Breaking - Redstone sells Midway for $0.0012 a share
Megaton - Play.com drops pants in pre-Christmas sale
Report - Lich King is EB's biggest launch of all time
September 6th, 2008 @ 09:19
VentureBeat’s posted a lengthy article going into depth on Xbox 360’s red ring of comedy woes. Snip:
Microsoft replaced these machines for free under the warranty that it announced on July 5, 2007, for defective Xbox 360s exhibiting what it more politely called the “three flashing red lights.” That warranty program cost Microsoft up to $1.15 billion, but the loss of face and loyalty among gamers in the fierce console war with Nintendo and Sony has been immeasurable. Szarek, who became a spokesman for dispossessed defective Xbox 360 owners, played a part in making Microsoft acknowledge its console quality problem.
Great forum ammunition. Read it.
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I would pay up to €10 (but only if...
September 6th, 2008 at 10:25 am
Just read all of that, and it’s a great read. Illuminates some shocking decisions by MS, who clearly had no problem treading on the heads of their most loyal consumers to get first to market. Shipping with those sorts of yields and such an obvious lack of testing is one thing, but then having the cheek to charge consumers for repair after 90 days is quite despicable.
As a business decision, I dare say it has paid off and it’s really anyone’s guess as to the impact it’s had on their overall sales to date. If Sony hadn’t dropped the 599 dollar ball, and had a better supply of games in it’s first year, I dare say 360 would have suffered terribly.
As it stands, both Sony and MS have made enough missteps this gen to cancel out the others cock ups.
I think both companies will have learnt a lot from this gen, and I imagine next gen machines will be focussed around smaller, moderately specced machines.
September 6th, 2008 at 4:00 pm
The 360 headstart was always a head start. And how the PS3 has caught up quite so considerably is amazing if you ask me.
What I am interested in is despite the extended warranty that took billions out of their parent company’s pockets, I know many friends that after theirs broke they went out and repurchased.
I literally know 3 people in my friends group that did that once or more. Mainly becuase they just think they were part of an unlucky few, not becuase it’s a widespread problem.
I’d just love to know how many sales have been based on resale. What percentage of the userbase has bought multiple consoles becuase their current one bit the dust?
September 6th, 2008 at 4:14 pm
PUD: Not enough to make up for the loss MS has b/c of broken units. I promise.
September 6th, 2008 at 4:29 pm
Depends how you look at it. If MS had launched the 360 at the same time as the PS3 and Wii I don’t think we’d be even talking about them now as they’d have become the next dreamcast. Sure, the $1bn was painful but they’re slowly working off that pain.
September 6th, 2008 at 5:43 pm
wz I agree, don’t sweat it. But what percentage of their perceived userbase is actually just replacing broken ones?
Psychotext I really don’t believe they will be with the price cut now. And I am sure that Microsofts non game division has taken a bigger hit than will be publicy admitted due to the game division.
I don’t see how it’s possible they can pay for these exclusives from Japan, pay for the massive marketing pushes they get, and pay for the warranty extension and still ahve made a profit last year.
Money must be coming out of somewhere.
September 6th, 2008 at 5:53 pm
No_PUD: MS has had the hardware (other than the failures) profitable for a while now so I doubt it’ll do their financials much damage. Though you will see this quarter at a considerable loss as they’ll be stocking the channels.
The warranty extension was a single $1bn set aside last year which is why it isn’t showing now.
September 6th, 2008 at 6:18 pm
Right… And all the games they have marketed (the huge marketing campaigns) along with the exclsuives they have bought… It just makes no sense that there is even the slightest possiblity that they are actually making a profit.
Where is that money coming from?
September 6th, 2008 at 6:30 pm
Marketing campaigns = Huge software sales = Huge revenue
Plus… XBLA games, XB original games, XBL gold, accessories (HDD etc), films, DLC, themes, gamerpics, advertising and more. There’s a hell of a lot of revenue streams there.
September 6th, 2008 at 6:30 pm
@ No_PUDding. Probably from where most of MS money is coming from: The Windows and Office monopoly. And I agree, I don’t think they are even remotely close to turning a profit with the 360.
Can’t wait to see their next step in this game, if there will be any after this, but then again the same thing can be said for Sony. But at least they have a longer time to decide.
September 6th, 2008 at 6:37 pm
Guys, they can’t use money from the other divisions for things in the entertainment and devices division without showing it in the financials. The SEC/FTC would nail them to the wall. I know it’s fun to have conspiracy theories but you have to understand that fucking with your financial reports is just not something you do (See Enron).
There’s a reason they have dropped the price so little over the last 3 years, and not aggressively pursued building their first party studios (and things like that) - It’s because the beancounters are running the show.
September 6th, 2008 at 6:45 pm
Yeah, good point. But what next then? What are they going to finance their next console with, if they are barely making a living off of their current one?
September 6th, 2008 at 6:48 pm
Probably some of the $50bn they have in cash reserves for the company.
September 6th, 2008 at 6:52 pm
I wonder if that will show up in the finacial reports, as “next gen XBOX console development” or something?
September 6th, 2008 at 6:59 pm
It’ll just be included in the entertainment and devices division numbers, as the xbox / xbox 360 numbers did. Probably as big fat red bolded numbers too.
September 6th, 2008 at 7:16 pm
Psychotext I don’t really think the SEC/FTC would pay anywhere near as much attention to the games industry as they would to a national (or international, I can’t remember) energy business, like Enron.
Especially bearing in mind Enron almost got away with it.
I really don’t think it’s beyond the realms of possiblity for Microsoft OR Sony for that matter.
September 6th, 2008 at 7:19 pm
No_PUD: You’re delusional. You think they’d ignore Microsoft… you know, the convicted monopolist and one of the biggest companies in the world? The company the US government threatened to break up.
September 6th, 2008 at 7:25 pm
Well no they wouldn’t, but their games division is in healthy competition, ofcourse that’s not being as heavily monitored.
And I am not some conspiracy theorist. I mentioned it for both Sony and Microsoft to dilute the idea of me claiming it purely on fanboy basis.
I just don’t think it’s impossible, specifically becuase the bean counters are just that, individual accountants basically. How much of a voice do they have?
Anyway you already proved me wrong in this instance, I am not debating that, but I am saying it’s (the system) is not infallible.
September 6th, 2008 at 7:41 pm
I’m not talking about beancounters in terms of accountants, I’m talking about the people running these divisions. Directors, managers etc. The division was restructured with profitability in mind (and you can’t blame them given what the original xbox cost them).