Anyone who calls the Xbox a failure has no clue. It's the big winner in this round of console wars. It's the only multimedia device that's networked to millions of PCs and hooked up to millions of computers.
It maybe hasn't sold as many units as the Wii, but the games per console stat is a blowout. As are paid downloads of content, third party games, etc.
And yeah, the red ring of death sucks (has happened to me a few times) but that's how they beat the PS3 to market and won the generation. In the end the 1 year lead is worth whatever they had to eat on that.
What's the total profit from Xbox? Considering the complete package - total investment etc from start to finish? Quite a large loss.
There's been one clear winner and that's the wii - unless you're looking for something other than cold hard cash profit, and I suspect number of units in peoples living rooms.
In terms of hardware, the xBox absolutely sucks. I use it rarely because the thing is so loud with its 100 fans. I have a quieter washing machine. If MS were going after the 'living room multimedia device', they failed spectacularly. The large HDD is also rendered useless, since you still have to put game discs in for 'copy protection purposes'.
If you include the 1st generation, you may well be correct. But the 2nd generation has been profitable.
And that first generation as a loss-leader was essential to produce the results of this current (and future) generations. So that seems far less like a loss than it does an investment.
Truth is, every company in the hardware space (Apple, Microsoft, Sony, and lesser companies like Tivo) all understand that when it comes to moving hardware units, we've got them in the cubicles first, then the home offices, then the bedrooms. The big untapped markets are the living rooms, pockets and cars.
And it seems obvious as anything to me that the xBox, PS3, etc, are not about gaming consoles. They're about getting a multimedia PC attached to your TV. Gates saw this as the next big thing 15 years ago. That's why they bought WebTV! Microsoft and a score of other companies have determined that the living room will be a very profitable market and they've been willing to drop a few dollars to get there.
>> "They're about getting a multimedia PC attached to your TV."
The problem is, the xBox is absolutely unusable as a media thing. It's ridiculously noisy, big, and useless. A mac mini beats it hands down. Or any small lightweight PC. The xBox still doesn't even have a browser for the love of god. We live in a time when new calculators probably have web browsers included.... but not the xBox.
I've used the Xbox to watch media almost every day since the day it launched. I download all my files through bittorrent, stream them to the Xbox. I also use PlayOn to let me watch Hulu there.
It's not too noisy if you have the latest version and aren't running a DVD. A Mac Mini is not better (though it is smaller and quieter) and it's significantly more expensive and harder to use for living room applications. I know because I tried.
The Wii has a browser, and I've used it once and then only to check it out. Wtf would I want a browser on my TV for? All the Xbox needs is a YouTube app, and then there'd be no reason for one.
I have wii, xbox, mac mini hooked up in the living room.
wii: family games (Agreed, the browser is crappy, no keyboard, etc), but games are best for kids/family.
xbox: guitar hero, good if someone wants to shoot random stuff or do real racing games.
mac mini: browser, youtube, photos, play backed up dvds, movie trailers, itunes, etc etc.
IMHO The UI in the xbox isn't good, and their insistance on reimplementing the web in 'apps' isn't one that I agree with - facebook, twitter integration? Just use a browser. I just simply can't stand to use the xBox more than is really necessary. It's painful :/ Whilst everyone else is moving towards the web as a platform, Microsoft still seems to think the web is irrelevant.
You miss the point of a monopoly -- Microsoft is able to eat losses to take over markets as long as they have a safe cash cow.
Then, the monopolist have a new "owned" area to milk money out of, for taking over the next application type.
The result is that in the process of getting a monopoly of something, there is lots of development. Then, the developers/money is being sunk elsewhere and the development speed in the monopoly areas are really low.
That is why you haven't seen any revolutionary changes in e.g. office products for quite a few years. Which we all lose by, since productivity isn't increased.
(Or maybe there just haven't been any new possible ideas in writing documents? Hardly. Computer linguistics hasn't been standing still the last decade.)
The problem is that unless the 360 can make up for the losses of the first XBox, they are still losers. They'll either need that to happen or they'll need to continue profitability with their 3rd console.
It's easy to say that MS has taken over the "gamer" market but we thought the same thing when Sony dominated with the PS and PS2. It's clearly a market whose leader can be taken down: The rise and fall of Sega. The rise and fall and rise of Nintendo. Sony and Microsoft coming out of nowhere to take over.
My point was that Microsoft only need to up the investment speed enough that everyone are in the red.
The non-monopolists will have to give up in the end. Then the monopolist can stay and earn lots of money for generation n, n+1, n+2, ...
(I think this is a classic example in economy, but for bakeries (?). A big chain goes into a geographic area and undercuts the prices of the small bakeries. After a while they close. Then the prices are raised to higher than ever before -- to pay for undercutting prices in the next area.)
There are two things working against that idea: 1) monopolies are illegal in most countries that you'd be targeting and 2) achieving monopolies in most markets is difficult.
In your bakers analogy, the barrier to entry is low enough that other bakers could set up shop and create competition. The video game console market is large enough that there will always be some company that could pounce on an opportunity. In fact, it's happened twice in recent history. Sony with the PS1 and Microsoft with the XBox.
1) Uhm, hello... Microsoft pays their fines and laughs all the way to the bank -- or use regulatory capture. (How many years has the EU been trying to get usable documentation for network standards?!)
2) Uhm, hello... Microsoft and different application areas? History contradicts you here, too.
(Then, I don't know enough about Sony/PS1, but Microsoft entering areas like this is a bit outside of their normal behavior, but open source will change their home market.)
How did such a lame fanboy rant get upmodded so highly?
Wii sales are double Xbox 360 and PS3, the sales of Wii Fit (bluetooth connected bathroom scales!) are more comparable in number.
Microsoft invested Billions in this and after two generations they're sparring with a self-destructing Sony for a distant second place.
I agree that it's not all about games or marketshare, but building a big, noisy, failure-prone box and backing the wrong horse in Hi-Def media aren't exactly great moves in the media centre space even if the latter failure got them belatedly onto the right track of movie downloads.
Lifetime, Xbox lost money. Their bet is that Project Natal will crush Wii. MS lost on the first years, they're making a profit since Halo 3 launch (yearly, at least until 2008 fiscal quarter)
The Xbox 360 has been a success for MS, it displaced Sony. But they made the mistake of focusing on replacing the number one, and forgot the whole, which Nintendo acquired.
If the market was a cake, 360's won a slice, but Nintendo baked more.
I thought Project Natal belonged more to the Cairo, WinFS and Windows for Pen Computing bin, namely, vaporware products that don't work nearly as well as advertised (Milo and Kate? gimme a break), pre-announced by many, many months (if not years) and designed to create a FUD atmosphere that hurt the sales of competitors.
It maybe hasn't sold as many units as the Wii, but the games per console stat is a blowout. As are paid downloads of content, third party games, etc.
And yeah, the red ring of death sucks (has happened to me a few times) but that's how they beat the PS3 to market and won the generation. In the end the 1 year lead is worth whatever they had to eat on that.