Originally posted by: TallGeese
Strategically, here is what MS has done wrong with the Xbox:
* Over-reliance on hardware specs - This is not the PC market...the hardware mindset (if you can call it that) is different in the console market.
* Not pursuing exclusivity agreements - Rather than buying companies outright, they should be purchasing exclusivity contracts. Cheaper than owning studios. I do think Bungie was a BRILLIANT acquisition. Rare? Remains to be seen...altho an Xbox exclusive Perfect Dark would kick mucho bootay!
* Terrible hardware form factors - Sure, the "S" controller is here now, but first impressions matter (and STICK in people's heads). With all the SFF PC cases around, I find it LUDICROUS that MS couldn't design something that didn't strangely hearken back to the size of the Atari 2600.
* Playing catch-up - The Xbox console was released behind PS2. MS' Live is coming out AFTER the PS2 network adapter. MS more than anyone else should understand the importance of SHIPPING FIRST!
And here's where MS has executed successfully:
* They have captured the #2 spot on their first outing - A HUGE accomplishment, given the entrenched position of Nintendo.
* Been willing to correct mistakes, AND get serious when competing - Price cuts, replacing faulty units quickly, the "S" controller. Microsoft has not been arrogant in this new market.
* Played to their strengths - The Xbox does have some sweet features, and they are making the most of them.
* Online strategy - Make no mistake...this is gonna be HUGE to console gaming, just like it revolutionized PC gaming. MS has the best plan for this area...and here's why:
Let's look at the economic model of Xbox Live...
Now MS has publicly been announcing numbers of 150K signups for the Beta testing.
Let's even go so far as to halve that number...you're talking 75K players.
Figure at $50 a pop for the Live starter kits...
That's a cool $3.75 million from subscriptions for Year 1.
Now, let's look at Year 2 revenue...
Let's assume that MS charges $10 a month for Xbox Live.
We'll still assume a base of 75K players.
An even cooler $9 million in subscription revenue.
Bump that to $15 a month (unlikely tho), and you're talking $13.5 million in subscription fees alone.
Personally, I think the penetration rate for Y1will be more like 100K to 125K.
So figure somewhere between $5M~$6.25M Y1 subscription revenue
Figure $12M~15M Y2 revenue
If MS starts punching out subscriber numbers...LOOK OUT!
At 250K users: Y1=$12.5M; Y2=$30M (this is a valid target..less than a 10% penetration in North America)
At 500K users: Y1=$25M; Y2=$60M (more aggressive target for sure...a bit less than 20% penetration at current console numbers)
And that is continuing revenue, unlike the one-shot charge from Sony for the network adapter.
Now in North America, Sony has sold roughly 11.5 million PS2 units.
Assuming a 10% penetration for the Network Adapter (over 1 million adapters, mind you), Sony would stand to generate roughly $46M, one-time.
Not a small number to be sure, but compare that to MS' potential numbers, with only half the number of units sold...hmmmm.
Consider than MS' revenue is a subscription model....in the immortal words of Keith Jackson...
WHOA NELLY!
Now let's discuss this like adults...and leave the fanboy cr@p to another thread :frown: