When will Microsoft own up to the X360 bomb?

[Hotfoot]

Minor nitpick, the 360 wireless controller is $50, not $70, so it's the same cost as the PS3 controller. The full-out Wiimote with nunchuck, meanwhile, is $60 (of course, it is the more complex controller).

And I have not entirely experienced the full use of the Wiimote, I've just dabbled, but what I'd love to see is a Die by the Sword style game, where your controller is directly mapped to the sword arm and such.

Anyway, pointing out that the 360 is outclassed by PC hardware is a non-point. We've known for decades that PC gaming is technologically superior to console gaming. The console market itself has some significant flaws compared to the PC market, but it is attempting to appeal to a different demographic. I know I personally get frustrated when I install a game a day, week, or month after release and find out that I have to install a patch to get it to play. Sometimes I even have to install new drivers, uninstall other programs, or jump through other hurdles to get everything playing nicely. Sure, I can do it, but it's annoying that it's needed in order to play a game. There's something to be said for the plug and play functionality of console games, and frankly, graphics-wise the differences between the current generation of consoles and modern gaming PCs is diminishing. It's not gone, not by a long shot, but let's be honest, how many games can your average gamer run at HDTV resolutions with all the bells and whistles turned up? The answer is not that many.

I have a gaming laptop that, for all intents and purposes, beats the living hell out of my desktop. Yet when I hooked it up to an HDTV to try and see a sweet 60" game of Company of Heroes and Medieval Total War going, I was sorely disappointed to see that both games showed significant chug when displaying at the appropriate resolutions with all the little graphical bells and whistles going at full. Yet when I hooked a 360 up to it, it was smooth as could be for the games I played on it, and of course looked fantastic.

It also is good to remember that the price of the PC hardware that can clearly outclass consoles is significant. A top-end graphics card can cost as much as a top-end PS3 after all, to say nothing of the mobo, processors, RAM, HDDs, and so on. Sure, it's useful for more than just gaming, but with a very few professional applications, all of that extra hardware is useless for most uses people have for PCs (word processing, email, surfing, etc.). Those tasks can easily be done with a $500 idiot box or the PCs a hardcore gamer discards.

Personally, my rule on hardware and consoles is that I won't buy anything until it's been around for about a year. Once it survives that long, most of the kinks have been worked out and it will be worth picking up, and of course the price usually drops.

Now, if you're incessantly frugal, then yes, it pays to wait until the console generation is nearly over before buying a system, because the prices will approach $100-200 and there will be a large library of games to choose from. This is fantastic for students and other people who have lots of free time but very little extra cash, but it's been my experience that as you get older and have more responsibilities and less time, you can afford to spend a little extra money so you can do what you want to do now as opposed to later.

[Arthur_Tuxedo]

It's not a non-point when it's more expensive than previous gens, and yet the PC's caught up faster than ever. The SNES and Genesis had superior graphics and sound to the PC for years. The PS was superior for months, as was the Dreamcast. This is not exactly encouraging, but at least it's better than the 360, which was outclassed by PC's the day it came out. For $100 extra, you expect more, not less. Especially since I can spec out a killer gaming rig on Newegg for $830 incl' tax and shipping that features an A64 X2 5600+, 2 gigs of RAM, and an 8800 GTS 320 MB. It was not my intention to rehash the old PC vs. console argument, but to point out that these consoles have been outclassed faster than ever, and the price difference between PC and console is smaller than ever. That translates to less value for the dollar compared to previous gens, which is what I was comparing it to.

If MS had made the Premium model the only model at $300, I think the 360 situation would be very different right now than it is. After Sony satisfied its curiosity about what shit tastes like, and with the Wii off in left field, MS might have had the next PS2 on their hands. Instead they tried to jack up the price and sent any hopes of a truly successful console for this round down the drain.

[Praxis]

That the Xbox didn't sell well in Japan hardly matters because it's selling well in Europe and North America, both of which are much larger markets than Japan alone.

Is it?

We know that Microsoft has been overstuffing the retail outlets so they can claim higher numbers. Their 'sold' numbers are how many they sold to retail, but every Best Buy in town here has 20 or 30 XBox 360s if not more; I've seen pyramids.

http://www.informationarbitrage.com/200 ... phili.html

Read that article. A tiny tidbit from it:

Microsoft reported earnings this evening, and with it, they announced their actual results for XBox 360 sales over Christmas. The good news: Microsoft shipped 4.4 million XBox 360 units in the fourth calendar quarter of 2006. The bad news: the company only expect to sell another 1.6 million by July 1, lowering its projection of 13 to 15 million down to only about 12 million. These numbers nicely confirm Blackfriars' earlier prediction that Microsoft was shipping excess XBox 360 consoles to retailers to make its 10 million XBox's sold by the end of 2006.

Microsoft's actual sales numbers aren't near 10 million yet; that's just how many they've stuffed in the retail channels.


From a market perspective, the XBox 360 is doing better than any console Microsoft has ever sold, but it's only doing 'okay'. It's not going to approach the level of sales the PS2 did. However, the Wii is just doing spectacular.

From a business perspective, the XBox 360 is just a huge loss making machine.

[Hamel]

edit:

[Hotfoot]

It's not a non-point when it's more expensive than previous gens, and yet the PC's caught up faster than ever.

Caught up how? Moore's law has already failed, and when you need a $3000 PC to gain a noticable graphics improvement over a $400 console, you've already lost the argument. That's a $1000 increase on the PC end to maintain the superiority they enjoyed at $1500-$2000 dollars, while the Xbox is a mere $100 more than most of the previous generations.

The SNES and Genesis had superior graphics and sound to the PC for years. The PS was superior for months, as was the Dreamcast. This is not exactly encouraging, but at least it's better than the 360, which was outclassed by PC's the day it came out.

Well golly gosh, do you think that might be because consoles need to freeze hardware before release to allow their game developers time to work with it? If you buy a top of the line graphics card for a PC, you could wait for up to a year for its resources to be used to full effect in a game, much less used at all.

For $100 extra, you expect more, not less. Especially since I can spec out a killer gaming rig on Newegg for $830 incl' tax and shipping that features an A64 X2 5600+, 2 gigs of RAM, and an 8800 GTS 320 MB.

Will that system work right on delivery, already assembled? Or are you buying components and banking that you have time and skill to put it all together right the first time? For a pre-built custom PC with top of the line hardware capable of blowing away current console graphics, you're going to be spending a hell of a lot more than $830. The GAP between graphics on console and PCs is narrowing. How fucking hard is that to understand? Previous consoles could only reach resolutions of 480. I don't think I have to paint you a picture of how an increase to 1080 widescreen is significant in itself, along with all of the other nice little graphical touches. To run every modern game on a PC at that resolution, you need a monster machine, wheras in the past PCs could easily run games made for consoles at HIGHER RESOLUTIONS without problems. Is that so hard to grasp? I'm not saying consoles have surpassed PCs, but the gap IS closing, and you're blind if you can't see that for yourself. In case you haven't noticed, graphics are starting to plateau as is, no matter what system you're running.

It was not my intention to rehash the old PC vs. console argument, but to point out that these consoles have been outclassed faster than ever, and the price difference between PC and console is smaller than ever. That translates to less value for the dollar compared to previous gens, which is what I was comparing it to.

Oh come on. The PS2 was obsolete before it was released, as was the Xbox1 and Gamecube. The freaking Dreamcast fits the bill too, and the PS1 was pretty far behind as well. Once 3D cards hit the market for PCs, consoles got left far, far behind. Seriously, even the Dreamcast wasn't ahead of the PC market. Oh look, a 200mhz CPU in 1998! My PC back then had a 333mhz processor, more RAM, and a better graphics card, and it was a mid-range PC at the time. High end PCs were double the machine the Dreamcast was, so let's stop with the bullshit. The only time that consoles were significantly better than desktop PCs was in the SNES era and earlier. After that, PCs took off, especially once pentium chips and graphics cards hit the shelves.

If MS had made the Premium model the only model at $300, I think the 360 situation would be very different right now than it is. After Sony satisfied its curiosity about what shit tastes like, and with the Wii off in left field, MS might have had the next PS2 on their hands. Instead they tried to jack up the price and sent any hopes of a truly successful console for this round down the drain.

That may be, but frankly I've never liked the way that consoles eat a loss selling the hardware to make more money with the software. I've always thought the process to be somewhat deceptive, so I'm not going to shed tears when console companies raise prices in order to stop taking the same sort of losses they did when they were directly competing with computer games.

[Hotfoot]

That the Xbox didn't sell well in Japan hardly matters because it's selling well in Europe and North America, both of which are much larger markets than Japan alone.

Is it?

We know that Microsoft has been overstuffing the retail outlets so they can claim higher numbers. Their 'sold' numbers are how many they sold to retail, but every Best Buy in town here has 20 or 30 XBox 360s if not more; I've seen pyramids.

So...wait, because Microsoft can more than meet demand, this means it's not selling? Do I need to remind you that the top selling console on the weekend of the release of the PS3 and Wii was the Xbox 360? I guess the fact that they kept stock flowing through that means that they didn't actually sell anything. In order to be a success, you have to be constantly out of stock like the Wii, right?

By that watermark, the PS2 is selling like shit too. Funny how the fact that there is more supplied than sold doesn't mean automatic failure.

http://www.informationarbitrage.com/200 ... phili.html

Read that article. A tiny tidbit from it:

Microsoft reported earnings this evening, and with it, they announced their actual results for XBox 360 sales over Christmas. The good news: Microsoft shipped 4.4 million XBox 360 units in the fourth calendar quarter of 2006. The bad news: the company only expect to sell another 1.6 million by July 1, lowering its projection of 13 to 15 million down to only about 12 million. These numbers nicely confirm Blackfriars' earlier prediction that Microsoft was shipping excess XBox 360 consoles to retailers to make its 10 million XBox's sold by the end of 2006.

Microsoft's actual sales numbers aren't near 10 million yet; that's just how many they've stuffed in the retail channels.

Okay. And your point is? I've said it before, putting more in the stores is only going to help when the fratboy demographic that have been waiting for Halo 3 before getting an 360 storm their local Best Buys for the only other thing they like nearly as much as beer.

From a market perspective, the XBox 360 is doing better than any console Microsoft has ever sold, but it's only doing 'okay'. It's not going to approach the level of sales the PS2 did. However, the Wii is just doing spectacular.

The PS2 had a long history with the PS1 to build a significant consumer base. Note that even with the success of the PS1 and PS2, the PS3 has fallen flat on its face. Meanwhile, the 360 is chugging along rather well, and should turn a profit on the loss of the original Xbox's development by the end of the year. That's not a small feat, given the amount of money Microsoft threw at the project.

And yes, the Wii is a breakaway success beyond the expectations of pretty much anyone. However, in this world, the one we like to call "reality", there's a magical place between "selling like mad" and "not selling well". It's called "selling well".

From a business perspective, the XBox 360 is just a huge loss making machine.

That's funny, because that's what I'd call the PS3, which managed to take a wildly successful entertainment department and drive it into the ground, while the 360, by all accounts, is bringing Microsoft out of the hole it dug back with the original Xbox. Do I have to AGAIN point out that the original plan with the Xbox was not to turn significant profit until after 2010? The fact that it's poised to do so by the end of 2007 says to me that it's doing reasonably well for itself.

The fact of the matter is that Microsoft is making money from the 360, it's not this magical black hole that keeps sucking down more and more money like a lot of people seem to think it is. Just because it's not selling at breakneck speeds doesn't change this.

If the 360 can turn a full profit for the Xbox project by the end of the year, it's made a place in the console market for itself, regardless if it "wins" this generation or not. If it can't, then Microsoft might have to rethink its strategy for the console market.

[Vendetta]

Is it?

We know that Microsoft has been overstuffing the retail outlets so they can claim higher numbers. Their 'sold' numbers are how many they sold to retail, but every Best Buy in town here has 20 or 30 XBox 360s if not more; I've seen pyramids.

VGchartz claims that Microsoft's actual sellthrough to end users is 9.7 million. It's not that surprising that they have shipped 300,000 more than that worldwide, since they are probably selling in several tens of thousands of retailers globally, all of whom need regular stock.

Remember, as well, that in February 07 there were 250,000 xbox 360s bought in the US market alone, so that supposed "overstuffing" you're talking about only actually represents one month's sales in one region.

[Praxis]

Meanwhile, the 360 is chugging along rather well, and should turn a profit on the loss of the original Xbox's development by the end of the year. That's not a small feat, given the amount of money Microsoft threw at the project.
...


If the 360 can turn a full profit for the Xbox project by the end of the year, it's made a place in the console market for itself, regardless if it "wins" this generation or not. If it can't, then Microsoft might have to rethink its strategy for the console market.

If Microsoft can turn $5 billion dollar profit in 8 months, I'll gladly concede they did well.

But you're insane if you honestly think they can make that kind of money in that short a time.

The point is that the XBox 360 is not selling spectacularly...it's selling at 'okay' rates. This would be fine if the system sold at break-even or for-profit, but when you sell a system for a loss you need it to sell spectacularly to be able to profit off the user base.

[Vendetta]

If Microsoft can turn $5 billion dollar profit in 8 months, I'll gladly concede they did well.

Whilst they won't turn the gaming division around as a net profit to the corporation anytime soon, they have an operating profit of $4 billion per quarter as a corporation, so the price they are paying to have a media centre extender in the living room is piffling.

[Praxis]

Is it?

We know that Microsoft has been overstuffing the retail outlets so they can claim higher numbers. Their 'sold' numbers are how many they sold to retail, but every Best Buy in town here has 20 or 30 XBox 360s if not more; I've seen pyramids.

VGchartz claims that Microsoft's actual sellthrough to end users is 9.7 million. It's not that surprising that they have shipped 300,000 more than that worldwide, since they are probably selling in several tens of thousands of retailers globally, all of whom need regular stock.

Remember, as well, that in February 07 there were 250,000 xbox 360s bought in the US market alone, so that supposed "overstuffing" you're talking about only actually represents one month's sales in one region.

Except that Microsoft claimed 10 million sold by the end of 2006, so EVEN IF we assume VGChartz is correct (and we know that they base their numbers in part by the numbers the manufacturer's release, and Microsoft releases "sold to retail" numbers instead of sold), Microsoft have still not sold their 10 million shipped stock four months later. They've also lowered their estimate from 15 to 12 million shipped by June, so they are clearly slowing down the shipments.

Whilst they won't turn the gaming division around as a net profit to the corporation anytime soon, they have an operating profit of $4 billion per quarter as a corporation, so the price they are paying to have a media centre extender in the living room is piffling.

Did you read the context of my post? I was replying to the claim that the XBox 360 might be able to turn around and make back all the money lost on the XBox division by the end of the year. Not Microsoft as a whole.

[Hotfoot]

If Microsoft can turn $5 billion dollar profit in 8 months, I'll gladly concede they did well.

But you're insane if you honestly think they can make that kind of money in that short a time.

What, do you honestly think that the Xbox project hasn't been making ANY profit? Did you miss the fact that they turned a profit back in early 2005? I may not have all the details, but it seems to me like they've been building things up to turn the gaming department around early. The sources I've seen indicate Q3 2007, but realistically Q4 would seem to make more sense once you factor in Christmas sales. Now, I might be wrong, but so far nobody has given me reason to assume that is the case. In any case, we'll certainly find out come year end, but a good indication will be how well Halo 3 sells.

The point is that the XBox 360 is not selling spectacularly...it's selling at 'okay' rates. This would be fine if the system sold at break-even or for-profit, but when you sell a system for a loss you need it to sell spectacularly to be able to profit off the user base.

If that's the case, then there should only ever be one winner in any console war, and the other companies should all fade away into obscurity. Clearly, this does not happen. Every console company has, for years, sold consoles at a loss. The only change to this trend has been with the Wii, which has by all accounts has surpassed anyone's expectations or projections.

The key thing here that seperates Microsoft from the other console companies is that they had to do force through their first console in a very short period of time and basically force their way into the market in order to get noticed and gain a consumer base.

[Arthur_Tuxedo]

It's not a non-point when it's more expensive than previous gens, and yet the PC's caught up faster than ever.

Caught up how? Moore's law has already failed, and when you need a $3000 PC to gain a noticable graphics improvement over a $400 console, you've already lost the argument. That's a $1000 increase on the PC end to maintain the superiority they enjoyed at $1500-$2000 dollars, while the Xbox is a mere $100 more than most of the previous generations.

You've lost me here. Are you suggesting that PC's have become more expensive? While it's true that there's an ultra high-end that didn't exist before and you can conceivably spend more on a PC than you could before, the price of entry for components that will satisfy most serious gamers has dropped precipitously. Sure, you can easily blow 3 grand on a new PC nowadays, but you can also spend a lot less and get most of the performance.

The SNES and Genesis had superior graphics and sound to the PC for years. The PS was superior for months, as was the Dreamcast. This is not exactly encouraging, but at least it's better than the 360, which was outclassed by PC's the day it came out.

Well golly gosh, do you think that might be because consoles need to freeze hardware before release to allow their game developers time to work with it? If you buy a top of the line graphics card for a PC, you could wait for up to a year for its resources to be used to full effect in a game, much less used at all.

True, but sparing no expense on a new PC that's just going to be obsolete in 6 months is foolish. I was comparing consoles against PC's with more sensible performance parts, such as the 8800 GTS 320 instead of the 8800 GTX.

For $100 extra, you expect more, not less. Especially since I can spec out a killer gaming rig on Newegg for $830 incl' tax and shipping that features an A64 X2 5600+, 2 gigs of RAM, and an 8800 GTS 320 MB.

Will that system work right on delivery, already assembled? Or are you buying components and banking that you have time and skill to put it all together right the first time? For a pre-built custom PC with top of the line hardware capable of blowing away current console graphics, you're going to be spending a hell of a lot more than $830.

This is all getting rather tangential. I was criticizing the 360, not rehashing the PC vs. console debate, and certainly not starting one about prebuilt vs. self-assembled. The only point I was making was that PC components have gotten cheaper while the 360 is more expensive.

The GAP between graphics on console and PCs is narrowing. How fucking hard is that to understand? Previous consoles could only reach resolutions of 480. I don't think I have to paint you a picture of how an increase to 1080 widescreen is significant in itself, along with all of the other nice little graphical touches. To run every modern game on a PC at that resolution, you need a monster machine, wheras in the past PCs could easily run games made for consoles at HIGHER RESOLUTIONS without problems. Is that so hard to grasp? I'm not saying consoles have surpassed PCs, but the gap IS closing, and you're blind if you can't see that for yourself. In case you haven't noticed, graphics are starting to plateau as is, no matter what system you're running.

I will conceed the resolution issue, and I never argued against the notion that modern games take a lot more hardware to effect smaller and smaller changes, but one still needs to question why MS didn't cut the price down to $300 if there wouldn't have been much graphical difference from a slightly weaker GPU and CPU anyway.

It was not my intention to rehash the old PC vs. console argument, but to point out that these consoles have been outclassed faster than ever, and the price difference between PC and console is smaller than ever. That translates to less value for the dollar compared to previous gens, which is what I was comparing it to.

Oh come on. The PS2 was obsolete before it was released, as was the Xbox1 and Gamecube. The freaking Dreamcast fits the bill too, and the PS1 was pretty far behind as well. Once 3D cards hit the market for PCs, consoles got left far, far behind. Seriously, even the Dreamcast wasn't ahead of the PC market. Oh look, a 200mhz CPU in 1998! My PC back then had a 333mhz processor, more RAM, and a better graphics card, and it was a mid-range PC at the time. High end PCs were double the machine the Dreamcast was, so let's stop with the bullshit. The only time that consoles were significantly better than desktop PCs was in the SNES era and earlier. After that, PCs took off, especially once pentium chips and graphics cards hit the shelves.

I do remember the PS being superior even to PC's with 3D accelerators until the 3dfx Voodoo hit, but I conceed about the Dreamcast.

If MS had made the Premium model the only model at $300, I think the 360 situation would be very different right now than it is. After Sony satisfied its curiosity about what shit tastes like, and with the Wii off in left field, MS might have had the next PS2 on their hands. Instead they tried to jack up the price and sent any hopes of a truly successful console for this round down the drain.

That may be, but frankly I've never liked the way that consoles eat a loss selling the hardware to make more money with the software. I've always thought the process to be somewhat deceptive, so I'm not going to shed tears when console companies raise prices in order to stop taking the same sort of losses they did when they were directly competing with computer games.

I don't think MS wanted a repeat of the XBox, so I doubt they would have been willing to double their per-unit loss. I was saying that they would have been better off downgrading the specs so they could sell at $300. Actually, if they had licensed a variation on the Core 2 processor instead of a customized 3-core inline IBM chip, that probably would have saved them a lot right there.

[Vendetta]

Did you read the context of my post? I was replying to the claim that the XBox 360 might be able to turn around and make back all the money lost on the XBox division by the end of the year. Not Microsoft as a whole.

Yes, you'll also note that I specifically agreed with you. However, the fact that the Xbox division loses a billion dollars a year is not relevant whilst it provides a resource that can be leveraged in the home operating system market, a media centre extender. (Hell, I even shelled out for Connect 360 so I can use that function with OSX, If I could afford one I would seriously be considering an MCPC specifically to use with my Xbox as an extender to my TV)

At the end of the day, Microsoft were in the position before the Xbox was greenlit that they knew that it was going to cost them billions of dollars, but they made the decision that it was worth spending that much to obtain the subsidiary benefits. In fact, in "Xbox 360 Uncloaked" the level of financial commitment Microsoft are willing to make was figured at a seventeen billion dollar loss over the next ten years, on top of the existing loss made on the original Xbox. That was what Microsoft were willing to spend, out of pocket, on getting Xbox 360s in homes. The fact that they are making losses is unsurprising, the fact that their losses have been so small is the only surprise.

[Hotfoot]

You've lost me here. Are you suggesting that PC's have become more expensive? While it's true that there's an ultra high-end that didn't exist before and you can conceivably spend more on a PC than you could before, the price of entry for components that will satisfy most serious gamers has dropped precipitously. Sure, you can easily blow 3 grand on a new PC nowadays, but you can also spend a lot less and get most of the performance.

No, I'm saying to get the same sort of increase over console graphics, you have to spend MORE. The gap between console and PC graphics quality is less than it was before. From the PS1 on, PC's have traditionally been capable of better than twice the graphical performance than consoles. That is no longer the case unless you spend much more money than before.

True, but sparing no expense on a new PC that's just going to be obsolete in 6 months is foolish. I was comparing consoles against PC's with more sensible performance parts, such as the 8800 GTS 320 instead of the 8800 GTX.

Okay. Now show that the setup you've created is capable of more than twice the resolution of the PS3 and 360.

This is all getting rather tangential. I was criticizing the 360, not rehashing the PC vs. console debate, and certainly not starting one about prebuilt vs. self-assembled.

You were criticizing the 360 by comparing it to PCs. You're a moron if you don't think that IS bringing up the whole console vs. PC debate again. You can't get away from the can of worms you've opened by claiming it's not what you meant to do. First off, it clearly IS what you meant to do, or you wouldn't have made the comparison.

The only point I was making was that PC components have gotten cheaper while the 360 is more expensive.

No. It. Is. Not. How can I best explain this to you? For decades, console companies have sold their hardware at a loss in order to compete with the PC market. The only possible point that follows is that PC costs go down over time much more rapidly than console prices do. The fact of the matter is that the costs for both go down over time, but it's not as noticable on consoles because they have to get through the cost they ate at launch first before they can realistically afford to lower the prices for the consumer.

The idea that $300 should be a solid price point for consoles from now until the end of time is retarded anyway, since inflation will force prices up over time anyway.

I will conceed the resolution issue, and I never argued against the notion that modern games take a lot more hardware to effect smaller and smaller changes, but one still needs to question why MS didn't cut the price down to $300 if there wouldn't have been much graphical difference from a slightly weaker GPU and CPU anyway.

....WHAT? Did you not catch the part about how pumping the resolution requires more hardware that will cost more? The Core system was $300, by the by, the big difference between it and the Premium system being the hard drive.

I do remember the PS being superior even to PC's with 3D accelerators until the 3dfx Voodoo hit, but I conceed about the Dreamcast.

PS1 was in 1994. It's processor was less than half the speed of existing Pentium processors. You fail.

I don't think MS wanted a repeat of the XBox, so I doubt they would have been willing to double their per-unit loss. I was saying that they would have been better off downgrading the specs so they could sell at $300. Actually, if they had licensed a variation on the Core 2 processor instead of a customized 3-core inline IBM chip, that probably would have saved them a lot right there.

They downgrade the specs, they lose the reason for coming out with the next generation when they did. Now, pray tell, how would Microsoft bend time to get the Core 2 processor back in 2005?

[Arthur_Tuxedo]

You've lost me here. Are you suggesting that PC's have become more expensive? While it's true that there's an ultra high-end that didn't exist before and you can conceivably spend more on a PC than you could before, the price of entry for components that will satisfy most serious gamers has dropped precipitously. Sure, you can easily blow 3 grand on a new PC nowadays, but you can also spend a lot less and get most of the performance.

No, I'm saying to get the same sort of increase over console graphics, you have to spend MORE. The gap between console and PC graphics quality is less than it was before. From the PS1 on, PC's have traditionally been capable of better than twice the graphical performance than consoles. That is no longer the case unless you spend much more money than before.

Most console games run at 720P, which is roughly equivalent to 1024 x 768, or 1080i, which isn't much better, so there's still a sizable resolution difference, but I do agree that this will disappear once 360 games start running at 1080P. However, once you make the Hi-Def argument, you have to factor in the cost of an HDTV or a monitor with 360-compatible VGA or DVI cables, so I still wouldn't say that bang for buck on consoles has increased.

The only point I was making was that PC components have gotten cheaper while the 360 is more expensive.

No. It. Is. Not. How can I best explain this to you? For decades, console companies have sold their hardware at a loss in order to compete with the PC market. The only possible point that follows is that PC costs go down over time much more rapidly than console prices do. The fact of the matter is that the costs for both go down over time, but it's not as noticable on consoles because they have to get through the cost they ate at launch first before they can realistically afford to lower the prices for the consumer.

The idea that $300 should be a solid price point for consoles from now until the end of time is retarded anyway, since inflation will force prices up over time anyway.

Never said that $300 should be the ideal point for all time, only that the 360's sales have shown that it's still the ideal point right now. The buying public doesn't care about subsidized hardware and R&D costs, they just care that they're willing to pay $300 and the thing costs $400.

I will conceed the resolution issue, and I never argued against the notion that modern games take a lot more hardware to effect smaller and smaller changes, but one still needs to question why MS didn't cut the price down to $300 if there wouldn't have been much graphical difference from a slightly weaker GPU and CPU anyway.

....WHAT? Did you not catch the part about how pumping the resolution requires more hardware that will cost more? The Core system was $300, by the by, the big difference between it and the Premium system being the hard drive.

Yes, but the differences between hardware are smaller. They could have made a big savings by taking a comparatively small hit in graphical quality in order to hit that $300 price point, and I bet they would have done a lot better.

I do remember the PS being superior even to PC's with 3D accelerators until the 3dfx Voodoo hit, but I conceed about the Dreamcast.

PS1 was in 1994. It's processor was less than half the speed of existing Pentium processors. You fail.

I'll conceed that. The point is that the main reason the 360 hasn't been a runaway success is that it's too expensive. The other arguments are just window dressing.

I don't think MS wanted a repeat of the XBox, so I doubt they would have been willing to double their per-unit loss. I was saying that they would have been better off downgrading the specs so they could sell at $300. Actually, if they had licensed a variation on the Core 2 processor instead of a customized 3-core inline IBM chip, that probably would have saved them a lot right there.

They downgrade the specs, they lose the reason for coming out with the next generation when they did. Now, pray tell, how would Microsoft bend time to get the Core 2 processor back in 2005?

I shouldn't have said Core 2, but they none-the-less should have licensed an off-the-shelf processor instead of having a custom one developed. It's not like the 360's CPU is some behemoth that blew the A64 X2 out of the water, so what was the point of spending all that R&D?

[Hotfoot]

Most console games run at 720P, which is roughly equivalent to 1024 x 768, or 1080i, which isn't much better, so there's still a sizable resolution difference, but I do agree that this will disappear once 360 games start running at 1080P. However, once you make the Hi-Def argument, you have to factor in the cost of an HDTV or a monitor with 360-compatible VGA or DVI cables, so I still wouldn't say that bang for buck on consoles has increased.

Remember, you're not just increasing the overall resolution density, but also the aspect ratio. HDTVs are getting cheaper, of course, and depending on the size you get, it's not going to be much more expensive than an equivilent LCD screen for a PC.

Never said that $300 should be the ideal point for all time, only that the 360's sales have shown that it's still the ideal point right now. The buying public doesn't care about subsidized hardware and R&D costs, they just care that they're willing to pay $300 and the thing costs $400.

Remember there is a $300 version, but most people see it as "gimped", even though it is upgradable. You're right in that the two version thing was pretty stupid, and I'm not happy about the magic third version they're coming out with, but meh. Slowly, the PC and console markets are coming back together again, and soon we'll be able to order an Xbox 3000 with various bells and whistles.

Okay, well, maybe not soon, but that's the way things seem to be going.

Still, enough people seem to be buying it for it to be doing well for itself.

Yes, but the differences between hardware are smaller. They could have made a big savings by taking a comparatively small hit in graphical quality in order to hit that $300 price point, and I bet they would have done a lot better.

Maybe, but I'm thinking not. They had to make it powerful enough to get Sony shaking in its boots. By upping the bar, they intimidated Sony into trying to beat them, a move that's worked pretty well for Microsoft so far. Remember, they're not just playing the consumers, they're playing their competitors.

I'll conceed that. The point is that the main reason the 360 hasn't been a runaway success is that it's too expensive. The other arguments are just window dressing.

Honestly, I didn't expect any of the consoles to be runaway successes this time around. I expected a solid showing from Microsoft and Nintendo, with a weak entry from Sony. That Nintendo broke away and is off so far into the lead is something that really nobody expected, but then Nintendo took a big gamble and broke from the herd in a serious fashion. If the Wiimote didn't work as intended and had been as much of a gimmick as people had expected, we'd probably see Nintendo surviving almost entirely on the DS.

I shouldn't have said Core 2, but they none-the-less should have licensed an off-the-shelf processor instead of having a custom one developed. It's not like the 360's CPU is some behemoth that blew the A64 X2 out of the water, so what was the point of spending all that R&D?

Yeah, using existing technology would have probably been preferable, but I can see why they would want to make proprietary tech to go with the 360. Still, even the AMD X2 didn't come out until mid-year 2005, which was a little late for the development of the 360. At the very least, it's nowhere near as bad as the Cell fiasco.

[DPDarkPrimus]

If the Wiimote didn't work as intended and had been as much of a gimmick as people had expected, we'd probably see Nintendo surviving almost entirely on the DS.

Of course, Nintendo already survived on it's handheld division during most of the GC era.

[Praxis]

If the Wiimote didn't work as intended and had been as much of a gimmick as people had expected, we'd probably see Nintendo surviving almost entirely on the DS.

Of course, Nintendo already survived on it's handheld division during most of the GC era.

I wouldn't use the word survived...despite lackluster sales (it 'only' sold as well as the XBox, which compared to the PS2, was abysmal), it was still profitable, so even without the handheld division Nintendo would have made more money than lost.

[Darth Wong]

Same old argument, dressed up with a new article.

Obviously, you don't know how to read. It's about whether the whole Xbox project has been a financially successful business venture, not the usual gamers' wankery about which console is doing the best.

Funny, I was certain I noted those points in my response. In fact, I'm pretty sure that was the bulk of my response. The argument that the Xbox project continues to be a financial failure for Microsoft is NOT a new one, and has been repeated over and over again here and elsewhere.

Hey fucktard, saying that an argument is not new is not the same thing as refuting it.

It's common knowledge that Microsoft planned to take a loss with the Xbox line and was more interested in how things looked at the end of it all rather than immediate returns.

So? The same thing could be said of the Iraq war. The point is not whether they expected initial losses at all, but whether their initial and continuing losses are greater than expected, and greater than one would have wanted for this venture, and how long it's going to take to climb out of the hole. Once again, I have to ask whether you know how to read.

[Ace Pace]

So lets see, Microsoft dumped $4-5bn over 5 years?

Sony just dumped 1.7 billion in a single year.

[Hotfoot]

Hey fucktard, saying that an argument is not new is not the same thing as refuting it.

Agreed. However, that one line was not the entirety of my post, now was it? Are you responding to my entire post, or just that one line, taken out of context? Because right now it sure as hell looks like the latter.

So? The same thing could be said of the Iraq war. The point is not whether they expected initial losses at all, but whether their initial and continuing losses are greater than expected, and greater than one would have wanted for this venture, and how long it's going to take to climb out of the hole. Once again, I have to ask whether you know how to read.

Given that original expectations didn't show Microsoft making a significant profit for twenty years and current expectations show potentially making a profit in less than a decade, I'd say it's doing reasonably well for itself.

[Ace Pace]

I guess it does help to follow up stories.

Selectively quoting interesting parts.
First off, Sony pays MS back for 'ruining' the EU launch.

Roger Ehrenberg, financial analyst and president of investment firm Monitor110 asks, “When will Microsoft own up to the Xbox 360 bomb?” in a new article (which incidentally was forwarded to Next-Gen by Sony Computer Entertainment America PR).

Now then.

A prepared statement from Microsoft reaffirmed the company’s forecasts for the Xbox business:

The Xbox business is in a great position to secure long term success and profitability, and we are pleased with performance and momentum to date. We are managing the Xbox business to achieve our target of profitability in FY08 and in the short-term, this means we will optimize for profitability rather than share. We believe this puts us in a strong market and financial position as we go into FY08, a year that will feature a number of catalysts, highlighted by the strongest first and third party game line up we’ve ever had.

Currently, Xbox 360 is available in more than 37 markets around the world and we expect to exit June having sold about 12 million units since launch. We continue to maintain our record-setting software attach rate – currently at 5.4 games per console – and expect more than 300 high-definition titles by end of year.


The company recently cut its total hardware shipment estimates for the Xbox 360 from 13-15 million units to 12 million by the end of the fiscal year on June 30, presumably to help achieve profitability on target as opposed to eating more manufacturing costs in a massive effort to increase market share, as outlined above.

It’s hard to argue against Microsoft’s claim that it has surpassed its personal best regarding its first and third party software lineup. Previously released titles and franchises like Gears of War, Call of Duty, Guitar Hero II, Dead Rising, Lost Planet, Need for Speed, Madden, Ghost Recon Advanced Warfighter, The Elder Scrolls IV: Oblivion and Saints Row are some of the games that have not only helped Microsoft, but also third party publishers who have raked in millions of dollars in revenue from Xbox 360 software.

But as Ehrenberg points out, the Xbox business is still a money-loser.

Other analysts optimistic of Xbox 360

The original Xbox launched way back in November 2001. Is it really that wrong for investors and industry watchers to expect Microsoft’s games business to be profitable?

Wedbush Morgan Securities analyst Michael Pachter says that deeming the Xbox 360 a “disastrous endeavor” is premature, nonetheless.

“Microsoft clearly planned to spend several billions of dollars to establish a sustainable position in home entertainment,” Pachter wrote in an e-mail. “It's premature to conclude that it has or has not worked. I would say that if they end up with 30 percent share or more of the US and European console market (virtually a certainty), they will have succeeded wildly. It's very tough to determine what their share of revenues from downloadable content will be, as the market is in its infancy. The same is true of in-game advertising.”

Pachter added that he expects Microsoft to generate a sustainable revenue stream from its 6 million-user strong Xbox Live online platform “likely in the $200 million or more range.”

He continues, “I also see game royalties growing to over $1 billion annually, and first party software sales of at least $500 million annually. In other words, Microsoft should see profitable revenues of $1.5 - 2 billion annually by 2010, so their ‘investment’ of several billion dollars will ultimately pay off. It's way too early to call their investment a ‘disaster’, and probably unfair.

“I think [Ehrenberg's] right to point out the cost of entering the market, but I question his conclusion that the costs are not justified,” Pachter said.

A.G. Edwards analyst Bill Kreher also said that the Xbox 360’s standing isn’t as disastrous as Ehrenberg implies. He pointed out how Microsoft expects the Xbox 360 to be cost neutral over its lifespan, meaning it could be sold without incurring a loss.

Kreher took particular issue with Ehrenberg’s claim that “game developers are less willing to invest in high-risk projects” on the Xbox 360. “By holiday '06 Microsoft already had a deep library of over 160 titles available at retail, including Epic's killer app Gears of War," Kreher said. "We expect Xbox 360 sales to do well at retail this holiday aided by the highly anticipated Halo 3 and GTA IV exclusive content.”

[Praxis]

If Microsoft can turn $5 billion dollar profit in 8 months, I'll gladly concede they did well.

But you're insane if you honestly think they can make that kind of money in that short a time.

What, do you honestly think that the Xbox project hasn't been making ANY profit? Did you miss the fact that they turned a profit back in early 2005? I may not have all the details, but it seems to me like they've been building things up to turn the gaming department around early. The sources I've seen indicate Q3 2007, but realistically Q4 would seem to make more sense once you factor in Christmas sales. Now, I might be wrong, but so far nobody has given me reason to assume that is the case. In any case, we'll certainly find out come year end, but a good indication will be how well Halo 3 sells.

They turned a small profit one quarter, which didn't come close to paying for the loss of the previous quarter. The XBox 360 has just been moer losses since then.

Yes, it's very likely they will make a profit in Q4 2007 with holiday season. However, it's not likely to be a $5 billion dollar profit; that's just insane. It might be enough to make back the money lost on a SINGLE QUARTER, but not 6 years of losses.

The point is that the XBox 360 is not selling spectacularly...it's selling at 'okay' rates. This would be fine if the system sold at break-even or for-profit, but when you sell a system for a loss you need it to sell spectacularly to be able to profit off the user base.

If that's the case, then there should only ever be one winner in any console war, and the other companies should all fade away into obscurity. Clearly, this does not happen. Every console company has, for years, sold consoles at a loss. The only change to this trend has been with the Wii, which has by all accounts has surpassed anyone's expectations or projections.

The key thing here that seperates Microsoft from the other console companies is that they had to do force through their first console in a very short period of time and basically force their way into the market in order to get noticed and gain a consumer base.

Actually, it's a rather recent phenomenon. Nintendo has never sold their consoles at a loss, but rather break-even (even GameCube sold at a tiny profit); I don't believe Sega did either, IIRC it started with the PS1 or PS2.

[Praxis]

I guess it does help to follow up stories.

Selectively quoting interesting parts.
First off, Sony pays MS back for 'ruining' the EU launch.

Roger Ehrenberg, financial analyst and president of investment firm Monitor110 asks, “When will Microsoft own up to the Xbox 360 bomb?” in a new article (which incidentally was forwarded to Next-Gen by Sony Computer Entertainment America PR).

HAHAHA oh wow. Sony should be quiet. Anything that can be said about Microsoft in that article can be said tenfold about Sony this generation. We have to DEBATE whether Microsoft made good decisions or not, Sony just blatantly made bad ones.

[Hotfoot]

They turned a small profit one quarter, which didn't come close to paying for the loss of the previous quarter. The XBox 360 has just been moer losses since then.

Yes, it's very likely they will make a profit in Q4 2007 with holiday season. However, it's not likely to be a $5 billion dollar profit; that's just insane. It might be enough to make back the money lost on a SINGLE QUARTER, but not 6 years of losses.

Hey, if I'm wrong, I'm wrong. It's entirely possible I misread my sources and they were talking about short-term profits. Still, even with steady short term profits, they are showing staying power in the market. Microsoft has a big opening this round with the PS3 falling on its face like it is. If they can exploit it (which they are doing), they can carve a pretty hefty niche into the market and start working on moneyhats.

Actually, it's a rather recent phenomenon. Nintendo has never sold their consoles at a loss, but rather break-even (even GameCube sold at a tiny profit); I don't believe Sega did either, IIRC it started with the PS1 or PS2.

Actually, reports from 2001 indicate that they did sell the Gamecube at a small loss (under $20), but regardless, it's not near the "norm". Unfortunately, such data seems to be spare the further back you go. If it started with the PS1, however, that's a long term trend, as it goes back to 1994. I'm pretty sure it goes back further than that, but I don't have any reliable numbers on that mark.

However, I still maintain that just because the 360 isn't a runaway smash like the Wii, doesn't mean it's a failure, and it's certainly not a failure just because Japan didn't pick it up.

HAHAHA oh wow. Sony should be quiet. Anything that can be said about Microsoft in that article can be said tenfold about Sony this generation. We have to DEBATE whether Microsoft made good decisions or not, Sony just blatantly made bad ones.

Hehe, but seriously, a lot of the things that Sony did wrong this generation, they did at the prompting of Microsoft. I'm going to plainly state that Microsoft did some entirely assholish shit to Sony to goad them into running face first into a wall. The entire launch of the 360 was calculated to light a fire under Sony. The dualshock case was a case of Microsoft turning the tables on Sony in what they thought would be an easy case of burying the other side with money and lawyers. Even though it was likely unintentional, the fact that people were willing to pay $400 per console likely led Sony to think that any price hike would be acceptable, which of course led to Microsoft's "Buy a 360 AND a Wii".

So yeah, Sony done fucked up this round, and while people are still questioning Microsoft's place in the market (with some good reason), I still think it's way too early to call the game as a loss for the 360.

The Zune, of course, can go to hell.