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Microsoft The Almighty Buck XBox (Games)

Ballmer Justifies 360's Costs 104

Posted by Zonk from the best-things-in-life-aren't-free dept.
Next Generation follows up on news last week of the enormous financial burden the 360's launch has placed on Microsoft. CEO Steve Ballmer sent around an email discussing the company's bright outlook with the new console. From the article: "While Xbox 360 hardware itself is the most prominent area of videogame-related investment, Ballmer indicated that further development of Xbox Live is also integral to the success of the platform and its respective division, saying, "We must execute our Live strategy with speed and precision." Relatedly, Live's downtime yesterday has resulted in an underwhelming feature addition: messaging.
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Ballmer Justifies 360's Costs More

Ballmer Justifies 360's Costs

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  • Speed and Precision (Score:5, Funny)

    by oahazmatt ( 868057 ) on Wednesday May 03, 2006 @02:24PM (#15255762) Journal
    "We must execute our Live strategy with speed and precision."

    a. Speed
    b. Precision

    You know the rules, Steve. You pick one or the other.

  • MS vista for gamers? (Score:3, Insightful)

    by paladinwannabe2 ( 889776 ) on Wednesday May 03, 2006 @02:27PM (#15255791)
    From the article:

    "The software giant also plans on releasing the gaming-focused Vista operating system to the public in January 2007."

    Since when is MS Vista focused on gamers?

    • I think he means they are going to release yet another flavour of Vista "MS Windows Vista - gamers", alongside the other 7 flavours of Vista that are planned.
    • Sinces M1CR05oF7 W1ND0WZ V1574 GAMERZ EDITION.
    • DirectX 10.

    • DX10 (Score:5, Insightful)

      by Anonymous Coward on Wednesday May 03, 2006 @02:38PM (#15255868)
      Well.. MS Vista doesn't really contain any benefits for gamers, in any way.

      However, MS Vista does contain DirectX 10-- and as far as has been announced so far, DirectX 10 will only be available for MS Vista. Before long, DirectX 10 is going to be required to play any new video games. So if you want to keep playing video games and get all the features and whatnot, you are going to have to upgrade to Vista. So you just have to learn to think like Microsoft. The way you probably think, "focused on gamers" means "designed to appeal to gamers and make gamers want to buy it". The way Microsoft thinks, "focused on gamers" means "we will be forcing gamers to buy it".

      In other words, Vista is "focused at gamers" the same way a sniper rifle might be "focused at" someone unexpectedly running across the White House lawn.

      • Re:DX10 (Score:3, Insightful)

        by CaymanIslandCarpedie ( 868408 )
        It'll be the game developers who will decide if gamers are "forced" to upgrade to Vista not MS. DirectX10 is just a new tool MS is providing to game developers. It will be up to the developers to make a business decision if the new tool offers enough performance gains, ease of use, new functionality, etc to make forcing an upgrade to Vista worth while. If game developers choose to write games for older versions of DirectX, they will still play fine on Vista.

        • Re:DX10 - OpenGL (Score:3, Interesting)

          by S3D ( 745318 )
          It's my opinion that DX10 may actaully make OpenGL more attractive for games. With huge installed Win XP base, any DX10 game not sponsored by MS had to be released for DX9 too. All new features of DX10, like unified shader will probaly supported by OpenGL as well. So with OpenGL you will be able to use one 3d engine for XP and Vista, instead of two. And it's officialy confirmed that OpenGL will not be crippled on Vista. Of cause MS answer to it will be to promote unified XBOX 360/Vista DevKit, but I doubt M
          • Interesting idea, except that most articles I've seen mention that DirectX9 will be installed side by side on Vista, so I expect game companies will just focus on DX9 for the meanwhile.
            • That's not how it's worked in the past, DirectX has just always been backwards compatible (for varying values of compatible. DirectX 5 stuff using D3D frequently fails to run on DX8 or 9.)
          • It would be brilliant to see DirectX usurped by an open standard - then it might be more likely a game is ported to the Mac/Linux. Unfortunately all the major engine/middleware/tools are built for DirectX so chances are the games companies will largely stick to DX9 until most people have Vista. And if they can afford it, they may have optional features that exploit DX10 in the meantime.
      • Vista is "focused at gamers" the same way a sniper rifle might be "focused at" someone unexpectedly running across the White House lawn.

        I love that analogy, its scarily accurate!

        Shame it'l be attributed to AC when quoted!

      • However, MS Vista does contain DirectX 10-- and as far as has been announced so far, DirectX 10 will only be available for MS Vista. Before long, DirectX 10 is going to be required to play any new video games.

        So here's a question - rather than get Vista, why not simply buy a 360? All of the games that are going to get the most benefit out of Direct X 10 are also going to be on the 360. Probably first!! Between Vista and a new video card, it really seems a gamer would be better off with a 360.

        Microsoft ha

        • So here's a question - rather than get Vista, why not simply buy a 360?

          The answer is still just as simple as it was when the question was "why not get an Xbox" or for that matter "why not get a Playstation" or what have you.

          That answer is still flexibility. For instance, even though Halo PC was a complete bugfest, that's still where I chose to play it, because it meant I could use mouse and keyboard and map my keys however I want. Typically, console games give you none of that.

          • The 360 supports a mouse and keyboard as well, and presumably you can use the in-game control chaning features to alter the setup.

            The answer is different when you throw in a $200 OS into the mix, whereas before with the XBox chances were your PC was about as powerful or perhaps a little more so. The 360 is more ahead of the curve in that regard. And of course not many games were all that high in resolution, where 720p is starting to get pretty decent if you have a good display.

            With every step Microsoft ta
    • DirectX10 which will ship with Vista is supposed to add some features but mostly make big improvements in simplicity and performance of the DirectX engine for game developers. I'm not a game developer though so cannot say if in reality its the best thing since sliced bread, a bunch of hot air, or somewhere in between.
    • Since when is MS Vista focused on gamers?

      Well... Ever since you needed a top of the line gaming rig just to run Vista with all the desktop effects on.
    • The Vista "Ultimate Edition" is focused on gamers as it features "game optimization" tools or some such nonesense. It's also supposed to be the version with the most digital rights management/"hardest" to pirate.
    • From the moment they have replaced Hearts with DNF.
    • guessing when Vista will actually be released is sort of a game, but i guess that's more in the gambling sense of the word

  • Metaphors... (Score:4, Insightful)

    by Kuukai ( 865890 ) on Wednesday May 03, 2006 @02:37PM (#15255863) Journal
    Microsoft has always said that the console race is a marathon, not a sprint. However, this initial costly sprint remains important during a period when the company boasts the only next generation system on the market.

    A marathon where you're bleeding money for most of the race. Sure hope another company doesn't zip past you on a bicycle [folklore.org] or something.

  • Xbox Live as a money maker is not going to happen (Score:2, Insightful)

    by Anonymous Coward
    In this console generation's cycle. Why do I say that? Because it's widely and publicly known within the industry that the iTMS' profit margins are razor thin. The store drives sales of the hardware, which is where Apple is making their money. Now tell me, in the next three to five years does anyone see Microsoft making content delivery on Xbox Live at the level of success that the iTMS has had? Can they negotiate with ABC in order to get Lost delivered to 360s? Pixar movies? It goes the other way around. I
    • The content provider sets their price, not MS. Blame Bethesda software for the stupid horse armor.

    • Re:Xbox Live as a money maker is not going to happ (Score:2, Interesting)

      by Anonymous Coward
      Even going by Microsoft's own inflated marketing numbers, the first Xbox had less than seven percent of owners signed up for the service.

      Just to put that in perspective, Sony who didn't see the need focus heavily on online gaming last gen had more people playing online with just one of their games, SOCOM, than the entire subscriber base of Microsoft's online service. What a humiliation.

      Microsoft's online service is a vastly reduced long time dream of Microsoft that goes back to the days of the Internet taki

      • Re:Xbox Live as a money maker is not going to happ (Score:1, Insightful)

        by Anonymous Coward
        The final nail in the coffin for Microsoft's dreams of taxing online access is the free and much better services that are coming out from Sony and Nintendo this year.

        How do you know they are much better if they haven't even come out yet?
      • Sony who didn't see the need focus heavily on online gaming last gen had more people playing online with just one of their games, SOCOM, than the entire subscriber base of Microsoft's online service.


        while that may be true... Sony's online service is free, whereas Microsoft's service is paid.
    • Halo 2 continues to be the top game on Live. Not a 360 title.
      Hardly surprising, there are what - 22 million Xbox units out there compared with maybe 4 million 360s? What surprises me is how many 360 titles ARE in the overall top 10.

      Likewise, I find it interesting that to this date MS refuse to state how many Live subscribers and users they have
      Some facts from Microsoft [gamerscoreblog.com]:
      • This quarter, we shipped 1.7 million Xbox 360 consoles, bringing our cumulative sales to date to 3.2 million consoles with 1.8 million in N
      • Correct me if I'm wrong, but I thought the "Silver" membership was free? And they are boastng about the "Silver" attach rate? How many Silver accounts are just folks that had Xbox, then upgraded to the 360?

      • Hardly surprising, there are what - 22 million Xbox units out there compared with maybe 4 million 360s?

        Wrong stats to use. The ones that we can use are:

        #1. So there you have it. 4 million consoles (let's be generous, the figures are a little old), and "more than half" are connected to Live.
        #2. I seem to remember the Live attach rate for Xbox 1 being around 10%, so figure another couple of million there.

        So 2 million Live subscribers on 360 and 2 million Live subscribers on original xbox. A level
    • Likewise, I find it interesting that to this date MS refuse to state how many Live subscribers and users they have.

      If you're looking for specific numbers accurate down to single digits, you aren't going to find it -- no company is that specific; specific information gives too much away to compeditors. They occasionally release figures when they hit milestones, and release general information about the service in their quarterly reports.

      They always issue press releases with non specific, skewed numbers to c

  • 360 is a decent machine, still needs work (Score:3, Interesting)

    by Nightspirit ( 846159 ) on Wednesday May 03, 2006 @02:53PM (#15255992)
    I had a 360 for about a week, took it back, and got a ps2 (for a specific game, plus some cash in the pocket). First of all, they did a great job with the dashboard, it looks slick and you can customize it. The achievements, gamerscore, and interaction with other gamers are genius. Geometry wars and burnout were some of the funnest I've had playing games ever. Downloading demos was genius as well, I had as much fun downloading and trying new games as I did playing ones I paid for.

    So why did I take it back? Well, perhaps I wouldn't have if street fighter II was out already and Oblivion wasn't such a bugfest (and runs suprisingly slow at times for a 360 game). The machine is noticibly loud (I even took it back and got another and it was still loud). If I had an enclosed cabinet, this wouldn't have mattered as much. The future announced games didn't hold much interest to me. But the biggest factor was that the 360 sucks as a media center, and it couldn't replace my hacked xbox with Xbox Media Center. Lack of divx support and video only available to MS XP Media Center Edition killed it as a media center. My TV only has a couple componenet video inputs, so my decision was to keep the xbox and take back the 360.

    What MS needs to do is quiet down the console (they are already taking steps towards this with a smaller chip), add divx support (and FLAC tag support, but that doesn't have as wide an appeal as divx), remove the "XP media center" lock-in for videos (they are taking steps towards this, but we will see what they actually do), improve the media features in general (better media player features), and add more games to xbox live (porting abandonware would be cheap and make a killer system IMO).
    • Not just abandonware... they need to really update their backwards compatability list. Some of their top-flight Xbox games like Soul Calibur II are still incompatible. Meanwhile Barbie Horse Adventure was in the initial list of 200 that WAS.

    • Re:360 is a decent machine, still needs work (Score:5, Informative)

      by Osty ( 16825 ) on Wednesday May 03, 2006 @04:24PM (#15256854)

      Just some nitpicking:

      Well, perhaps I wouldn't have if street fighter II was out already and Oblivion wasn't such a bugfest (and runs suprisingly slow at times for a 360 game).

      While Oblivion does have its share of bugs, the only slowness I noticed was after playing for a while and letting the game cache get fragmented. There's a work-around to clear the cache by holding down any button on the controller when you start the game (hold it through the BethSoft logo. Once the 2K logo displays, you can let go). Not the best solution, but it is a solution. I'm right there with you, wishing for SFII. What ever happened to shipping it in March?

      The machine is noticibly loud (I even took it back and got another and it was still loud).

      You should clarify that the DVD-ROM is loud when it's spinning at full speed. The machine itself (fan noise) is very quiet, and the DVD-ROM is also quiet while watching DVDs. There's not a whole lot you can do about drive speed when it's running that quickly (the 360 DVD-ROM is something like 16x, compared to the 4x in the Xbox or PS2).

      But the biggest factor was that the 360 sucks as a media center, and it couldn't replace my hacked xbox with Xbox Media Center. Lack of divx support and video only available to MS XP Media Center Edition killed it as a media center. My TV only has a couple componenet video inputs, so my decision was to keep the xbox and take back the 360

      You're dinging the 360 for not doing something it never claimed to do. The 360 is a Media Center Extender. In other words, it's completely dependent on a Windows Media Center PC to feed it media. It sounds like you want the 360 to be a stand-alone media player (or mostly stand-alone, while occassionally pulling media from the network).

      As for having limited component video inputs, get yourself a mux. I'm preferential to Audio Authority's 1154A [audioauthority.com], but you don't need to spend > $200 on a mux. You can find decent ones (minus auto-switching, audio format conversion, and the cool rack-friendly form-factor) for less than $50. You do realize the PS2 can do component output, right? The graphics will still look PS2-bad, but the color and sharpness will be better (and if you have a game that can support 480p, like GT4, you can only do that over component).

      add more games to xbox live (porting abandonware would be cheap and make a killer system IMO).

      There is no such thing as "abandonware", legally. Either the games are released to the public domain, or they're not (or they're released under a license that makes it possible to port them without legal troubles). "Abandonware" games that are still technically under copyright cannot be ported without proper consent. The question is, who gives that consent? How do you get permission to port a game that's been out of print for 15 years, and the original developer/publisher has been out of business for 10? Who currently owns the property? You have to track down the series of sales of IP until you hopefully find the right company you need to deal with. This is painful.

      I do agree Microsoft needs to add more games to XBLA, but I don't think that's really going to be a problem for them. I think we're just in the lull before the storm right now, having not had any new XBLA games since Jewel Quest. Prepare to be bombarded (good thing I just finished up Oblivion, so I'll be ready to play some new arcade games)!.

      • "While Oblivion does have its share of bugs, the only slowness I noticed was after playing for a while and letting the game cache get fragmented."

        What about the dirty disk errors that pop up at random? (the oblivion tech forum is rampant with them, so I know it wasn't just the two machines I tried). Yah, I know how to clear the cache, but have you tried riding a horse? The loading every 3 seconds is unbearable. And the fact that with a PC with similar specs to the 360 gets farther grass draw distance is per

        • What about the dirty disk errors that pop up at random? (the oblivion tech forum is rampant with them, so I know it wasn't just the two machines I tried). Yah, I know how to clear the cache, but have you tried riding a horse? The loading every 3 seconds is unbearable. And the fact that with a PC with similar specs to the 360 gets farther grass draw distance is perplexing.

          I must be extremely lucky. After > 100 hours of Oblivion on the 360, completing all achievements, I've never once run into a dirty

    • (porting abandonware would be cheap and make a killer system IMO).

      "Abandonware" is just an excuse for copyright infringement. There's no law (or moral justification, IMO) that says that just because a product isn't being sold anymore it's legal to make and distribute however many copies you want.

      Sure, right now, companies like Electronic Arts aren't that keen on worrying about all the disk image copies of F-117 for Commodore 64 floating around, but you can bet your ass that if a company like Microsoft trie

  • Kudos to MS (Score:3, Insightful)

    by i am kman ( 972584 ) on Wednesday May 03, 2006 @03:03PM (#15256075)
    At least MS recognizes they can't live on keyboards and mice alone and the future of computing for the masses will not be driven by PCs, but by game consoles, TVs, iPods, cars, and many other non-PC based that integrate into everyday life.

    It's all about the user experience, not the keyboard.

    But it still remains to be seen how well MS competes in a world dominated by primarily device-driven devices - particularly since this seems almost the exact opposite of their business model and strengths.
  • I had nothing to do with the new feature.

  • Strange... (Score:3, Insightful)

    by Aphrika ( 756248 ) on Wednesday May 03, 2006 @03:12PM (#15256152)
    When you're sat on a $40 billion slush fund, I didn't think you had to justify making a loss. I mean, the money's there to be spent taking the company into new markets, right?

    So what M$ and Ballmer did was exactly right. Heck, I bet Sony'd love a $40 billion slush fund right now, then they could offset PS3 losses against it. In fact, any company would love to do this - all to often you hear about a single product bombing and taking a whole company with it...

    • Re:Strange... (Score:1, Interesting)

      by Anonymous Coward
      I don't think you know how fast 40 billion can go in the business world.

      Let's look at Microsoft's second fiscal quarter, ending December 31, 2002 (I know, it's far back, but I this source [tribuneindia.com] has all the info I need for this example).

      Net profit: 2.28 billion
      Revenue: 7.78 billion

      This means that they had 5.5 billion in expenses during 3 months, or about 22 billion in that year. (Assuming all quarters were equal, which they weren't.) If Microsoft didn't have any revenue, their 40 billion dries up in 2 years. In
      • Revenues don't tend to just "dry up" like that for a company that big. Even if they started losing money, they would not necessarily lose all revenue. Plus, they could most likely reduce a lot of expenses if necessary.
    • But isn't this how Sony likes to play?

      Sony dumps a bunch of money into chip fabs so that they don't have to line the pocket of any hardware manufactures, and then makes it back on the hardware once they've brought production costs down. Despite all the claims to the contrary, Sony does not expect to lose money on the hardware in the long run.

  • But his strongest justification is.... (Score:3, Funny)

    by Foobar of Borg ( 690622 ) on Wednesday May 03, 2006 @03:14PM (#15256179)
    "I love this X-Box, YYYEEEAAHHH!!!!" *throws chair*
  • A solution to start making serious money would be to port the games available in MAME32 to run on the XBox. This would involve offering a nominal fee to every owner of each old ROM, setting up a good team to write the emulator code, and figure out the pricing scheme (hint: make it really low). I still have fun with Elevator Action, Double Dragon, and the like, so I think there's definitely a market; I also wouldn't think twice about investing $20-50 in a collection of the oldies that I liked. I've alread
    • A solution to start making serious money would be to port the games available in MAME32 to run on the XBox. This would involve offering a nominal fee to every owner of each old ROM, setting up a good team to write the emulator code, and figure out the pricing scheme (hint: make it really low). I still have fun with Elevator Action, Double Dragon, and the like, so I think there's definitely a market; I also wouldn't think twice about investing $20-50 in a collection of the oldies that I liked. I've already p
    • Pricing scheme? How much would MS have to pay to Capcom, Atari etc for the rights to the games? Hobbyists get away with Mame because there's no-one (with any money) to sue. If Mame was an integral reason for people buying a 360 there'd be a queue of IP lawyers outside Gate's office...

  • Downtime NOT just for messaging (Score:4, Informative)

    by radish ( 98371 ) on Wednesday May 03, 2006 @03:35PM (#15256386) Homepage
    Relatedly, Live's downtime yesterday has resulted in an underwhelming feature addition: messaging.

    This is a myth. Microsoft have said repeatedly that the downtime was not for any specific new features but to prepare the various systems (Xbox Live, xbox.com, forums, etc) for future upgrades and the onslaught of E3 (masses of trailers, demos, etc). The messaging addon is nice, but you can't seriously believe they took down the entire network for a day to add a feature like that.

    I can understand the 13 year olds on the forums not understanding the need for downtime for infrastructure upgrades and rework, but I'd expect a little more from the /. crowd.
    • I can understand the 13 year olds on the forums not understanding the need for downtime for infrastructure upgrades and rework, but I'd expect a little more from the /. crowd.

      Nobody ever went broke overestimating the stupidity of /.'ers. Or, uh, something like that.

      (It's a joke, people, laugh a little)

      --
      This sig is on the Red List

    • It's Microsoft, and this is Slashdot - a place where readers will make up random stuff to bash Microsoft with, so manipulating the facts is child's play in comparison. After all, there was much bashing when it was announced that the 360 was going to have a new processor design in the future, even though every other console in history has done the same things.

      People don't let truth and reality get in the way here.

    • I can understand the 13 year olds on the forums not understanding the need for downtime for infrastructure upgrades and rework, but I'd expect a little more from the /. crowd.

      Or, you know, they could have testing servers, and get the new stuff working on those, and then flip 'em over. With a halfway intelligent architecture it could be done totally invisibly.

    • There are several companies who show it. Take Guildwars for example. They sometimes have 3 different Versions of the Client&Servers online. The whole downtime for the first year was NINE HOURS.

    • Re:Downtime NOT just for messaging (Score:1, Insightful)

      by Anonymous Coward

      I can understand the 13 year olds on the forums not understanding the need for downtime for infrastructure upgrades and rework, but I'd expect a little more from the /. crowd.
      Sorry dude, there are plenty of people here who admin large server farms with >99% uptime. Seamlessly re-number a /20, no problem. See the look on the fanboi's face when he realizes that those 13 year olds were right, priceless.
    • I can understand the 13 year olds on the forums not understanding the need for downtime for infrastructure upgrades and rework, but I'd expect a little more from the /. crowd.
       
      Sorry, I got confused, were you talking about two different groups?
  • The funniest thing that I am seeing is that a lot of people are saying that microsoft should do a lot of the things that Nintendo is doing but yet people are saying that Nintendo will fail ?

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