Multi |
by Dan Nicolae Alexa |
6th February 2008 |
Yeah, that's right: why don't they enter the competition? Is the bid for Yahoo too expensive and they're out of money now?
In
the recent period Microsoft went from the acquisition-spree that
characterized the burst of the "dot-com bubble" era to a more pragmatic
approach to business. And by pragmatic I mean " building products in
house".
Just think of this classical example. In 2000,
Microsoft had two options in order to enter the increasingly profitable
gaming market: one was to buy the ailing Nintendo, which at that
time was valued at "only" $13 billion (compare that to the $70.89
billion today) and the other was to build its own console. Guess what:
top representatives from Redmond thought that Nintendo
was too expensive, so they went on with crafting the Xbox, which debuted in 2001.
Fast
forward four years later and Microsoft unveils the second generation of
Xbox, dubbed Xbox 360, after reporting a whooping $4 billion loss at
the Xbox division. The new console, although extremely advanced for its
time, is immediately hit with production problems (actually, production
for the Xbox 360 began only 69 days before the November 22, 2005
launch) and with a high rate of failures.
One year later,
Redmond enters the competition with Apple in the digital music
industry, unveiling the Zune MP3 player. The manufacturing circuit
includes Toshiba, which gives up its GigaBeat player in favor of
Microsoft's. In 2007, the software and hardware behemoth unveils the
second generation of Zune, but prefers to remove Toshiba out of the
landscape and decides to manufacture the gadget "in-house".
There
are more examples like this (Windows Mobile is one of them), but I
think it's enough to give you an idea of what to expect from Microsoft
in the near future: closed-source. This is the defining feature of Bill
Gates' company and we'd be fools to think something is going to change
while we're still alive...
How does the closed-source philosophy
relate to the portable gaming market? I think you already know the
answer: instead of letting Sony or Nintendo or SEGA or anybody else
reap profits from the increasingly popular portable gaming industry,
Microsoft would rather give up an arm and a leg... So the question is
now:
why the hell don't they build a portable Xbox or something?
I mean they've entered the competition with the almighty Apple in the
music and MP3 market, but they're afraid of entering competition with
Sony or Nintendo, where there's much more room... Lots of companies
have tried to free the digital music from Apple's tight grip, but so far
their efforts proved to be in vain. Is Microsoft so blind not to see
that Zune is basically a flop and that they stand no chance in a market
where the likes of Creative, SanDisk or Samsung dictate the rules?
To
explain the idea mentioned earlier: there is much more room for
Microsoft in the portable gaming domain because it only confronts
two
main rivals, Sony and Nintendo. Yes, those are powerful adversaries,
with strong brands, huge install base and a lot more experience. But
hell,
they're only two, and their
combined value doesn't even come close to Microsoft's ($
276.88 billion), and it's not like the latter has no experience in gaming, right? Generally speaking, Microsoft owns the
desktop (and laptop) market with the Windows platform, has a strong
position in the fixed-console market, but obstinately refuses to come
up with a portable gaming device, although it does have the money, the
logistics and the people to invent it.
One other argument would be the cost of building such handheld. It would definitely be lower than the one Microsoft had to "endure" for the Xbox and the Xbox 360, and
the profitability target would be a whole lot easier to achieve. Both
Nintendo DS and PlayStation Portable became profitable after their
first year on the market. Currently, the DS is the second most popular
console out there (fixed and portable consoles considered) with more
than 66 million units sold, trailing only the PlayStation 2.
The PSP sold more than 30 million units and, with the launch of the
enhanced PSP 2000 model, it even surpassed DS' sales in Japan.
The subjective argument should also be taken into account:
people WANT a Microsoft-built portable console. Rumors
about a possible Xbox handheld have flamed spirits more than once and
the interest such rumors get on the Web is proof enough that an
investment in this domain is the right path for Redmond. I mean I can't
believe Microsoft is so cocky to consider that if they have the PC
gaming market in their back yard and a considerable portion of the
console market too, they should just sit on their asses and do nothing.
Nintendo is coming in fast, and Sony is by no means an enemy to be
trifled with.
Nintendo has at least two hardware products to offer: the Wii and the
DS, both insanely successful, both reaping huge profits. Sony has
three: the PS2, the PS3 and the PSP. Microsoft has only one... Can
Microsoft withstand the pressure with a product plagued by RRoD
problems, with the launch of PlayStation HOME looming, with the
imminent death of the HD DVD and with highly pessimistic predictions
about sales for PC games? Hardly...
Actually, the Redmond
giant needs a portable console not only because of profits, but because
it needs to create the kind of "eco-system" its two Japanese rivals
have created in their long history. You can still play PS1 games on the
PSP or even on the PS3. You can still play NES games on the DS or the
Wii, which economically speaking means more value for old games.
Developers are thus interested in creating games for your console,
since they can make profits on a longer period of time. This is one of
the reasons for which Sony boasted with the "ten year life-span" for
its consoles.
By comparison, the original Xbox
lasted only 4 years, while the Xbox 360 will probably last even less,
considering the high failure-rate (close to 30%, caused apparently by the fact that it has been rushed to the market).
Moreover, while Sony has the PSP interacting with the PS3 through
Remote Control, the Xbox 360 has practically no interaction with other
gaming devices, except for the controller, the headset and the HD
screen.
Yes, it's true that Microsoft created the Xbox Live Arcade (for oldies
but goodies) and that the service is one of the most successful online
services at Redmond, but is that enough to keep the engine up and
running? Is it enough that the Xbox Live is now "talking" to Games for
Windows Live? How many of you PC fans have used Games for Windows Live
in the recent period?
While I do agree that the Xbox 360 had a strong momentum on the market
when both the Wii and the PS3 came out, I find it worrying (and so
should Microsoft) that the aforementioned momentum has been literally
shattered in just one year and 3 months by the Wii. Moreover, a leaked
internal memo from EA predicts that Sony's next-gen console will
surpass worldwide sales for the Xbox 360 this year, while Sony UK's
boss David Reeves makes a bold statement, saying that PS3's install
base in PAL areas will beat that of the X60 by this summer.
I'm not trying to portrait the Xbox 360 as dying console, because I'm
not a console fanboy and because I like competition. Competition is the
driving force behind good and reliable products and I'm actually glad
that we gamers have more choices every year. But just as you probably,
I wouldn't mind seeing the Big Brother from Redmond offering us even more choices for our favorite daily activity.
I just pray they don't make the same mistake as Sony, which instead of
encouraging third-party applications for the PSP, closed the circuit by
forcing gamers to buy the fiasco dubbed UMD...
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