The end of the XBox?

[swivel]

Not likely to happen. However, if the XBox goes the way of the Saturn, we will look back at the summer of 2007 and be surprised that everyone didn't see the end coming all at once. So, to hedge my bets (and be able to say, "I told you so") I want to point out the string of events that will make the demise of the brand seem obvious in retrospect:

1. Microsoft has manufacturing issues that delay units getting to market. (http://www.joystiq.com/2006/01/27/msft-earnings-fall-short-xbox-360-supply-woes-to-blame/)
2. High launch failure rates that take over a year to begin subsiding. (http://kotaku.com/gaming/xbox-360/xbox-360s-still-dying-customer-service-still-crap-222843.php)
3. Repair centers refuse to take in more 360's. (http://www.shacknews.com/onearticle.x/47671)
4. Gaming stores jack up price of warranties of all systems to compensate for 360 return rates. (http://revision3.com/forum/showthread.php?t=7437)
5. A probe finds game stores getting 30%-35% return rates on 360's. (http://www.neoseeker.com/news/story/6863/)
6. Refurbished units sent back with extra heat sinks. (http://www.1up.com/do/newsStory?cId=3160333)
7. Massive thread in Forza forum blame game for RRoD (http://digg.com/xbox_360/Microsoft_deletes_mass_Xbox_360_crashing_claims_fr om_Forza_2_forums/all)
8. User reports and YouTube videos from MS fans who have had multiple failures (11 in one case) (http://www.1up.com/do/newsStory?cId=3160603)
9. Microsoft's entertainment and devices chief Robbie Bach sells $6.2 million in stock two months prior to the announcement of... (http://www.betanews.com/article/Xbox_Exec_Sold_Stock_as_Problems_Mounted/1184254176)
10. ... a 3-year warranty extension to cover the RRoD problem, which will cost MS over 1 billion dollars. (http://www.neoseeker.com/news/story/6876/)
11. Microsoft has a lackluster showing at E3, despite big game announcements (http://arstechnica.com/journals/thumbs.ars/2007/07/12/the-showdown-which-of-the-big-three-came-out-on-top)
12. Peter Moore, credited with making the XBox brand "hip" leaves MS to join EA (http://www.betanews.com/article/Xbox_Chief_Peter_Moore_Leaves_Microsoft/1184704296)
13. Microsoft cancels X07, the European showcase they have used for major announcements since the first XBox in 2001 (http://xbox360.ign.com/articles/805/805935p1.html)

*general issues*

14. The Zune has been a massive failure, adding to financial stresses (http://www.itwire.com.au/content/view/11644/532/)
15. The Japanese market is completely closed to MS, a market they spent a lot of money and made many promises regarding. (http://www.xbox365.com/news.cgi?id=GGuGiLuGiu07190956)
16. The Wii is kicking MS and Sony's asses in a way that nobody expected. A recent study showed that Wii owners are not casual, but are old-time gamers, a source of competition that MS (and Sony) never banked on. (http://www.360-gamer.com/news.asp?id=1168)
17. Google, Firefox, Mac, Linux are squeezing MS where they make money, making throwing away money on risky ventures more painful (http://www.readwriteweb.com/archives/microsoft_vs_google_heats_up.php)
18. Vista is getting hammered by the press. (http://www.crn.com/software/198702242)
19. The 360 missed its 12 million promise, and another, earlier, launch promise for units sold. (http://ce.seekingalpha.com/article/19252)
20. HD-DVD, despite almost giving away players and movies for the last month, has been declared the loser in the Next-Gen media war. (http://www.sci-tech-today.com/news/Analyst-Declares-Blu-Ray-the-Winner/story.xhtml?story_id=030003CL0A6I)


It is like a snowball rolling down a hill. The question is, will the stellar game lineup looming this holiday season stop the avalanche, and turn the 360 into a future champ? Or did the unit peak with no competition? The Wii will certainly have outsold the 360 before the holidays get here, doing in a single year what the 360 didn't do in two. And if another PS3 price-drop is coming (as rumored), Sony could hit its 2nd-year-stride the same way the 360 did when GoW came out last fall. Microsoft could easily be in third place by April, which, with all of the other nails in its coffin, could spell doom for the brand.

[swivel]

http://www.gamesindustry.biz/content_page.php?aid=26905

Following the decision to set aside USD 1 billion for Xbox 360 repairs, the year-end loss for Microsoft's entertainment and devices division has reached 1.89 billion - up 47 per cent from last year.

Revenues for the year were up by 28 per cent to reach USD 6.08 billion, which the company said was due to increased sales of hardware, software, TVs and mobile devices.

During the last quarter of the year Microsoft shipped 700,000 Xbox 360 units - down from 1.8 million during the same period last year. Console sales were lower for the quarter but sales of 360 accessories and the Zune media player helped to offset this.

Revenues for Xbox and PC games fell by 28 per cent to hit USD 265 million.

Fourth quarter EDD revenues stood at USD 1.16 billion, a year-on-year fall of 10 per cent which Microsoft said was due to "decreased Xbox 360 console sales".

The division made a loss of USD 1.2 billion, attributed to the cost of the Xbox 360 repair program. However, according to Microsoft, a reduction in the cost of manufacturing Xbox 360 units did partially offset this.

Uhh, no. It was the initial reduction in the cost of manufacturing that COST you 1.2 billion dollars you idiots! The fact that this was probably said with a straight face is just too much for me.

Kotaku has this analysis:

While Microsoft Corp. has seen an increase in revenues, its entertainment and devices division (Xbox 360, Zune) has not. It is now posting losses to the tune of 1.89 billion bucks. For those keeping score, that's up 47 percent from last year. Plus, the number of Xbox 360s shipped dipped to 700,000 from 1.8 last year. Xbox 360 game sales, likewise, were down, falling 28 percent. Good news! A reduction in Xbox 360 manufacturing costs helps to offset the loss. Still with Xbox honcho Peter Moore jumping ship to be with his college-aged children and division prez. Robbie Bach selling off millions in stock, I can't help but thinking in the back of my mind that things could get worse. Let's chalk it up to me being paranoid or something.

Okay... I was going out on a limb earlier this week when I cataloged the woes of Microsoft in general and the 360 in particular. I never would have guessed that it would take three days for someone to scurry out on the bough with me!

The worst news here, Microsoft has sold 1.1 MILLION LESS consoles last quarter compared to the same fiscal quarter last year. I wonder if the market is nearly saturated for the 360? Could it be that the XBox fanboys are the sole reason for MS's early lead in the console war? Or has the Wii completely stolen their thunder? Will Halo 3 be enough to turn the console back around? Or will the Wii continue to dominate, or the PS3 liftoff with the coming of its actual launch of games?

Stay tuned...

[Killroy]

I'm merging these two threads, as they really are just the same thing. No need to have the entire gaming section, as inactive as it is, populated with Xbox360 and PS3 "sky is falling!" type subjects...as easy as it would be to do with either system.

[CPL CHUD]

I think we'll have to wait and see how the holiday season does, especially after the release of Halo 3. I know of a few people waiting to buy the system merely for that game.

[Killroy]

Microsoft will be fine. Besides, the PR nightmare they would go through if the just abandoned this console would be worse than if they just lost money with it. They are in no worse shape than Sony is with the PS3, even if it is for different reasons.

You could fill up a page of links on both consoles, demonstrating why one would think either of them are on the brink of cataclysmic failure. It's all just speculation. This holiday season will be were it gets interesting and we will see if Microsoft and Sony continue to get their asses handed to them by Nintendo in North America. My guess? Absolutely.

[swivel]

Crecente, of Kotaku fame, just had his NINTH 360 die on him. Luckily for him, they were all loaners from Microsoft and he just keeps getting new ones sent to him. This last one was an Elite 360, which hasn't been out very long, so the hardware woes aren't solved.

Two factors to consider: This is a professional gamer, so he knows how to handle his consoles. Also, this is a professional gamer, so his consoles are getting more use than regular folk, and he may even be running pre-gold versions of games, though I doubt that this is likely.

Two more down and he holds the record. As I was telling Morbid the other night, Microsoft is a software company, and their UI and networking code is top-notch and the envy of Nintendo and Sony. But they just don't do hardware. Sony has the opposite problem. Great hardware, but horrible interface and network. You'd almost LOVE to see a merger here. And if Nintendo keeps rolling, it might just make sense and be necessary.

Source (http://kotaku.com/gaming/xbox-360/another-one-bites-the-dust-281244.php)