Nintendo--VS--Microsoft

[PuPPeT]

Originally Posted by gekko

Microsoft made $8 billion in profits last year. This year, Microsoft's Home & Entertainment division is on track to lose $1 billion. If you think either Microsoft or its investors are happy with those numbers, you're crazy. Microsoft didn't plan to profit from Xbox, but you can be assured they didn't expect their losses to increase over time, and they have.

I don't think any one who has Microsoft share will be unhappy at the mo as they could be on the end of the biggest share holder pay out of all time!!!! Also the Home & Entertainment division of Microsoft was around and losing money well before the Xbox was on the Scene yet it was aloud to do so for over 5 years with out compliant from share holders! How in the light of getting the biggest pay out of all time on top of ever increasing shares really don't care and will let Microsoft moving into what ever areas they want with or with out lose. At the end of the day share holders like my self are only after one thing and that’s money, if the Xbox was stopping them from getting money it would be a problem but its not so get off the subject!!!!

Oh and as for “ we’re not talking about which system will dominate the industry ”! Well you might not be talking that way cuss it makes Nintendo look so bad but the rest of us are (so get over it)!!!!! Also it a bit stupid not to talk that way the company which sales the most console in the end will make the most money back off software sales. I can pretty much guaranty with the next generation of consoles coming so fast Nintendo will not have the time to make its hardware so cheep next time round and if it does not included some of the added in extras you get with the next Sony and Microsoft console it will fail big time and you will see Nintendo full out of the home console market a lot faster then you think is possible.

[TheGame]

Originally Posted by gekko

Now when you get back to who is most likely to drop out, you have three choices:

1) Sony - Would make less money
2) Nintendo - Would make less money
3) Microsoft - Would increase profits by 10%

I think it's obvious.

lol... didn't I just say: "Don't get me wrong though, eventually profits are important, but comparing MS to Nintendo in profits now doesn't make a lick of sense."

it's like a gambler... You put money out and in the end hope to get more money back from it. You are the guy standing there saying "Oh man, he just bet $1,000 that the spurs will win the NBA finals, he just lost $1,000 of his income" I am the guy saying "Well, he bet $1,000, but it's too early to say if he has 'lost' the money"

The money MS put down for Xbox to this day is the bet... and the payout goal for MS is in the long run. Nintendo's financial plans stay pretty short-term... and Sony likes to gamble too (losing around $250 on every Ps2 sold at launch in Japan, and $150 at launch in US)

as for the question of who is more likely to drop out... well, MS isn't any more likely to drop out than anybody as long as things go as planned, and right now, this is how they were planning Xbox to start off. Was Nintendo planning for GCN to have less than 15 million in it's first two years on the market? Wasn't Nintendo the ones making reports of how thier profits aren't where they want them to be?

MS (if they were stupid enough) could last forever without profit... but Nintendo not only needs a profit, a nice hulky profit. Thus, imo, making them more likely to drop out or merge.

[BreakABone]

One thing, I've never got with the Xbox profit deal is this whole planning to lose proft stuff.

I really can't imagine the board meeting

Board Member 1: So what future plans do we have?

Board Member 2: Nothing really, we already got a monopoly on the computer industry, what should we do?

Board Member 3: How about we going into the food indsutry? We can start selling MircoChips?

Board Member 1: Not a bad idea at all, but is htere much money to be mde in that?

*Board Member 2 pulls up some stats* We look to make a profit in the first couple of years, after that it's unpredictable

Board Member 1: Make a profit? No no, you got it all wrong. We are living in the dough at the moment, we need to lose money!

Board member 3: We could always go into gay porn starring Bill Gates that justin fellow keeps e-mailing for it....

Board Member 1: Someone deal with him

*Guards rush in to eliminate Board Member 3*

Board Member 1 points to the waterboy: You, you're a new board member, got any ideas?

Replacement Member: Why not start a handheld to compete with the GameBoy?

Board Member 2: That is a brilliant idea, I mean with such a monopoly on it, we would look like Apple!

Board Member 1: Even better, we could make a console to go up against Nintendo, Sony.. *Checks calender* I forget is Sega making a console today or not?

Board Member 2: I'm not quite sure sir, we can have our people on it!

Board Member 1: How much chance do you think we have of turning a profit?

Board Member 2: nintendo seems to have it's loyal fans and Sony is the "in" thing so we don't stand much of a chance.

*Eyes light up* You mean we will lose money each year?!?!

Board Member 2: I think that is about right, we can get our foot in the door, and maybe turn a profit later on.

Board Member 1: Who cares about later on, we lose money. Get to work on it now!

[TheGame]

*sigh*

MS is losing money now to build thier userbase up... and once they get a big enough mind share they won't have to spend like they do now to stay on top.

it's that simple.

If MS wouldn't have used this tactic, Xbox would have done worse than Atari Jaguar.

[Null]

except technically, your userbase drops to 0 everytime you go to release a new console. theres nothing saying your userbase will transfer over to the new console. so you have to spend just as much to market and get that system name out as you did before.

if thier losing money on every console sold.... what exactly is it they are going to do when they believe they have the correct 'userbase' ? make a cheaper system, or sell it for a whole lot more ?

[gekko]

Originally Posted by TheGame

MS is losing money now to build thier userbase up... and once they get a big enough mind share they won't have to spend like they do now to stay on top.

it's that simple.

If MS wouldn't have used this tactic, Xbox would have done worse than Atari Jaguar.

Null is right. Microsoft has no userbase come Xbox 2. If that were the case, Nintendo would have every NES, SNES, Game Boy and N64 owner jumping on board Gamecube, but they don't.

You can't assume that Microsoft won't have to spend like they do now to stay on top. Microsoft has not made a profitable console, so you can't assume they will be able to. People bought Xbox for a reason. Maybe they want the best graphics and sound, seems reasonable enough. Well now what if they don't have the best? You can't count on that guy buying Xbox 2. Or maybe they do have the best again, but to get the best they need to take another huge loss on the console. Now they're losing money again.

Maybe they bought Xbox because they wanted the HD. Well if all the systems have a HD next generation, you can't count on them buying Xbox 2.

This spending has only gotten Microsoft a name, but a lot of good that does. Atari had a name when they released Jaguar, Sega had a name when they released Saturn and Dreamcast. Let's not forget about Nintendo, by far the biggest name in the gaming industry. They single-handedly revived the gaming industry, and spread it all over the world. They are responsible for many of the greatest games of all time, the most recognizable characters as well as the best selling system and game of all time. Come on, surely if you want to compete with that you need to get your name in the industry by spending a lot of money, right? Damn, I knew Sony did something wrong

[TheGame]

Alright, Gekko, let me kill the Sony comparision right now... Sony came in at a time when Nintendo and Sega screwed up BADLY. That's why it was so easy for them to step in. Also, Sony is Japan based, so people out there accepted them faster than they would ever accept Xbox.

Null is right. Microsoft has no userbase come Xbox 2. If that were the case, Nintendo would have every NES, SNES, Game Boy and N64 owner jumping on board Gamecube, but they don't.

I never said everybody who owns an Xbox would go out and buy an Xbox 2, did I?

Also, Nintendo has a mind share.. built up by it's previous consoles. They don't have to start from 0 like you think... The ONLY thing keeping Nintendo alive today is it's brand recognition.

Why is it going down? Well, let's think... there is a long list of popular games lost in the transition from SNES to N64, and there is a long list of games lost in the transition from N64 to GCN. There is also a large list of popular games gained... but like they say, it's easier to burn a bridge than to build one.

Sony successfully gave a hardcore fan of Psx every reason to buy a Ps2, that's why Ps2 is so successful. Nintendo didn't give every hardcore fan of SNES a reason to buy a N64.. and they didn't give every hardcore fan of N64 to buy a GCN.

Even then, some hardcore 64 fans would buy GCN anyway based off of pure expectations. Microsoft is building a relationship with it's fans... Just like Sony built... and just like Nintendo built. Nintendo is falling because they are losing games, and when you lose games on a console that is only capible of that function, you lose fans. You make newer great games, you gain a solid foundation of fans. Nintendo is doing both at the same time, and thier losses are over-powering thier gains. I mean, hell, are they going to sell retro and the rights to Metriod to MS just because there game didn't sell well?

Also, I'm not assuming thier plan will work, but I know for a fact that as long at thier systems sell better and better with each gen, they will keep throwing money away. That is thier plan, and it is fact... Your userbase will grow if you don't burn bridges, I have seen nothing to prove otherwise.

if thier losing money on every console sold.... what exactly is it they are going to do when they believe they have the correct 'userbase' ? make a cheaper system, or sell it for a whole lot more ?

Well, when they get a mind share like Nintendo's, some zombies who will buy thier top franchises every year... they won't have to spend as much money will they? Imagine if they made a console like Xbox every generation, didn't have to buy off new developers, didn't have to market half as hard, and didn't have to pay for developers to support them initally because developers will already trust it's sales, and even better, don't have to worry about creating this new online gaming service and taking a huge hit again to get fans to come, and finally, didn't have to even worry about how it's going to do in Japan...

They could still release a beast like Xbox and manage to profit... But right now they have to go the extra mile to get "Xbox" out there. Once they have the mind share they can advertize at the same level as sony and cut a hell of a lot of spending for marketing and developers.

I mean, they could always go cheap like Nitendo when they get big enough... and profit even more, but I think they would be more like Sony if things go to plan.

But that's the thing, things have to go to plan... MS is planning for the long run, not the short term, and to stay in a long time you have to have a big Mind share with certain games, ask Nintendo.

The reason I see Nintendo dying before Microsoft is because Nintendo is a independent game company, and like Sega, they can't exactly afford to have any huge mistakes. MS could live through some giant mistakes in the future, and the userbase would be thier incentive to keep going... and like I said earlier in the thread.. if Xbox 2 sells less than Xbox, MS is a sure thing to drop out because they won't achive thier goal of having enough solid fans to keep them alive.

[playa_playa]

Heh, I thought MS's profit expectation utterly shattered itself when I saw my friend's piracy setup w/ the Xbox. Some of you may be familiar w/ it, so I won't reiterate it. But suffice it to say, it's even more convenient than DC pirating (something that I thought wouldn't be possible). When he started playing pirated Halo broadband games against other players w/ pirated copies, I thought that all pretensions of Xbox being a console fell apart quicker than porky's cottage under hurricane Andrew.

However, with the user-friendliness of Xbox's OS coupled w/ its computer-like setup makes stopping this piracy a certain quagmire. This would have to mean that whatever MS decides to do against piracy will have to be relegated to future preventions that will be inherent to its next console.

Unless MS conjures up a way to stop this deep-seated piracy, I see the potential profit margin of Xbox going down the toilet. While this may not phase MS initially, it will make their future console endeavors that much more precarious. Therefore, inferring that MS will not be able to offer as attractive offer as the Xbox for its successor would be a prudent deduction.

My guess as to the magnitude of the impact on MS? Let's put it this way: they certainly won't be hurting all that much nor will they give up their amibitions for console market domination (MS's total revenue is way to large for that to happen). However, it will reduce their options as to how they can approach their next console

[Stonecutter]

Originally Posted by playa_playa

fell apart quicker than porky's cottage under hurricane Andrew.

I don't even care to comment on anything else, but being a master of obscure references myself I must say that's damn good. At least for these boards where 50% of the members probably have never seen porky's and a good amount wouldn't remember hurricane andrew.

[playa_playa]

Originally Posted by Stonecutter

I don't even care to comment on anything else, but being a master of obscure references myself I must say that's damn good. At least for these boards where 50% of the members probably have never seen porky's and a good amount wouldn't remember hurricane andrew.

Um, thanks...I guess. But I seriously thought it'd be transparent.

Good stuff.

[TheGame]

Um... I saw more piracy on Psx than any console in my life.. and that didn't exactly hurt the userbase did it? MS wants user right now, not money.

[GameKinG]

I think because of the piracy, PSX's userbase increaed, because they could get free games.

[Joeiss]

Free games? Hell no. Blank CDs cost about a buck back then.

[gekko]

Originally Posted by TheGame

Um... I saw more piracy on Psx than any console in my life.. and that didn't exactly hurt the userbase did it? MS wants user right now, not money.

You really are getting everything backwards in this debate. Console sales hurt Microsoft, software sales help Microsoft. The more people who buy Xboxes, the more money Microsoft will lose. Now if those people don't buy games, Microsoft will never make back the cost. So if 20 million people go out and buy Xbox to pirate it, Microsoft would lose about 2 billion.

Software sales have always been a much bigger source of profit than hardware sales. That's why it's not uncommon for a company to release a gaming console at a loss, because they can rely on software sales to make up the difference, and bring in additional profits. For a company who is still taking a loss on hardware, piracy means big losses. For a company making money on hardware sales, piracy still means less profits, because game sales bring in a lot more than hardware sales.

[playa_playa]

Originally Posted by TheGame

Um... I saw more piracy on Psx than any console in my life.. and that didn't exactly hurt the userbase did it? MS wants user right now, not money.

Userbase means jack and sh** if the said users do not purchase games for it.

Do you honestly think that those users pirating Xbox games are going to be the sort of the loyal, staple pool with which MS could risk its next venture (the same sort of venture with which MS is gambling right now with the Xbox; given the losses)?

The argument that MS is losing money on the Xbox to build userbase only holds water if the users will remain loyal for future consoles. Loyalty is not the paramount characteristic for userbase springing from piracy; they want whatever's easy to pirate for - the flavor of the month, a la Dreamcast.

And let's suppose that the piracy userbase do remain loyal and purchase the next console. What then? Do you think they will, out of their respect for the company, begin to actually purchase the games? I think we all know the answer to that question.

Really, I don't think you're understanding the magnitude with which piracy is being undertaken for the Xbox. The piracy with which you refer to - bootleg games from southease Asia - didn't even begin in large prevalence until the end period of PS. By then, PS already had its loyal users and whatever piracy hardware sales accrued were insignificant.

The means for Xbox pirating available via the usenet nowdays is simply astonishing. You do not have to worry about badly-ripped games (given that it is so simple to encode Xbox games into dvd images), nor do you have to PAY for the bootlegged games; it's all free, clean and most of all, convenient.

Case in point, my friend just shot me an IM saying that he d/led Soul Calibur 2 (the Japanese version). In no time, he was playing it through an aftermarket HDD he purchased specifically for pirating. He can erase it to make room for other games, or keep playing it at his will and leisure. No blank dvd's gone to waste, no bootlegged copies to pay for. What's all this cost you say? $60 mod chip and a $80, 100gig HDD.

This sort of pirating is idiosyncratic to the Xbox due to its computer-like setup; a feature which I foresaw would bring a dilemma of calamitous proportions.