Microsoft Joined Console Race to "Stop Sony", Says Former Exec

Microsoft Joined Console Race to "Stop Sony", Says Former Exec

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The beginnings of one of gaming's most prevalent platforms stemmed from a grudge.

Microsoft's entry into the console market with the Xbox was certainly a bold move against the apparent success of Sony's PlayStation and the well-established presence of Nintendo. The brand is still alive and kicking, but what motivated the company to compete in the first place? A former Microsoft executive said that the company only entered the console space simply because Sony refused to co-operate with them.

Joachim Kempin, former VP of Windows Sales at Microsoft since 1983, stated that if the company couldn't work with Sony, they were dedicated to beating them instead. "The main reason was to stop Sony. You see, Sony and Microsoft...they never had a very friendly relationship, okay? And this wasn't because Microsoft didn't want that.

"Sony was always very arm's length with Microsoft," he continued. "Yeah, they bought Windows for their PCs but when you really take a hard look at that, they were never Microsoft's friend. And Microsoft in a way wanted them to be a friend because they knew they had a lot of things we could have co-operated on because they are, in a way, an entertainment company, you know? I mean, at least a portion of Sony is and they had some really good things going there, but as soon as they came out with a video console, Microsoft just looked at that and said 'well, we have to beat them, so let's do our own.'"

Kempin added that even Bill Gates was keen to tackle gaming consoles head on, saying that Gates was afraid that the "living room computer" would eventually threaten the traditional PC marketplace.

It was a move that barely paid off, given the expenses incurred from hardware manufacture were only just offset by royalties and paid services such as Xbox LIVE. "They're just maybe a little bit above breakeven, that's all there is. This is not a big money-making machine for Microsoft," Kempin said.

Source: IGN

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Now there are two shitty consoles competing with each other.

Ironically Sony broke into the gaming market out of spite because Nintendo had them make a CD what not for the nes.
Then Nintendo screwed their pooch by canceling the project.
If I'm remembering correctly

Not a big money making machine?

24+ million sales of the original and triple that for the Xbox 360, bullshit hahahahaha

KiKiweaky:
Not a big money making machine?

24+ million sales of the original and triple that for the Xbox 360, bullshit hahahahaha

And yet the Xbox decision of Microsoft consistently puts in loss reports.

Profit margin, not turnover, is what ultimately matters. It's a lesson a surprisingly large number of American businesses fail to learn - look at GM.

Vie:

And yet the Xbox decision of Microsoft consistently puts in loss reports.

Profit margin, not turnover, is what ultimately matters. It's a lesson a surprisingly large number of American businesses fail to learn - look at GM.

There's no real purpose to arguing with gamer logic.

Nintendo's dead/dying, Sony and Microsoft are the kings of gaming, just don't talk about PC because it's supposed to have been dead since the 80's so its lingering presence is just awkward for us all. Oh and remember every game is too easy for you because you're just so hardcore.

"wanted them to be a friend"... bitch please, conglomerates like this do not get up there with making friends and MS is the master of not making fiends, only that spite part does fit the profile.

And I highly doubt they are losing money overall, they are the most money grubbing asses in the market, if they are barely breaking even then everyone else would be dead broke decades ago.

Timothy Chang:
Gates was afraid that the "living room computer" would eventually threaten the traditional PC marketplace.

How very forward thinking of him:
Xi3 Unveils Valve Backed Piston Gaming PC

There must have been more to it since the costs in R&D, among other things, are so huge.

Although if a huge corporation like Microsoft can't make the console market "super profitable" then we should be grateful that there are at least three competitors, rather than just two or even one.

I'm a little surprised, if this isn't hugely profitable, why are they still doing it? Surely nothing softens a grudge like billions of pounds?

Vie:

KiKiweaky:
Not a big money making machine?

24+ million sales of the original and triple that for the Xbox 360, bullshit hahahahaha

And yet the Xbox decision of Microsoft consistently puts in loss reports.

Profit margin, not turnover, is what ultimately matters. It's a lesson a surprisingly large number of American businesses fail to learn - look at GM.

This soo much. Making a billion dollars sounds fantastic...unless you have to spend two billion to make that one billion.

OT: Microsoft joining out of spite makes sense. But wanting to be friends with Sony? Corporations don't make friends, they make mutually beneficial projects. If one side doesn't want to join up...it's because they don't feel it's beneficial. Not because they don't want to be "friends". If the friends part is true, someone was pretty damn naive.

BrotherRool:
I'm a little surprised, if this isn't hugely profitable, why are they still doing it? Surely nothing softens a grudge like billions of pounds?

its not hugely profitable, but the profit is there and thats what counts.

If it was constantly in the red across all sectors, lisencing hardware and subscriptions you can bet your ass they would cut it.

Then again...they would have a larger profit margin if they didnt hire circ de soleil to unviel their kinnect shit :P

Sony are in badish shape of late due to not having the microsoft power base to support the whole 'not very profitable gaming machines' issue.
Just to give you an idea the game retail i worked for only ever made about 5% profit off any hardware sales and I don't think sony/microsoft ever made much any off the actual machines. Nintendo did untill 3DS and WiiU but the investment in those was massive(like PS3 and 360) so they have to play catch up. Games are where they make the cash and xboxlive and psn.

FelixG:

BrotherRool:
I'm a little surprised, if this isn't hugely profitable, why are they still doing it? Surely nothing softens a grudge like billions of pounds?

its not hugely profitable, but the profit is there and thats what counts.

If it was constantly in the red across all sectors, lisencing hardware and subscriptions you can bet your ass they would cut it.

Then again...they would have a larger profit margin if they didnt hire circ de soleil to unviel their kinnect shit :P

It depends on how small that profit margin is though. Once you've got a lot of money it's fairly easy to make more money with it but the amount you make back and the risk are important. The billions they put into the Xbox are billions that they can't invest to make Windows better or pay off debts or survive losses from a failed project etc. I guess it must be right on the border of not making enough for the effort to be worthwhile, there was that analyst who was predicting they might have to sell it off soon if Microsoft doesn't have a breakthrough as a company, because they can't afford to have so much money tied up in one thing that doesn't even bring much back

BrotherRool:

FelixG:

BrotherRool:
I'm a little surprised, if this isn't hugely profitable, why are they still doing it? Surely nothing softens a grudge like billions of pounds?

its not hugely profitable, but the profit is there and thats what counts.

If it was constantly in the red across all sectors, lisencing hardware and subscriptions you can bet your ass they would cut it.

Then again...they would have a larger profit margin if they didnt hire circ de soleil to unviel their kinnect shit :P

It depends on how small that profit margin is though. Once you've got a lot of money it's fairly easy to make more money with it but the amount you make back and the risk are important. The billions they put into the Xbox are billions that they can't invest to make Windows better or pay off debts or survive losses from a failed project etc. I guess it must be right on the border of not making enough for the effort to be worthwhile, there was that analyst who was predicting they might have to sell it off soon if Microsoft doesn't have a breakthrough as a company, because they can't afford to have so much money tied up in one thing that doesn't even bring much back

And what a company like MICROSOFT considers a small profit margin :P

"Shit, we only got a billion in profit off xbox royalties."
"Fuck man, why do we even bother with those gamer plebes?"

Know what I mean? heh

Then again, I havent taken any serious look at MS's books so I have no idea how their profit margins look.

karma9308:

Vie:

KiKiweaky:
Not a big money making machine?

24+ million sales of the original and triple that for the Xbox 360, bullshit hahahahaha

And yet the Xbox decision of Microsoft consistently puts in loss reports.

Profit margin, not turnover, is what ultimately matters. It's a lesson a surprisingly large number of American businesses fail to learn - look at GM.

This soo much. Making a billion dollars sounds fantastic...unless you have to spend two billion to make that one billion.

OT: Microsoft joining out of spite makes sense. But wanting to be friends with Sony? Corporations don't make friends, they make mutually beneficial projects. If one side doesn't want to join up...it's because they don't feel it's beneficial. Not because they don't want to be "friends". If the friends part is true, someone was pretty damn naive.

Yeah well friends is just short hand for cooperation. Sony is like Microsoft in that they have alot of different markets so having a beneficial relationship is like a beneficial relationship between two country's, yes they ACTUALLY each want the other to cease to exist at their own exclusive benefit but that's doesn't happen too often so sometimes it's simply beneficial play nice instead of beating each other bloody.

Justin Smith:
Ironically Sony broke into the gaming market out of spite because Nintendo had them make a CD what not for the nes.
Then Nintendo screwed their pooch by canceling the project.
If I'm remembering correctly

Thats correct, except the system in question was for the N64.

yes.

now how will the children (fanboys9 think of themselves when they know they were only made to stick it to someone else and nothing more?

If you can't join 'm, beat 'm.

I love how Microsoft is trying to come across as if they were carrying an olive branch to Sony. Since Microsoft was obviously know for it's oh so friendly business practices back then.

Justin Smith:
Ironically Sony broke into the gaming market out of spite because Nintendo had them make a CD what not for the nes.
Then Nintendo screwed their pooch by canceling the project.
If I'm remembering correctly

There's a bit more to it than that but yeah pretty much. Nintendo had good reasons for axing the project.

OT: Bullshit, MS got into the console business because it's a lucrative and profitable business when you do it right. $20 licence per title or some shit is pretty damn beneficial to a company doing well with it.

ohhh microsoft are the good guys trying to stop evil Sony.
And I should take Mircosoft's word for it.

The war of words has began.

You see, you can't beat Sony OR Nintendo in console space. That's just not going to happen. Microsoft managed to get a share of the market, but at they moment they're 3rd place worldwide (could be worse, but they're on top in US) and it looks like it's not a very profitable endeavor (hence they stopped funding core titles and trying to appeal to casual market - it's cheaper to develop for).

Come to think of it, I've always preferred Sony - but not because they're particularity consumer-friendly, but because Microsoft is the evil of this industry, really. Patches on consoles? Paid online? Dear god.

Lord_Gremlin:
Come to think of it, I've always preferred Sony - but not because they're particularity consumer-friendly, but because Microsoft is the evil of this industry, really. Patches on consoles? Paid online? Dear god.

What?! You're complaining about Microsoft for having Patches on their console, while supporting Sony and its frequent Firmware updates (That shut down your console for the duration, and don't allow you to delay installation)? That's pretty funny.

Scow2:

Lord_Gremlin:
Come to think of it, I've always preferred Sony - but not because they're particularity consumer-friendly, but because Microsoft is the evil of this industry, really. Patches on consoles? Paid online? Dear god.

What?! You're complaining about Microsoft for having Patches on their console, while supporting Sony and its frequent Firmware updates (That shut down your console for the duration, and don't allow you to delay installation)? That's pretty funny.

You missed my point. Sony have their share of BS. It's just Microsoft is where BS originates. Hate the source.

FelixG:

And what a company like MICROSOFT considers a small profit margin :P

"Shit, we only got a billion in profit off xbox royalties."
"Fuck man, why do we even bother with those gamer plebes?"

Know what I mean? heh

Then again, I havent taken any serious look at MS's books so I have no idea how their profit margins look.

So true =D Oh no we only have a third of the console marketshare over the entire world, what shall we do :)

A distant second with the Xbox and now 3rd place with the 360 in this gen. So much for "stopping" anything.

FelixG:

Then again, I havent taken any serious look at MS's books so I have no idea how their profit margins look.

http://www.businessinsider.com/chart-of-the-day-microsoft-income-by-segment-2012-10

In that chart, the light blue area near the bottom is the Entertainment division, which includes Xbox. Some months it's slightly positive, other months it's in the red. It's pretty tiny compared to the other areas of the company.

In Q4 2012 their revenue was $73 billion ($1.78B from entertainment & devices), and based on that they made a total of $21.6B of income ($263M from entertainment & devices.) So it's approximately 1% of their profit. (source: http://betanews.com/2012/07/19/microsoft-q4-2012-by-the-numbers-6-2b-charge-saps-record-quarter)

I think one reason they keep investing in the Xbox is they consider it their best bet for having a presence in a room of your house other than your study. PC sales are declining, and people are using a greater variety of devices. Having a PC/Xbox/Surface/Windows Phone ecosystem all working together is an attractive idea, in theory. In practice, I don't see much excitement for their smartphones or tablets.

Sounds about right. Microsoft have always seemed to me like a company with no real vision or long-term goals, just jealousy for every other company in the electronics and computer industries. So they try to play me-to with everyone. From DOS (CP/M, UNIX) to Windows (Macintosh) to the Xbox (Sony) to Zune (iPod) to Bing (Google), it seems the only thing they've ever been capable of is latching on to someone else's market for its own sake. Granted, they usually do it pretty darn well (Windows, in particular), but they're still only doing it because someone else thought of it first. That it sometimes isn't even about the money doesn't really surprise me at all.

The Grimm Reaper of Software Companies has spoken!!!

i'm tempted to go back in time and screw everybody over by stopping the playstation from ever existing

Didn't the Playstation come about through something similar grudge with Nintendo?
Well trends seem to suggest that if you Ouya wants to be a success, they have to get into a fight with Microsoft.

Justin Smith:
Ironically Sony broke into the gaming market out of spite because Nintendo had them make a CD what not for the nes.
Then Nintendo screwed their pooch by canceling the project.
If I'm remembering correctly

Trueness. I had originally heard that during the collaboration, Sony ran all the way to the bank behind Nintendo's back, but a friend corrected me by pointing out that Nintendo lost faith and has probably been kicking themselves ever since.

Incidentally, I deny any and all success the X-Box can be attributed. Not because of any quality of the thing. Oh no, it's quite good...as the Playstation's American counterpart. It's a copy of the work pioneered elsewhere. And while that is a normal business practice in a competitive market...X-Box owes any kudos it ever had to Sony.

Vie:

KiKiweaky:
Not a big money making machine?

24+ million sales of the original and triple that for the Xbox 360, bullshit hahahahaha

And yet the Xbox decision of Microsoft consistently puts in loss reports.

Profit margin, not turnover, is what ultimately matters. It's a lesson a surprisingly large number of American businesses fail to learn - look at GM.

If they cant make a decent profit margin then they should gtfo and leave the industry to someone else who knows what they are doing

 

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