Steve Ballmer about Xbox360, Zune, Vista and more ... Options

[Xbox-Scene]

Steve Ballmer about Xbox360, Zune, Vista and more ... Posted by XanTium | October 11 17:57 EST

Steve Ballmer shares his thoughts on businessweek.com about the Web 2.0 phenomenon, Zune, XBox, Vista, Bill's upcoming 2008 retirement, the future of Microsoft, and other subjects. About the Xbox360: [QUOTE] * Businessweek: Explain how the business for Xbox changes from the first generation of the console to the current generation with Xbox 360. * Steve Ballmer: Generation one was lose money--gross margin loss on the console for the lifetime. You've got to take a lifetime view. We did have a lifetime view that said if you add all the revenue from selling consoles and all the costs of shipping consoles, it was negative. It was a model that made that back on royalties and third-party games and our own first-party games. We actually thought we could pencil it out. We also didn't think we would lose as much money as we did because we thought we could charge a premium for a device that had a hard disk in it. But we could premium price to Sony (SNE) because we had a hard disk. So this generation, we're not pricing to lose money on the hardware over the life. At the same time, we said we can't have hardware that we can't recover with the consumer. We couldn't recover the hard disk. So the hard disk is not mandatory in the 360. The most popular model has a hard disk. But no games require a hard disk. Sony, in some senses, is in the exact same position we were in in the last generation. By sticking in the darn Blu-ray [high-definition DVD player] drive--and they are pricing to recover its cost--they are at a price disadvantage. If they move to match our price, they will lose a lot of money over the life of the console. And I'm not sure that Sony's P&L, frankly, would be able to tolerate that. [/QUOTE] Read More: businessweek.com

[redwolf]

But no games require a hard disk.

is he serious?

So this generation, we're not pricing to lose money on the hardware over the life.

i swar they said they're losing monies. plus future how much 20gigs HDD gonna cost.

Blu-ray [high-definition DVD player]

Hmmm HD-DVD = high-definition DVD player, Blu-ray = similer to what killed Steve Irwin.

[bucko]

Sony, in some senses, is in the exact same position we were in in the last generation.

I love it!

This post has been edited by bucko: Oct 11 2006, 10:19 PM

[Big Al]

To tell you the truth I don't think MS has much of a vision of what they want the 360 to be. If they can make money selling the hardware (which Apple does), then why don't they add things like better Media Center capability so they will sell more consoles?

[thax]

i swar they said they're losing monies. plus future how much 20gigs HDD gonna cost.

The problem with HDDs is that there is a substantial fixed cost to make them. Adding additional higher density platters doesn't increase the cost much. So if a 20 gig HDD costs 50 dollars to make, you could probably get a 60 gig model for 55 dollars.

[DMAddict]

I can just see M$ execs rubbing their hands together and chuckling in deep laughter while chanting. . .Death to Sony.

This post has been edited by DMAddict: Oct 11 2006, 11:10 PM

[KAGE360]

is he serious?
i swar they said they're losing monies. plus future how much 20gigs HDD gonna cost.

Hmmm HD-DVD = high-definition DVD player, Blu-ray = similer to what killed Steve Irwin.

-yes he's serious, only two games to date require the HDD

-They are losing money per console, but only currently. it was previously stated that they designed the 360 so they can begin making a profit off the consoles as early as 2007. also remember that much of what hindered microsoft with losing money on the xbox was that they did not own the technology in the xbox, this is not the case with the 360.

To tell you the truth I don't think MS has much of a vision of what they want the 360 to be. If they can make money selling the hardware (which Apple does), then why don't they add things like better Media Center capability so they will sell more consoles?

see above, they can over time.

The problem with HDDs is that there is a substantial fixed cost to make them. Adding additional higher density platters doesn't increase the cost much. So if a 20 gig HDD costs 50 dollars to make, you could probably get a 60 gig model for 55 dollars.

what im confused about is that i know that the 360's HDD is laptop HDD (SATA is it?) but is it custom made in the least bit? if so are they able to lower the cost/price for it in any way?? im curious because they already announced that they would release bigger HDD in the future. if the current 20GB is $99, then how much will a 60GB or 80GB cost if they cant reduce the price? i know you just said that increasing the size wont increase the price that much but if they were to replace the current 20GB with a 60GB and sell that for $99, it would be wiser to get a core for $300 and a bigger HDD for almost the same price as the premium version (sans headset). this would not benefit microsoft IMO.

i dont know what developer commented on it, but it was suspected that in the future they would drop the core package entirely and every 360 would have a HDD. might as well since 85% of the 360's made are premiums. they can lower the Premium to $300, drop the core, and release a bigger HDD for $99.

[ic3man1999]

-yes he's serious, only two games to date require the HDD


-They are losing money per console, but only currently. it was previously stated that they designed the 360 so they can begin making a profit off the consoles as early as 2007. also remember that much of what hindered microsoft with losing money on the xbox was that they did not own the technology in the xbox, this is not the case with the 360.
see above, they can over time.
what im confused about is that i know that the 360's HDD is laptop HDD (SATA is it?) but is it custom made in the least bit? if so are they able to lower the cost/price for it in any way?? im curious because they already announced that they would release bigger HDD in the future. if the current 20GB is $99, then how much will a 60GB or 80GB cost if they cant reduce the price? i know you just said that increasing the size wont increase the price that much but if they were to replace the current 20GB with a 60GB and sell that for $99, it would be wiser to get a core for $300 and a bigger HDD for almost the same price as the premium version (sans headset). this would not benefit microsoft IMO.

i dont know what developer commented on it, but it was suspected that in the future they would drop the core package entirely and every 360 would have a HDD. might as well since 85% of the 360's made are premiums. they can lower the Premium to $300, drop the core, and release a bigger HDD for $99.

If he is serious he must be retarded, 1 game requiring it isnt "NO GAMES"

This post has been edited by ic3man1999: Oct 12 2006, 12:17 AM

[KAGE360]

If he is serious he must be retarded, 1 game requiring it isnt "NO GAMES"

its 2 games actually and both were known to be required for a long time.

remember there are exceptions to almost everything in the gaming industry.

if these 2 measly games are such a big deal to you sell your 360, if you dont have one why bitch?

[DaddyO21]

-They are losing money per console, but only currently. it was previously stated that they designed the 360 so they can begin making a profit off the consoles as early as 2007. also remember that much of what hindered microsoft with losing money on the xbox was that they did not own the technology in the xbox, this is not the case with the 360.

Thats correct , Microsoft didnt own XBOX , each part of the hardware was from someone else , GPU was property of NVIDIA , CPU from Intel , the only thing they didnt have to pay royalties was for the dashboard.

On XBox360 they own the rights for each parts so they dont have to pay royalties , reason why XBox360 haves to emulate XBox or else they would have to pay royalties to NVIDIA but 100% of the game library would have been backwards compatible. since the problem is the GPU not the CPU.

[incognegro]

Kage I think Ms relies alot on the sale of peripherals to make profits. So I doubt they are gonna be very lenient on the pricing. peripherals are treated the same as software and we all know software is their bread and butter. Its a sort of a "back door" way of profiting. They use the main product as bait to get you spend money on additions to it cause thats where the profit lies. McDonalds uses the salty food to get you to buy their over-priced soda! I mean you can't join xbox live without a xbox! You can't stream video without purchasing Xp MCE.

Im not mad though, thats business.


Im sure that when MS announces price drops the HDD in the premium is gonna get bigger and the 20 gig won't be sold anymore. That way new consumers will have the biggest HDD possible and Old ones have to upgrade for the same $100 price. It sounds bad but thats how technology works. PCs are just like that, My PSP is just like that and even the Ipod is similar. We have to pay to stay up to date. Why did we buy 360 in the first place when the xbox handled all ur needs (through homebrew, ofcourse)?

Our human desires prevents us from ever being in a comfort zone. No matter what we always want more. This is the weakness that companies exploit.

So ppl can kick and scream about how they are being ripped off when bigger HDDs for $99 come to 360 but the fact is they are gonna buy it!

WTF......where was I supposed to be going with this rant again?

This post has been edited by incognegro: Oct 12 2006, 02:18 AM

[0794]

He really did a great job summarizing the profit models in both xbox versions and then the comparison to the PS3. Sony won't be able to recover the cost of Blu-Ray while maintaining competitive prices in this next-gen environment. They are absolutely banking on the hope that Blu-Ray wins over HD significantly and thus makes their console more attractive. Anything less than a large margin of victory in the HD realm spells loss of profit in the long run (over the life of the console), regardless of how well the PS3 is initially perceived to perform in sales.

[-Spud-]

Sony, in some senses, is in the exact same position we were in in the last generation. By sticking in the darn Blu-ray [high-definition DVD player] drive--and they are pricing to recover its cost--they are at a price disadvantage. If they move to match our price, they will lose a lot of money over the life of the console.

Absolute load of rubbish. If you add the price of an Xbox 360 plus the HD-DVD unit this becomes more expensive or roughly the same as a PS3 on it's own. And on top of that the PS3 has more features out of the box.

The base model PS3 here in AUS will retail at $829.99AU. This version is closest to functionality of the Xbox 360 yet still has more functions lol. The Xbox 360 Premium pack retails here at $649. Add to that the Xbox HD-DVD retail price of $200USD and that works out as AUD $649 + $268 which equals $917 AUD.

The PS3 is cheaper. You are talking absolute rubbish Steve Ballmer.

[cerberus414]

You need to understand that not everyone needs the freaking HD-DVD drive. Yes, I get it, PS3 does have BluRay built-in. But with all due respect, how many people will actually use the bluray drive for movies. 85% of people will get it for games period. If people wanted HD movies, they've would go the stand alone players. The crapppy bluray drive that will be in PS3 will suck. Why, because SONY, them self said that they need to cut down costs. If they took out rumble pack out of the controller because of the cost, you might as well think that they will cut corners on the bluray drive just to make is as cheap as possible. But overall, they want you to think: "Yes, we have the bluray drive." 2 in 1 deal isn't always good. I had a DVD/VCR combo once and it broke almost instantly. If one part break, the hole thing is broken. Sony messed up because they are focusing on two things at once instead of putting extra effort into one and perfecting it (cough gaming cough not media entertainment crap). I'll take one good thing over two mediocre things any day.

[Vipernig]

Yeah sure if you add the HD-DVD player the prices are going to be the same but at least YOU HAVE THE CHOICE with Xbox360. I dont give 2 fucks about HD-DVD or Blu-ray and there for I am not going to buy the add on and hell why should I have to pay a prenium if I dont give a shit about Blu-ray Movies. I want to play games. I dont want to pay 200$ more just for the crappy option of renting Blu-Ray movies. On top of that it seems that the difference between Blu-Ray/Hd-DVD and upscaled DVD is minimal. So yes Sonyis shooting its selfin the foot. It made sense with to have DVD on PS2 because everybody had VHS at the time. Now everyboody has DVDs and upscaling DVD players cost 50$ now. And you have to rebuy new movies that you bought 2 years ago on DVD. Common this is bullshit. Sony is fucked.


BTW sony took out the rumble feature not to save cost on the rumbling hardware,but to actually not have to liscence the patent that Immersion has on the rumble feature .

This post has been edited by Vipernig: Oct 12 2006, 04:32 AM