Is Microsoft In Trouble?
Sure, J Allard is "playing it cool" these days, I mean the Xbox360 sells itself right? It's certainly an amazing system: with superior graphics architecture, best-of-class developer tools, is on par for value with competing products, has the best online strategy in the business and some seriously deep pockets to back all of that up. But, it's with great dispair and responsibility that I must announce I've come to a horrible conclusion: That Microsoft might have actually botched this generation worse than their respectable rookie effort last-gen. Everyone is quick to jump on Sony for their mistakes but everyone seems to be under the impression that Microsoft is blowing Sony out of the water. Are you surprised to read that I beg to differ?
Let me start with the fact that in just 3 short months Nintendo has moved more consoles than Microsoft was able to sell in 3 quarters last year. Granted Microsoft has picked up steam over the Christmas buying season but it's clear that the Wii intends to outsell both consoles over (at most) the next couple of years. Once you consider almost every Wii sold represents a lost Microsoft opportunity to make inroads in the consumer (read: one console) households it's easy to see that not everything is going according to plan. Microsoft wants the '360' to be the set-top box of choice in every home and the consumer is speaking out clearly against this quest for world domination.
It's interesting to note the latest sales (@ retail) data:
(from vgcharts.org):
I don't know about you, but some of my friends are still lining up Saturdays in order to buy a Wii. This is also widely reported in every major city. I think it's a pretty safe assumption to assume that all 5 million units have been sold despite this data only representing units shipped.
If you dig a little deeper, Microsoft's picture appears bleak: If you look at vgcharts shipment data (no accurate shipment data exists for the last two quarters until companies report in March) in Sept 2006 and March 2006 you can plainly assume steady 360 shipments leading up to Christmas, in excess of 9 million.
Microsoft sold 1.5 million consoles in December alone- A great feat no doubt! But, find me a 360-fanboy that will ever admit outright that the PS2 outsold the Xbox360 every month during the 2006 Christmas season. This is a huge problem for Microsoft: 3 other systems have plenty of life and are eating away at their console war budget. I have to admit, I laughed out loud when Ken Kutargi claimed a 10-year lifecycle for PS2 but it is still strong.
Also, from these charts we can gather that Microsoft has shipped way more consoles than they've sold, as a matter of course. Sept 2006 shows they had already shipped more than 9 million to retailers prior to the Christmas rush- yet after the dust settled they've sold barely 9.28 million. I know one thing is for sure, there are plenty (read: too many) of Xbox360s, sitting at retail. Steve Ballmer is probably throwing chairs at his manufacturers right now for not delivering when they had the chance last Christmas. To make matters worse, his console is clearly not selling as well as his investors hope.
So you see, Sony isn't exactly hurting right now, as one might think. Their strategy appears to be a transitional one, and one that still could win out in the long haul, at least over the Xbox360.
Chew on this fact: In the same time last year, Microsoft sold 929,750 consoles at retail worldwide. Meanwhile this year, in the same time frame, Sony has moved 1.88 million suffering the exact same supply chain issues as Microsoft.
But, such are the woes of a premature console, with superior hardware. Remember the Turbografx-16? The Atari 5200? People assume that the first year of a console's life doesn't matter, but PS3 and Wii have launched just in time to directly eat away at every Microsoft sale at the peak of its sales potential. This point in the curve is critical to a hardware manufacturer that is losing money with every sale, and the longer already produced units sit in warehouses, the longer Microsoft is prevented from delivering lower-cost units to retail and in the hands of the consumer. One would think Microsoft doesn't want to sell these systems at a loss, but they must! Wouldn't you much rather lose 200$ per sale than 500$ per sale only to deliver profitable units later in the life-cycle?
Finally, the situation for Microsoft is exasperated by their poor showing in Japan. I mean this is more than disappointing: an installed base of (get this) 360,000 consoles in Japan is pretty awful.
Microsoft had a chance to be #1 and they downright blew it. And they blew it just as bad as the current Sony launch if you ask me. I said on my now-defunct podcast last November that I was certain this was Nintendo's generation to regain some major ground and I'm happy to say that at least the preliminary data supports this. It's not Sony that ought to be worried about Nintendo- (they have much larger problems at the moment) but even they could find themselves in the same boat if they don't pick up the pace. Microsoft however, ought to be looking over their shoulder, as at retail all I see are dusty Xbox360 cases.
Gee soo convincing.. lol you
Gee soo convincing.. lol you dickwad.. the xbox 360 is selling 1/2 as many per week in japan as the ps3 ... miss that did u ? or the info that xbox easily beat ps3 when the ps3 has no supply problems over late xmas.
ah whatever you cant add 1 and 1 anyway
Ever hard of that psp fanboy site? ;)
I don't take offense
..merely because you can't read. I never said PS3 beat anyone over the holidays. I was comparing Microsoft's launch numbers from last year competing only against PS2 and Gamecube (barely).
They're abysmal compared to the PS3's number during their launch window in Christmas 2006.
I'm not making these numbers up, nor did I add them on behalf of vgcharts.org which appears to be quite authorative.
PSP fanboy site? Are you drunk?
Ps3 Linux is the dark horse in all this
If/when someone develops an easy to use linux-based multi-media OS for the PS3 then it is going to look like a real bargain to a large number of consumers. A ps3 running linux is a powerhouse that can play any format of media out there (that isn't DRM protected) - all it's missing is an easy to use and configure interface purpose built for the ps3 and a couple of drivers.
As it stands now it can play anything on my LAN - tho it took a bit too much work for the average consumer.
I wouldn't write the ps3 off just yet - not over the long term. As I see it, it is the one console on the market that can potentially give ALL those ps2 owners who are not serious gamers a reason to upgrade their console... as well as those who don't own a console but may want to play games occasionally - those are huge markets.
Agreed
Our shared position on PS3 Linux is not a popular one though.
As you mentioned, one thing is for certain, it will be a while before the average consumers figure out that they also have a great Thin Client PC under the hood as well.
I know my PS3 is going to have a 500GB drive in it, and Linux modded all to hell.
I would use it all the time, and I know it would drive alot of OSS geeks to NOT buy an Xbox with this sort of solution available. Sony was smart to open it up *almost all of the way* this gen. I had been disappointed with the Net Yaroze and the PS2 Linux solutions offered in previous gens.
Wow
What a great article. This is what I call good journalism, much unlike some of the "spin" I've seen around here. Seriously.
It's very smart to compare launch numbers to gauge overall success. One thing the PS3 has going for it that the 360 might have lacked was brand name loyalty. You need only to look around the corner to see how prominent Sony fanboys are. XBox gamers sometimes seem a bit more casual whereas the diehards are still sticking to last-gen's Halo 2 for comfort.
I do disagree with the statement that MS already blew it. From what I can tell they've starting off slow but are gradually picking up steam. Big releases like Mass Effect, Halo 3 and their powerful XBox Live are sure to solidify their success. I truly believe the PS3 will begin to slow down while gamers realize the cheaper and more plentiful 360's offer the same level of gaming if not more.
I think it will be a looong time before MS sees success in Japan. However, the last decade has proved gaming isn't as dependent on the Land of the Rising Sun as it once was. Because of this MS could still see financial success if only solely from the US.
I think Sony is still in the race though. All they need are some good solid titles within the next 8 months to really show us gamers they've still got it. The flagship Final Fantasy's and Metal Gear Solid's seem all too far away at this point. With God of War II being PS2, Halo 3 and Nintendo franchises creeping up it'll be an uphill battle. The good news is brand name loyalty is stronger than gold, and if anyone sparks such blind loyalty it's the 'Japanese-company-that-could'.
If Sony can just keep dangling that carrot in front of us gamers we'll hopefully still be there when they let us bite.
RE: Wow
I personally am not interested in spin. You're going to hear spin everywhere but that's what brings in the bacon! Thanks for you compliments on this story, I hope to deliver this type of insight on a fairly regular basis.
I really try to set my tendencies to respectfully hate Microsoft in general, aside. I have no interest in the XBox360 succeeding (or not), but imagine my surprise when I found once again, the early numbers support some of my gut feelings about their product this generation. For me, this goes back to the day it was unveiled on MTV and I debated this with my podcast panel. Back then, my panelists said the "wii was a darkhorse" and "360 is going to have a strong start" and I disagreed with them vehemently!
Perhaps I should restate that I think the race is far from over, but Microsoft had a year long chance to improve upon their previous gen's install base. The numbers show clearly that not only have they failed to do so, but Nintendo and Sony are chomping at their heels harder than ever as things heat up.
I don't know where people get this idea that Japan is not is important as it once was. I'm sorry, it's still everything. It's one-half to a third of your global market and nearly half of the NTSC market- End of story! :) You seriously can't convince me that success in PAL regions makes or breaks a system, but once you split NTSC hardware, Japan is extremely important! Nintendo matched XBox sales 'till the bitter end based on Japan alone (and that was *all* profit for Nintendo)
Unless games like Assassin's Creed (killer apps! NOT HALO3) get people to "go xbox" and Japan jumps on board, the only future I see for this system is 'also ran'. Nintendo will gobble most of Microsoft's sales potential and the PS3 will hold steady on brand recognition alone.
Things could start to click for Microsoft if Sony continues to falter, but I honestly don't think Sony has screwed up as much as Microsoft on launching their next gen systems, and the numbers also support this.
Kind of
The Japanese market has been slumping. It's high point was in 1997, since then it's really been slowing down while the NA market and been picking up speed. It was only until 2006 that the Japanese market shined thanks to the DS, but it's sales still paled in comparison to NA's market share*. Obviously global success is worth more than regional. Nintendo's living proof of that, but failure in Japan isn't impending doom. Think the automobile market, many car companies are successful in NA or Japan only, rather than worldwide.
MS definitely messed up their launch, but the difference here is they had virutally no competitiors. If you were tired of MS's mistakes you'd simply stick with what you've got. Sony however, has the 360 (already a year in) and the obviously underestimated Wii to compete with. So if gamers get fed up with Sony constantly fumbling the ball they'll jump ship to one of their competitiors. I think that's what we're seeing now with the increase of 360 and Wii sales compared to that of the PS3. Plus the fact that the Wii and 360 complement eachother so well it's hard not to overexaggerate Sony's faults and head to the other guys.
Overall I believe success in NA will be enough to keep the XBox relevant. Japan has proved time and time again they have different tastes and ideas of what makes a good game, while North American sales are accelerating yearly and their approach is thriving on connectivity and Halo-esque games.
* http://www.vgcharts.org/japyearlysum.php
Decent article but..
I don't feel that the content of the article actually supports the claim that Microsoft is in a threatened position with the Xbox 360.
Xbox 360s are selling very well and price drops are already being seen. Soon enough they will actually be making profit from the hardware, as they have already planned. Sure they're not the number 1 seller, but how many things can be the #1 seller. C'mon.
It's also important to note that just because they are not making money off the hardware of th console itself, doesn't mean they aren't making money off of other hardware. Things like the harddrive and the memory cards, headsets and all that kind of stuff. Most of it is overpriced (as they are with any console), but people still buy it. Regardless, they know they are losing money per console, they have planned it that way.
Oh, I almost forgot.. they are also making a nice shilling from Xbox live, something that is not just a one-time buy. It's also something that brings in money though advertising and promotion. Advertising and promotion is almost completely profit.
But does any of this really matter, financially? Xbox is a part of Microsoft. Microsoft is made of money. Even the Xbox 1 came in at a loss, but it was just to get their foot in the door. Their foot is now much more than just in the door and they are ready to actually start making some good money. Money they don't even NEED to make yet, because after all, it's Microsoft we're talking about.
To get to the point of my comment: I don't think it's proper to compare the 360 sales to that of the Wii or the PS2. If anything the Wii and the PS2 are the most directly comparable of the systems in question, leaving the 360 and PS3 in a separate category of their own. I say this because of two reasons: The Wii and PS2 are by far the cheaper consoles. The Wii and PS2 are also close in terms of technology, at least closer to each other than they are to the 360 or PS3. This leave the 360 and PS3 to their own category as they are close in price and tech to each other. That is how I see 'generations' of consoles.
So one can pull out sales numbers and say that the Wii and PS2 are going to make the 360 and PS3 failures, but that would be like saying that newer faster technology will never catch on and time will start going backwards.
It's nice to say that Sony has the PS2 holding it above water but it's a cheap console selling for a cheap price. The profits per system there are going to be positive but they aren't going to offset the losses of the PS3, should Sony actually start selling more PS3s. The PS2 falls in place with any other well-selling Sony product on store shelves.
Personally I think the 360 is the most fantastic console ever released to date. It has introduced many new things to the gaming world and even beyond gaming. But it still holds its roots as a gaming machine and this year is going to be a great year for gaming on the 360.
Honestly, I feel that Sony may be in trouble. I guess that means I am directly opposing your article. I believe this because of the never ending problems of the PS3. They just keep finding new things to cause mass upset among gamers. The dedicated Playstation fans and all those slaves to marketing who cling to the PS3 are starting to fall off the bandwagon, because these problems are getting into main-stream news and media all over. Normally only the die-hards of gaming would know about half of Sony's problems but this is no longer the case.
The latest problem being that Sony has decided to follow Microsoft in how backwards compatibility is handled. This would normally not be a problem except that they've chosen this after already starting out on a different route. In Europe it's going to cost more for a system that does less than it does in other parts of the world. Soon enough the rest of the world will get PS3s that followed suit of the European ones. What I mean is that sometime after the European launch of the PS3 there will almost undoubtedly be a version of the PS3 released in the US and Japan that no longer contains the PS2 backwards compatibility in hardware form. Instead it will be software form (which Sony has already said, will not support as many games). So if kid A has a Gen1 PS3 and a library of PS2 games that work on it, and he goes to his friends place (Kid B), there is very likely going to be a problem in the likes of "this game works on my PS3, why doesn't it work on yours?!". An even worse situation would be if Kid A had to replace his PS3 under warranty and Sony decides to replace his Gen1 with a new Gen PS3 that won't play all his PS2 games. So basically once again, Sony is saying fuck standards, and fuck the customer. Most of all, fuck Europe. I wouldn't be surprised in the least if the acceptance of the PS3 in Europe was worse than the 360 in Japan. That would be a total insult to Sony and I would love to see it. At least Microsoft has an excuse for their failure in Japan: They are American!
Well you know what? Fuck Sony. Fuck PlayStation. I'm so glad that when I decided what console to get my sister, I chose the Wii over the PS2. Of course, the PS3 was out of the question entirely, seeing as it's in another category all together ;)
Well.
It looks like your problem is the same as most, if not all, Wii60 fanboys. And I call you a Wii60 fanboy for the basic and simple reason that you like Sony least. Your problem isn't the PS3 or its capabilities, it's Sony's image.
A LOT of Wii60 fanboys like to complain about games, and gameplay being the reason why they dislike the PS3, but none of them complain about the PS3's ABILITIES to have great games. Instead, they spend their time whining about what this CEO said, or what that President has done. They are more concerned with Sony's public image than they are with the PS3's actual abilities or the games that ARE going to come.
Remember, the PS3 is still a new console and it didn't have a game to hold back until its launch that would sell it like the Wii did with Twilight Princess, a game originally intended for the Wii. The 360 needed a full year to come out with a REAL system selling game like GoW because when it was first released there was no other competition. Why was everyone willing to give the 360 a year to improve, but not the PS3? Sounds like yet another double standard to be used against the PS3.
BakedGoods: Yeah, we really need more Halo-esque games don't we? In fact, let's eliminate all genres except First-Person Alien shooters that, if Halo 2 is any indication, get worse as time progresses.
It can be said that the genre of games that is most successful in any given area is indicative of the type of people that live in that area. So, if that's the case, then most of North America is plagued with gun-loving primitives that only like to blow things up and play at war. That's exactly the type of people this world needs. We have too many people who don't like death and destruction, let's try to make more of them come out of the woodwork.[/sarcasm]
9 diggs!
Wow, I'm touched that 9 diggers found and appreciated this story!
This is the most I've ever been dugg and may be a sign of better things to come?
Considering this site went live less than 4 weeks ago, I am deeply encouraged.
Thanks to everyone for your support! Please help drive traffic to the site by digging and crosslinking someonestolemydomain.com where relevant!
signs are getting clear... 360 on its way out.
I bought my 360 last April because it was the only new thing out and it's not bad. but like many people with new tv's now, I just got myself a new 40" Visio HDTV LCD at Sam's and had to try Blue-ray out. so i now have a PS3 also which is now the ONLY console i touch in the house.
thought about returning it to gamestop. they have tons of 360 returns already compared to zero PS3 and Wii returns. in fact the people at the store say 360's get turned in everyday for either a new Wii or a new PS3. not a good sign for Microsoft.
To my mind
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