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Interesting Interview with Robbie Bach


May 10, 2006

Some tidbits, pretty long interview:

Q: Regarding Zune, it’s just a year ago, about that time, that you started it?

A: Yeah. The time frames are always a little bit sketchy with things like this, but yes, it's over a year ago. And then you have to try to say, "Well, when did it start?" And the way these things work, they aren't as definitive as you might want to think they are
Q: You said at the analysts meeting that you'd put hundreds of millions of dollars into this over some period of years. It sounds like it is a less costly effort than the Xbox for sure, then?

A: Well, understand that the business model works significantly differently than the Xbox business model works. You don't have an environment where you have subsidized hardware. If you looked at the investment in the Xbox over the last four or five years, a significant percentage of that was purely in hardware subsidization. So, because the business models are different, the investment required is different, let's call it that. So, it scales differently. The intent, in terms of the seriousness with which we approach it, is no different.
Q: Does Vista also give a platform to doing more of those things together?

A: Well, Vista is part of that whole ecosystem just by its nature. It turns out even Xbox actually relies on Vista for a lot of things. Our Xbox.com site is up there. That's integrated into what we're doing on Live. We've announced our Live Anywhere initiative to connect the communities of people playing on PCs and people playing on Xboxes and ultimately, people who are playing on mobile phones. So, certainly, in the Zune ecosystem, the client on XP and Vista is a lot of where the action is. In fact, it's where people do most of the creating of their play lists. It's where they purchase their music, etc. So, I do think Vista plays an important role in that. And we're pretty excited about Vista, particularly in the gaming space.
Q: What’s your view on games and how you are going to win? How do you see things unfolding this holiday season?

A: A number of things are happening are happening this season. You and I have talked about this before. The No. 1 thing happening in the holiday season is where is the content. I think we’ve got a great line-up of games. Early reviews on both Viva Piñata and Gears of War have been very positive. If you look at what we have coming from third party, Need for Speed Carbon is doing exceptionally well. The Tom Clancy titles from Ubisoft are all doing well. Call of Duty 3 is a very anticipated title from Activision. THQ has great things coming. If you go through the publishers, you see the content portfolio is rich and full. If you don’t have that, the rest is tough. But I think we’ve got great content coming down the pike. The second thing is frankly our value proposition is just better. Our console is at $299 and $399. Sony is going to have a pretty limited supply of consoles at $499 and $599. Consumers want to buy during the holiday. We’re going to be a great logical choice for them. As you start to move out into 2007, you have the promise of Halo 3 as a cool title coming out, in that era, along with a whole line-up of content from us and our third parties. I think this is going to be a good holiday for the video game space. I think there is going to be a lot of excitement in the category. We have an opportunity to benefit from that dramatically. Our goal is to get to 10 million and we think we’re going to be able to do that.

Q: It’s 10 million shipped, right?

A: Yeah. In our case, it’s reasonably close to sold through. To make sure we’re clear, Sony does shipped from factory. We don’t. Our shipped means it has left a distribution warehouse in Memphis to a retailer. There is a big lag of six week to eight-week lag between what we called shipped and what Sony calls shipped. That’s the way we do the accounting.
Q: So are you thinking about Xbox 720?

A: You know how these things work. The engineering team is always thinking about the future. Right now we are thinking about how to cost reduce the Xbox 360. That seems to be the first order of business


May 10, 2006
Another interesting tidbit:

Q: I would guess the story that hinted at these in the New York Times, by John Markoff, is probably right that you’re thinking about doing more of this work yourselves? Doing more of the architecture, doing more of the design through your internal people?

A: Well, the Xbox 360 is an example. We did a reasonable percentage of that ourselves. There is a core chip architecture work that we didn’t do. IBM and ATI did. I probably wouldn’t see that changing. The difference of the first Xbox and the Xbox 360 was pretty dramatic on that front. We are managing the intellectual property direction. We are the guys that take it to the fab. We are the ones who are responsible for the economics. That was a big shift from the Xbox to the Xbox 360.

Q: That you can do more from a virtual point of view, as opposed to buying a chipmaker?

A: Yeah, exactly. We certainly believe that is the case. You have to be careful. There is a reason that Microsoft didn’t go off and buy a manufacturer. There are some things that Microsoft just isn’t going to be good at. (Laughs). Flextronics is world class at it. Wistron is good. So is Celestica. Those guys do it every day so we should let them do that. TSMC—they’re pretty good at fabrication. I’ve been to their facility. It’s nicer than where my guys are. They’re really good at it. We want to take advantage of experts where we can.


Jun 7, 2004
Q: It seems like you are going to be profitable a year later than you hoped. Did things come in more expensive than you had hoped?

A: That’s a complicated equation. The group’s composition changed. We had home and entertainment. We added the mobile. We added Media Center. You have Games for Windows. It changes the division dramatically, and Zune. When we originally said that, Zune didn’t exist. You have a lot going on.

Q: That applies to the whole division as opposed to just the Xbox.

A: In the original discussions, we thought that home and entertainment had a chance to be profitable in fiscal 2007.

Q: Is Xbox behind on its financials?

A: Xbox is one the trajectory we thought it would be on. We feel very good about that.