"Despite billions in investment, its Xbox line is still at best an equal contender in the game console business."
He didn't forget the Xbox, but he did give the impression that he wouldn't consider it a success.
He didn't forget the Xbox, but he did give the impression that he wouldn't consider it a success.
The 360 is the go-to console for any major game developer. Partly because 360 owners buy about 50% more games than either Wii or PS3 owners. Given that games are responsible for the bulk of the profits related to console gaming that's an enormously significant figure. The 360 console is raking in cash for Microsoft and continuing to grow in popularity. It's one of Microsoft's most successful ventures of all time.
Xbox is successful in that it has a large mind-share in the hard-core gamer community, but financially the project is still a failure. Had Microsoft decided not to begin the Xbox project 10+ years ago, it would easily have a few more $billion in the bank today.
Contrast that with the Wii, which, along with the DS, has added billions of dollars in profit to Nintendo's coffers over the past few years alone.
Now that Xbox has established itself, the next decade will show whether or not the system is net-profitable, or whether the project never should have started to begin with.
Nintendo is operating in a different market. They are a toy company, first and foremost. And it's better, conceptually, to think about the Wii and DS as toys. They have a completely different audience - and completely different revenue model. People buy toys for a short-term entertainment value, or novelty - and then the novelty wears off.
This describes the Wii exactly - people buy one, they play a game or two, or maybe Wii fit, and that's it. You aren't seeing serious time spent with it - and the tie ratio demonstrates that.
BTW - I think I'd classify Guitar Hero / Rock Band as toys, too. Hence the horrible sales numbers this season - people are sick of this particular kind of toy.
Yes, Microsoft sold 30 million Xboxs to "hard core gamers" and effectively conquered that market niche.
But, in the same time, Nintendo sold 50+ million Wiis to people who like "toys", making billions of dollars in the process.
As a hypothetical investor, I don't really care if Microsoft "wins" the hard-core market, I care about the bottom line. Nintendo effectively created a new market and capitalized on it, and they would get my hypothetical dollar.
This is the nature of the game in the tech industry, significant returns are rarely achieved without significant risks and investments.
In gaming consoles, Microsoft had Sony to compete with. It's easier to beat Sony than to beat Apple or Google.
Also, Microsoft envisions Xbox as an entertainment center where families not only play games together, but watch TV and movies as well.
Nintendo and Xbox have claimed different market segments but that's not because they weren't competing.
It's redefined each generation. This generation is about motion controls as the top seller of all time, the Nintendo DS, has motion controls alongside its console brother the Wii which also does. Sure the 360 has stream lined the online experience, however it has also introduced gamers to the closed era of consoles. You want a bigger HD? Sure just pay an absolute premium on it. Not to mention the 360's hardware problems which have been conveniently forgotten.
The fact that you're comparing the Wii to flash games is absurd. It's fine not to like the Wii, I know I don't like it besides some drunken debauchery, but its impact on the industry is clear. Clear enough that Microsoft and Sony are both coming out with motion control products in the next year.
And for the hardcore gamers I know, XBox Live is a redefinition of consoles. Before Live, PCs were the only serious online game in town, now the XBox actually offers a better (less painful) online experience. Sony's online system is a joke in comparison.
(I own none of these systems, but I'm an ex-gamer and know a lot of gamers.)
And note, most non-MMORPGs games on PC have free online.
Both the PS3 and Steam have adopted their innovations - they've become the defacto standard for online gaming.
These are, as they say, generally the better variety of problems to have, warranty extension costs notwithstanding.