Japan's Golden Week Console Sales - HW/SW

[Praxis]

Square Enix did announce a number of Final Fantasy games. Final Fantasy Dissidia, Final Fantasy Tactics PSP, and some new details on FF7: Crisis Core.

[General Zod]

I'm suprised at the PSP resurgence.

I'd imagine the price-drop to $130/$160 (I forget which) is helping PSP sales a fair bit.

[Xisiqomelir]

Ouch, getting beaten by the Game Boy Advance has to hurt.

3x in a row

[Stark]

I'd imagine the price-drop to $130/$160 (I forget which) is helping PSP sales a fair bit.

Does anyone know what the unit profit on a PSP is at the moment? Another slight price drop and people like me (who have zero interest in the game side) will buy them just for media etc. I think they're currently about AUD$299 (in other words we get totally raped, as USD$160 is AUD$220ish).

[Vendetta]

The claim is, though, that Microsoft isn't even expecting a profit on those and was instead expecting to consistently lose billions for a decade before ever turning a profit. An extremely dubious business model, IMO, given the magnitude of the losses involved.

Consider that those "losses" are spread out over 10 years, and that the corporation as a whole still makes $12 billion a year overall profit.

Bait and hook was Sony's strategy, Microsoft's is pure loss leader, get a product into living rooms in order to make money on some kind of peripherally related service (media centre, and if they can manage it, end to end IPTV).

[Master of Ossus]

Consider that those "losses" are spread out over 10 years, and that the corporation as a whole still makes $12 billion a year overall profit.

That makes it so bad, though--they not only have to, eventually, make back their losses but they also have to recover the foregone interest on their original investments. The fact that the rest of the company is making high returns almost guarantees that the money would've been better invested somewhere else, since Microsoft IS making supra-normal returns to its capital.

[Sea Skimmer]

That makes it so bad, though--they not only have to, eventually, make back their losses but they also have to recover the foregone interest on their original investments. The fact that the rest of the company is making high returns almost guarantees that the money would've been better invested somewhere else, since Microsoft IS making supra-normal returns to its capital.

Microsoft already dominates so much of the software industry I kind of wonder what else they could have spent that much money on, that would increase market share and make a profit.

I’m pretty sure Microsoft has always had a concern that in the long run consoles will become so powerful that they can directly threaten desktop computers, you really will be able to have one machine that can do everything and at a decent price. They have to be in on that market. Sure, the PS3 and 360 sure as shit can’t do this, but what about the next generation?

Computer technology isn’t going to keep leapfrogging forward like it has been, and we don’t have that much longer left before stagnation kicks in. Then its all going to be about how can package the technology best, and it would be foolish to work on that only from the desktop end. Microsoft might well have expected to make a profit by now, but this always was a very long term strategy. The costs sunk into the orginal Xbox dont even matter to them. It was just an expense to be paid.

[Darth Wong]

I wonder if this isn't just a case of MS saying "I meant to do that!" after the fact. It's hard to imagine a future MS console doing so well that it not only puts the console games division in the black, but gives an all time Return-on-Investment comparable to the company's other divisions taking the billions of losses for years into account.

I don't think that any reasonable person can possibly believe that Microsoft actually intended and planned for such a gargantuan scale of year-over-year multi-billion dollar losses over a decade and counting. However, it's possible that they're doing it not as a normal business venture but as a hedge against fears of being eclipsed by a market they do not control. In other words, the XBox is kind of like Microsoft's version of the War on Terror: they sink money into it with no regard for how much it will end up costing, because they're afraid that their world will end if they don't.

[Darth Wong]

That makes it so bad, though--they not only have to, eventually, make back their losses but they also have to recover the foregone interest on their original investments. The fact that the rest of the company is making high returns almost guarantees that the money would've been better invested somewhere else, since Microsoft IS making supra-normal returns to its capital.

Microsoft already dominates so much of the software industry I kind of wonder what else they could have spent that much money on, that would increase market share and make a profit.

They could try breaking into the CAD/CAM software market or the graphics software market. They could try taking market share away from companies like SAP or Computer Associates. They could try becoming a larger player in the software end of the game market.

Hell, considering the money they've thrown away on this project, they could have just gone nuts and started up ventures in completely unrelated markets, like firearms. "Your rifle has failed with an error code 503. Press the button behind the trigger to inform Microsoft of this error."

[Starglider]

I’m pretty sure Microsoft has always had a concern that in the long run consoles will become so powerful that they can directly threaten desktop computers, you really will be able to have one machine that can do everything and at a decent price. They have to be in on that market. Sure, the PS3 and 360 sure as shit can’t do this, but what about the next generation?

This hasn't been a power issue since at least the original X-Box. The previous console generation (PS2, Dreamcast and Gamecube) all had enough power to run a web browser, Windows and typical office/consumer media applications. The X-Box was literally a PC without a keyboard. The current generation is powerful enough to run all the software the average consumer cares about (productivity, Internet, encoding/media playing, games) as well as the average consumer PC.

The reason consoles aren't viable PC replacements are user interface (display and input), storage, connectivity (peripherals and Internet), perception, backwards compatability and licensing. The connectivity issue has gone away; all consumer grade stuff connects via USB or wi-fi these days, and all the new consoles are Internet connected. The display issue has partly gone away in that HDTVs are competitive with monitor resolutions, but a lot of people still aren't comfortable with doing web browsing and letter writing on a big screen several yards away. With HDMI it's trivial to plug a console into a normal monitor though (it's just that not many people do it). The storage issue is starting to go away, both because console hard drive sizes are increasing (and the possibility of user-upgradeable drives) and because of USB external drives. The interface issue is now just a question of plugging in a USB or bluetooth keyboard.

So really all the technical reasons are either already gone or nearly gone. That leaves perception, backwards compatability and licensing, and curiously these are the strongest reasons why consoles won't replace PCs. Replacing the PC/Windows combination is difficult due to the huge and attractive base of legacy software for it, though an x86-based console is a possibility (the first X-Box was) and software emulators/JIT compilers/virtual machines is a possibility. But what really makes a console a console is not actually the hardware, or even the positioning (see the 'media PC' trend), but the fact that you have to pay Microsoft, Sony or Nintendo a bundle of cash to develop for one and give them veto power over whether you get published. This is mandated by the console 'sell at a loss and make it up on the software' pricing model and it rules out the bulk of the traditional software industry (and just about all the smaller companies and individual developers) ever writing for consoles. There is only one really plausible way around this; pervasive Web delivery of consumer applications, bypassing the licensing requirements (while simultaneously rendering the OS and hardware mostly irrelevant). It might happen. Don't hold your breath though, the vast clouds of hype are suffocating enough as it is.

That still leaves perception. Much as Sony like to deny it, non-experts like simple black-box appliances that do one thing (or one category of task) well. Stretching 'console' to 'entertainment centre' is already pushing it. The dismal failure of WebTV is an example of pushing it too far. Most of the market want a different context for the activities they typically do on a PC and the activities they typically do on a console. The hardware should eventually converge due to it just getting so powerful that it isn't cost-effective to specialise, and cheap enough to make and design that the strict licensing and sell-at-a-loss model isn't sustainable or desirable. But that type of convergence isn't really consoles usurping the PC. On top of that there's the fact that the majority of the recent growth in the PC industry is in laptops, which consoles literally can't replace, and if you already have a laptop there's no point trying to use your console like a PC.