The console market as it currently exists:

• Retailers do not generally make money on hardware.
• Software from third parties is charged a royalty.
• Online distribution is a growing but limited field.

Microsoft operates as a service/software company:

• Subscriptions.
• Services.

Microsoft does not really care about these in the console business:

• Hardware.
• End user software (Games).

Microsoft does care about these in the console business:

• Developer services in return for royalties.
• Consumer services in return for subscriptions.

So long as it connects through their services and uses their software Microsoft doesn't really care what hardware you use. The full name for the original Xbox 1 was direct X Box which was shortened to Xbox. Direct X or Direct 3d is a standard set down in agreement between ATI, Nvidia and Microsoft. The Xbox was always an extension or derivative of the Windows/Direct X platform for games and media. In fact the current Xbox 360 uses a modified version of the Windows 2000 kernel.

Consoles are dirty and proprietary things if you consider the relatively open world of the internet and computer operating systems in comparison. Its the one of the few markets in computing where dirty tricks are not only accepted, but condoned by end users and governments. One of Microsofts key reasons for entering the market is to protect their Windows empire and to do so they can design their Xbox systems however they like using whatever software they want to and exclude any company/service they want to. This means that if they want the Xbox platform to only connect to Windows mobile cell phones, they can do just that, or only connect using Windows services like messenger and Windows Live, they are doing just that.

The Xbox is merely an extension of the Windows platform and you must think of it that way. Its designed to shore up, and expand the Windows empire through proprietary systems and market expansion into the living room. Microsofts angle on business is in creating standards. The Windows, Office, Direct 3d etc standards. Their angle is always to be number one, but the question for the console market is "What are the standards Microsoft wishes to create?". Given the current developments in interconnectivity from cars to tvs which are all being computerised, the standards they would likely wish to create would likely to be a standard DRM passport for movies and music to be used anywhere, a standard user interface for computing on TVs and a standard specification for games machine.

so wat is this thread about?

Interesting read. It will be interesting to see how their huge cloud service will play into their future console offerings.

Thanks, I had a think about Microsofts direction and thats what I came up with...

What you're saying makes sense but I think you're talking about what the Xbox is for. You're not making any prediction on the future direction of the Xbox.

Wow. That was a pretty darn good read Squilliam. And I agree with all of it pretty much. However I don't think you can necessarily put it into a group of bullet points to sum it up. To say that Microsoft's plan for the 360 has been "interesting" would be a huge understatment.

Very few 1st party offerings / studios
letting their biggest 1st party studio Bungie go independant
Landind surprising and controversial partners (Sqare Enix)
Not buying 3rd parties and transforming them into 1st parties but instead buying right to the series (Halo, Gears of War) and exsclusive DLC
Not announcing huge AAA games far in advance like Sony (Killzone 2, FFXIII, etc) but insteadonly a few months before release (Gears 2)

Microsoft is a very interesting company to watch this gen and honestly i never really have any idea what they have up their sleeve

Microsoft does not really care about these in the console business:

• Hardware.
• End user software (Games).

Microsoft does care about these in the console business:

• Developer services in return for royalties.
• Consumer services in return for subscriptions.

I suppose that sounds good in theory.

But Sony and Nintendo aren't going to be offering MS customer or developer services on their console.

I don't think the PC world is much better as far as expanding their base. Windows Live subscriptions tanked, so there goes consumer services. I'm not sure what services developers by from MS, but I know it's not dozens of expensive dev kits.

So unless MS makes their own hardware, their market to sell developer and consumer service is prety limited.

Im sure microsoft goes where the money goes, i wont be surprised if i see a wii-like console from microsoft, though i dont think it will happen

Services developers get from Microsoft: Tools and a console to sell software on.

Reason why Microsoft doesn't care for hardware: They sell software platforms and services as a company. They only make the hardware because they have to. If they could get someone else to design it they would, and they are looking at using the Xbox 360 hardware in all manner of consumer devices and they don't manufacture them all.

Hmm. NVidia wasn't very important until the Riva 128... heck not really until the TNT, and that was what... DX5 era? DX3 at the least. I don't think they had much to do with DirectX in the beginning. NVidia cards were very OpenGL centric in the beginning, and remained so until only recently -- largely due to their fair number of ex-SGI employees, which have been there for eons.

Outside of that, I agree with Squilliam on almost every point. Microsoft is very bright, in the strategic sense, and they realized that the livingroom was the biggest threat to their business, and the only place where there could, one-day, be full-fledged computers that didn't run MS operating systems (unless they entered the market). With the advent of online office suites, like Sun's OpenOffice, or Google's office suite, the danger has finally materialized as a threat to Microsoft's main source of income.

They were smart to get in early, and they are most certainly here to stay.