So here is the take of a former Microsoft Employee...
Over the years I have read a lot of comments from people about Microsoft being evil, only out for money, cutthroat, etc...
I will not deny that they can be cutthroat, but so are other businesses. They are also out for money, their investors demand as much.
But to say they are evil shows an obvious lack of understand or knowledge. Having worked at Microsoft for over 5 years and knowing several individuals pretty high up in the Xbox organization and Windows organization, I can say beyond a doubt that they are not evil. People who work at Microsoft are some of the most passionate and driven people you would ever meet. They want to deliver the best software and hardware on the market and aim to fulfill the needs and desires of their customers.
When the RROD stuff started hitting, they felt the pain. Many in Xbox were extremely frustrated and upset that all the great work they did on the dashboard, Xbox Live service, games, everything; would not be experienced by Millions of potential customers now because of the damage that RROD did to the brand image.
When people complain about the $50 per year charge for Live, sure they would like to offer it for free. But they also understand that to make a great product you have to make money to support it. When Xbox Live was first in development it was an extremely hard business decision to charge for it. But at the end of the day, they knew that not charging for Live would kill it long term. Being that they were Microsoft employees they had access to tons of market and development research that you can only dream of. They were able to look into what happened to Internet Explorer. See how the fact that IE was not contributing direct revenue eventually led to the organization being cut down to barebones and them not keeping up with competition. Sure they would get a lot of funding for Xbox Live 1.0, but if it was free you would never have gotten things like the NXE, Live Parties, Netflix, Video Marketplace, integrate dashboard, etc... All of the money that is funding those improvements has come directly from the Xbox Live Gold subscribers.
I think this is part of the problem with Sony and PSN. If Sony had charged for PSN from launch like Microsoft is for Xbox Live, PS3 owners would likely be looking at significant more improvements. That money could have gone to add trophies much earlier. To provide voice communication across all games. To help reach out to developers and publishers to get more demos and game videos. To hire more staff to ship Home on time over a year ago. Instead PSN improvements are suffering in part due to the losses on the PS3 as a whole.
With Microsoft, when the Xbox was losing money, they never cut funding to Xbox Live. Why? It was profitable and as a result keeping them funded and growing was vital to the future success of the platform.
In regards to Microsoft innovation, by some people's definition of innovation almost nothing these days would qualify as innovative. The iPod is not innovative, after all its just a Walkman with a HDD. Walkmans played music years before the iPod. Thats almost as good as the comparison above that PCs have had HDDs for a long time and people were watching video and playing flash games on them well before the 360.
Innovation takes many forms. Innovation can be a completely new technology like the creation of LEDs. Innovation can also be a simple improvement to an existing product or idea that helps bring it to a larger audience.
The Creative Zen 20gb MP3 player came out over a year before the iPod. Yet the iPod innovated in several key ways including design, size, and user interface. Who cares if they copied the Zen in a lot of ways, they innovated in key ways that helped grow the market and bring it to the masses.
Look at Microsoft with the Xbox 360. Sure Videos were for sale on the PC through iTunes, Amazon UnBox and others, but they created an easy and convient way to purchase them directly on your TV in both SD and HD with no connected PC.
Sure you could already talk while playing games on the PC. But even on the PC not all games behave well when running a 3rd party voice communcation application in the background, it is an inconsistent experience. On the Xbox 360 Microsoft designed technology that allows users to communicate across all games with up to 8 people (all 8 can be playing different games) with no performance hit to any of the games. With consistent quality experience.
On the PC you can chat with a friend and arrange to play a game together. On the Xbox 360 I can send an invite to a friend and once accepted it just loads the game and puts them right in with me. They don't even have to go through the UI in the game to join me.
On the PC you can buy little games from small development shops. But they have to setup a store, manage the transactions, manage distribution and DRM, everything themselves. On the 360 you can no just make a community game and get it put up on Live quite easily. You set the price and Microsoft handles all the billing, deployment, distribution, and everything. They take roughly 20% off the top and then give you everything else.
There are a lot more scenarios like this I could draw up, but I am sure you get the point. Innovation isn't always the big revolutionary things, its the little things that can make all the difference.
It was not the PS1's great hardware alone that allowed them to beat the Saturn and the N64. Sony made some minor innovations in the business side of things including decreased certification processes as well as lower royalties and improved distribution channels. This caused significant growth in the industry and made it cheaper for more developers and publishers to enter the market.
I am not convinced Microsoft has what it takes to win the console market long term, but I do like their business model as it sits right now. They are no longer relying just on game and system sales to drive improvements in the platform and service like their competitors are. The Video Marketplace is funding itself to get more content. The Music Marketplace is doing the same. The Live Services team is rolling in dough to provide tons of new enhancements to the new NXE over the next year. The Hardware team is also now profiting and thus working on new revisions that improve quality, add features like HDMI and 256mb onboard flash, and shrink the system. This all will work well to keeping their system and service improving.
Is Microsoft perfect? Ohh no, definately not. As a corporation they have way too much beuracracy present to be healthy at times. Even in Xbox, it takes an extremely dedicated person to fight for and get some of the customer requested improvements into the system. In Windows it takes a new VP like they just got to improve the organization and get something like Windows 7 in development after the disaster that was Vista. But does that make them evil? Far from it. They are just another corporation of over 65,000 employees that really want to do right by their customers.
