without the distractions of hardware.

Last edited by Azzanation - on 10 May 2023

Azzanation said:
DonFerrari said:

Azzanation said:

Don, you would be the front running of seeing Xbox exit the market, so what brings you here? Clearly not to defend this forecast..?

I already gave my opinion on the subject and very much in topic, would be good to have OP also stay in topic.

And although MS doesn't release games that interest me directly a lot of my friends like and play on it so nope I have no desire for Xbox to leave the market, I have my resistance on them buying big publishers and some other aspects but nothing against they being on the market and competing.

I must have missed your post. What was your opinion on the matter?

Why do you want them on the market exactly?

I have made several posts here and not really wanting to repost.

But summarizing, as a customer I would have no need for MS to keep in the market, as business side for MS it makes sense to still be on the market and basically I agree with all the points for doing so that Ryu brought forward.



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

Azzanation: "PS5 wouldn't sold out at launch without scalpers."