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[Malitik Sabu]

Read his entire post. Also have fun with this

http://www.usinflationcalculator.com

$362 is still a lot cheaper than $550. And as he said 360 has no competition outside the PS2.

 

[Malitik Sabu]

I agree that it's a big difference.

But you're missing the bigger picture. And it's clear you didn't read my post. Please read it again then read the below.

Especially when you consider that the Xbox 360 at $299 sold in 1.5 million units during the launch quarter where as the Xbox One sold in 3.9 million units at $499 during the launch quarter.

That is a huge difference. Using your logic it should be the other way around.

The point I'm making is that the 360 saw very low sales because the brand was not established and the PS2 was still the console to get. The Xbox One saw very high sales because the brand was established and because we were coming out of a very long gen where Xbox 360 had done really well.

So it's very clear that the Xbox One was poised to do very well compared to the 360. But what we saw was a sharp decline in sales and the only way that Microsoft could maintain sales above the 360 aligned sales was by dropping the price $150. (Also you have to remember that $299 in 2005 ain't the same as $349 in 2015).

So i'm not comparing Apples to Oranges. I'm looking at the whole fruit bowl... to use your termanology.

Well keep in mind that for half a year Xbox One was $500+tax and then for the rest of the year was $400+tacx, comapring the $299 with inflation tio the $349 isn't really the best solution.

 

[Zedox]

In order for Nadella's statements to be reassuring for Xbox, he needs to talk up what kind of strategic position it can occupy in Microsoft's greater product visions. He hasn't done so yet, and there are no suggestions that he ever will.

So when the CEO says this (LAST YEAR): http://time.com/2972888/microsoft-ceo-satya-nadella-suggests-the-future-of-xbox-could-be-mobile/

The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming,” writes Nadella in the letter, adding that Microsoft is “fortunate” to have the Xbox brand, and that the company “will continue to vigorously innovate and delight gamers with Xbox.”

And then he trumpets all the gaming-spawned technologies feeding other aspects of Microsoft’s platform-sphere: core graphics, NUI in Windows, Skype speech recognition, Kinect for Windows camera tech, GPU-related Azure cloud improvements and so forth. “Bottom line,” says Nadella, “We will continue to innovate and grow our fan base with Xbox while also creating additive business value for Microsoft.”

He doesn't reassure you when he says stuff like this. When he puts Xbox at "big enterprise Microsoft divisions" keynotes? Sorry, but they aren't getting rid of Xbox anytime soon.

 

[ZhugeEX]

And as he said 360 has no competition outside the PS2.

The Xbox One has no competition outside the PS4.

The PS2 in 2005 sold 20 million units and in 2006 sold 15 million units, The PS4 in 2013 sold 4.5 million units and in 2014 sold 15.4 million units.

You tell me which one launched to more competition. (Hint, the Xbox 360)

Well keep in mind that for half a year Xbox One was $500+tax and then for the rest of the year was $400+tacx, comapring the $299 with inflation tio the $349 isn't really the best solution.

It's an example. My point there is that don't take $299 in 2005 to mean that Xbox One needs to hit $299 to be perceived as a good value price.

 

[Three]

$362 is still a lot cheaper than $550. And as he said 360 has no competition outside the PS2.

First of all, where did $550 come from? Secondly, what's the price of the XB1 right now? $350. Lower than what the 360 was at this time in its life.

 

[Malitik Sabu]

The Xbox One has no competition outside the PS4.

The PS2 in 2005 sold 20 million units, The PS4 in 2014 sold 15.4 million units.

You tell me which one launched to more competition. (Hint, the Xbox 360)



It's an example. My point there is that don't take $299 in 2005 to mean that Xbox One needs to hit $299 to be perceived as a good value price.

The Xbox One launched against 2 consoles, and like 8 microconsoles the Xbox 360 was the only nex gen consoles on the market, and the PS2 was it's own thing, so I don't agree at all with the 360 having more competition HOWEVER......

...Yes, you are correct, $299 now is not $299 even 5 years ago.

 

[4Tran]

I've said 5this a few times now but you need to look at Xbox as a device like surface. It's a multi-media device, running windows 10 (will soon) that has all the apps and acess to the same stuff as all other windows 10 devices with it's own features and games. People who go through this will be in the MS ecosystem, as those 40 people on WP and the 300 people on Surface. The numbers grow, MS get's more, some may add other devices to their line-up, it's the apple strategy, and Xbox is a multi-million selling device that will bring customers in. Do you understand what money and hopw many potential people theuy will cut off by stabbing Xbox?

Right now, Xbox's claim to fame for the rest of Microsoft is to promote the Windows 10 store. This is an extremely unambitious role because, instead of relying on the Xbone's built-in advantages, most apps are going to be primarily useful on either PC or mobile devices. I don't think that Microsoft expects much from this project, but it doesn't cost that much, so why not?

Or if you want a direct comparison, Android apps can now be used on PCs and Macs - how many people do you think will take advantage of this?

 

[Malitik Sabu]

First of all, where did $550 come from? Secondly, what's the price of the XB1 right now? $350. Lower than what the 360 was at this time in its life.

I am adding tax, and the 360 started out at $399, not the Xbox One. For a most of the year it was much higher, and for the rest it was decently higher.

 

[Journey]

The Xbox One has no competition outside the PS4.

The PS2 in 2005 sold 20 million units, The PS4 in 2014 sold 15.4 million units.

You tell me which one launched to more competition. (Hint, the Xbox 360)

 

[Malitik Sabu]

Right now, Xbox's claim to fame for the rest of Microsoft is to promote the Windows 10 store. This is an extremely unambitious role because, instead of relying on the Xbone's built-in advantages, most apps are going to be primarily useful on either PC or mobile devices. I don't think that Microsoft expects much from this project, but it doesn't cost that much, so why not?

Or if you want a direct comparison, Android apps can now be used on PCs and Macs - how many people do you think will take advantage of this?

Xbox will have it's own features that will appeal top the tens of millions of people who buy it and the millions of new people interested in it. That along with having acess to the core apps and services/features is a bonus. It's not different from surface excpet surface has less difference outside of being portable.

 

[ZhugeEX]

The Xbox One launched against 2 consoles, and like 8 microconsoles the Xbox 360 was the only nex gen consoles on the market, and the PS2 was it's own thing, so I don't agree at all with the 360 having more competition.

The 360 had way more competition than the Xbox One does. Especially as we get later on when the Wii and PS3 come out.

The Xbox One isn't competing against any last gen console for sales, it's not competing against the Wii U, it's only got the PS4. Just like how the 360 only had the PS2 as it's major competitor at the time of launch.

When I say competing I mean competing to be market leader or against each other for the foreseeable future. Therefore the Nintendo gamecube never competed against the PS3 for example because Gamecube sales were decreasing drastically.

What did I say that was wrong?

(Don't bring up mobile or something outside consoles)

 

[Three]

I am adding tax, and the 360 started out at $399, not the Xbox One. For a most of the year it was much higher, and for the rest it was decently higher.

So did you add tax to the 360 price too where did you get $362 from then? Why did you not do $399+tax in that case?

Your calculations seem wrong.

 

[jcm]

I've said 5this a few times now but you need to look at Xbox as a device like surface. It's a multi-media device, running windows 10 (will soon) that has all the apps and acess to the same stuff as all other windows 10 devices with it's own features and games. People who go through this will be in the MS ecosystem, as those 40 people on WP and the 300 people on Surface. The numbers grow, MS get's more, some may add other devices to their line-up, it's the apple strategy, and Xbox is a multi-million selling device that will bring customers in. Do you understand what money and hopw many potential people theuy will cut off by stabbing Xbox?

That sounds more like Ballmer's Devices and Services strategy than Nadella's current focus.

 

[Malitik Sabu]

The 360 had way more competition than the Xbox One does. Especially as we get later on when the Wii and PS3 come out.

The Xbox One isn't competing against any last gen console for sales, it's not competing against the Wii U, it's only got the PS4. Just like how the 360 only had the PS2 as it's major competitor at the time of launch.

Actually Xbox was competiting against the 360 for sales for a bit there. But anyway it's all good, doesn't matter, as long as we agree $299 is not the same now as it was 10 years ago.

Edit: Caught your edit, yeah I understand what you mean Zhuge.

 

[Malitik Sabu]

That sounds more like Ballmer's Devices and Services strategy than Nadella's current focus.

Nah, nadella pretty much said this eaxct thing. Only real thing he sad i didn't put was acessing games across all devices, but that's still going to require the hardware.

So did you add tax to the 360 price too where did you get $362 from then? Why did you not do $399+tax in that case?

Your calculations seem wrong.

I didn't add tax to the 360.

 

[ZhugeEX]

Edit: Caught your edit, yeah I understand what you mean Zhuge.

Cool.

Sorry, sometimes my English is off and I'm not able to get across a point easily. But I think you know what I'm trying to get at when I use the word competition here.

 

[Three]

I didn't add tax to the 360.

So why exactly did you do it to one and not the other? Do you agree then that $299 is actually not that far from the price of the XB1 now? So the 360 does not have a price advantage in those charts with the price drop.

 

[Malitik Sabu]

So why exactly did you do it to one and not the other? Do you agree then that $299 is actually not that far from the price of the XB1 now? So the 360 does not have a price advantage in those charts with the price drop.

Because it doesn't matter, adding tax to $362 doesn't change anything, Tax on $500 will always be a good deal more. The 360 was bsically short the price MS changed to in Jubne but still behind, so yes, the Xbox one has been more expesnive than the 360 the first year.

 

[4Tran]

Xbox will have it's own features that will appeal top the tens of millions of people who buy it and the millions of new people interested in it. That along with having acess to the core apps and services/features is a bonus. It's not different from surface excpet surface has less difference outside of being portable.

This doesn't sound particularly synergistic or worthwhile. Either way, we should know if it's any good by the end of the year.

That sounds more like Ballmer's Devices and Services strategy than Nadella's current focus.

This particular idea doesn't cost much to implement so Nadella is giving it a chance. Microsoft needs Windows 10 to succeed, and they'll do anything to boost the Windows 10 Store. However, it's also possible that Nadella's just giving the idea a chance to fail.

 

[diffusionx]

Microsoft had a monster installed base and a huge Live community of xbox 360 owners to sell the One too. They weren't limited to those who bought the 360 in year one. And from everything I've seen a lot of those people jumped ship to Sony. Heck right now Sony is printing money by selling PS3 exclusives to them on the new system.

 

[Malitik Sabu]

Cool.

Sorry, sometimes my English is off and I'm not able to get across a point easily. But I think you know what I'm trying to get at when I use the word competition here.

Right, I saw it just took me a second to realize why you omitted the Wii u and then it hit me.

Anyway you think the XO will have a bigger second holiday than the 360's?

 

[Withnail]

I can understand the talk about how much they sold and what not...but this speculation about MS leaving the market is crazy.

How many of these people play sports or like sports. It's like saying the Philadelphia Eagles (boooo Eagles, Go Cowboys) shouldn't be a team anymore because they haven't won a Super Bowl in god knows when, wait...they never did win. You know what they did do...make money and continue making money because they have a product that people like, no matter the outcome. As long as Microsoft keeps making good games/services for Xbox...people will still buy. Sure they may not win SuperBowls but they can make it to the playoffs.

Hopefully that analogy doesn't wooosh...I know I'm talking to couch potatoes here.

You should read up on opportunity cost. It is the real killer for Microsoft. While MS was busy making chump change (relatively speaking) in a videogame war against Sony they allowed Apple and Google to become globally dominant in devices and online services, areas where MS already had a foothold. Therefore it can be argued that gaming was the wrong consumer strategy for MS over the past decade.

Who can say with confidence that it's the right one for the next decade?

 

[Malitik Sabu]

You should read up on opportunity cost. It is the real killer for Microsoft. While MS was busy making chump change (relatively speaking) in a videogame war against Sony they allowed Apple and Google to become globally dominant in devices and online services, areas where MS already had a foothold. Therefore it can be argued that gaming was the wrong consumer strategy for MS over the past decade.

Who can say with confidence that it's the right one for the next decade?

This only works if you think gaming was taking 100% of their time, and that would be wrong. In fact, this theory doesn't make an ounce of sense.

 

[Malitik Sabu]

Does anyones?

Hey, I think win 10 will be massive, hell they are literally giving it away, even to the pirates.
It won't get people using it on their TV though, or the vast majority of phones. Kinda straying off topic.... lets say that win 10 on xbone will do virtually nothing for the platform, in comparison to the business and OEM sale side.

But people who play Xbox on the other hand may go into it even more via Xbox...

 

[ZhugeEX]

You should read up on opportunity cost. It is the real killer for Microsoft. While MS was busy making chump change (relatively speaking) in a videogame war against Sony they allowed Apple and Google to become globally dominant in devices and online services, areas where MS already had a foothold. Therefore it can be argued that gaming was the wrong consumer strategy for MS over the past decade.

Who can say with confidence that it's the right one for the next decade?

Microsoft have different divisions. This argument isn't a good one I'm afraid. Even though your main point with Apple and Google makes sense.

 

[jcm]

Nah, nadella pretty much said this eaxct thing. Only real thing he sad i didn't put was acessing games across all devices, but that's still going to require the hardware.

He has basically disavowed Ballmer's strategy.

"A lot what we want to achieve with Windows will be measured more as the cross-device experience that we orchestrate because of Windows. It's not about one size fits all … trying to put one experience on every device form factor, but it's about being able to have consistency."

"To me, Apple is very clear," he says. "I think Tim Cook did a great job of describing it very recently when he said they sell 'devices.' In our case, our identity is really about empowering others to build products. It's not really about us and our products."

Obviously he's not going to come out and whack Xbox and Surface and Nokia in one fell swoop, but I think you're very wrong if you think he's continuing Ballmer's strategy.

 

[ZhugeEX]

Right, I saw it just took me a second to realize why you omitted the Wii u and then it hit me.

Anyway you think the XO will have a bigger second holiday than the 360's?

Yes I do think so.

The first two holidays for Xbox 360 weren't exactly amazing compared to the later on holidays. Where as it looks like Microsoft are doing well with Xbox One for the holidays.

Whether the Xbox One's third, fourth and fifth holiday will be bigger than 360.... well.... right now I don't think so but it's too early to say.

 

[Withnail]

This only works if you think gaming was taking 100% of their time, and that would be wrong. In fact, this theory doesn't make an ounce of sense.

If it took 10% of their resources it was arguably too much. The money they invested in gaming could almost certainly have been invested more profitably elsewhere.

 

[Malitik Sabu]

He has basically disavowed Ballmer's strategy.

"A lot what we want to achieve with Windows will be measured more as the cross-device experience that we orchestrate because of Windows. It's not about one size fits all … trying to put one experience on every device form factor, but it's about being able to have consistency."

"To me, Apple is very clear," he says. "I think Tim Cook did a great job of describing it very recently when he said they sell 'devices.' In our case, our identity is really about empowering others to build products. It's not really about us and our products."

Obviously he's not going to come out and whack Xbox and Surface and Nokia in one fell swoop, but I think you're very wrong if you think he's continuing Ballmer's strategy.

You absically just linked me to him doing the exact same strategy but with more things shared across multiple devices.

 

[Malitik Sabu]

Yes I do think so.

The first two holidays for Xbox 360 weren't exactly amazing compared to the later on holidays. Where as it looks like Microsoft are doing well with Xbox One for the holidays.

Whether the Xbox One's third, fourth and fifth holiday will be bigger than 360.... well.... right now I don't think so but it's too early to say.

Halo 3 holiday wasn't that big?

 

[Malitik Sabu]

If it took 10% of their resources it was arguably too much. The money they invested in gaming could almost certainly have been invested more profitably elsewhere.

No, they absically just moved the PC gaming division to the Xbox.

 

[ZhugeEX]

Halo 3 holiday wasn't that big?

Well the first holiday we saw MS ship 4.4m worldwide, the second holiday was 4.3m (when Halo launched) and after that the holidays range from 6m-8m. (with one 5m).

Microsoft shipped 6.6m XB1/360 at first holiday and I'll be impressed if 360 accounted for more than 2 million. It is a certainty that XB1 sales were over 4.4m that quarter, therefore higher than 360.

So with the release of Halo 5, with an expected even lower price/bundle, I can see it happening.

But as I said I think that'll be the last holiday where XB1 is higher than 360.

 

[McHuj]

Halo 3 holiday wasn't that big?

If I remember correctly, it launched in September so it's impact may have been really spread out.

 

[Three]

Because it doesn't matter, adding tax to $362 doesn't change anything, Tax on $500 will always be a good deal more. The 360 was bsically short the price MS changed to in Jubne but still behind, so yes, the Xbox one has been more expesnive than the 360 the first year.

But it does matter, it changes the price from $362 to $399, it makes no sense to do it on one and not the other. Anyway, my point was the XB1 has actually been cheaper than the cheapest 360 at the 12 months mark on that graph. The 360 does not have a price advantage at that point on the graph, it should be outselling it (gradient) but it isn't. $399 for the 360 vs $385 for the XB1.

 

[jcm]

You absically just linked me to him doing the exact same strategy but with more things shared across multiple devices.

No, "In our case, our identity is really about empowering others to build products. It's not really about us and our products" is pretty clearly not the exact same strategy.

 

[Malitik Sabu]

No, "In our case, our identity is really about empowering others to build products. It's not really about us and our products" is pretty clearly not the exact same strategy.

Did you watch the recent ms press conference?

 

[Lynn616]

If it took 10% of their resources it was arguably too much. The money they invested in gaming could almost certainly have been invested more profitably elsewhere.

If they were hurting for cash I would agree but they are not. If they want to invest more into other parts of the business they have the resources to do so. Xbox is not what is stopping them. They have 80+ billion in cash and adding 4+ Billion to that every quarter.

It feels as though your relying on that deep MS war chest. At some point, MS will have to cut the losses just to appease their investors. We're talking about one division here, not the whole MS brand.

What losses? What investors? The investors are fucking thrilled right now. MSFT went up 10% today.

 

[Hans.Gruber]

You should read up on opportunity cost. It is the real killer for Microsoft. While MS was busy making chump change (relatively speaking) in a videogame war against Sony they allowed Apple and Google to become globally dominant in devices and online services, areas where MS already had a foothold. Therefore it can be argued that gaming was the wrong consumer strategy for MS over the past decade.

Who can say with confidence that it's the right one for the next decade?

OMG
Gaming was never/is not/ and will never be a core business and focus for MS. That's why opportunity costs in that segment are just as small as the segment itself in MS numbers.
And it's not like they did not try stuff besides gaming. The Navision acquisition was big and combating SAP will be 100 time more important for the bottom line than stealing some marketshare from Sony.
Apple and Google just had better products over the mentioned timeframe, it was not like MS only focused on gaming and allowed them to invent the iPhone or free cloud based services (Gmail, Drive etc.).
Windows CE (a handheld OS waaaay before iOS and droid) launched in 2002(!) and failed. Zune (launched 2006 to combat iPods) failed. Xbox stuck and is a relevant player in that market. It rounds out the hardware portfolio nicely and shouldn't be abandoned because the competitor #1 is doing better numbers.

 

[Captain Tuttle]

It feels as though your relying on that deep MS war chest. At some point, MS will have to cut the losses just to appease their investors. We're talking about one division here, not the whole MS brand.

Investors don't give a shit about Xbox.

 

[Cyborg]

Combined sales mean something isnt selling good enough. But I could care less about MS. As long as PS and Big N are going strong

 

[JaggedSac]

Investors don't give a shit about Xbox.

No they do not. Stock is up 10% today because of yesterday's earnings report.

 

[4Tran]

If it took 10% of their resources it was arguably too much. The money they invested in gaming could almost certainly have been invested more profitably elsewhere.

The opportunity cost for Xbox probably isn't that big for Microsoft. They have so much money and resources that even wasting a ton of it wouldn't hurt them much. About the only problem is that it may distract the movers and shakers in the company from more important projects. Admittedly, this isn't necessarily a minor concern.

Windows CE (a handheld OS waaaay before iOS and droid) launched in 2002(!) and failed. Zune (launched 2006 to combat iPods) failed. Xbox stuck and is a relevant player in that market. It rounds out the hardware portfolio nicely and shouldn't be abandoned because the competitor #1 is doing better numbers.

I don't think that Xbox complements Microsoft's portfolio at all. It doesn't synergize with any of their more important segments, and it has the chance of detracting from their growth markets. How does Xbox Live integrate with Outlook.com or Server? Can Xbox promote Windows and Office adoption? The only positive I see Xbox doing is adding revenue to Microsoft's bottom line, and they don't really care about that.

 

[serversurfer]

Yup.

MS decided first to 10m actually meant something and so ended up with an estimated 2.4 million unsold units at the end of 2006. They sold in an additional 1.2m units for H1 2007 taking channel to 3.4m and it's estimated that sell through was over 2.3m units which took channel back down to a more somewhat reasonable 1.1m units.

That's why I wouldn't be at all surprised if they had 2M in the channel right now. The units they shipped last quarter were likely those MCC bundles that weren't generally available last year, and they're still selling AC bundles that shipped before Christmas. At this rate, it sounds like they may be lucky to return to normal stock levels by E3.

 

[hawk2025]

Investors don't give a shit about Xbox.

Hence why the "War chest" argument doesn't work: If Xbox starts tapping significantly into other resources, investors certainly WILL give a shit.

 

[Lynn616]

Hence why the "War chest" argument doesn't work: If Xbox starts tapping significantly into other resources, investors certainly WILL give a shit.

Yup. If it does. No sign it does right now. No sign it will be anytime soon.

 

[Captain Tuttle]

Hence why the "War chest" argument doesn't work: If Xbox starts tapping significantly into other resources, investors certainly WILL give a shit.

Honestly Xbox isn't a big enough factor in MS's finances to even matter unless they did something crazy like give away Xbox Ones for free or something.

 

[Hans.Gruber]

I don't think that Xbox complements Microsoft's portfolio at all. It doesn't synergize with any of their more important segments, and it has the chance of detracting from their growth markets. How does Xbox Live integrate with Outlook.com or Server? Can Xbox promote Windows and Office adoption? The only positive I see Xbox doing is adding revenue to Microsoft's bottom line, and they don't really care about that.

Me: Hardware portfolio
You: Does not help Office and Outlook

You need to watch the W10 reveal thing and everything will become clear to you.

 

[hawk2025]

Yup. If it does. No sign it does right now. No sign it will be anytime soon.

Honestly Xbox isn't a big enough factor in MS's finances to even matter unless they did something crazy like give away Xbox Ones for free or something.

But that's the point; People often tend to try to have their cake, and eat it too:

Argue that Xbox has access to many more resources, while simultaneously arguing that investors are not concerned with the division.

The two are intimately related; You can't have the second if the division decides to tap into the first.

 

[joecanada]

Honestly Xbox isn't a big enough factor in MS's finances to even matter unless they did something crazy like give away Xbox Ones for free or something.

true but they aren't exactly setting the world on fire either, if they really wanted to go all in with money, they could try buying COD exclusive, make a Halo every 2 years, buy all sorts of DLC content, buy studios , etc... there's all sorts of things you could do if you were given a blank check, which they obviously weren't.

they seem pretty happy to kind of cruise along with the status quo? or they are doing their best within a budget of some kind?

 

[Captain Tuttle]

But that's the point; People often tend to try to have their cake, and eat it too:

Argue that Xbox has access to many more resources, while simultaneously arguing that investors are not concerned with the division.

The two are intimately related; You can't have the second if the division decides to tap into the first.

I'm not saying that MS won't shut down Xbox, I'm just saying that it won't be from pressure from investors.

The main reason institutions buy MS stock is because it's relatively stable and pays a nice dividend. Xbox isn't large enough to have an effect on either of those.