How IBM Out-foxed Intel With The Xbox 360

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."

Not so fast Billy Ray...

[mabu]

I think the jury is still out on the success of the 360. This guy could be batting 1000.

Jumping the gun...

[ivan256]

...the never successful WebTV... But Baker finally has a hot seller with the Xbox 360, Microsoft's video game console launched worldwide last holiday season."

Shouldn't we wait until the 360 has outsold WebTV before we make that declaration?

Re:well...

[johnfink]

Generally, selling as much as you supply at asking price is considered a success.

Re:Xbox?

[ivan256]

Only people who count market share instead of dollars when judging success would call the Xbox anything but a failure.

Re:Xbox?

[Karma Farmer]

only Linux monkeys would call the original XBox a failure.

I agree, if by "Linux monkeys" you mean "accountants and businessmen."

Re:well...

[Burlap]

it helps when you are the only show in town. The jury is still out as to how far their sales will fall when the PS3 hits the shelves.

MS is in dire need of a Halo for the 360 to sell on, sure the games they have out now look 'ok' but there isn't anything out there that makes me say "WOW!"

Thus just in...

[gnovos]

And this should properly be followed by: How Intel outfoxed IBM with Apple

Re:Outfoxed?

[Anonymous Coward]

Excuse me? Since when would hype generated from the use of PowerPC chips in Apple's DESKTOP and LAPTOP computers boost the market for Power processors for sale in SERVERS and SUPERCOMPUTERS? I mean, I guess seeing the same processors that a company or research institute bought in its top-of-the-line blade cabinets and Blue Gene supercomputers in a Mac might send girly shivers of stylish delight down any CEO's spine... but seriously, get real. The Power sells well in high-power applications because its a high-power processor, not because Apple used to put it in a pretty little white case.

um...

[everphilski]

... getting to market a year+ before your competition, selling your devices as quickly as you can produce them, considering that Microsoft is only on their second generation device whereas Sony is on their third (not to count portable devices) and Nintendo is on... uh... fifth? Microsoft is doing well. They cracked a market.

Value of RISC??

[Anonymous Coward]

Why are we treating the processors like they are equal? Clearly a risc arch. is a better design for what they are doing on graphics world today. Dev tools are certainly a factor, but multi cores on sisc arch blow chunks compared to the segmenting ability of risc design. Am I missing something here??

Re:Outfoxed?

[Anonymous Coward]

I understand that one shouldnt feed the trolls.

However - this fucking macfanaticism is getting even worse than the linux-fanboying around these parts. Now here's a question for you:
Apple sells around 1 million computers a quarter*.
Xbox360 has so far been selling almost 2 million units per quarter.
Add in whatever the PS3 will sell.
Add in whatever amount of Cell chips IBM will be able to sell on its own.
Now - which is more profitable, selling, oh, lets say 5 million cpus/quarter to various companies or 1 million to one single company? Make a wild guess!

ps. Nobody but stupid mac fanboys never believed a word that Steve Jobs was saying about the PPC. Nobody. Sorry.

*) http://news.com.com/Apple+earnings+continue+to+hum +along/2100-1045_3-5669710.html [com.com]

Learning from SUCCESS is the hard part.

[dpbsmith]

Learning from failure is easy. The tough part is learning from success. When a project succeeds, there's no pressure to make searching analyses of the reasons for success. The upper-level managers involved begin to think they're innately cool and have all the answers... the success of their product line proves it.

Think Netscape... think Digital Equipment Corporation (I date their decline from the day when a salesperson apologized for being slow to return a call but added "After all, we're a billion dollar corporation." Think Ashton-Tate. Think Quark...

Re:Ahh, the litany of failure

[Anonymous Coward]

Honestly, it all depends on why the company (or product) failed and what the person's involvement in that failure was. Lets just talk about a hypothetical future situation, we'll say that Nintendo is forced out of the console buisness (and becomes a third party) after the Wii is not that successful; we'll suppose that it failed to reach mass market success because of lack of HD support (an insane assumption).

Now, would you hire the person who was directly responsible for developing the hardware? Remembering that he produced a low-cost, reasonable powered system which provides a unique interface designed to give inovative gameplay experiances. Of course you would, he took a calculated risk that was reasonable.

On the other hand, suppose that someone in marketing decided to name the system the Ninendo Gay and had the system pink and purple because "Gay is the new straight!" and the system failed in the marketplace because no one wanted a pink box with "Gay" written on the side; would you hire this guy? Probably not because he (obviously) doesn't understand the market.

The odd thing with the XBox is that many of their higher executives sound closer to the second guy than the first;

Re:Why not?

[poot_rootbeer]

Hard to say it wasn't a success.

That's like saying George Mason had a successful run in this year's NCAA basketball tournament. Yes, they posted a lot of wins that no one expected them to, but they still ended up with fewer points than Florida in their Final Four game. They failed to win the tournament.

Like Mason, Microsoft's Xbox division may be a success by some measures, but if they're in the red on the accounting ledgers, they're still a failure in some way.

Re:Why not?

[nule.org]

Have numbers to back that up? Given the number of ipods/itunes users out there (was it 8.5 million units this quarter?) compared to the number of xbox360 users I find your downloads a day statement a little far-fetched. Plus I imagine that xbox live downloads might be priced higher than the $0.99 that most itunes stuff goes for.

An alternative to flaming his failures

[BAM0027]

Blame his management for his failures. He was probably subordinate to many in key decisions. I would praise his for going after such diverse and technically challenging projects as he has.

What's the alternative? He slept with the right people? Come on. Each of his "failures" has been really high profile for each of the company's he's worked with. I think it's shortsighted to simply blame him.

Re:'Out-foxed'? No...

[Anonymous Coward]

Incendescent lightbulbs and portable electric heaters are behind as well but they still out sale comparable alternate products.
x86 is "behind" but it is needed for compatibility. Maybe not in the specialized console gaming, cell phones, PDA markets but it will around for years in the PC market.
No one is going to throw away everything they have to switch over any time soon.

Re:Jumping the gun...

[Psychotext]

Last numbers I read for the worldwide sales of the 360 were 3.2 million. Anyone got a number for WebTV sales?

Re:Why not?

[KingJoshi]

By this logic, life is always a failure. You die in the end. Until we create an immortal, every life is a failure.

Often we determine success or failure by the original expectations of the project. The Xbox was meant to carve a segment into the market. I'm sure they hoped to make money, but most didn't expect so much on the first iteration. The Xbox 360 is a continuation of the original goals to have a main stay in the living room, feed into other Microsoft services and eventually make money. They're still on the journey. In some sense they're still on target, in others they've fallen behind. It's premature to call it a failure or success.

Embedded device market

[klubar]

The IBM PowerPC is chasing the embedded device market which in terms of unit volume (and profit) is much larger than the entire Apple computer market. The gaming console market is well suited for an embedded device as are automobiles. Designing custom chips for Apple, for what I assume is a difficult customer, is not necessary a profitable venture.

Re:Too true

[jandrese]

Networking. The top level executive pool is an exlusive club, but once you get in you're pretty much set for life, no matter how much of a screwup you are. The best way to get in is to be the son of an existing high level executive, although there are occasional chances for other people to squeeze in. It helps a lot to already be rich too.

Re:um...

[Frag-A-Muffin]

...They cracked a market...


Anyone can crack the market if they're willing to take a $4,000,000,000 hit! (that's 4 Billion in case the zero's were blinding you)

The real questions are: a) can the 360 turn a profit? b) how long will the shareholders allow them to bleed money into this "project"?

But they will.

[tkrotchko]

"MS is in dire need of a Halo for the 360 to sell on"

But they will; they're saving that for when the PS3 launches.

They learned this trick from Sony, who launched Final Fantasy VIII on the day the Dreamcast launched to take the shine off Sega.

I think you mean

[Anonymous Coward]

... getting to market a year+ before the market is ready to buy, not being able to make devices quickly enough to meet even small levels of demand, moving yourself into a position where six months into your second attempt at market one of your competitors has five successful consoles, one of your competitors has three successful consoles, and you have none...

Re:'Out-foxed'? No...

[SrJsignal]

BZZZZZZZZZZZZZZ incorrect. Microsoft went with IBM because Intel was not willing to design a chip and then have Microsoft own the IP on the chip. You do know that Microsoft owns ALL of the silicon IP for the Xbox 360, they didn't own squat on the original Xbox and thus were held to the wall on the prices of chips because they didn't own them. Also, maybe you should ask this "senior engineer" at Nvidia why they aren't doing the 360, it's for the SAME REASON, Nvidia wasn't willing to do all the design work and then not own anything. Has nothing to do with x86 vs not x86, thanks for playing. (incidently why in the world would a company with so much expertise not want to go with an x86-style chip, see above).

Please MOD UP

[spun]

This is the truth. Rags-to-riches is mostly a myth. In fact, if you want into the club, you pretty much have to sell out. You need to prove to them that you are just like them or they won't let you play. And once you are in, you are set for life. The one no-no is getting caught with your hand in the cookie jar, because the myth is that these guys are all fine upstanding citizens who would never do that. So you will get a slap on the wrist if you get caught in some kind of malfeasance, just to prove to the plebes that white collar crime is an aberation performed by a few bad apples, rather than a standard operating procedure. But they will never kick you out of the club just for screwing over the common citizen. That's pretty much what you have to do to prove you are one of them.

You know what makes me sick? That so many otherwise decent Americans aspire to be just like these sociopaths.

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[account_deleted]

Comment removed based on user account deletion

Re:well...

[Dan Ost]

Those estimates all assumed that Sony would be paying what other OEMs would be paying to the manufacturers of said parts. However, Sony doesn't buy their parts, they manufacture them themselves. Thus, the cost to Sony to build a PS3 will be less than the cost someone else to purchase all the PS3 parts individually.

We won't really know what it costs Sony until they release a quarterly report that includes the PS3 (and even then we'll still only be able to guess at the details).

Re:well...

[AHumbleOpinion]

... it helps when you are the only show in town ...

Well that is further evidence of a successful launch and good planning and execution.

indeed.

[zippthorne]

Also, a marginal cost of $800 per unit, even if they purchase ALL the parts from outside vendors seems awfully high considering what that $800 will be able to buy *retail* when the PS3 comes out.

Re:At least you're consistent

[khoffman]

Well bias usually results in inaccurate analysis, I think the MS haters are not off-target here. Background facts: 1. I run Windows (horrors!) 2. I own an xbox and a ps2. The ps2 lives in a box in the garage. I use the xbox, even to play dvds! 3. I also use linux sometimes. 4. My housemate and I were amped up about the xbox 360 in November. Ready to buy buy buy. 5. Now we have zero interest. Limited title releases, shoddy xbox 360 verions (madden), overheating PSUs. This is why the launch was a failure. I believe that the pool of potential buyers in November is much smaller than the pool of potential buyers now and that the maximum # of xbox 360s that they can sell has declined since release. Sidepoint: I agree that Sony is evil. I recently bought a new tv and it pained me to buy a Sony but it really was the best tv in the class at the best price in the class. Evil evil evil corporation. Worse than MS? (start the hate!) But the reality that you are ignoring is that everything you would want in a successful release is absent from the xbox 360 release: Here's an hypothetical release wishlist: 1. Knockdown title that will never be available on another system (e.g. Halo 3). 2. A hardware unit that performs beyond expectations, people should rave about the new graphics. Sure, they are better but not in a vastly compelling way (for example, the textures in Madden look plastic) 3. A stream of new releases over the 6 months following release to convince people who wait until after xmas to go ahead and get one. 4. A sufficiently limited supply to pump up enthusiasm and commitment to the platform but not so limited that you get nearly zero market penetration (how many people own xboxs, how many own ps2s, how many own xbox 360s). 5. A re-release of an existing title that knocks the socks off the old version (e.g. "You are still playing Madden on the xbox? Dude, you have to get a 360, it's so much better!). None of these things are present. Here's an hypothetical list of things you don't want in a release: 1. Availability so limited that buyers committed to purchasing (at nearly any price) can't get a unit 2. A lack of titles overall, with no grand slam new title and no grand-slam re-release 3. Faulty hardware reports BEFORE xmas. 4. A continuing limited supply of titles 5. A *dramatic* decline in demand as your market penetration increases. Basically, I'm wondering what you think MS did right with 360. Don't say: sold all available units before xmas.