2000-2009: Microsoft's Decade of Shattered Dreams
betanews.com
betanews.com
Have you guys ever checked out windows home server? Probably not. They don't promote it enough, but it's the best product they have made in ages. It's functionality pisses on Apple's Time Capsule and I love time capsule to death.
My guess in the next decade? Their core businesses get shaken up (office, windows, etc.) causing them to trim a LOT of this fat after the stock takes a rocking. They finally get the gut check they need and start pulling ahead in other areas (Bing, XBox/Entertainment, etc.)
Once you add the RROD issues and the fact that the Wii is kicking the Xbox's butt from a marketshare/penetration perspective it is hard to say that the XBox is a slam dunk success.
And do you mean profitable including the start up losses or profitable for those quarters only?
Wherever I go I see WIIs, Xboxes not so much any more.
They're still being sold in record numbers but WII outsells xbox by a comfortable margin.
And you can't use Wii for pretty much anything else. Surely you could "buy" a browser with Wii-points (if they haven't made it free already). But the web-browsing experience is also pretty lame. And you can't use it to watch movies.
So I bought a Wii because it was cheaper at the time (not anymore). But you won't catch me buying any games for it. I just borrowed some games I didn't like and now it's just sitting there ... and from time to time when a friend comes I just take out the free "Wii Sports" that came bundled with it.
If Wii really outsels Xbox it doesn't say much because they target different markets.
WII hit the sweet spot and sold an enormous number of units in a very short time, and for a very large number of those one xbox less was sold.
As for the Wii, it's a great product, but it is fundamentally a differet market and business model. Nintendo makes money on hardware sales. They have a low attach rate of primarily 1st party games. Microsoft makes money on royalties. Xbox had an unprecidented high attach rate with significant 3rd party profit sharing. Xbox LIVE is also a hearty subscription business.
I agree that nintendo has a different business model, but I think there is significant overlap between the markets, in other words I would expect xbox sales and wii sales to be competing at least in part for the same dollars.
Or is it a documented fact that those that own a wii buy xboxes later on ?
If you are thinking in terms of making products at a loss just for the heck of it then you are no longer competitive, you're already on the way down, it's just that the ground is still a long way off.
I doubt that's their real perspective. But the eagerness with which a 6 billion loss and a 7 year losing streak gets polished away with 'in a few years we'll be in the black' is quite amazing. I wouldn't be too proud of that.
The way these things get spun we'll probably never know the truth though. Nobody seems to like to admit to failure, even when it is blatantly obvious to the rest of the world. Zune anyone ?
Furthermore, graphical capabilities have just gotten to a point where the game developers are begging the hardware producers to stop for a while. They simply can't afford the art costs to do anything higher definition than they already are. Sure, the devs would like some extra CPU cycles. And the designers would love a faster medium to remove loading restrictions. And the list of wants and asks will never be satisfied. But making AAA games cost boatloads of money. Every new console is a new burden on developers and they have spoken, loudly.
I think one reason the xbox looks like a great success is due to how badly the ps3 sucks, and how stupid Sony got. £300 for a games console is ridiculous, and basing it on a soon to be obsolete bluray standard is just more idiocy. They never seem to learn - minidisc, UMD etc - they always try to lock in these ridiculous new formats.
For me, the only innovator lately has been Nintendo. They have absolutely turned gaming on its head, and come out with some truly imaginative games that focus soley on fun and gameplay. They've captured amazing large new markets of gamers who have never played before.
The xBox is a good all round console, but it's just more of the same IMHO. I don't see much innovation going on there. I'm sure ms are pleased with xbox, but I wonder just how much money they've lost in total doing it. Maybe they'll break even in the next generation, or maybe Sony will realize just how stupid they've been. Maybe they'll go back to their playstation 1 roots.
And you would be correct. According to data from manufacturers [1], Nintendo has sold nearly twice as many Wiis as Microsoft has sold Xbox 360s.
Wii 56 million (as of Sept. 30th)
Xbox 360 34 million (as of Oct. 23rd)
PS3 27 million (as of Sept. 30th)
I seriously doubt this is the case.
Also note that a large number of wii games are 'in house' through Nintendo. So Nintendo makes larger margins on games than Sony or MS.
Even if you just measured the profit from the game 'wii sports' vs profit from xbox live subscriptions, I'd bet Nintendo trounced them.
As far as I'm aware, Sony and MS have to share a large amount of each games sale with publishers and game developers etc. Nintendo does most of that themselves for the big wii games, so they get far higher margins.
Interestingly, it seems as though the MBA's don't harass the game studios very much. Too bad MS management hasn't taken a lesson from them... but I guess that's what happens when you start bringing in "professional managers (tm)".
Per console, it does look like Xbox and (barely) Sony did make more money per console.
That doesn't really mean all that much though, since Wii's console base is roughly twice that of the Xbox.
[1] http://www.gamasutra.com/view/feature/4172/npd_behind_the_nu...
I actually had a Wii. I even waited in line to get it. I returned it within 24 hours. I wanted something more. The ability to rent movies, stream media, download new games, multiplayer over xbox live,etc. I'm not even a hardcore gamer. I only own the Halo franchise of games. The wii is best described as a very very advanced toy, rather than a gaming console. I don't think that's a bad thing either.
It won the living room, in that it's the console in most living rooms. You can happily play multiplayer on the wii against people in other countries (xbox live like I guess).
It does what it's designed to do - entertain.
The idea that one device will "win" the living room and provide everything, I think is an unrealistic pipe dream. And certainly not a device that isn't expandable or user modifiable in an easy way like a games console.
The Mac mini is actually an awesome 'living room' device. If they marketed it right they could really capture some market there. Frontrow movie previews, playing backed up dvds, music, etc. It does well for a small cheapish box.
The mac mini and the concept of the HTPC is one that I think will certainly flourish over the next decade. There were 141 million LCD HDTVs sold in 2009 alone. $599 gives you a very very powerful machine for its purpose. Most importantly, it always comes down to apps. The killer app for living room PCs is entertainment+content. It's all there. Right now I can instantly access anything I want (movies via netflix, itunes, hulu,etc. or games via steam) within seconds and on-demand. That was NOT possible a short while ago on the hardware or software end at a reasonable price point ($599 or less).
I think the Wii is cool and it definitely broke into new markets. Party/casual games are a big thing and I like playing it at friends' places. Families I know get really into it, with parents playing as much as their kids.
I'm sure there's little incentive for Nintendo to do so, but I'd gladly pay another $100 for a more powerful version with HD graphics and more HTPC-like capabilities.
ETA: The only bad thing I've heard about PS3 is how difficult it is to program for from former game developers. Publishers seem to be pretty good at getting good results with it, plus you can install Linux and tinker with Cell programming if you're so inclined. MIT has some really good slides and notes from one of their courses online (http://groups.csail.mit.edu/cag/ps3/).
OTOH, any company the size of Microsoft has a lot of failed ideas, or poorly executed ones. Not every idea is a home run; foul balls are part of the game.
Almost 20 years on Microsoft sound like IBM did back in the day.
It contained a stack of shrinkwrapped end-user software licenses for the long-dead database environment their product was based on, one for each of their 60-70 customers over the life of the company. Cost at least a half-million dollars total, and went right into the dumpster.
It's been rather effective.
This last part is what hurts me more: we can't really innovate in hardware because there is an economic imperative to be able to run Windows... Microsoft is dragging us down.
The catch there is that Intel and AMD have accomplished such huge economies of scale combined with such advanced manufacturing technologies that no one else can match their cost to performance ratio.
For markets where cost isn't as constrained, like the big financial systems, stock exchanges, vehicle crash simulations, environmental modeling (like the Earth simulator and the NCAR weather models) you'll see quite a variety of non-x86 processors, including very application-specific PowerPC variants like the one in BlueGene. In markets where performance is far from the primary criterion like in smart phones, ARM dominates.
That said, Windows does have an adverse affect on innovation in other ways -- for example, to function in a corporate environment, it's nearly mandatory to interoperate with Exchange and Office.
This is untrue. No processor can run as many threads per socket as an UltraSPARC T2. No general-purpose CPU can match the Cell at floating-point performance (the Cell BE in the PS3 can do single-precision FP, but IBM has other models that handle double-precision). No processor can match ARM in performance per watt.
The sad truth is those processors are pretty much niche in that they cater to people who don't need Windows.
Once you make a server Windows-compatible, you can sell it to a much bigger public, just because it runs Windows and it runs Unix, if not at the most performance per dollar over a 5 year period, they run it well enough.
You can't get a comparably performing system for the same amount of $ on a different platform. That's a simple fact.
It's nothing to do with niches, every niche except for the smallest machines (and that's where ARM really shines) has an intel chip or a compatible just about tailor made for that niche, at a very competitive pricepoint.
Of course, a more appropriate comparison to Itanium is POWER since it's aimed at the same market -- IBM charges upwards of $10k per socket compared to $2500 per socket, and yet IBM's hardware sales aren't by themselves profitable; most of IBM's revenues are from consulting, service, and software sales. (That was 60% before IBM acquired PWC Consulting from Price Waterhouse Coopers, drastically growing their consulting arm.)
I realize that that is a somewhat extreme case, but it's illustrative of how much Intel's economy of scales impacts its prices relative to everyone else's.
Economies of scale will dictate prices, but this software availability will make processors tailored to specific roles viable. You will see ARM-based low-power servers and more designs like Tilera's in cloud-computing applications.
If not for Office they'd be a lot hotter water right now. Lock in is really nice when you've got it, even if your customers hate it.
Open Office still has a lot of rough edges, even after all those years, it's one of the few things that buys microsoft more time. If open office were to be ported to C, trimmed of it's bloat and made more compatible (ok, that would add some bloat back in) Ballmer would sleep a lot less good.
Especially the Gates - Blair bit.
IBM managed to 'reinvent' itself after a very rough patch, maybe microsoft will manage to do that too but definitely not with the current leadership. To solve these issues you first have to be able to admit (maybe even publicly) that there are issues. Until then it's down.
I remember IBM passing out little flashlights with 'I've seen the light', and they really had.
Microsoft is at least a decade away from a moment like that.
Give google another 10 years to figure out how to kill office and they probably will.
I mean just because they did something before Apple did it doesn't mean they invented it, nor that they were particularly visionary. Most of the items on that list were talking points at the time and many wanted to do them in the .com bubble years. What Microsoft was talking about then was just part of the general "vision hyper-inflation" of the time.
Hailstorm was a concept for an XML Web Services platform. Yes it was supposed to support API access to things like address books among many other things, but presenting this as the predecessor to Facebook is a stretch to say the least. Facebook started out as a web site, not as a platform. Turning that on its head is not visionary. It's an old blueprint for certain failure.
And the tablet PC a precursor to the iPhone? Excuse me but the iPhone is a phone. It's primarily a communication device on which people play some games as well, and a very small minority does one or two other things with it. Is everything with a touch screen now a would be iPhone?
And then there's the NTFS successor. As far as I remember it was not planned to be a distributed file system or some kind of virtualized cloud/cluster thing. It was supposed to be a file system that had database-like features like a rich data model, and it used SQL Server technology. Scaling out was not the vision but that's exactly the point of "cloud" storage.
Microsoft as the largest OS vendor completely missed the boat on virtualization, which is probably the most important OS trend in the past 10 years. Ok, they took the next boat, but the fact that it's not even mentioned is telling.
And then there is Office collaboration. What a horrible mess. There's nothing even remotly usable. They piled on useless features in Office but stuff like editing a Word file in a group, something really obvious, is so horribly broken and has been forever. That's an anti vision.
So no, they haven't just been bad at executing. Their visions were either of me-too quality or the kind of failed platform grandstanding that IBM was known for.
That said, they have created some solid high quality stuff in the past 10 years as well. Windows is a good solid OS. .NET is a good solid development platform and C# hasn't stalled as Java has. They have opened up Office file formats and invented a sane alternative to PDF. It's good engineering work and a little bit visionary in some places.
That goes for most innovations - they are floating around when the time is right.
Wave? [edit for clarification: isn't that a platform first? not that we know it's a success, of course]
Also, the whole anythingFS Microsoft kept announcing since NT4 was called Cairo never made it even to beta. It was, mostly, a very long-lived research project that kept getting fashionable features according to the age of the press-release they were announced.
"stuff like editing a Word file in a group, something really obvious, is so horribly broken and has been forever."
And would be really easy to implement on top of MSN or Office Communicator.
I think one of the reasons is that they are well ... Microsoft. It is irrational, it doesn't make sense, but that's the vibe I get.
Their languages and ideas are not bad, I think it is the association with their company that is somehow hurting them. For example, F# is a very nice language, but I think the fact that it runs on .NET is putting off a lot of people. It seems to me if F# wasn't related in any way to Microsoft, it would have fared a lot better.
The .NET runtime and languages have been updated regularly with significant changes and improvements, and Microsoft themselves support C#, VB.NET and F# as "first-class" languages, as well as developing IronPython and IronRuby and working on the Dynamic Language Runtime project to ease dynamic language implementation. All of these equal or better Sun's support of Java.
There are also quite a few non-Microsoft languages based on .NET including IronScheme and Boo. .NET's CLR also supports tail-call optimisation, something the JVM doesn't.
When comparing the CLR to the JVM, I'm only jealous of one feature of the CLR ... stack-allocated objects.
On the other hand, saying that .NET's support for multiple languages is "equal or better" then that of the JVM is just flat wrong.
The CLR doesn't optimize call-sites where the called method is virtual. This is alleviated somewhat by the semantics of C# (all methods are non-virtual by default), but for dynamic languages it's a disaster. The JVM on the other hand does this ever since Java 1.3 (when hotspot was added as an option).
And the DLR is a cool framework for language designers, but it's one layer above the CLR, and it's just code extracted from the IronPython implementation. And related to speed, if you compare Jython with IronPython, Jython does a lot better right now, although it's not the most active language-implementation on the JVM.
The upcoming InvokeDynamic for the JVM will really kick ass for dynamic invocations ... the JVM will allow one to make calls without knowing the type of the object used in single dispatch ... and those call-sites will be optimized (like method-inlining) just as with a normal "invoke_interface".
And then there's the little things that make your life easier on the JVM ... for example it's easier to generate .class files, or .jar files ... along with debugging symbols. And the JVM is truly multi-platform.
You mentioned tail-calls ... well, the tail-calls in Mono have always been broken and unusable and there's no fix on the horizon. Also speaking of Mono, the GC is not generational and does not defragment the heap. IMHO, it's a low quality implementation that's only optimized for C#.
That said, I think that my core point still stands, even if the CLR isn't yet quite as good as the JVM: Microsoft are hardly letting .NET languish.
Admittedly, I don't really dabble with the .NET ecosystem much, but when I had to use SQL Server Reporting Services for a work project and we had to create a custom data source, we had to write the component in C#, it didn't support other .NET languages (I think it also supported VB.NET, but yeah, no thanks). That would have been a logical place to allow for extending their code with a language that I was more comfortable with.
There's also the ignored opportunity to provide better scripting in their Office offerings. While Resolver One is a really cool idea (spreadsheet built and scripted in IronPython), what I would REALLY love is to be able to call IronPython from Excel, but it's probably not gonna happen.
(BTW thanks for the kind words about Resolver One -- that's my day job :-)
As often did I. But it turns out that managing people is hard. It is amazing to me that an organization that is Microsoft's size can decide and execute on anything at all, much less on the number of things that it actually does.
Cutting five layers of management, which is already few for an organization that's Microsoft's size, is really a recipe for chaos.
Cutting five layers of management, which is already few for an organization that's Microsoft's size, is really a recipe for chaos.
I'd say Microsoft's barely navigable size might have a lot to do with those 5+ layers of middle management.
As far as Youtube is concerned, AFAIK it still hasn't been profitable for Google and would have likely bled more red ink with Microsoft in higher bandwidth charges, or alternatively, MS might have tried monetizing sooner slowing Youtube's growth. It's doubtful purchasing Yahoo in this economic climate would have been a big winner either.
I also don't really buy the article's description of the Xbox business defying the data and business common sense. For a long time, Microsoft has wanted to be in the living room, purchasing WebTV in 1997. If anything, it's an example of how Microsoft has succeeded in the past; constantly improving upon it's past mistakes and not giving up as quickly as other companies might. The original XBox wasn't all that successful, but they did some smart moves with the 360, getting it out earlier than the PS3, providing good tools and support to their development community, and realizing that good networking support at the OS level to allow seamless multiplayer experiences was going to be a game changer for this generation of consoles.
http://news.ycombinator.com/item?id=886109
I wouldn't deny that the Microsoft seems to be improving the Xbox from the customer's point of view... but I think the larger point is that the Xbox program is in the red.
There was already a convergent device for the living room. It's a computer with an HDMI cable and a wireless keyboard, or maybe a wireless tablet. Packaging it as a console with funky controllers is not a game changer, no matter how many games come out for it.
Taste is what the enduser sees. Endusers don't care about strategy, proprietary technology, bottomlines, acquisitions, tie-ins, and what have you.
The big problem here is that having good taste is like being a good hacker - you have to be one to spot one. And since Microsoft doesn't seem to have many people with taste they don't recognize it when they see it. This is why Microsoft isn't doing well on the web - it's easy to switch to a competitor if a site doesn't just work right away, and many Microsoft offerings don't. They're clunky, hard to navigate and often have a hidden agenda thought up by a MBA. This is also the primary reason that Apple is doing so well: Their CEO has taste.
Endusers just want shiny stuff that works.
I think the article is a bit harsh, even hostile. The criteria Most every technology decision must be justified by some data point. No company spends on research like Microsoft is not unlike the criticism leveled at Google by that departing designer. Large companies need operate this way.
The heart of the challenge is what transformations are necessary for a seriously successful company to stay vital. IBM went through a catastrophic point and came out due to some very astute business leadership. MS is more technologically focused.
Seems to me like its a hurried piece of negative PR in part of a much larger war. Probably a response to the "Top 9 products Google killed" story somewhere else on the internets.
Customers want storage, lots of it. One way to do it is to provide the technology to make that storage cheap and easy to maintain. Another way to have cheap/maintainable storage is by using an external provider.