Console Wars IV

[Asher]

Originally posted by lord of the mark
SONY can afford the 3 billion, IIUC, they're more than making that on TV's etc. (doesnt mean its a good thing, or an "investment") The level of losses that SONY couldnt afford, I think, would be so high that MS probably wouldnt want to spend that kind of money, even though they could.

You're (surprise, surprise) hilariously misinformed.

Sony is actually losing money on both TVs and video games. They "expect" them to be profitable by March 2009.

The company as a whole is still turning a profit, but the PS3 is massively reducing this profit.

Let's compare MS and Sony.

Yearly profits (latest figures)
Sony: $369M (2.96% profit margin)
MS: $14,065M (27.51% profit margin)

Let's drill down to the latest quarter, shall we? See where we're trending.
Sony: $29M (0.64% profit margin)
MS: $4,388M (30.36% profit margin)

Now tell me, which one of these companies can play this game of selling HW for a loss on a scale the other couldn't even begin to imagine? Now that you have your answer there -- which one of the two companies is turning a profit on their console and which is losing billions?

[lord of the mark]

Hmm,

http://www.itworld.com/sony-net-profits-up-080514

Of course MS is a massively bigger player than SONY. I still think there is a limit to what MS thinks buying share is worth. And yes, I'm quite aware that MS has finally reached a quarterly positive profit on the 360.

[lord of the mark]

Originally posted by Mr Snuggles Now tell me, which one of these companies can play this game of selling HW for a loss on a scale the other couldn't even begin to imagine?

Which one is STILL trying to buy Yahoo? Which one is engaged in a battle for the internet with Google? MS has many places where they NEED to invest (or at least think they do) besides gaming.

[Krill]

Your first point is wrong LotM

[lord of the mark]

Originally posted by Krill
Your first point is wrong LotM

That theyre still trying to get Yahoo?

http://eastbay.bizjournals.com/eastbay/stories/2008/06/30/daily59.html?ana=yfcpc

http://news.yahoo.com/s/nm/20080702/wr_nm/yahoo_microsoft_dc_7

http://news.yahoo.com/s/ap/20080702/ap_on_hi_te/microsoft_yahoo_report_15

[Asher]

Originally posted by lord of the mark



Which one is STILL trying to buy Yahoo? Which one is engaged in a battle for the internet with Google? MS has many places where they NEED to invest (or at least think they do) besides gaming.

MS does not NEED to invest tens of billions or even billions to compete with Google. Ballmer looked at taking the MBA-esque lazy approach by buying Yahoo, but that's not the only way. It also doesn't preclude additional losses in the 360 division, giving the immense overall profits on a consistent basis. Google is also not necessarily a direct competitor to Microsoft. In many ways, an argument by some shareholders is being made that there's no point in competing aggressively in that segment.

Another terrible argument from you.

[Agathon]

Originally posted by lord of the mark

Of course MS is a massively bigger player than SONY. I still think there is a limit to what MS thinks buying share is worth. And yes, I'm quite aware that MS has finally reached a quarterly positive profit on the 360.

That doesn't really matter. MS is a massively bigger company than Apple, but Apple raped MS's music strategy and left it in tatters (Apple is primarily responsible for killing DRMed WMA as a format). For all their money, the best MS can do is to create a derivative player that resembles a compressed turd.

Now Apple and Google will push MS out of the mobile phone space (Windows Mobile is a stock joke). Smaller companies are often nimbler.

About the only good news for MS is that Jobs appears to be a dead man walking.

As a Forbes writer said the other day:

Under Ballmer, Microsoft is enduring one of the worst times in its history. The stock has been flat. Vista, the latest version of Windows, has been such a disastrous technical flop that Microsofties themselves are said to refer to it under their breath as "Vistaster." (A recent industry study suggested that only 26% of business customers will have switched to Vista four years after its 2007 launch.) Ballmer's recent failed attempt to acquire Yahoo ended up making Microsoft look clumsy, weak and ridiculous. Twenty years ago Microsoft's young Turks loved to mock the clueless old backslappers who ran IBM. Today upstarts see Microsoft as a sad old bully that makes lousy software.

The Xbox is a North American thing. No-one else really cares. Despite all the hoo-haa Microsoft hasn't managed to break out of North America, which is a relatively static market.

I think it would be funny if MS bought Yahoo. They wreck it just like they wrecked Hotmail.

[Asher]

It's funny that MS has record revenues and it's still one of the worst times in its history. It's also funny that Vista has outsold OS X10.5 about 10:1 and it's a flop.

I've already done this Vista argument with you and you don't care. Vista is not a flop from a technological standpoint (something both you and the unnamed, unsourced Forbes article are not qualified to make), nor is it a flop from a business and market standpoint.

The only people I ever hear *****ing about Vista on a regular basis are Mac users or Linux users, and journalists who pick that up to write sensational stories. You are, by far, the biggest whiner about Vista on this site. And since you've never used it, one can only imagine you're just doing your job as a faithful Jobs footsoldier to ensure Jobs and his uber-capitalist company become even more successful through underhanded tactics.

When you, or your mysterious Forbes article, can discuss why it's a "technological flop" you may have a case. In the meantime, I'm not sure MS is minding the 140+ million copies sold of Vista since it's launch. It's time for you to get a reality check.

Despite all the hoo-haa Microsoft hasn't managed to break out of North America, which is a relatively static market.

By "static" market, you mean the largest and the fastest growing market?

The 360 is successful in every English-speaking country I know of. You know this as well. It's moderately successful in continental europe as well. The only place it is a flop is in Japan, and frankly, that's not a big a deal as you might think. (As evidenced by the 360's dominance here).

[El_Cid]

ouch! meoow! etc

http://www.gamasutra.com/php-bin/news_index.php?story=19266

I love this bit:

"Yeah, absolutely. I think that there's a difference in the type of customer that is buying the Wii. When you think about it, there's a difference between trying to be the number one console with nine year old gamers, and being the console that offers the most experiences from 13 to 33.

I think for us, we don't really see the Wii as a direct competitor, we actually very much complement the Wii experience..."

Tell that to the fit girlfriends all over the world playing hula hoop on their wii!!!

Sounds like sour grapes to me - MS has been aiming(predominantly) at that 10-15(33? who's he kidding?- yes i'm sure lots of 30+ play xbox, but that doesn't mean they make the xbox especially sophisticated by default.) year old boy market since the beginning and maybe they realise they have missed the boat in terms of the new gaming demographic.

shock - girls like to play games too, and they are not that fussed about the HD/super real graphical violence type of gaming most of the industry has gotten so used to producing. I think that's a cool thing, and will help our industry reach a new level of maturity.....probably.

[Asher]

Originally posted by El_Cid
ouch! meoow! etc

http://www.gamasutra.com/php-bin/news_index.php?story=19266

I love this bit:

"Yeah, absolutely. I think that there's a difference in the type of customer that is buying the Wii. When you think about it, there's a difference between trying to be the number one console with nine year old gamers, and being the console that offers the most experiences from 13 to 33.

I think for us, we don't really see the Wii as a direct competitor, we actually very much complement the Wii experience..."

Tell that to the fit girlfriends all over the world playing hula hoop on their wii!!!

Sounds like sour grapes to me - MS has been aiming(predominantly) at that 10-15(33? who's he kidding?- yes i'm sure lots of 30+ play xbox, but that doesn't mean they make the xbox especially sophisticated by default.) year old boy market since the beginning and maybe they realise they have missed the boat in terms of the new gaming demographic.

The average Xbox gamer is 28 years old (or something very similar to that number, last I checked). If you knew anything about marketing or demographics, the 18-35 market that the 360 dominates is the most lucrative demographic there is.

The kind of gamer who buys games for the Xbox 360 (Halo, Gears of War, Madden, GTA, NHL, COD4, etc) is demonstrably different from the people buying games like Wii Fit for the Wii. I'm not sure why you consider that sour grapes when it really should be obvious?

Nintendo found a market that most companies had disregarded as not being worthwhile. Make no mistake -- the only reason they did this was because they'd completely lost their foothold in the traditional video gaming market, something MS and Sony are both doing quite well in. Nintendo had impetus to make that gamble that MS and Sony did not have. So far, it's worked out wonderfully for them.

But I have very real concerns that the "traditional video gaming" market is going to be harmed by the shovelware, gimmicky games that have been all over the Wii as MS and Sony now try to do a half-assed "me too". I hope they continue to ignore the Wii market segment and let the Wii own the "fit girlfriend" (you obviously have seen different people buying Wii Fits than I have, most of them are ugly as sin and overweight) demographic as that is one I'd be happy to see zero future MS/Sony resources go into unlocking. Give me video games as I know them, not weight loss tools.

And it's interesting that you think the Wii will bring "maturity" to the game market. It's quite evident, I think, that most of the games on the Wii are lacklustre in quality control (far worse than 360/PS3 titles) that has more evidence of a cash cow mentality taking advantage of an ignorant "newbie" demographic than a thriving software ecosystem that competes with, and usually wins, all other more "mature" forms of entertainment.

[DrSpike]

Originally posted by Mr Snuggles


Nintendo found a market that most companies had disregarded as not being worthwhile. Make no mistake -- the only reason they did this was because they'd completely lost their foothold in the traditional video gaming market, something MS and Sony are both doing quite well in. Nintendo had impetus to make that gamble that MS and Sony did not have. So far, it's worked out wonderfully for them.

I actually agree with most of that post, so forgive me for singling out the bit where I disagree.

Whatever your views on the Wii or Wii games I find it interesting you also have to deny the vision Nintendo have showed with the Wii. Given how crowded the market was getting and the fact that it was clear the other two companies were playing a larger game around 'controlling the living room', which would no doubt lead them to price very aggressively, Nintendo made the best strategic choice open to them. It's far from being 'forced to take a gamble'.

And as you said, they have carried out that strategy incredibly well.

I don't own a Wii as regular posters know, and am not getting one before a price cut (which doesn't look like it's coming anytime soon given strong sales), but I have nothing but admiration for what Nintendo have achieved this generation.

[Asher]

Whether you admire them or not, you missed the point I made. Do you think if Nintendo was in Sony's position in marketshare they'd have tried something radically different with the Wii? Nintendo dropped massive marketshare numbers every generation. Things were looking grim, they had to do something different because they demonstrably cannot compete head to head with MS and Sony when they all are putting out directly competing consoles. So Nintendo made a calculated risk with the Wii, which is really the brainchild of Reggie Fils Ame as far as I know, and it's got his fingerprints all over it. I find him to be a sleezy marketingdroid who nonetheless gets results.

This isn't about admiration, it's about motivation...and the motivation behind the risk with the Wii wasn't "vision", it was desperation. They needed to open up the market because the old market was getting bored of Nintendo.

As a result, this is why we've got two kinds of video game markets now with only a little bit of overlap (typically with the old Nintendo gamers). You've got Sony/MS vs Nintendo, and Nintendo's got a monopoly on their demographic of the market and as a result is doing quite well.

[DrSpike]

I perfectly saw the point you made - I just don't agree. I think you see the move as desperation because you are so bitter of the Wii's success and that the 360/PS3 are making moves to emulate it, as you mentioned above.

[Asher]

I saw it as desperation because I understand just how much marketshare Nintendo has lost from generation to generation. To keep shareholders happy they needed to grow, and Nintendo could not compete head to head with Sony/MS and they knew it.

There's no bitterness involved, it's just business sense. If you can't compete directly, don't. Nintendo tried for a couple generations to do so and failed to be anything but a niche player -- the path to riches for them involved something new. It was desperation, not vision, that spawned the Wii.

If it was truly vision that spawned the Wii, and not calculated desperation, they could've spent a couple more bucks for a slightly beefier console and more precise control scheme that could actually unlock lots of the potential of motion control. As it is right now, and it's a half-realized concept that people bought based on the potential alone (which is what was sold). The reality is the Wii's implementation of any "vision" is pretty lacking, and if it was truly driven by vision it'd be less half-assed than it actually is.

[asleepathewheel]

Originally posted by Mr Snuggles
Whether you admire them or not, you missed the point I made. Do you think if Nintendo was in Sony's position in marketshare they'd have tried something radically different with the Wii?

GBA-DS?