How IBM Out-foxed Intel With The Xbox 360 327
xcaverx writes "Learning from failure is a hallmark of the technology business. Nick Baker, a 37-year-old system architect at Microsoft, knows that well. A British transplant at the software giant's Silicon Valley campus, he went from failed project to failed project in his career. He worked on such dogs as Apple Computer's defunct video card business, 3DO's failed game consoles, a chip startup that screwed up a deal with Nintendo, the never successful WebTV and Microsoft's canceled Ultimate TV satellite TV recorder.
But Baker finally has a hot seller with the Xbox 360, Microsoft's video game console launched worldwide last holiday season."
Re:Outfoxed? (Score:4, Informative)
Apple's entire value of "Goodwill" as of Sept '05 (last number I could easily find and yes they actually have to value these things though it certainly isn't easy to come to a precise number): 69,000,000
IBM's market cap: 127,630,000,000
IBM's Cash And Cash Equivalents (as of Dec '05) 12,568,000,000
Mirror (Score:2, Informative)
Mirror [nyud.net]
Re:Outfoxed? (Score:4, Informative)
Apple may not count for a huge amount in sales, but the amount of hype Apple fan's created for PPC is worth more money then IBM has ;-)
Delusional. "Hype" for one product that accounts for maybe 10% of IBM's business is worth more than the net worth of the company? I'll bet IBM's calculation here is that a)the "hype" generated by Mac PPC sales was worth little to nothing, given that the sales they care about are to large corporate buyers; b)console sales will generate hype themselves which will likely be similarly (read: not very) powerful; c)the console market requires chip volumes a couple of orders of magnitude higher than Apple; d)the new partnering fits better with future plans for Cell, which mostly involve consumer-electronics embedding.
Hype is not better than money. Companies that fail to recognize this don't last. Your nick and post are well-coordinated.
Re:Why not? (Score:4, Informative)
Known paid for Microsoft astroturfer using multiple accounts to self mod up posts.
Re:Dollars in the short term... (Score:5, Informative)
The XBox has lost upwards of $4 billion [joystiq.com]. I think the XBox either qualifies as a failure or a disaster. If the 360 doesn't turn a profit in a couple years I think they are going to throw the towel in.
Re:Outfoxed? (Score:5, Informative)
Your description of Goodwill is incorrect.
Goodwill is a very specific number used to define an intangable asset that was aquired.
So, lets say I buy a company for 5 million dollars. On the books, the company has materials and property worth 1.5 million dollars.
For accounting, I say that I spent 5 million dollars on 1.5 million of assets, and 3.5 million of "Goodwill" Every year (at least) I evaluate the 3.5 million dollars worth of Goodwill and make sure it is worth as much as I think it is.
The accountants don't get together and say: "People really, really like us. Lets call it 69 million dollars worth of "like"!"
If it didn't make sense to sell them at a loss... (Score:5, Informative)
this [businessweek.com] article states Microsoft expects to make money in 2007. Also note that all figures on how much microsoft is "actually losing" is speculation by industry analysts. No one actually knows precisely how much Microsoft is paying for what component.
If you want to crack a market you have to pull out the checkbook and take a hit. You can't go in timid. Microsoft has shown that and look at the market share they have gained. They have a good percentage of gamers hooked, now on the third generation consoles they don't have to take as big a hit on the console price.
Re:well... (Score:1, Informative)
Why don't you check it NOW:
http://search.ebay.com/search/search.dll?sofocus=
Looks to me like they're selling at or BELOW retail...
Are you a shill?
Re:Outfoxed? (Score:3, Informative)
the console market requires chip volumes a couple of orders of magnitude higher than Apple
Apple sells 5-8 million macs a quarter. The PS2, at it's peak, sold 25 million units per year. The Xbox hit 8. We won't count Nintendo since they already used IBM chips. 8 million/quarter vs 8.25 million per quarter... Where's the order of magnitude again? Forget plural... There isn't even close to one.
And about Apple putting 2 IBM chips in each box...don't the XBox and PS3 each ship with more than 2 IBM chips? Isn't it 3 per XB360 and like 8 for the PS3?
No.
Oh, and while I'm at it, aren't the bulk of Apple's quarterly unit-volume sales ipods?
Clearly, I was talking about Macintosh sales. iPod sales would make this no-contest.
Re:Not so fast Billy Ray... (Score:1, Informative)
GP2X [gp2x.com]
Re:Not so fast Billy Ray... (Score:1, Informative)
All third-party sales figures for the 360 show the system at a appallingly bad 1.7 million units as of May 1st. And those numbers include all US retailers, even the ones like Walmart that don't publicly give numbers out.
Xbox fans have been trying to pull the same crap for five years now where they all love to talk about how 'they are sure the real numbers are higher' or 'they are sure they heard a higher number somewhere' for Xbox sales.
The world isn't fooled.
Re:Dollars in the short term... (Score:2, Informative)
I'm not a big MS fan, but before you all go sticking your feet in your respective mouths:
From the article [businessweek.com]:
Intel dodged a possible bullet (Score:3, Informative)
Stockholders = parents. Kids = Intel. A contract with Microsoft sounds great for a company, until you start reading into it. By the way that Microsoft does things, if the xbox 360 flops at any point Microsoft would be protected from losing capita by Intel and other contracted companies. The way they do it is that say they estimate 5M units to be sold in X time, they order that many units. If only 1M sells and they don't think they can sell the rest, by their contracts they do not have to, the contractors have to keep the parts that MS didn't sell and sell it themselves or take it as a loss. So if Intel took up the task and the 360 undersold (a very real worry if I was Intel), they would be at a loss of hundreds of millions to billions of dollars, while Microsoft would shrug it off and make an xbox 720 or something. Intel put the numbers in a calculator with some estimate of probability, and it came up sour. Microsoft wasn't willing to budge. To the best of my knowledge, this is what happened.
Signing a contract with Microsoft is like arguing on the Internet....