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Microsoft

XBox + UltimateTV for $500 302

Daetrin writes "Red Herring reports in this article that Microsoft is planing on combining the XBox with their UltimateTV Recorder with a projected final cost of about $500. The article also talks in some detail about the massive (though partially expected) losses that the XBox is costing Microsoft. There's also another article on Yahoo that sums up what Red Herring said."
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XBox + UltimateTV for $500

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  • Again, they're complicating what is supposed to be blazingly simple. Console games are attractive to many for ease of operation.

    And to some, plunking down $500 may seem like a lot, people may decide to make separate purchses for a video game and PVR instead.

    Maybe Microsoft should be looking at their offering of games instead to see why they're losing the battle against sony and Nintendo.
    • by EXTomar ( 78739 ) on Tuesday June 25, 2002 @12:03PM (#3763029)
      Black Aardvark is describing this problem exactly.

      The Swiss Army Knife Effect is when designers see a group of disparate things that have some sort of likeness and try to stick them together. The problem is when you stick them together you get a chimera instead of a value added tool. A Swiss Army Knife may have a screwdriver, a scissor, and a knife but none of them are really that good to use and often times you find yourself looking for the seperate tools to complish your task.

      Could you put together a computer with just your Swiss Army Knife? Sure...the tools are all there but they don't perform as well as finding them tools seperately. You'd be better off gathering the tools and leave the Swiss Army Knife to emergency usage(ie. think MacGyver).

      I am leary of spending $500 for a machine that is that is nearly as good as a Tivo and nearly as good as a console. For me to buy the machine it has to be just as good as both otherwise it is a waste of money.
    • I hate to be the cruel one (well, no I don't), but I have to agree with this.

      For the most part, the games on the Xbox have been, well, rather weak compared to the other systems.

      For console gaming, it seems like Sony has the most games, Nintendo has the best games, while Xbox has the most mediocore (sp) games.

      That might change in the future, but I'm personally waiting for the Xbox to hit that magical $99 price range before I pick one up just for the 2 or 3 games (aka - Halo, since it looks like its never coming out for the Mac) that I really want to play on it.

  • by T3kno ( 51315 ) on Tuesday June 25, 2002 @11:26AM (#3762768) Homepage
    Root canal + Proctological Exam for $275
  • by totallygeek ( 263191 ) <sellis@totallygeek.com> on Tuesday June 25, 2002 @11:27AM (#3762773) Homepage
    Yeah, but who wants to watch "movies" of their gameplay?

    • Go to http://www.drunkgamers.com. They have some funny quicktime movies of Halo(somewhere on the site). One of their favorite things to do is blow up a Warthog or two into the air with grenades, and then try to shoot it with a rocket launcher. Warthog skeet shooting!
    • "Yeah, but who wants to watch "movies" of their gameplay?"

      Recording and watching your own gameplay is more fun than you might think. Have you ever done this?

      Back in the day when I played Descent, I always recorded my daring escape from each mine from the time I blasted the reactor to my way out of the exit. They were a blast to re-record and re-watch.

      Did you ever use the replay mission command in Wing Commander II and such? What about reorded matches in Need for Speed III? This is the way I was able to re-watch the time I (as the cop) was able to stop my brother (the crook) by driving around the track in the opposite direction, going up a hill, hurling my car through the air and landing on top of him. And I was able to watch it from his perspective as well.

      Yes, replay demos are fun, especially at LAN Parties while you take a break to eat pizza.*

      * yeah yeah I know 'real' lan gamers eat WHILE they play

    • watch "movies" of their gameplay

      Maybe. Can you get Virtual Valerie on X-Box?
  • Oh great (Score:2, Insightful)

    by uradu ( 10768 )
    First, they were giving away hardware below cost. Now, they're giving away more hardware even more below cost. But I guess, in the grand old tradition of dot-coms, they'll eventually make it up in volume.
    • I thought that selling below cost was illegal. Years back, in the pre-digital camera era--at least before digital cameras were popular and affordable at the consumer level--Fuji was getting into trouble for 'dumping' film in the US. The intent, of course, was to gain market share and eventually recap the loss. I remember because I grew up in Rochester, NY where Kodak was big. I suppose this was a US law to protect US businesses from foreign competition, and as such it wouldn't apply to a domestic business selling in the US.

      I know, I'm talking about completely different products, film is generally interchangeable from brand to brand and no one will notice the difference. Not so with gaming consoles.
  • Oh boo hoo (Score:2, Informative)

    by Anonymous Coward
    "Massive" losses? I don't see "Massive" losses in the article. I see statistics describing a 3.3 billion loss over ten years, for a company that has 50 billion in the bank and is reportedly now getting a $10billion/yr net profit? That's not massive, not relatively.

    Of course, if regulators decide post-enron that balance sheets should be more explicit, and you suddenly have to do things like count employees as being paid even though you're paying them in stock options instead of money, some amount of that may evaporate.

    But either way. Microsoft has more than enough money to buy users. So they will. And it will be nothing more than a small wincing pain to them.
    • If M$ sells alot of games then the hardware loss is moot because it is more than made up for. Unfortunatley for them people like me only want one to play DivX movies and other media files.
  • From the Yahoo/Reuters report:

    All three companies make losses on their hardware products, but make up those losses with sales of higher-margin software.

    Of course, only Microsoft is losing money on the X-Box, but the myth that all console makers routinely sell their hardware at a loss is pervasive. It just ain't so.
    • Include R&D costs in the price of the console. Most console build-prices only take into account the labor and parts that go into it, not the research and development efforts that have been conducted over at least two years prior to the launch of the console.

      On the other hand, Microsoft didn't exactly do any R&D on the console itself, so much as how to apply it. When it came down to designing the console, they probably could have just as easily had Dell build them ten million Xboxes...
    • Actually, Sony is also selling the ps2 at a loss. So, this is common for consoles. I believe Nintendo does make money from console sales though.
    • Of course, only Microsoft is losing money on the X-Box, but the myth that all console makers routinely sell their hardware at a loss is pervasive. It just ain't so.

      Okay, I'll bite. Do you have any evidence to back up this assertion? I'd like to believe you, but just stating it is hardly compelling. Any articles you can point us to? Recent financial statements from Sony or Sega that show this to be true?

      It may be a myth, but it certainly makes sense (its a variant of the razor-blades business strategy) especially in a market that is so competitive. It clearly used to be true, at least back in the days of 8-bit consoles, so why should we believe it is not true now? To debunk the myth you'll need to present some evidence.
      • Time to trot out Chapter Two [actsofgord.com] in the Book of Proclamations [actsofgord.com] written by The Gord. This is the insight of someone actually in the industry. You may wish to check out some of his other writings about the XBOX [actsofgord.com] to see the accuracy of other predictions he has made. Quite interesting, and great fun to read.

        In short, while it may "make sense" to use consoles as a loss leader, this isn't how things are usually done in the industry. When the Gord wrote the article above, both Nintendo and Sony were already making profits on their consoles. This was last year sometime. Today, Microsoft still isn't making a profit.

        • In short, while it may "make sense" to use consoles as a loss leader, this isn't how things are usually done in the industry

          I think that the quote is somewhat correct (and so are you). What the quote really is referring to is initial costs. Almost all manufacturers take an initial hit on the hardware to create market share and thereby push software. The Herring article says that each PS2 costs Sony $185, which at an absolute is cheaper than their $199 MSRP. But when you consider that even if they sold it to their dealers for $190 to eek out some profit, we're still only talking $5 per box, not exactly a bounty (though still better than a loss). Now this is one area that Nintendo definitely has their sh*t together. They specifically designed the cube to be underpowered but easy/cheap to manufacture and are "reaping" the benefits.
    • by dackroyd ( 468778 )
      First up here's a Karma-whoring link to an in depth article about the profit/loss of each company selling games consoles:

      http://www.actsofgord.com/Proclamations/chapter0 2. html

      Secondly I don't really believe either Microsofts maths for the Xbox, or Dean Takahashi's (he was the author of 'Opening the Xbox', which is alledgedly an outside view of the Xbox development process, but is actually really only about glorifying Seamus Blackley, one of the original xbox designers).

      The article claims that each Xbox cost $325 (which is below the $375 that other analysts have come up with), and that each Xbox is sold to retail at $175, leaving a massive margin of $24 or 12% for the shop, which is much below the 15-20% that shops expect.

      Also none of Mr Takahashi's articles (or any others) mention the huge bribes^H^H^H, joint marketing schemes that Microsoft makes available to companies that want to develop Xbox games. I've heard rumours from a company that I used to work for (codemaster.com) that Microsoft would give up to $3 million for a game to be ported to the xbox, mulitply that by 100 games that they want, and you've got a whole load of cash.

      But anyway I doubt real figures for how much the Xbox costs microsoft will ever come out, as they have enough accountants to obsure the real figure, from their shareholders, who ought to be asking why Microsoft are willing to spend $4-6 billion, when most of the games industry have always said that they never had a chance to beat Sony.

    • This time it is not a myth.

      Prior to the large price cuts this past spring, you were probably correct. Given that the Red Herring reports that it is estimated that it costs Sony $185 to build a PS/2, it is pretty reasonable that to figure that they are selling it at a loss when it retails for $199.

      Similarly, Nintendo was planning to sell the GameCube at a slight loss at $199 and planned to eventually be profitable due to economies of scale. With the cut to $149, the road to profitability for Nintendo hardware, that road just got a lot longer.

      Blame it all on Sega. According to the Gord, Sega was the first console maker to regularly sell their console at a loss.

      -l

  • Xbox had dropped in price to $199, obviously. If you are a new DTV subsciber, you can get an ultimateTV box for $100 or less in most cases.

    So, we're excited to pay twice as much now?
    • Videophiles may sneer at the convergence capabilities of these boxes (they did at the PS2's dvd capabilities) but the fact of the matter is they make sense. I don't want a half dozen boxes around my TV. That's a great way to blow the circuit breakers and eat up space and plugs I don't have. If it can be built all in one box (and it can, and since there are common technologies such as MPEG2 compression underlying these different devices the convergence boxes can be made relatively cheap and efficient compared to buying a bunch of them) then why not do so?
  • This may be the first somewhat innovative thing that M$ has done in a good long time. Unless innovation doesn't mean bringing things to market. I generally hate M$, but UltimateTV had two receivers before Tivo, still only costs $10/month (and they're still updating the software and coming out with new units).

    If I could throw my DVD player into the same unit as my DSS/PVR, that would kick so much ass. I use the PS2 as my DVD player right now, but I'd like to free up a digital audio port for a CD player or mp3 storage box for my stereo. I don't care if the PS2 is digital because I've still only seen one game mixed in 5.1, and that was only SOME of the cutscenes of Metal Gear Solid 2...mucho dissapointing (on the audio angle...otherwise, kick ass game).

    So what I get to do is buy the new UltimateTV/XBox thingy for $500 (or whatever) instead of buying a $1000 5.1 receiver with 4+ digital audio inputs on it. I like my receiver, and I don't want to buy a new one.

  • New Xbox? (Score:2, Interesting)

    by restauff ( 168301 )
    "A machine that combines the features of the Xbox with UltimateTV" could mean one of two things. The way I understand it, you would have to essentially buy a new Xbox (if you already have one) when you purchase this device. Wouldn't it make more sense to provide expansion and upgrade features for the current Xbox, rather that incorporation its technology into a new device?
  • I am a current xbox owner, and although I really don't like microsoft at all because of what they have done to remove competition from the computing industry, the console seemed to be a really cool thing, that and I wanted to play halo within my lifetime. This type of thing is going to actually hurt them a lot more than it would help, because the majority of console gamers buy a system just for the task of playing games, not for recording television shows, or any other idiotic random task that they will come up with for the next versions, if they don't step up on the games, which is the most important aspect of console gaming, then they will lose all of their customers.
  • I, for one, think this is a great idea. A game console and digital VCR all in one. I'm *really* hoping that this will give us the ability to import actors from TV, movies and commercials into video games.

    Afterall, why should Austin Powers be the only one lucky enough to beat Britney Spears to a pulp...now you can import her into the fighting game d'jeur and beat-in her talentless ass or import her into Halo and blast her to smithereens!

    • "I, for one, think this is a great idea. A game console and digital VCR all in one. I'm *really* hoping that this will give us the ability to import actors from TV, movies and commercials into video games."

      Supposedly the next MPEG video compression standard will work by separating the video out into 'objects' and handling them individually. Honestly I see this idea of ripping characters from movies and putting them into video games feasable when done in league with the video codecs that are around the corner.

      Since I am at work, I will leave it up to the trolls to suggest what kind of mods you could make by taking characters from certain types of movies ;-)

  • We have a TIVO and a game box. But the TIVO's in the den and the Games are in the basement, and frankly, that's a pretty consistent division with all my friends. The two functions just target different audiences. I could see M$ stumbling badly on this.
  • by quantaman ( 517394 ) on Tuesday June 25, 2002 @11:36AM (#3762845)
    Seems that MS is trying to make it by heaping on the features. Not that this is a bad thing in itself but when you do so you have to make sure you don't lose direction.

    The product is controversial in part because it creates a conflict within the machine: will the game slow down so that the hard drive can record "BattleBots"? Balancing the needs of gamers and general users will not be easy.

    Why not throw in some word processing capabilities for another couple hundred? Add a CD-R and printer so you can printout docs and scoresheets and copy saved games (of course a DRM drive). MS has too be careful they don't start to lose direction and the XBox no longer becomes a gaming console and starts to lose its user freindliness (never used one so I don't know what the environment is like). Perhaps the console market will turn out to be a market where feature bloat isn't as nearly a good thing.
    • Your typical PVR drive can record and/or play up to three digital streams at a time (based on DirecTivo's capabilities). With multiple or faster drives you could presumably do more. Recording a digital stream on a drive should also not consume much if any processing power. Thus you could probably play the game while recording at least one show, though if you have more set there might be problem.
      • That's fine for recording your television shows, but what happens if Mom wants to actually watch the Oprah reruns she recorded earlier. Convergence seems like a good idea if you are targetting families with only one television set, but most folks with children actually have a separate television for the kids to play games on.

        • Well, lots of folks aren't using their various boxes with multiple TV sets, because lots of folks only have one TV, and don't want anymore. That's why we need ever-larger stands to put our home theaters in. My family didn't have more than one TV, neither does my brother. That's a big market. Furthermore, their are a lot of singles and couples out there who don't have a need for more than one TV but do want all the different stuff. Lots of game systems are sold to adults too, particularly young adults, who are likely to be single.

          Plus, kids can record shows too (if you make it simple enough). They certainly watch a lot of recorded stuff. A PVR might even mitigate their TV watching habits to just a few (parent-approved) shows.
          • There are two major problems with your argument, the first is that according most surveys there are an average of 2.5 to 3 televisions in most U.S. homes. I also have only one television, but it would appear that we are the exception to the rule. The second major problem is that most single adults are also fairly cost concious. If the XBox/UltimateTV combo debuts at $500 then it is more expensive than purchasing both an UltimateTV and an XBox at current prices.

            In other words, the only market for this convergent box is people that don't own an UltimateTV or an XBox, only have one television, and are so concerned about how their entertainment center looks that they aren't interested in saving $100.

            Something tells me that Microsoft is going to have a hard time marketing their newest contraption.

  • Microsoft started bundling IE with Windows and look at the trouble they got into. Maybe someone should drop a line to the Justice Dept. about this.
  • A gaming console and a PVR in one? CoOOOOol.
    Oh, it's from Microsoft ... Arrg!

    Get thee behind me Satan and tempt me not!
  • by Zelet ( 515452 ) on Tuesday June 25, 2002 @11:39AM (#3762874) Journal
    Don't people (generally younger people) like to replace their console much more often then they would replace a tv-recorder? It seems to me like you are getting locked in to two separate pieces of hardware that have very different upgrade/replace cycles.

    Also, with dual-use systems you generally save money, but in this case I'm not seeing a huge amount of savings. What are the benefits? Save a little space? What about when you replace your Xbox and have to keep the old one around as your tv-recorder. Maybe I am missing something, but it doesn't seem to make much sense to me.
    • Actually, when a younger person (I mean very much younger) tries to get one of these consoles, or any console for that matter, they have to convince their parents that it's worth it. The parents ask questions like "Will it still be as good in 5 years?" "Are you going to want to just get the next one that's a little better?" With a built in TV-recorder, it adds some amount of legitimacy to the device (in the minds of parents) that it lacked earlier. When a mother buys this for her son, she knows she can also use it herself, and that it will last longer.
  • but right now I would really like some more games for the thing...
  • Killer app (Score:2, Funny)

    by Tune ( 17738 )
    Probably a stupid suggestion, but I wonder...

    If
    XBox + UltimateTV = KillerApp
    Then
    Massive loss + massive loss = big bucks?

    How do all these poor Microsoft share holders make a living?
    • How do all these poor Microsoft share holders make a living?

      I'm sure the 10 billion dollars that MS makes in profit annually does something to reduce their pain.
  • by Lumpy ( 12016 ) on Tuesday June 25, 2002 @11:41AM (#3762885) Homepage
    With older tivo's available at bargan basement prices of $99 to $150 and many other alternatives available, who are they after? The parents surely dont want the kids to have their own pvr or spend that money on them... the hardcore adult gamer is a very small segment of the total console gamer population (Look nintendo is targetting kids... little kids... there's a reason for this) Along with this the PVR market is having trouble... most stores are dropping PVR's (you cant get a tivo in best buy or circuit city anymore...) as the sales are prett much over with.. everyone who wanted a pvr has one, everyone else isnt buying them or are waiting for someone to make one that doesnt require a service.. (Do NOT tell me the Tivo will work without it.. until they give me a way to set the clock without having it ever dial in to the company with all my viewing habits I dont want their crap.) or who look at the device and say.. "MY $99.00 VCR does that. why should I buy something expensive that I cant just keep that tape of that show/movie/porn feature?"

    I really want to know what they think will gravitate people to this? they killed the Ultimate TV project because of dismal sales.. do they think that combining a poor selling product to a good selling product will result in a stellar product?
    • Yeah, I tend to agree with the original poster (although I can't really speak for why PVR's aren't available at Best Buy and the like -- maybe they are just always running out of stock?).

      I'm starting to get really touchy about paying any more money out for subscription type services, and that's a big reason why I haven't bought a PVR. In today's society, we're expected to spend an awful large chunk of our monthly income on services. When you sit down and look where your money is going, it's rather scary.

      I'm paying out $50 a month for my DSL circuit, another $30-50 for my analog phone line it runs through, $30 a month for my cellphone (more if I use it too much), $25 a month for my DirecTV subscription, $10 a month for a basic "EasyNews" subscription so I can download binaries from Usenet reliably and quickly, and am doing a free trial of the $19.95 per month NetFlix service to rent DVD movies by mail. Of course, none of this includes the "essential" utilities like gas, electricity, water, sewer, and trash pickup -- which are still services that disappear as soon as you quit paying for them.

      Everything's always "only $10 a month!" or whatever, and before you know it - you're talking thousands a year in these non-essential services, chipping away at your income.

      IMHO, the PVR thing is a neat idea - but really, could have been implemented a lot better if they got "buy-in" from the TV/cable/satellite networks. They cold broadcast some hidden data along with their signals that PVRs pick up -- eliminating the need for a service run by the PVR makers to give them their "brains".
  • with all the news of the poor xbox sales and the big lead that tivo has over microsoft's ultimateTV device, i have to admit this seems like a desperate attempt to boost their sales by combining both products. give it a couple of months and they'll want to throw in webtv with the package.
  • Gimme more (Score:2, Funny)

    by duckpoopy ( 585203 )
    Add in a microwave oven and you've got a deal.
  • Wouldn't these two be better seperated? Will I be able to record while gaming? What if the game I am playing is making heavy use of the harddrive? even with two hardrives I would imagine that if both functions (gaming/dvr) are being maxxed out there could be a problem...

    Also, what happens if a game crashes the console? - it's not like crashes on console games are unheard of - on any platform...
    • Hmmm - my TiVo has no trouble recording one show while playing back another. If there's a co-processor to handle the compression for the video it ought to be easily done.

      But ... that X-Box is going to need a MUCH bigger hard drive if it's going to be useful as a PVR.
  • by Rahga ( 13479 ) on Tuesday June 25, 2002 @11:49AM (#3762942) Homepage Journal
    While we had the NES, Nintendo had the Family Computer. During the 80's, Nintendo's Famicom could hook up to a disk reading system, a keyboard with a tape drive, microphones, digital punching bags, and typing tutors....

    The similarities between the Famicom and X-Box don't end there.

    Sharp partnered with Nintendo quite a bit before casting their lot with the X68000.... besides releasing a combination Disk System/Famicom (the Twin Famicom) and a TV with a Famicom built-in, they even released a combination Famicom/Video Titling unit. Of course, the coolest thing about this unit happened to be that it was the only Famicom with S-Video out.

    Anyway, Nintendo learned and evolved. Though they could do some amazing things with technology at the time, they learned that treating a video game system as a component of a constantly changing entertainment system was the way to go. They are sticking to this way of thinking with the gamecube. One box meant to do one thing. You should neve have to buy anything besides memory cards, controllers, and games for it, because the market simply won't support much more than that in the long run.

    I have a feeling Nintendo knows the game market much better than Microsoft does, and slightly better than Sony does.... if nothing else, they know that gameplay rules, and if Sony's developers don't keep producing games that match Nintendo's consistent level of quality, customers won't keep buying Playstation titles. Nintendo's in-house titles were matched in closest by Sega, and the Gamecube shows that Nintendo learned from Sega's mistakes in the hardware department.
  • by aron_wallaker ( 93905 ) on Tuesday June 25, 2002 @11:52AM (#3762959)
    Interesting - Sony & Nintendo designed their units from scratch so as they ramp up their production volume of custom chips they get sizable decreases in cost.

    Microsoft went with mostly standard parts which already had sizeable production volumes, so there wasn't nearly as much room for their cost to drop down. Even worse, their CPU speed is now lower than anything sold in the PC market, so Intel is seing overall volumes of that chip drop, meaning costs can't get any lower. Likewise the small (by PC standards) hard-drive they use. RAM prices were dropping but have slowed lately. Throw in the custom video/audio/system chip that NVidia did for them - for which NVidia & MS are in court over chip pricing - and that's the bulk of the cost.

    Maybe it's just me, but it looks like MS painted themselves into a corner. Because so many of their components were already "volume-discounted" from day one they have far less room to lower costs. Meanwhile Sony is supposed to combine the two main chips in the PS2 into a single chip to drive down costs even more - something I don't think MS could get NVidia & Intel to do - and I think MS has a lot more pain to come.
    • A sane company would go back to the drawing board, sunk costs or no. Unfortunately, Microsoft has been telling investors that video games would be the next Microsoft growth market. My guess is that they are going to keep up this fiction long enough so that they can sell their Microsoft stock.

    • ...it looks like MS painted themselves into a corner
      Not to worry. When Bill Gates paints himself into a corner, he just knocks down the wall behind him and starts painting his neighbor's apartment.
    • That makes me ask the question: what if Microsoft were to just use the bottom rung of Intel's production line at any given time, and put in the cheapest hard drive they can find? I mean, other than the fact that it might cause incompatibilities between the systems, but MS could probably figure out a software patch to fix that. Their costs would decrease at about the same rate they are now, and the Xbox would get more powerful at the same time. The biggest problem with this is that it would convince people not to buy an Xbox now, but instead wait until it gets that new processor.
    • Yeah, they really screwed the pooch on that one. They also decided that losing money on the x-box was a good idea. Well guess what? it wasn't. Sony, Nintendo and Sega never really LOST money on their boxes, they always just BROKE EVEN. Which in the world of business is bad, you can't make any money when you're selling something for the same price you paid for it.
      MS is losing amost 200 dollars on every box. That means that you have to buy 4 or 5 games for them to break even. Most playstation owners only own 5 or 6 games. Thus you can expect that X-Box owners will own less just because there are less games available for it. So MS is losing money on every box sold, even if you buy games for it.
  • by NanoGator ( 522640 ) on Tuesday June 25, 2002 @11:58AM (#3762998) Homepage Journal
    "The product is controversial in part because it creates a conflict within the machine: will the game slow down so that the hard drive can record "BattleBots"?"

    A game machine is not a PC. It's a game machine. A game machine doesn't want to be $500. A game machine doesn't want to be interrupted by non-gaming experiences. Remember the CD-I (Phillips) or the 3DO? A game machine aspires to being played, that's it.

    Microsoft: Halt development of the combo unit, and pump the money into having games made for the XBOX. I don't have an XBOX today because I'm not wild about the game selection on it. Building a PVR into it will not save you, not for $500.
  • When Microsoft was announcing the dissolution of the UltimateTV team back in January, and reassigning them to the Xbox team [slashdot.org], it was pretty obvious what was going on. It was to me [slashdot.org].
  • Aren't there laws against dumping?
    http://www.investorwords.com/d4.htm#dump ing

    All companies sell below cost from time to time to clear inventory and once and a while they sell things at or below cost for limited promotional periods. But when losses are expected to be extended for long periods of time so as to hurt the competition, you have a clear case of dumping.

    IANAL, so I don't know if the U.S. has domestic dumping laws, but they definitely have dumping laws on exports, as do many other countries. This has the beginnings of a very strong international case against Microsoft.

  • by TheLoneCabbage ( 323135 ) on Tuesday June 25, 2002 @12:03PM (#3763030) Homepage

    Look, I'm rather happy about the fact that my TV doesn't have a "boot time". It always works. Really, every day. It doesn't need extra memmory if I want to watch the latests Star Wars, and it NEVER CRASHES! As a matter of fact, the only things more reliable than my TV in my house is my carpet and toilet paper. (seriously, even a door knob breaks more often than a TV!)

    I DO NOT WANT M$ ON MY TV!!! It works great people, it does everything it was ever intended to do! Don't F#CK with it!!

    • You're clearly not on Time-Warner cable. The TV itself is reliable, it's the damn signal over the wire that decides that it doesn't need to come over. Which of course makes my TV a large box of plastic and glass, and my TiVo useless.

      Somehow, for $55 a month (Basic cable and TiVo) I'd expect more than the ability to timeshift static.
  • If a U. S. company is selling for substantially less than the cost of goods, and keeps doing it for an extended period of time (so it's obvious that it's a strategy and not just a mistake or a fluke)... and the U. S. doesn't stop Microsoft from doing it... doesn't this give Sony a totally legitimate grievance against the United States?

    Going to make it harder to complain when Japan does the same thing to us, isn't it?
  • im stil waiting for a reason to get an x box. i havent seen a game that i just must have. to tell you the truth im content with my Dreamcast, because frankly it has better games than any of the three "current" systems, although there are a few exceptions. as for "h4x0r" add ons go to dcemulation.com. the only reason im getting a PS2 this weekend is so i can have a DVD player other than my computer.

    the xbox hasnt sold me yet, let me know when theres something game related that comes up that might change my mind.

  • by bryanbrunton ( 262081 ) on Tuesday June 25, 2002 @12:14PM (#3763113)

    The XBox really really is amazing. Here we have a product that defies the laws of economics. At this point its just a matter of how much money Gates and Ballmer can stand to lose. Its an ego thing. Every other company on the face of the planet would drop a money losing project like the XBox as fast as possible. The world is filled with companies that are not named Microsoft which have stock holders and corporate boards that actually have influence over the decisions of executive management. Not so with Microsoft.

    We all know that XBox is finished in Japan. If Microsoft is lucky they will manage to sell their original shipment of 250,000 Japanese XBoxes before the end of this year.

    http://www.the-magicbox.com

    The XBox is in the process of dying in Europe. Just look at the European software charts. The XBox has just one exclusive game in the top 20:

    http://www.elspa.com

    And now one of MS game developer partners has pressured MS into allowing it to publish title for the Nintendo GameBoy:

    http://biz.yahoo.com/rf/020625/tech_thq_microsof t_ 1.html

    Is there anyone out there who will force Gates and Ballmer to come to their senses? Or would dropping the XBox at this point be such a face losing position for Microsoft that they have no choice but to keep throwing money at it?
    • Here's a quote from Robert X. Cringely that may help....

      But I have to wonder why Microsoft would engage in such foolishness. They could have bought Burst.com at any point, and never even been able to detect a level change in Microsoft's corporate bank account. Why risk so much just to screw (allegedly) a little company from Santa Rosa?

      If there is a reason, it has to come from the competitive nature of Bill Gates as Microsoft's spiritual and ethical leader. Everything is a competition to Bill, and every competition has a winner and a loser. Microsoft people have always been encouraged to see the game, not the consequences, and to win the game even if winning this way makes no sense.

      Let me give an example of this behavior. In the early days of Microsoft, one of the popular games was to see how late the boys could leave work for the airport and still make their flights. These weren't people who were habitually late, they were playing a game. The eventual winner was Bill Gates, of course, but to win he had to abandon his car at the departures curb. -- from the article, Is a Little Broadband Enough? Covad Seems to Think So. Also, Why Microsoft Keeps Getting Sued [pbs.org] by Robert X. Cringely

  • by Tarindel ( 107177 ) on Tuesday June 25, 2002 @12:16PM (#3763140)
    I see a lot of comments here saying "Buy an Xbox and cost Microsoft $150! This is great! We get a cool machine and hurt Microsoft!". Let's do a little math here. Now that you have a cool machine, you're probably going to buy a few games for it (and maybe a 2nd controller), cutting Microsoft's losses a little.

    Since Microsoft has sold between 3.5 and 4 million XBoxes to date, let's assume that we get 4 million evil Slashdotters to buy Xboxes. Lets also say that all of your slashdotters are SO evil that you're not even going to buy any games for your XBoxes. 4 Million consoles * $150 loss/console = $600 million loss for Microsoft. While this seems like a lot in pure monetary terms, this is a drop in the bucket for a company with $42 billion in cash reserves.

    Continuing our scenario, game companies are going to see the number of consoles sold increase. They're also going to see that each console buyer is purchasing many fewer games on average, but since some of you are going to end up buying a few games for your new XBoxes the overall raw volume of games sold is going to increase. That means they're going to have more incentive to produce games for the Xbox, which is going to fuel legitimate sales.

    If you really want to see Microsoft out of the console-space, buy a PS2 or Gamecube instead. Give game developers incentive to develop for the other machines instead of the Xbox and the Xbox will wilt.
  • not a good idea (Score:3, Insightful)

    by asv108 ( 141455 ) <alex@phata[ ]o.org ['udi' in gap]> on Tuesday June 25, 2002 @12:19PM (#3763158) Homepage Journal
    All these convergence ideas sound great at first but after awhile they don't make any sense. The problem with having a PVR and the Xbox put together is that the parents usually put the video games in another room so the kids won't bother them while they are watching TV. I don't know how this will work but if you can't record tv and play video games at the same time, they might as well toss this idea. The second thing is I realize PVR's are great and lots of people on here have them, but I have yet to see one person I know in the flesh buy a PVR. Maybe I just have white trash friends or maybe people think PVR's + a monthly subscription are way too much to watch the crap on TV. So that brings me to my third point, most of the people who have PVR's now will not buy this device because they will always want the latest and greatest technology or they already have an Xbox+PVR in the house.

    Personally, I have a Netflix [netflix.com] membership that lets me take out 5 DVD's at a time for $30 a month. I would rather watch 15 DVD movies a month for $2/DVD than record a limited selection of movies off HBO coupled with some crappy sitcoms. I think this device is just an attempt by M$ to bring life back in to machine that appears to be dying less than a year after it was released.

    • If you look at the market, the demographics of the people that buy XBox and PS2s are late teens to early 30s. These are people in college, or just out of college and in a small apartment of some sorts. Video games have come a long way since the Nintendo that 8 year olds used to play back in my younger days..
  • U turn (Score:2, Informative)

    by John Ineson ( 538704 )
    Six months ago The Guardian asked Xbox's general manager, J Allard, about the XBox including PVR technology in the future. His response:

    "We are not confused: this is a single-function device entirely focused on the games market. We have to focus on creating great games."

    I assume they thought twice when they saw the sales figures ;)
  • Lotsa Money (Score:5, Interesting)

    by fm6 ( 162816 ) on Tuesday June 25, 2002 @12:29PM (#3763226) Homepage Journal
    Jeez, look at those figures. MS has $40 Billion in cash and $30 billion in annual revenue -- one-third of which is profit! At that rate, they can sustain the losses of the X-Box division forever.

    And in fact they sort of need to spend money. It might sound nice to have so much cash lying around, but for a big corporation it can be a nightmare. In the current money market, that $40 Bil will not stay $40 Bil for long. And since they follow the "recycle the profits" model (MS stock does not pay dividends), it's only going to get worse. Better to throw the money at a Blue Sky project and tell the stockholders they're generating long-term growth. Which might even be true.

    But damnit, it's time to drop all the Reagan-era cliches and face facts. That much economic clout in the hands of one company is bad for the whole software industry. Including Microsoft. This is not a free market. Pretending otherwise is like saying Al Capone was just another illicit beer vendor.

    • Reinvesting the cash is nice and all, but it would totally kick ass if M$ would pay some dividends. According to classical stock valuation, M$ should go through the roof.

  • by LennyDotCom ( 26658 ) <Lenny@lenny.com> on Tuesday June 25, 2002 @12:43PM (#3763341) Homepage Journal
    I don't remeber wich store in the mall it was but they had a sign in the window that said xbox $99 with trade in of old game system. When I asked about details they said you have to trade in a dreamcast,N64 or playstaion plus 10 old games. I wonder if this is M$ is giving them a kick back to get the old systems out of circulation.
    • The store is Electronics Boutique. I just took advantage of this deal and picked up an XBox. However, I'm pretty sure it's not part of the "Evil MS Conspiracy".

      The deal is that you trade an old N64, Dreamcast or PS1 for $30 of trade-in value. Then each N64, DC, or PS game (up to 10) you trade in with the bundle will be worth at least $7.00. This is nice because if you have a lot of old games which are normally worth $1-$2 in their database, they will bump up the value of each game to $7. Games need boxes/cd cases and instructions, but the consoles themselves don't need anything except the necessary cables and controllers.

      You could theoretically go to Gamestop or Funcoland and pick up lots of old crappy games for a few dollars each and trade them in for $7.00 each. You can trade in more than 10 games, but they'll only bump up the value of the first ten.

      This promotion is for credit towards ANY new console. You do not have to buy an XBox. You can choose a Gamecube or a Playstation 2 if you prefer. From what I've heard, this deal lasts until June 30th. If interested, call your local Electronics Boutique.

      Check Fatwallet [fatwallet.com] for details. Personally, I got rid of my old PSX since I already have a backwards-compatible PS2. I also dumped a bunch of really cheap PSX games, and some free Dreamcast games that I got through promotions.
  • Does this quote in the article seem unusual to anyone?

    ...[Microsoft] is expected to report a net profit of about $10 billion and revenues of $28.25 billion.

    I don't know a great deal about business, but how many companies as big as Microsoft get 1/3 of revenue as profit? That, along with the 40 or so billion in the bank, makes it seem unethical for them to not pay dividends back to their shareholders. Do any other big companies horde their wealth like this?
    • About 5-6 years ago I read that both MS and Intel were making about 65% profit margins. That was back when their stock was doubling and tripling every year. So no, a 1/3 margin today doesn't surprise me. Bill and Co. still view themselves as a growth company and that is how they are running their business. If you don't like it don't buy their stock. Evidently a lot of people don't like it though since investors have lost more than half their investment over about the last three years.
  • Okay, I think most of us think an XBOX/PVR combo is pretty silly.

    There are a few positives I see. I dunno if they're enough to make me buy it, but it's fun to think about:

    It would be nice to have a DVD Player and a PVR in one box. Hook it up to the network and you've got a net connection. Imagine watching TV and getting a little icon saying you have message from somebody you're interested in hearing from. Pause the TV like Tivo, fire off a quick response via IR keyboard, then unpause and continue to watch. This'd be a neat feature during a game as well.

    Actually, having a DVD/PVR combo by itself is pretty cool.
  • by Ewann ( 209481 ) on Tuesday June 25, 2002 @01:24PM (#3763643)
    It seems that the US is pretty fond of heavily taxing or banning imports of products that are sold "below cost"- they call it "dumping". (Think steel, DRAM, etc). I wonder why Japan hasn't banned or put a stiff tariff on the Xbox since Microsoft is "illegally dumping" the Xbox in order to steal market share from Sony's PS2.

    Could be an interesting tactic if X-box starts winning some significant share...
    • FYI: Everyone does this, including PS2 and Gamecube. Both of those are sold below cost. In addition, this happens in a number of other industries. Cellphones in particular are sold WAY below cost so that that can make it up on the service agreement. Razor handles are also sold below cost and made up on the razor blades. MS isn't the only ones to do this. This isn't something new.
  • For years I have heard 'innovation' and 'Microsoft' linked in the press as though Microsoft were some how responsible for the very concept of innovation. It is generally accepted in the world that Microsoft has produced many computing innovations. I am led to the question, "such as?"

    I'm not a Microsoft employee but I do contracting work for them in Redmond. On four occassions I have offered Microsoft employees (a Project Manager, an Windows Server architect, and two Resource Kit technical writers) $100 if they could find a single, significant computing innovation that originated with Microsoft and made it to market. This wasn't a bet... I would just pay each $100 if they could find an example.

    So far none of them have claimed to find one or asked for their $100. I gave each a week or two (one guy 2 months so he could ask around).

    Admittedly this started out as a way to tweek Microsoft's arrogance. But, I'm REALLY curious now. Has anyone heard of a single significant computing innovation attributable to Microsoft?

    • First off, you clearly don't understand what "innovation" means. You are confusing it with "invention".

      Invention is "a discovery". Invention in the computer is rather rare; there haven't been many "significant" inventions in the entire industry; things like the CRT, or pagable memory, multi-tasking, multi-threading, etc are "inventions". Probably the most recent significant "invention" was the OSS development model. Collobrative volunteers working via the web is an invention.

      Innovation is much different. An Innovation is something newly introduced. These happen quite a bit.

      So pretty much what happens is that someone must innovate someone's innventions. The UNIX design philosophy was an invention, Linux is an innovation of that invention.

      Microsoft invents very little, if anything. Microsoft innovates - that is introduces new things - all the time. It is very rare that Microsoft innovates first, or the best.

      For example, Microsoft did not invent the C language, or C++; however, they did innovate C++ with the Active Template Library (ATL) which is a pretty damn useful extension to C++.

      So how about this, so we can get all on the "same page":

      How about a list of the last 10 computing innovations. Its a pretty hard list to make, but if you throw some things out there, just to try it, it gets worse: XML? Just a subset of SGML, which is decades old. OpenGL? Again, just a refinement of previous technologies.

      I think everyone, Microsoft included, needs to get a grip and realize how things happen in the computer software industry. Almost nothing is "invented", if anything. Everything is "evolved", "refined", and finally "innovated" when it is brought to market.

Whenever people agree with me, I always think I must be wrong. - Oscar Wilde

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