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."
well... (Score:5, Funny)
Re:well... (Score:4, Insightful)
Re:well... (Score:2)
Re:well... (Score:2)
Re:well... (Score:2)
Just no damn way.
Re:well... (Score:3, Insightful)
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).
indeed. (Score:3, Insightful)
Re:well... (Score:5, Insightful)
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!"
Yep (Score:3, Interesting)
I got a Gamecube for my wife for Christmas. I was shocked. The games on it are really fun.
I then got a PS2 so I could play Tourist Trophy. It is pretty nice, I have gotten a few more games for the PS2 and for the GameCube since then. From what I can see the GameCube games are more fun. The PS2 games are better simulations. I thought about picking up an XBox360 but why? None of the games seem that great and it is really expensiv
But they will. (Score:3, Insightful)
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.
Re:well... (Score:3, Insightful)
Well that is further evidence of a successful launch and good planning and execution.
Re:well... (Score:2)
They made resellers sign contracts that they would sell out all stock each day it was delivered.
Re:well... (Score:2)
Re:well... (Score:2)
I think the Apple switch to Intel will, in the long run be seen as a blunder, but the reasons are mo
um... (Score:3, Insightful)
Re:um... (Score:4, Insightful)
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"?
Re:well... mods, it is not a troll (Score:2)
There were numerous things that went wrong with the launch such as supply problems, issues with over heating and game crashes. Some suggested that these problems were indicative of a premature launch. It woudl say that launching without an HD disk solution and offering an addon later on was an unfortunate decision and indicated that they released it before it was really ready.
Re:well... (Score:2)
Re:well... (Score:2)
Might be able to make yourself a profit. I'd sure be selling them if they had any in my town.
Re:well... (Score:2)
None with any bids that is.
They were selling like that before there was a supply. Now that there's a supply, there's no demand.
Ahh, the litany of failure (Score:5, Interesting)
Re:Ahh, the litany of failure (Score:2)
In this case though, Microsoft bought this guy's failu^H^H^H^H company for a meager (by bubble standards) $470 million dollars.
Re:Ahh, the litany of failure (Score:2)
Too true (Score:2)
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.
What I want to know is how he keeps getting job offers. Seriously - I haven't had 1/100th this much opportunity in my whole entire life.
How the hell does this guy keep landing these?
Re:Too true (Score:3, Insightful)
Re:Ahh, the litany of failure (Score:3, Funny)
Not so fast Billy Ray... (Score:2, Insightful)
I think the jury is still out on the success of the 360. This guy could be batting 1000.
Re:Not so fast Billy Ray... (Score:3, Interesting)
But yes, I agree it is too early to make a call either way on this. Although if they don't get a killer app on the system before the PS3 & Wii launch (or on the launch dates of the PS3 &
Re: (Score:2)
Re:Not so fast Billy Ray... (Score:2)
The unit numbers shouldn't matter (Score:2)
The unit numbers shouldn't matter from a success standpoint, should they? From Wikipedia: [wikipedia.org]
Businessweek magazine compiled a report[1] that estimates the total cost of components in the "premium" bundle at $525 USD, sans manufacturing costs, meaning that Microsoft is losing money on every Xbox 360 system sold. It should be noted that the strategy of selling a console at a loss or near-loss is common in the console games industry, as console makers can usually expect to make up the loss through game licens
Jumping the gun... (Score:5, Insightful)
Shouldn't we wait until the 360 has outsold WebTV before we make that declaration?
Re:Jumping the gun... (Score:2)
Offtopic? (Score:3, Interesting)
1.) not understand the whole "monthly fee" part of it and return it or
2.) Get confused anyway, and return it.
We had stacks, and stacks, and stacks of unsellable returned Web TV's that no one wanted. If Web TV shipped a million units, I'd be amazed if more than half a
Re:Offtopic? (Score:3, Interesting)
Re:Jumping the gun... (Score:2, Funny)
considering the overheating problems the 360 can have it may have been a subtle dig.
Re:Jumping the gun... (Score:5, Insightful)
destiny (Score:5, Funny)
Re:destiny (Score:2)
In all seriousness, in the tech industry failures can be more valuable than success. The important thing about a failure is that you learn what won't work. Microsoft Windows was a complete failure until version 3.0. Microsoft had a rash of failures with various databases until they came up with Access (low-end) and SQLServer (high-end). The failure of 3DO shows that you that overdesigning a game console and putting cutting edge technology
Re:destiny (Score:2)
So is Xbox now doomed? (Score:3, Funny)
Microsoft (Score:4, Funny)
Mirror (Score:2, Informative)
Mirror [nyud.net]
Thus just in... (Score:2, Insightful)
Aim High! (Score:5, Funny)
My hat, sir, is off to you!
Re:Aim High! (Score:2)
'Out-foxed'? No... (Score:3, Interesting)
A very senior engineer at NVidia I know is talking more and more about how they see Intel and AMD's x86 chips as dead weight dragging them down and how they would like to make x86 irrelevant by moving all application and OS functionality onto their boards.
The winners ended up being:
IBM
Sony
Nintendo
Microsoft
And the losers ended up being:
Intel - The big loser in all of this
AMD - Less so
Apple - Once IBM won all three console contracts they decided Apple was no longer worth the hassle for only 4% of their chips sales - buh bye!
If you love sitting around playing with SPEC and Intel's marketing compiler or hangout at aceshardware or other x86 fanboy sites you probably see things differently. Heh.
But the fact that a company sees there is a viable market for another 2-300 performance add on for x86 gaming systems in the PhysX boards should be as clear an indication as anyone needs to how far x86 is falling behind.
Re:'Out-foxed'? No... (Score:5, Insightful)
Oops. (Score:5, Funny)
They couldn't be late. They had to make hardware that could become much cheaper over time and had to pack as much performance into a game console as they could without overheating the box.
"Unfortunately, Larry Yang did not explicitly forbid overheating the power supply"
Learning from SUCCESS is the hard part. (Score:5, Insightful)
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...
An alternative to flaming his failures (Score:4, Insightful)
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.
What _are_ his successes? (Score:2, Interesting)
What _are_ his successes?
Hahahahahaha ... (Score:2)
The team labored for years and made critical decisions that enabled Microsoft to beat Sony and Nintendo to market with a new box, despite a late start with the Xbox in the previous product cycle.
When I read that
I love spin!
Nick Baker (Score:2, Funny)
Re:Nick Baker (Score:2)
Govt work anyone? (Score:3, Funny)
Comment removed (Score:3, Insightful)
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....
Re:Xbox? (Score:5, Insightful)
Dollars in the short term... (Score:2)
By the way I don't own and never have owned a
Re:Dollars in the short term... (Score:2)
No "time frame" is going to help that.
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: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:Dollars in the short term... (Score:2)
Thanks for the link.
Re:Dollars in the short term... (Score:2)
Thanks for the numbers, but I think it's about more than just marketshare on the XBox. Remember, Microsoft has Windows to worry about as well.
One of the main things keeping people from moving to Linux is games and entertainment software. If nothing else, the XBox and its forced use of DirectX instead of OpenGL is keeping Microsoft's Windows games platform alive. Of course, I don't know if that's even enough anymore, so they've started buying studios (poor Lionhead...)
4 billion is probably an acceptable
Re:Dollars in the short term... (Score:2, Flamebait)
First of all, 20% is not "amazing marketshare". You could argue wether 20% is acceptable when you want to coexist among your competition, but it's certainly not "amazing". And when you want to become number one it's neither amazing nor acceptable.
Secondly, it's irrelevant wether it's the "first round" or not. AFAIK every "first round" console, be it from Atari, Sega, Sony or Nintendo managed to get more than 20% in the "first round" - actual
Re:Xbox? (Score:5, Insightful)
I agree, if by "Linux monkeys" you mean "accountants and businessmen."
Re:You must know some stupid businessmen (Score:2)
Uh, dude, thanks for predicting that the 360 will do well - I now know that I should wait and choose the PS3 or the Wii for this round.
Re:You must know some stupid businessmen (Score:2)
Should I read that to mean wait until Microsoft starts selling them, or wait until people start buying them?
Because unfortunately for Microsoft, reading one of those ways makes sense.
Re:Xbox? (Score:2, Interesting)
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
Re:Outfoxed? (Score:2)
Thanks for the figures tho - they really are informative.
Re:Outfoxed? (Score:2)
Xbox entire lifecycle unit sales: 22 million (2.4 million/quarter average)
Which of those two would you rather have as a customer?
Re:Outfoxed? (Score:2)
Uh, the Xbox came out in Nov 2001, and the 22 million figure is the latest official one, but it's up to the end of FY 2005. That's not 2.4 million a quarter.
Re:Outfoxed? (Score:2)
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"!"
Re:Outfoxed? (Score:3, Interesting)
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:Outfoxed? (Score:5, Funny)
Thanks
(I am single handedly trying to save
Re:Outfoxed? (Score:2)
Frankly, that fact that you did it unintentionally (I mean, there's two letters between N & G keys on a qwerty keyboard) reveals even more about your anti-mac, homophobic agenda.
Re:Outfoxed? (Score:2)
Utter nonsense.
At best, I'd say Mac user's tend to be wealthier then the general computing population & hence, less likely to cover up behavior deemed by others to be "bad".
Re:Outfoxed? (Score:2)
That's just plain wrong. The original Xbox never achieved quarterly sales greater than 25% of Apple's quarterly sales by unit volume... And Apple put *two* of IBM's chips in a lot of those machines.
Re:Outfoxed? (Score:2)
That's just plain wrong. The original Xbox never achieved quarterly sales greater than 25% of Apple's quarterly sales by unit volume... And Apple put *two* of IBM's chips in a lot of those machines.
Time to work on reading comprehension. I said: the console market requires chip volumes a couple of orders of magnitude higher than Apple. Console market != XBox market. Both the XBox 360 and the PS3 [will] run on IBM chips.
And about Apple putting 2 IBM chips in each box...don't the XBox and PS3 each ship wit
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 quarte
Re:Outfoxed? (Score:2)
Apple sells 5-8 million macs a quarter.
Where in the fuck are you getting these numbers?
My googling took me to Macworld [macworld.co.uk] where they claim:
Apple sold 1,112,000 Macs during the quarter, returning $1.572 billion in revenue - a 4 per cent increase in units shipped and 5 per cent increase in revenue year on year.
That article is dated 12 days ago (4/20/2006).
Re:Outfoxed? (Score:2)
According to this link [nytimes.com], losing Apple will account for 2% of IBM's chip sales and IBM's overall chip sales make up only 2-3% of their overall sales revenue company wide. Losing any business is bad but looking big picture, this specific instance had very little impact on IBM.
Re:Outfoxed? (Score:2)
Oh, and a small note; from that link you gave they are saying Apple bought
Re:Outfoxed? (Score:2)
Embedded device market (Score:3, Insightful)
Re:Baker (Score:2)
Re:Why not? (Score:4, Informative)
Known paid for Microsoft astroturfer using multiple accounts to self mod up posts.
Re:Why not? (Score:2)
You can't compare consoles that have been out for years and have hacks that allow people to write homebrew and steal games to a console that's only been out for months and has no hacks yet. There's going to be an obvious difference in the numbers, even disregarding the console sales due to hacks.
Consoles that have been out for years have sole multiple units to the same person, especially abusive teenagers. (W
Re:Why not? (Score:2)
Re:Why not? (Score:4, Insightful)
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? (Score:2)
Hi. Welcome to slashdot.
Nobody is going to understand that analogy.
Re:Why not? (Score:3, Insightful)
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 s
Re:Why not? (Score:2, Insightful)
Re:Why not? (Score:2)
Since so few of them are available and their price is ridiculously high, it is no wonder they are bought by rich game/Microsoft fanatics, who are typically the ones who buy the most games. So your holy ratio should not be measured at this point in history.
Xbox LIVE has been a monumental hit with more downloads/day than iTunes already.
May I ask where you got this statistic from? I cannot outright deny it, but it seems pretty f
Re:Why not? (Score:2)
That number is always higher early in the life of a console. Generally speaking, the hardcore gamers who buy lots of games buy the system first. The casual games who don't buy many games wait until at least one price drop to start buying.
In this case, there have been heavy supply shortages of the 360, resulting in stores only selling the system in bundles, further limiting the system to the people willing to spend the lots of money
Re:Why not? (Score:2)
But is it profitable?
Any company can rack up impressive volume numbers, but it doesn't mean much if in the end their business model amounts to selling a dollar for eighty cents.