XB360: AN INCONVENIENT TRUTH / Finance Analyst Ehrenberg: XB = "disastrous endeavor"

[Digital-Nitrate]

In a recent article from Roger Ehrenberg, of Information Arbitrage, published by Forbes, once again raises the question, "At what point, regardless of its virtually endless financial resources, does Microsoft say 'enough is enough' in regards to its debt ridden console game division?"

This is a topic that comes up all the time among financial and industry analysts, ever since MS published their first financial reports on their Xbox division several years ago, and every year, their losses have only continued to grow.

Two years ago it became painfully clear that Microsoft's original Xbox would not only never return a profit, but when Microsoft pulled the plug on the original Xbox, they were over $2 billion dollars in the red.

Two years later, and Microsoft has now invested over $21 billion dollars on their total Xbox endeavors, and there are no signs that their Xbox division will ever be profitable.

Compare that to both Nintendo and Sony's console divisions, and it is a massive contrast in financials. In fact, Sony's PS2 division is still very profitable, and Nintendo's Wii division is already profitable.


Here is the article:

Japanese Failure Dooms Xbox 360
Roger Ehrenberg, Information Arbitrage 04.18.07, 4:13 PM ET

The success (or lack thereof) of Xbox 360 has been a hotly debated topic across both the blogosphere and mainstream media, with an amalgam of sober and utterly confused views depending upon one's vantage point: analyst, investor or gamer.

After taking a step back and looking at some objective numbers (taken from Microsoft's own financial statements and comparative console sales figures extracted from VGChartz.com and Wikipedia.org), I have concluded that gaming has been a disastrous endeavor for Microsoft, particularly from an investment perspective.

The seeds of this failure are evident from its sales performance in Japan, particularly when comparing its 18-week sales figures (which is about how long the Wii, made by Nintendo and PS3, made by Sony have been out) relative to those of the most successful console releases.

This early failure in the Japanese market has a compounding negative effect on worldwide console sales, as game developers are less willing to invest in high-risk projects for console platforms that are shaky out-of-the-gates, which makes it less attractive for gamers to buy these consoles, and so on.

Let's first consider Microsoft's Home & Entertainment Division ("H&E"), which includes Xbox 360, Xbox, Xbox Live, Consumer Software and Hardware Products, and IPTV. Making money, i.e., the creation of long-term shareholder value, has got to be the ultimate driver of Microsoft's gaming (and H&E) strategy, right? Well, after five years and over $21 billion invested, all they've got to show for it is $5.4 billion of cumulative operating losses, and Xbox 360 doesn't appear to be the silver bullet to turn things around.

I think it is also interesting to note that Microsoft's actual disclosure shows only revenues and operating losses--I backed into and show expenses below for explanatory purposes. Why might it be that Microsoft has strayed from the classic "revenues minus expenses equals profits (losses)" disclosure? Perhaps because it doesn't want investors to focus on the fact that more than $21 billion has been invested in a business that has performed so poorly, with unclear prospects for improvement.

Sometimes these cold, stark facts seem to get lost in the shuffle. Xbox 360 (a meaningful part of H&E) might be a fine product, but if so, why is it so financially disastrous to its maker? I understand the concept of selling a console at a loss in order to lay the foundation for recoupment of original investment, plus operating losses, plus attractive financial return through gaming, but what is it going to take to turn things around? Nothing short of a tectonic transformation in perception of Xbox 360 relative to its competitors.

Sure, the Xbox 360 can be righteous and cool with hard-core gamers, but this is not a sufficiently large user base to recoup the magnitude of investment Microsoft has made in its gaming platform. So if this is Microsoft’s strategy, it’s got a problem. And if the strategy is really more mass-market, then it’s got some serious repositioning to do relative to the Wii, which is both cheaper and more accessible to Ma and Pa and Timmy and Tammy gamer. In short, I am at a loss. Correct that: Microsoft is at a loss. $5.4 billion and counting.

As far as Japan’s role here, consider that over 19 million PS1s and 20 million PS2s were sold in Japan alone, close to the total worldwide sales figures for the original Xbox console. Success in the Japanese market is a key part of getting the game developers to buy into a platform, for which they invest substantial sums and create titles. Plus, people want to buy consoles with better game libraries. Success in Japan is frequently a precursor to success globally, which makes it particularly attractive for game developers who are looking to amortize their development costs over as large an installed base as possible.

If, for instance, the Wii is hot, you get shops like EA turning themselves into pretzels to build their title libraries for the Wii console. And if your particular console isn't hot? Well, let's just say that developers aren't going to be laying out big bucks to invest in the platform.

It is instructive to look at where the last major console releases were 18 weeks after launch in Japan. Basically, if you did well in Japan during this time frame, you had a chance to have a blow-out product. If you didn't, well, you didn't. The Xbox did better than the Xbox 360, and even the PS3 has done better than the Xbox 360. But success in Japan is not a guarantee of a runaway success, as the GameCube proved. Without question, Japan is an important and critical market for building a globally successful gaming platform, and an early read of the tea leaves does not bode well for the Xbox 360.

And this is clearly not lost on Ballmer's Boys in Redmond. Microsoft's vision of the gaming console as the window into the living room is a big, big bet, and one that clearly hasn't paid off thus far. The emphasis on HDTV as being a key factor driving broad-based console sales kind of misses the point. Is the Wii successful because of its zippy graphics and technological superiority? No. It is successful because it is fun. And because it appeals to a broad audience. And because it is comparatively cheap. The Microsoft strategy sounds more like a niche strategy for hard-core gamers, in which case it's investment in a console strategy should be smaller and more targeted.

Microsoft needs to take a long, hard look at its gaming strategy--and, in fact, its entire H&E strategy. At what point, regardless of its virtually endless financial resources, does it say "enough is enough"? Would we have been better served by returning the extra cash to shareholders rather than investing it in a franchise that seems to have questionable prospects for turning around? These are the kinds of questions Microsoft management should be asking. And hopefully, for shareholders' sakes, they are.

Adding to Microsoft's woes, even diehard XB360 & XBL fans are turning against MS in regards to its XBL pricing, add-ons, and additional game content.

Recently there have been several online petitions against these pricing issues, one of which was just on the pricing of the GHII 3-song downloads and talked about on this board. In just three days that Guitar Hero II DLC Pricing Petition got 10,000 signatures before it was closed.

Making matters worse, even Team Xbox is starting to put pressure on Microsoft to make XBL free of charge. In fact, Cesar Berardini even wrote an editorial last week on the subject, as well as other known issues with XBL, cleverly titled: "A Inconvenient Truth":

AN INCONVENIENT TRUTH
By: César A. Berardini - "Cesar"

Xbox Live Gold is overpriced.

I said it.

Back in the Xbox days, online multiplayer on a console could be considered a value-added proposition—but in this generation, it is just a commodity. The PlayStation Network is vivid proof of that.

It is also worth highlighting that, with this new incarnation of the service, Microsoft is getting lot of money from Xbox Live, thanks to its Marketplace. The success of TV shows, films and other downloads have exceeded Microsoft’s expectations, so it’s not like Uncle Bill is losing money this time around.

But it is easy to criticize without proposing solutions and alternate options.

To prove I’m not the typical make-it-free whiner who is demanding Microsoft to make Xbox Live completely gratis, I’m instead proposing that the two-level memberships should exist as it does now, but with online multiplayer gameplay (as we know it) being free for everyone, while a paid membership incorporates new features. What features, you ask?


Server-Based Online Multiplayer

Xbox Live online gameplay sucks. A weapon like Halo 2’s energy sword or Gears of War’s shotgun offer strong evidence that the user hosting a match—which translates into having no lag at all—has a terrible advantage over the other players.

Paying for peer-to-peer online gameplay is a scam. If we are paying to play online, the least we deserve is a server-based system where matches are hosted on a server provided by Microsoft.



Clan and Party System

Everyone cheered when Microsoft announced that on the Xbox 360 you’d be able to listen to music while playing games without developers having to program such a feature (as they had to with Xbox games). It was a feature that became universal when it was incorporated into the Xbox 360 dashboard.

So, how about also throwing in there a Clan and Party system that lets you play every Xbox 360 game on Xbox Live like in Halo 2? Bungie (which is owned by Microsoft) has already developed the technology, so it shouldn’t be a big issue for Microsoft's Xbox division to implement this technology across the entire platform.

What benefit should Xbox Live Gold subscribers get over Silver users? Well, Silver users should only be able to join one clan, yet have no option to create one, while Gold subscribers should have the ability to create their own clans and be a member of as many clans they want.



Dedicated Download Servers

Have you tried to download a big file from Xbox Live? You can leave the Xbox 360 on, go to have breakfast, lunch and dinner, then read “War and Peace” and maybe the download will be completed. Granted, Microsoft is saying that the soon-to-arrive Spring Dashboard Update will help this process in a couple of ways, but…

If we are paying a monthly fee for Xbox Live, the least we deserve is to have dedicated download servers similar to those offered by FilePlanet (which, by the way, is a sister service of TeamXbox).

Furthermore, even if you are an Xbox Live Silver user, paid content should always be pulled off from a dedicated download server differently from those hosting free content. If you’re paying for the content, you deserve a better bandwidth!



Microsoft Points Program

Another thing that is totally unfair for paid subscribers is that paid content costs the same for Silver and Gold users. There should be some advantage for those who are paid subscribers and there should also be some benefit for those who buy more content.

I think Xbox Live needs a “Microsoft Points Program,” something similar to credit-card services or airline-mileage programs, in which loyalty to a service rewards you for buying content. Obviously, only Gold subscribers should be eligible to enter the program—and it could be an addition to the Xbox Live Diamond Card.

That way, even if you pay the same as a Silver user for a TV show, a film or game content, you will get some Microsoft points in reward.



No Ads

If you are paying for your online-game service, why do you have to see ads on those Xbox 360 blades? Furthermore, if you are paying for a game, why you have to see ads in games? I’m cool with ads making content free, but, conversely, paying for content should remove any ad.

It’d be great if Microsoft could a develop a technology that enables game publishers and developers to know if the user playing the game is a paid subscriber. That way, the game will automatically know if it should display an ad (or not) in its single-player campaign or online multiplayer modes.

Microsoft has already acquired Massive Inc., which (along with the other big in-game advertising companies, Double Fusion and the recently-acquired-by-Google AdScape) already has deals in place with most major game publishers. You’d think if they wanted to remove ads for a specific group of players, they could easily do so by signing an agreement and developing the necessary technology to identify Gold subscribers from Silver users.

In the words of a great English bard... "Something is rotten in the state of Washington".


In all seriousness though, Microsoft's Xbox division is draining them of money, and unless something drastic changes, their debt will only continue to grow. Making matters worse is that due to the ever increasing size of games, they are going to have to come out with yet another Xbox in a relatively short amount of time in order to provide their customers with all the latest and greatest games from developers. Unfortunately though, this means yet another $10 billion dollar investment, with very little hope of ever turning a profit.

From a gamer's standpoint, it doesn't much matter right now. There are tons of games available for the XB360, but with only a 10 million user base and sales already leveling off, and no money coming in from the original Xbox, shareholders are losing patience with Microsoft's management, and may very well demand that Microsoft pull out of the console market.

After all, even MS can't justify a 5-year $21 billion dollar investment that isn't even coming close to paying off... it is after all a publicly traded company, and I would venture to guess, most investors with control over the largest numbers of shares are not hardcore gamers. They want to see results that turn into profit, and after five years, all they are seeing is a rising giant red figure!

 

[Dave A]

The main thing I can see with regards to Microsoft's X-Box franchise is that is that they might be hoping that they can keep it going long enough to control the market, and then debt or no debt the copetition will dwindle then the profits will rise. It's like a company selling a a loss to beat their competitors, the profits come after they defeat them, if they don't win though, the money is lost. Sadly for Microsoft, I don't see Sony losing any console wars around here.

 

[m7ammed]

The main thing I can see with regards to Microsoft's X-Box franchise is that is that they might be hoping that they can keep it going long enough to control the market, and then debt or no debt the copetition will dwindle then the profits will rise. It's like a company selling a a loss to beat their competitors, the profits come after they defeat them, if they don't win though, the money is lost. Sadly for Microsoft, I don't see Sony losing any console wars around here.

they lost the first battle , and from what I read above they are losing the 2nd battle too , are they fit for a 3rd one? from the above they are not .... 21 billion is a lot of money to loose , if they decide to continue and make a 3rd console and loose then thats the last one I would think ....

 

[vectradriver]

Losing the current battle? The PS3 is sitting on shelves here in the UK.

 

[Digital-Nitrate]

Losing the current battle? The PS3 is sitting on shelves here in the UK.

Actually if you do a little search you'll find that the PS3 sold more units in Europe in two days than the XB360 sold in a whole month after it was released in Europe.

Yes, XB360 has significantly more units than both the PS3 and the Wii, but it has also had a full year head start, and more to the point, despite having 10 million users, they are not only still losing money, but because they effectively cut all support of the Xbox, they ONLY have that 10 million user base, while Sony has sold over 100 million PS2 of which not only is it still supported, but PS2 hardware and software have continued to outsell XB360's and its software.

So in terms of the actual console market, Sony has a 10 to 1 advantage over Microsoft, and because the PS2 sales have a much higher proft margin, Sony is able to generate a great deal of profit from it.

So while Sony is still a long way away from seeing PS3 profits, the money they are getting from PS2 software sales more than makes up for it, and will keep that division in the black until revenue from PS3 software sales generate operating profits.

Adding to Sony's advantage is that they already have a console that is capable of playing games over 7GB all the way up to 49GB. Considering developers have already released and are making games well over twice the capacity of any XB360 game, with some games like MGS4 and GT5 that may even require a 50GB BD-ROM disc - the writing is on the wall and MS will have little choice but to release a competitive product... Which will cost them several billion dollars to design, build, distribute, and market... and will alienate many angry XB360 users, of which some were already upset that Microsoft abandoned support of the original Xbox so quickly.


Basically MS is damned if they do, and damned if they don't.

If they try to continue to charge for XBL and high prices for add-ons and additional content, they risk upsetting enough of their customers that they decide to stop supporting XB all together.

If they don't though, they will continue to lose money at a very alarming rate.

If they release a new Xbox that supports high capacity games, it will cost billions to launch, and will alienate many of their current loyal XB360 owners, and risk the chance that they might also stop supporting XB all together.

If they don't though, then again they risk losing more of their customers who want to play these games and will have no choice but to shift their support to other formats.

Basically, as many industry and financial analysts will agree, Microsoft is in a very bad spot. Their Xbox division continues to lose money, and as pointed out above, any change they make in their business strategy could potentially put their financial position and market growth at even more of a serious risk... and yet they cannot afford to continue on the same path they are on now.

 

[waxer]

The thing i agree with in that article is xbox live. It annoys me greatly. Ive had my 360 since launch and pay for gold. I get maybe 100kb/s on avg. Sonys servers are taping my connection out at 900kb/s and its free. But thats just a gripe and nothing to do with how successfull they will be.
The 360 is in a way better position than the xbox ever was software and hardware wise(dont know about financialy)
I think the 360 will last longer this time and the wii will be the one to sell cheaper consoles more often.

 

[Digital-Nitrate]

The 360 is in a way better position than the xbox ever was software and hardware wise(dont know about financialy)
I think the 360 will last longer this time.

If it weren't for the limitations of the DVD drive I'd agree.

Frankly, Microsoft's decision to go with a DVD drive and no support for games on HD DVD or Blu-ray is the same as if Sony had released the PS2 with only a CD drive and no support for games on DVD... which of course would have been disasterous - despite what many said was unnecessary at the time, and criticized Sony for including a DVD drive and thus adding cost to the PS2.

In hind sight, the critics were clearly wrong, and the PS2's ability to play larger and better games on DVD is largely the reason it has lasted for more than seven years in the market place and continues to outsell most consoles today.

Games are only getting larger and more quickly then ever before, with bigger non-linear game formats, vast areas of gameplay, and huge amounts of "missions", and they get significantly bigger when games are programmed in HD and when using higher quality lossless multi-channel audio.

Microsoft on the other hand have this great next-gen console that will be limited to playing games no larger than what was available on last-gen's hardware over the last seven years! Thus crippling the capabilities of this console. It's DVD drive, much more so than its CPU is the XB360's weakest link in the chain, and it wont be long till that weakness is severely exposed.

When that occurs, it will force Microsoft to make a change. Now what that change will be is anyone’s guess, but it had better have a very positive result on their bottom line or else shareholders are going to revolt.

 

[DuckRacer]

Well, I actually agree with most of it. But I know why MS is still in the market.

Home media centers.

Back when Sony announced the PS2 (in 1998 IIRC), they said it'll have a complete, full featured online network, an HDD, and all that jazz that media centers usually have. When MS caught wind of this, they designed the Xbox, because they couldn't let Sony dominate a future, highly profitable market. Thankfully for MS, the PS2's online service was more or less pathetic, and putting HDDs on PS2s didn't turn out very well either.

That's why the Video Marketplace exists... and content streaming, and other such perks that would typically belong in a media center.

But here's the kicker now – Sony has more or less caught up with MS. Online play is practically the same, with the only vices of a lack of a universal friend's list, and not having a headset as standard (which means less people use voice capabilities). When Home comes out, and fulfills expectations – which shouldn't be too hard – people will really be wanting XBL Gold to be cheaper... including me.

As for losing money ($21 Billion over six years), I'm sure MS is wincing. But they've sold half the amount of original Xboxes in a quarter of the time, and they'll easily pass over the total sales of original Xboxes by the end of the year. In the US, the 360 is still outselling the PS3 month to month, and in Japan, the PS3 isn't exactly burning up the streets to make it a market to worry about. Europe could be Sony's redeemer, but it's too early to tell as it just launched there.

My point with all that? Microsoft is starting to make progress, and to drop it now would be dropping it prematurely. They're making Sony lose its grip on the market, and while the PS3 will probably outsell the 360 by ~30,000, they could finally knock off their crown with the X720. Of course, that doesn't mean they'll pick it up – the Wii could easily experience bat**** insane sales and dominate with the Pii 5 years from now.

As for the money issue itself, MS could still support itself with Office and Windows if needed, and the 360 is starting to turn a profit as well. But if the 360 starts selling like crap (which it probably will get to that point... in late 2008), and if the PS3 sales start rocketing up (at Christmas time at the earliest), we could be seeing MS kill off the Xbox.

 

[Digital-Nitrate]

I just came across this interesting article:

Bach: Xbox Business Profitable Next Year
by James Brightman on April 19, 2007

Microsoft's Robbie Bach (right), president of the Entertainment and Devices Division, has said that the Xbox 360 business will become profitable in 2008 and he outlined the ways in which Microsoft plans to make money with the console.

Microsoft has been in the console video game space for nearly six years now, and the Xbox business has yet to be profitable. In fact, one analyst believes it's been a "disastrous endeavor" for the company. For the nine months ended March 31, Microsoft's Entertainment and Devices Division (EDD), which houses the Xbox business, just reported an operating loss of $693 million.

EDD President Robbie Bach doesn't expect the losses to keep piling up, however. In a new interview with eWeek.com, the executive explained Microsoft's thinking behind making money on Xbox and he promised that the business would indeed be profitable in 2008.

"Right now we're doing a pretty good job," he said. "We're humming pretty well in the business. Our costs are a little higher than we'd like, [but] we're pushing those down; there are good initiatives underway to drive that. Game attach rate [is at the] highest level in history for a game console at this stage in the life cycle. The same with our peripheral attach rate. Xbox Live has over 6 million members.

"The pieces are in place to drive the proverbial billion dollars. Specific date—oh, that's going to depend on what happens in pricing, which partly we control, partly we don't. You know what happens in component costs—mostly we have pretty good influence over that, but there are places where we don't. Pricing on memory goes up and down seemingly like a yo-yo, so [we have to manage] through that. So, it's a business that will be profitable next year—we'll make money next year and that will be the first time, which is pretty exciting. And then the next two or three years are the place where you need to make tracks, and the next two or three years are where you have to make money."

Bach also explained the ways in which Microsoft can make money, mostly focusing on the standard "razor and blades" model, but also adding in services like Xbox Live and the sale of peripherals.

"There are three ways to make money on an Xbox," he stated. "Generally it's not on the hardware itself; we'll probably be gross margin neutral on that over the life cycle of the product and try to break even on that. The second thing you try to do is you make money on the games themselves, and there are two models there. One is first-party games that Microsoft produces. The other is games that Electronic Arts or an Activision produces, and we get paid a royalty on those games. The third place you make money is on Live, and where we actually have a very nice service that's scaling very well, and that is a business model that's subscription, ad-based, and download-based. It kind of has the full gamut of business models associated with it, and I think you're going to continue to see that grow. And then the final place you make money is on peripherals, so game controllers, cameras, steering wheels, a whole other set of things."

The headline and comments from Robbie Bach about profitability certainly needs clarification. By profitable, that just means they will stop losing "more" money - it doesn't mean that they will earn enough profits by 2008 to wipe out the $5 billion dollars in losses their Xbox division has lost over the years. Although it is semi-good news for investors that Microsoft believes that division may indeed stop hemorrhaging money by 2008, the fact that they just reported another loss of an additional $700 million doesn't bode well.

In addition, I wonder how Robbie Bach's comments on how MS plans on stopping the losses from their Xbox division will impact customers. It's certainly pretty clear they have no intention of making Xbox Live free, and if anything may be looking at increasing some fees as well as charging higher premiums on accessories.

As far as income from games, they are already off to a bad start with the recently leaked information that MS paid RockStar $50 million for the rights to exclusive downloadable content. If this content sells for $20, of which MS would only get a small percentage of it, and even less after reporting expenses, they would likely have to sell at least 10 million copies of the extra content just to break even, although they would probably have to sell far more than that. Considering the best selling game for the X360 is GOW which has sold 4 million copies, and no other game for the X360 has sold more than 2 million copies, I seriously doubt they will sell more than a million copies of extra content for GTA:4.

One of the problems they'll have is customer base. While Microsoft claims they have 6 million XBL users, as far as I am aware, they have not released any specifics on the breakdown and confirmation of this data, but that claimed 6 million users can and likely do include users that signed up once for free and never came back as well as other users who are not currently active members, as well as double counting the same user who signs up using one account, then closes it, then signs up using anew account.

So even if every currently active member on XBL buys this extra content, even then they wont likely come close to returning a profit of $50 million to offset the payment.

If Robbie Bach's comments are to be taken seriously and he is committed to ending the cumulative losses coming from their Xbox division, I suspect we may see some serious trimming of development budgets, increases in prices, and continued fess for using XBL.

 

[Digital-Nitrate]

SmartHouse and Manufacturers of the X360 speak out against Microsoft regarding some of the major problems with the X360:

Why The Xbox 360 Failed
By David Richards and Wire Services | August 7, 2007

Asian Xbox 360 manufacturers are blaming poor console design cheap components and a lack of testing coupled with a manic obsession by Microsoft to beat Sony as the reason for the Xbox 360 "Red Ring Of Death" problems.

Two years ago In a desperate quest for supremacy in the gaming console market and in an effort to beat Sony and then later Nintendo with their Wii console, Microsoft committed themselves to getting the Xbox 360 to market some 12 months ahead of the new Sony PS3. They also stripped costs out of the unit in an effort to undercut Sony.

Now they are paying the cost of their failed marketing exercise after the world's largest Software Company announced on Friday that they will take a $1.3 billion to $1.4 billion charge to extend warranty coverage on repairs and replacements. The company said a months-long investigation into an "unacceptable number of repairs" to Xbox 360 consoles has helped it identify several flaws that caused the system to crash—indicated by three flashing red lights on the front dubbed the "Red Ring of Death" by gamers.

SmartHouse suspected 7 months ago that there was a problem with the Xbox 360 after we got a high level of emails from readers complaining of problems. We wrote a story that appeared online. This in turn triggered a lot more readers to write to us about their problems not only with the Xbox 360 but in dealing with Microsoft.

In Australia Microsoft refused to return calls on the issue and their PR Company even went as far as saying that there was no problem and that SmartHouse was exaggerating. So we decided to contact retailers selling the Xbox 360. They reported massive problems with the console with several claiming that the return rate was over 30%

As an example the Sony PS2 had a return rate of between 1 & 2% The PS3 which has only been in the market for 6 months is less than 1%.

Robbie Bach, president of Microsoft's entertainment and devices division, declined in an interview to say what specifically caused the failures or how high the failure rate has been, but Asian manufacturers of the Xbox 360 who have been pressured by Microsoft to lower costs by as much as 15% say that the problem is caused by poor Microsoft design and the Company buying low cost components in an effort to beat Sony.

Recently Microsoft adopted various strategies to be more cost competitive with its Xbox 360 game consoles, with moves including asking for a price reduction from Taiwan-based component makers and working with Lite-On IT for its add-on HD-DVD drive, according to sources in Taiwan.

One Asian manufacturer that SmartHouse spoke to on Friday said "Microsoft have known of this problem for a long time. They are trying to blame component manufacturers but it was a combination of bad design and them (Microsoft) wanting everything cheap. This is what caused the problem along with them wanting to beat Sony to market. A lot of manufacturers were pushed to deliver components without much testing of the components working together inside the console".

Microsoft has said little about the causes of the hardware woes. It relies on two contract manufacturers to make the Xbox 360—Flextronics International (FLEX) and Celestica (CLS)—both of which make the finished product at plants in southern China. But Bach indicated the issue had nothing to do with the recent spate of tainted or defective Chinese imports.

"You should think of it more as a design question," he says. "We had some design issues, and it's a combination of factors that led to the problems." Microsoft said it worked with the contract manufacturers to identify and address the problem, and has taken steps to make sure future shipments do not suffer similar issues.

Despite adding to the continuing losses for the entertainment and devices division, Microsoft executives pointed to a silver lining: "Most customers are going to look at it and say, 'Great, Microsoft stands behind the product,'" Bach says. "Ultimately, it becomes a positive thought in people's minds."

Microsoft will record the expenses in the quarter that ended June 30, compounding losses at a division that has yet to become profitable. Fallout from the admission won't end there. The hardware problems could undermine Microsoft's credibility with the hard-core gamers it has fought hard to court in recent years. The company belatedly owns up to flaws that reach back to the November, 2005, Xbox 360 launch.

Users complained then that the console scratched game discs and rendered them unusable. It took nearly a full year for Microsoft to admit that the original batch of shipments was failing at an unusually high rate. Last September, the company extended its 90-day warranty to a full year. Then they offered free shipping on returns.

This whole mess makes one conjure up a couple classic phrases, "The first out of the gate doesn't always win the race." and "You get what you paid for.", although I suspect many X360 customers may feel they got a lot less.

 

[V1P3R]

Basically MS is damned if they do, and damned if they don't.

Oh yeah... lets take the blame off them.

Well if that could be said for M$ then it certainly could be said for Sony too.

 

[Digital-Nitrate]

Oh yeah... lets take the blame off them.

Well if that could be said for M$ then it certainly could be said for Sony too.

What ever point you were attempting to make is difficult to find.

You quote a single line from a detailed post made well over two months ago and respond with two sentances that frankly do not make any sense by themselves with no explantions or information that supports them.

With the tremenous lack of reference & explantions in your post, it wont be easy to respond, but I'll try...

First of all, the quote you used was on speculation on Microsoft's dificult position should the progress of games and their need for more disc capacity continue to increase. Considering Microsoft put themselves in that position, how did you come to the conclusion that I was suggesting that the blame be taken off them?

Secondly, the same can't be said about Sony because they did design the PS3 to support games 7 times larger than the X360 on a single optical disc. Some will argue that games could come out on multiple discs, but for the same reason why game developers didn't like to do that with CD-ROMs, is why they haven;t dont it with DVD-ROMS - at least for consoles. This is particularly true for non-linear games, which are more popular than ever.

Others might argue that they could use a hard drive, but many X360 do not even have a hard drive, and of those that do, they are likely only 20GB. In contrast, every PS3 comes standard with a minimum of a 20GB HDD and more than 90% of PS3 come standard with a 60GB HDD, with additional support for countless 3rd party HDDs.

But HDDs are a very poor solution as it would take hours to download a 25GB game onto a HDD, and even if all the X360's had a 60GB hard drive, they would only be able to fit a couple of 25GB games, meaning every time they wanted to play a new 25GB game they would have to delete one game, and install the next, and so on and so forth... which clearly isn't going to be popular... and with so few X360's with 60GB HDD, it's not even an option for developers as they would have such a meaninglessly small market to sell to.

As many artciles have pointed out, like the one recently posted in this thread, Microsoft clearly rushed the X360 to market and to cut costs, they sacrificed performance, features and reliability along the way. 👎


So no, in terms of what you quoted, Microsoft is to be blamed for the ’Damned if they do, and damned if they don’t’ position they find themselves in, and no one has even suggested that we should take the blame off of Microsoft.

In addition, the same cannot be said for Sony as they are not in the same ’Damned if they do, and damned if they don’t’ position.

 

[MistaX]

Hrmmm. It appears I have stumbled across a bunch of fanboy babble.


Honestly, who really cares? If you don't like the 360, don't buy one.

Unless you work for Microsoft why the hell would you care that they're losing money? Microsoft themselves don't even care that they're losing money.

Either way, go back to playing your PS3.

 

[toyomatt84]

This is quite funny to me, seeing as Metal Gear Solid 4, a title that was exclusively licensed for Sony product, has just gone multi-platform (to the 360) to try and make profit on the larger console market. Bicker all you want, but when pivotal titles, like MGS4, switch to another console... it usually means something.

And, if you consider the fact that the Elite version 360 sold quite well, you'd eliminate all argument against it.

Basically, all I see is a fanboy running his keyboard with some heavily biased news articles. 👎

 

[Flerbizky]

What ever point you were attempting to make is difficult to find.

<snip>

In addition, the same cannot be said for Sony as they are not in the same ’Damned if they do, and damned if they don’t’ position.

Beautiful post - One is almost inclined to say - "As usual" 👍

 

[Digital-Nitrate]

Hrmmm. It appears I have stumbled across a bunch of fanboy babble.


Honestly, who really cares? If you don't like the 360, don't buy one.

Unless you work for Microsoft why the hell would you care that they're losing money? Microsoft themselves don't even care that they're losing money.

Either way, go back to playing your PS3.

Well that certainly was a well thought-out and informative post without resorting to off-topic childish one liner snipes... oh wait... never mind.

(and if you don't really care about the topic... maybe responding to it isn't such a good idea)

 

[Joey D]

Hrmmm. It appears I have stumbled across a bunch of fanboy babble.


Honestly, who really cares? If you don't like the 360, don't buy one.

Unless you work for Microsoft why the hell would you care that they're losing money? Microsoft themselves don't even care that they're losing money.

Either way, go back to playing your PS3.

Thank you! I pretty tired of everyone complaining about the 360 so much, if it sucks don't buy it.

Also these articles are tech blog entries, hardly something worth getting worked up over. If say Consumer's Reports came out with some article I'd pay attention to it, but any idiot can write on a blog.

 

[Digital-Nitrate]

This is quite funny to me, seeing as Metal Gear Solid 4, a title that was exclusively licensed for Sony product, has just gone multi-platform (to the 360) to try and make profit on the larger console market. Bicker all you want, but when pivotal titles, like MGS4, switch to another console... it usually means something.

What's sad is when someone posts something that is entirely untrue, and has been discussed in detail in GTP's MGS4 thread.

Now if you have an official response from Hideo Kojima that says he is going to release MGS4 for the X360 by all means post a link to it. Considering Kojima has only said that he has interest in making "something" for the X360, and that he already needs more than 22GB for MGS4 and sees the immediate need for 50GB for future games, clearly what ever he does release for the X360 wont be the same as MGS4 on the PS3.

And, if you consider the fact that the Elite version 360 sold quite well, you'd eliminate all argument against it.

Sold well? By what standards? They have sold less Elite's per month than all other consoles and handhelds, Wii, DS, PS3, PS2, PSP, and Reg X360. In fact, last I heard, they have yet to sell 100,000 of them and its been over two months since they were released. Their HD DVD add-on player has sold better than the Elite, and they only represent about 1% of all Xbox 360's.

Basically, all I see is a fanboy running his keyboard with some heavily biased news articles. 👎

And you would be quite blind then, as that is not what is here to be seen, and considering your terribly misinformed comments about MGS4 and Elite sales, it doesn't come as a real shock.

If you have some actual facts that dispute what these articles are saying by all means bring them up as they would be pertinent to the discussion, but if all you have to offer is untruths and name calling, I suggest you not participate in this thread, and find somewhere else where that kind of behavior is tolerated.

Also these articles are tech blog entries, hardly something worth getting worked up over.

Actuall they are not all tech blogs, nor are the authors some kind of anonymous bloggers, and they are but a very small sample of articles saying the exact same things that have been published in the NY Times, Wall Street Journal, Chicago Tribune, LA Times, SF Chronicle, etc.... and one quick search on Google you'd have known that before spreading more untruths. 👎


This thread is to discuss the actual, factual problems Microsoft is having with the Xbox 360, its Gaming Division, and how that is impacting the company, and speculation on what might happen because of it.

If you don't like the topic, have nothing to share that relates to the topic, or plan on posting more misleading or deliberately untrue remarks, DON'T POST IN IT.

 

[McLaren]

Digital, this is directed towards the quote with the "Live sucks, online should be free".

Now, I've always heard ads are a way for companies keep online gameplay free since companies like Nissan and Mazda are paying for you to see their billboards online.

But if this is supposed to be true, why hasn't it been in effect? I've seen tons of in game ads for NFS:C and Forza 2. Ads I thought were being paid to MS for me to see online so I wouldn't be paying to get online (In other words, I thought ads were paying my fees for me so I could see them online).

It seems like MS is keeping our money and ad money. I know the ads in TDU PC are what help keep it free.

 

[Digital-Nitrate]

That's an interesting point McLaren, and one that I hadn&#8217;t considered.

Legally, MS isn't obligated to pass on those earnings from advertisers to consumers to offset their XBL membership costs, but that certainly would be a nice thing if they did. You could compare it to cable TV channels though. As a consumer, you're paying a monthly fee, but most cable networks still have commercials. I remember when cable was relatively new, one of the benefits was that the cable shows didn't have commercials.

Considering how much money MS has lost and continues to lose, I can't imagine they'll make XBL free, and if anything, they'll likely increase the number of ads and 3rd party promotions on XBL to try and increase revenue. As an advertiser, knowing you'll have access to a specific target market, XBL as an advertising agent is very likely a valuable resource to Microsoft.

 

[toyomatt84]

What's sad is when someone posts something that is entirely untrue, and has been discussed in detail in GTP's MGS4 thread.

Now if you have an official response from Hideo Kojima that says he is going to release MGS4 for the X360 by all means post a link to it. Considering Kojima has only said that he has interest in making "something" for the X360, and that he already needs more than 22GB for MGS4 and sees the immediate need for 50GB for future games, clearly what ever he does release for the X360 wont be the same as MGS4 on the PS3.

Judging solely by an article I had read, I made an assumption on the reality of Kojima's title being launched multi-platform. After doing some research, it turns out that the article was published in a more "humorous" nature and shouldn't really be taken as "fact". It seems to be a topic the higher up members of the company have been kicking around, to try and boost sales for their upcoming title. So, sorry that I was mislead by that article.

Sold well? By what standards? They have sold less Elite's per month than all other consoles and handhelds, Wii, DS, PS3, PS2, PSP, and Reg X360. In fact, last I heard, they have yet to sell 100,000 of them and its been over two months since they were released. Their HD DVD add-on player has sold better than the Elite, and they only represent about 1% of all Xbox 360's.

Well, considering the market has already been quite populated by the original model, the new Elite 360 shouldn't have sold like a next-gen console. If you look at, in a standpoint of it being an "upgrade" option for those seeking it, and having the financial ability to, it actually has sold well. But, when comparing to stand-alone consoles and handhelds, like you did, it really wouldn't stand a chance, nor would anyone expect it to.

And you would be quite blind then, as that is not what is here to be seen, and considering your terribly misinformed comments about MGS4 and Elite sales, it doesn't come as a real shock.

If you have some actual facts that dispute what these articles are saying by all means bring them up as they would be pertinent to the discussion, but if all you have to offer is untruths and name calling, I suggest you not participate in this thread, and find somewhere else where that kind of behavior is tolerated.

If you want to really base my posting on evidence, I provided enough in this response to justify my initial post. If you feel unsatisfied by what I've posted, fine, but I'm definitely sticking by my statement that you're heavily biased towards the PS3. I didn't say anything bad about the console, but you obviously got butt-hurt over something. Sorry to have riled your nerves.

PS. Nice threat there in the end. Subtle, discreet, but yet.... obvious enough to appear as though you own this thread.

 

[DuckRacer]

I'm not going to counter anything in D-N's post because I'm not in the mood for drawn out arguments that proves both parties involved wrong in a few areas right now, but I do want to comment on this.

This is quite funny to me, seeing as Metal Gear Solid 4, a title that was exclusively licensed for Sony product, has just gone multi-platform (to the 360) to try and make profit on the larger console market. Bicker all you want, but when pivotal titles, like MGS4, switch to another console... it usually means something.

Erm uh wha? I just went berserk because of that, trying to find an announcement... but it's not on GAF's front page. Or the internet in general.


...Oh, I just previewed this post and saw Toyomatt. This. Will. Get. Ugly.

 

[MistaX]

My last comment for this thread:


The problem with PS3 fanboys is that they have too much time on their hands to start arguments.

Why do they have so much time on their hands?

Simple:

They've already beaten all 3 PS3 games that are out, and have nothing better to do. While the rest of us with 360's and Wii's... have games to play to pass the time.

 

[Digital-Nitrate]

Judging solely by an article I had read, I made an assumption on the reality of Kojima's title being launched multi-platform. After doing some research, it turns out that the article was published in a more "humorous" nature and shouldn't really be taken as "fact". It seems to be a topic the higher up members of the company have been kicking around, to try and boost sales for their upcoming title. So, sorry that I was mislead by that article.

No apologies necessary, but glad that was cleared up. 👍

Well, considering the market has already been quite populated by the original model, the new Elite 360 shouldn't have sold like a next-gen console. If you look at, in a standpoint of it being an "upgrade" option for those seeking it, and having the financial ability to, it actually has sold well. But, when comparing to stand-alone consoles and handhelds, like you did, it really wouldn't stand a chance, nor would anyone expect it to.

I think you are making my point for me though. Regardless of how you look at it, in terms of numbers, and in terms of a stand alone console, which it is, it hasn't sold well in terms of offering developers a large target audience for games that might be designed to take advantage of its 120GB HDD.

However you bring up a good point and that is the apparent saturation of the market for new X360's. Sony has sold 120 million PS2s and counting. At the current sales pace for X360, it will take them over 40 years to sell that many X360's. And just to be clear I'm not any kind of blind PS3 fanboy, or any kind of fanboy (which should already be clear to anyone that has read my many negative comments about Sony as well). As a point of fact Sony's PS3 sales are currently at a far slower pace than even the X360.

So if X360 sales are truly drying up, and the Elite isn't making up for those low sales, and they aren't profitable with their current customer base, these are more indications that MS may very well have to release a completely new Xbox (one that is far more reliable and supports games on HD DVD or Blu-ray, as well as some other progressive features and capabilities missing from the current Xbox 360), and/or seriously cut back all future development for the X360 and future games, or as many are starting to believe, cut bait and call it a day. Considering that they are very much a publicly owned company, large corporate investors will likely be the ones to make the final decision on the future of Microsoft's Xbox division.

My last comment for this thread:


The problem with PS3 fanboys is that they have too much time on their hands to start arguments.

Why do they have so much time on their hands?

Simple:

They've already beaten all 3 PS3 games that are out, and have nothing better to do. While the rest of us with 360's and Wii's... have games to play to pass the time.

Besides being off-topic and offering no value to this thread, besides being childish, besides stateing more untruths...

Perhaps the problem with Xbox 360 fanboys is that they have no facts to support their argument so they resort to lying and name-calling while avoiding the topic entirely.

BTW: Seeing as you apparently missed it the first time...

This thread is to discuss the actual, factual problems Microsoft is having with the Xbox 360, its Gaming Division, and how that is impacting the company, and speculation on what might happen because of it.

If you don't like the topic, have nothing to share that relates to the topic, or plan on posting more misleading or deliberately untrue remarks, DON'T POST IN IT.

 

[Race Idiot]

how about everyone stop being massive nerds and bickering about which massive multinational corporation your going to worship and just like maybe play some video games or something

or go outside maybe

 

[toyomatt84]

I think you are making my point for me though. Regardless of how you look at it, in terms of numbers, and in terms of a stand alone console, which it is, it hasn't sold well in terms of offering developers a large target audience for games that might be designed to take advantage of its 120GB HDD.

However you bring up a good point and that is the apparent saturation of the market for new X360's. Sony has sold 120 million PS2s and counting. At the current sales pace for X360, it will take them over 40 years to sell that many X360's. And just to be clear I'm not any kind of blind PS3 fanboy, or any kind of fanboy (which should already be clear to anyone that has read my many negative comments about Sony as well). As a point of fact Sony's PS3 sales are currently at a far slower pace than even the X360.

So if X360 sales are truly drying up, and the Elite isn't making up for those low sales, and they aren't profitable with their current customer base, these are more indications that MS may very well have to release a completely new Xbox (one that is far more reliable and supports games on HD DVD or Blu-ray, as well as some other progressive features and capabilities missing from the current Xbox 360), and/or seriously cut back all future development for the X360 and future games, or as many are starting to believe, cut bait and call it a day. Considering that they are very much a publicly owned company, large corporate investors will likely be the ones to make the final decision on the future of Microsoft's Xbox division.

Well, I'm not so sure that the 120GB HDD was designed for game purposes, seeing as many people use their 360 as a media center, to hold movies, music, and such. Even then, I've used well over 1GB in extra data for Rainbow Six: Vegas. And, if we see more games offering large amounts of downloadable content, I wouldn't be surprised to see some of that 120GB put to use in game support.

Would I say it was a mistake for Microsoft to not use the HD-DVD as it's main media format? Yes, I think it was. Considering how much the new formats of High Definition media offer, I think it was quite the mistake. And, I'm curious as to what other "progressive features and capabilities" you were looking for? You did know that Microsoft has 2 annual updates, one in the Fall and one in the Spring. These bring new features and capabilities to the console. So, if the feature or capability you are looking for isn't there now, what's to say it will never be?

Personally, if the PS3 had more to offer, in terms of game support, I would own one. But, GTHD looked and played horribly to me, and I really didn't see any titles (with exception to Rainbow Six: Vegas) that stuck out as something that I really wanted. I'm not knocking the system, because I know that it is way more powerful (in terms of computing and graphical output) than any 360 I've ever seen. And, maybe in the future, that may be a console I'll purchase. But, with as tiny as the game selection is right now, I don't feel the need or even want to buy one.

 

[DuckRacer]

Ahh, who am I kidding? I simply can't pass up a good argument.

They've already beaten all 3 PS3 games that are out, and have nothing better to do. While the rest of us with 360's and Wii's... have games to play to pass the time.

Wrongish and dead wrong.

With the PS3, you do have more than 3 games to play on it... more like 8+ off the top of my head. But if you have a 360, you do have about 3 games (MS, RFOM, NGS, I'm counting the popular ones and not the niche ones) to play with if you decide to get everything multiplatform on the 360 (and rightfully so, with all the gimped ports).

With the Wii... it makes the PS3 seem like the Garden of Eden. There's Zelda, Paper Mario, and... uh, nothing else. Unless you like minigames. But seriously, if I only had a Wii, I'd freak out. I know this is off-topic, but still. This had to be mentioned. If it weren't for Smash Bros and the inevitable Animal Crossing this baby would've been in someone else's hands months ago.

And just to be clear I'm not any kind of blind PS3 fanboy, or any kind of fanboy (which should already be clear to anyone that has read my many negative comments about Sony as well). As a point of fact Sony's PS3 sales are currently at a far slower pace than even the X360.

A couple things wrong with this.

1. You are a fanboy. Of extremely high tech stuff like lossless sound and 1080p and crap. Seriously you're probably the most obsessed person on this forum about this.

2. Actually, surprisingly enough, the PS3's sales aren't that slow... the 360 is just marginally outselling it worldwide. Unless you're talking about America, which puts the PS3 battling to the death against the GBA.

3. To be honest D-N, I do believe you fall into the high-end AV enthusiast group (see: point #1), but sometimes you do come across sounding biased towards the PS3. Maybe it's the doom and gloom articles about the 360 (from financial analysts, no less, they're flippin' annoying), and little to none of that kind of stuff in the PS3 forum about the PS3. I don't see you post articles like this very often, if ever. Maybe you do in other forums, I don't know, but here on GTP we don't see that. For example, when you said "...As a point of fact Sony's PS3 sales are currently at a far slower pace than even the X360," that's the first time I have ever seen you say that here. Maybe you've said them in other threads and I'm forgetting/haven't seen them, but AFAIK, you seem to give the 360 a much harder time than the PS3. Yes it deserves the extra flak, but not that much extra.

That's just the way I'm seeing it through my eyes. I know you've helped me countless times when I've come off as an Xbot, I'm just trying to help you.

how about everyone stop being massive nerds and bickering about which massive multinational corporation your going to worship and just like maybe play some video games or something

or go outside maybe

STFU noob.

But then again you are right.

 

[TopHat]

Here's how I see it.

They all suck.


The 360 sucks because its just about as reliable as a 27 year old French car.

The PS3 sucks because it just about as expensive as a Bentley, and it has all of 8+ games. ()

The Wii sucks because... Erm... What?

Oh well. It really doesn't suck.

 

[YSSMAN]

I'm interested to hear if it is the earlier builds of the 360 that is having problems, or just the overall run that has existed thus far. I know that I have an early build model (Late November 2005) that I picked up a little more than a year ago, and thus far it has given me few issues. Maybe its my lack of time that I spend running the system hard that has kept it on an even keel?

Either way, I still highly doubt that this is any kind of disaster for Microsoft. The 360 is still selling moderately well in most stores, as I often find more PS3s on the shelf than 360s, however both are being outsold significantly by the Wii... That is, if they can eventually get them into the stores.

With Microsoft officially cutting the cord on the XBOX in a short wile, I assume that those few folks (like my friend Joey at work) will have to choose a console, and many of them are looking (I presume) at the 360. It is still going to be a while until the PS2 dies, but once it does, that may prove to be the tipping point for the PS3 as well.

I think a lot of this still comes down to game selection and the overall cost/benefit ratio of either platform. To me, and I think most "average" people, the 360 will seem like the better choice, but there are quite a few people who are still saving and waiting for that PS3 ship to arrive.

Yes, it may seem like doom and gloom for the 360 now, but I doubt it is going to make much of a difference overall.

 

[Digital-Nitrate]

I am seriously hoping this doesn&#8217;t turn into yet another X360 VS PS3 thread, but to clarify things&#8230;

With the PS3, you do have more than 3 games to play on it... more like 8+ off the top of my head.

Actually there are close to 40, and that's not including any of the PSN games.

But if you have a 360, you do have about 3 games (MS, RFOM, NGS, I'm counting the popular ones and not the niche ones) to play with if you decide to get everything multiplatform on the 360 (and rightfully so, with all the gimped ports).

Gimped is a bit exaggerated, and it has been shown already, some ports do look better on the PS3, and some ports have almost no differences at all between versions. In addition, your definition of niche is quite different than mine. For instance, F1:CE is in my opinion, and as seen in the dedicated F1:CE board on GTP I am not alone, is one of the best games on the PS3 that didn't even make your short list, and NBA 07 and couple other exclusives have sold quite well in terms of percentage of PS3 owners, so let's not get too carried away.

I also know that even you seem genuinely exited over at least a couple exclusive PS3 games yet to be released... Mr. I want to fly a dragon!

1. You are a fanboy. Of extremely high tech stuff like lossless sound and 1080p and crap. Seriously you're probably the most obsessed person on this forum about this.

I don't know about the most, but I will gladly admit I am a dedicated certifiable videophile... but only a marginal audiophile... oh, and I do like tech gadgets! Guilty as charged!

2. Actually, surprisingly enough, the PS3's sales aren't that slow... the 360 is just marginally outselling it worldwide.

My mistake, but it is still selling slower than the X360, and is a year younger, so I suspect compared to X360 sales from last year, it is selling at a rate a good deal less, but regardless of that, it has to be way less than the PS2, although I read somewhere that it took a while for PS2 sales to really take off... which is a hopeful sign for Microsoft as well.

3. To be honest D-N, I do believe you fall into the high-end AV enthusiast group (see: point #1), but sometimes you do come across sounding biased towards the PS3. Maybe it's the doom and gloom articles about the 360 (from financial analysts, no less, they're flippin' annoying), and little to none of that kind of stuff in the PS3 forum about the PS3. I don't see you post articles like this very often, if ever. Maybe you do in other forums, I don't know, but here on GTP we don't see that. For example, when you said "...As a point of fact Sony's PS3 sales are currently at a far slower pace than even the X360," that's the first time I have ever seen you say that here. Maybe you've said them in other threads and I'm forgetting/haven't seen them, but AFAIK, you seem to give the 360 a much harder time than the PS3. Yes it deserves the extra flak, but not that much extra.

I think you'd be surprised, even here on GTP I have given Sony and the PS3 there fair share of criticism where criticism was due. Part of the problem though is you have often beat me to the punch in the PS3 forums.

Besides the differences in the consoles themselves, possibly one reason you may perceive me as more biased towards the PS3 is that one thing that always gets me riled up is when someone posts blatantly misleading posts and disguise personal opinion as unquestionable facts&#8230; and unfortunately I see this coming a lot more from certain X360 supporters far more so then that from PS3 supporters. I know there is one seriously biased PS3 evangelist that we both have had our run-ins with, you more so than myself, but if you don&#8217;t beat me to the punch, I&#8217;m all to willing to address their misleading comments just as I have with some over zealous X360 fans.

That's just the way I'm seeing it through my eyes. I know you've helped me countless times when I've come off as an Xbot, I'm just trying to help you.

👍 Seriously, I appreciate a healthy informative debate, especially when facts are discovered and exposed, and you often are at the heart of many of those discussions. 👍

Well, I'm not so sure that the 120GB HDD was designed for game purposes, seeing as many people use their 360 as a media center, to hold movies, music, and such.

I agree. I'm sure the main reason for the 120GB HDD is for downloading video content and as you mentioned, storing music and standard def movies. This is likely one of the reasons it isn't selling well compared to the regular X360 as most users likely do not consider that option worth the extra money.

Even then, I've used well over 1GB in extra data for Rainbow Six: Vegas. And, if we see more games offering large amounts of downloadable content, I wouldn't be surprised to see some of that 120GB put to use in game support.

I agree as well, however downloading 1GB of content is quite different than downloading 20GB of content for one game. This is where developers for the X360 are going to have a very limited market to sell large downloads to, as not only are there limited numbers of X360's with a HDD over 20GB, but how many would want to hassle with the process and eat up their HDD space with just a couple large games? This is why high data capacity blue laser optical drives are needed for today's and tomorrow's gaming needs. Until 1 Terabyte drives sell for under $100 and download speeds increase ten-fold over today's average broadband networks. Games will continue to be distributed on discs, and for consoles, high capacity single disc releases will not only be desired, but in some cases, needed.

Would I say it was a mistake for Microsoft to not use the HD-DVD as it's main media format? Yes, I think it was. Considering how much the new formats of High Definition media offer, I think it was quite the mistake. And, I'm curious as to what other "progressive features and capabilities" you were looking for? You did know that Microsoft has 2 annual updates, one in the Fall and one in the Spring. These bring new features and capabilities to the console. So, if the feature or capability you are looking for isn't there now, what's to say it will never be?

Firmware updates are terrific things, however they are only useful for features that have the hardware already installed that can support the software.

For instance, regarding optimal picture and audio quality, HDMI, especially v1.3 is highly regarded, and currently the best possible A/V signal path for consumer electronics. This is hardware that no software update is going to magically make it appear. The only way you can have it is if it is built into the console. Some hardware can be made as add-ons, like the HD DVD player, WiFi adapters, memory car readers, but some cannot, like HDMI. However, add-ons have rarely sold well as a lot of consumers like to have these things built-in for convenience, rather than have a bunch of devices plugged into the main unit and taking up more shelf space.

Personally, if the PS3 had more to offer, in terms of game support, I would own one. But, GTHD looked and played horribly to me, and I really didn't see any titles (with exception to Rainbow Six: Vegas) that stuck out as something that I really wanted. I'm not knocking the system, because I know that it is way more powerful (in terms of computing and graphical output) than any 360 I've ever seen. And, maybe in the future, that may be a console I'll purchase. But, with as tiny as the game selection is right now, I don't feel the need or even want to buy one.

In terms of games, one man's poison is another man's pleasure. In other words debating over what constitutes a good game is rather meaningless as it&#8217;s largely a subjective choice. What you might consider worth getting, others may well disagree.... and you'd both be right as it&#8217;s simply a personal choice. However, judging by the majority of comments in GTP&#8217;s PS3 board, many people are really enjoying a good deal more than just a couple games, and many seem quite happy with the current selection, which is naturally smaller than X360, but it&#8217;s also a year younger, and I think most understand that.

Obviously everyone is going to prefer having a larger selection of games to choose from, and it appears the game library for the PS3 is definitely ramping up, and right in line with the number of X360 games that came out when it was less than a year old. It also has its fare share of high profile exclusives scheduled for release, so clearly there is a lot of exaggerating going on when you see comments from people who do not even own a PS3 on how there are no decent games out for it.

More importantly, this thread is not an X360 VS PS3 thread... although some may try to make it out as one. The title of the thread and the articles posted in it clearly are focused on the business of Microsoft's Xbox division, and how their current position might affect their future position, and speculating on the possible results.

I believe there are already plenty of X360 VS PS3 threads to begin with, which is why I specifically do not want this thread to turn into one.