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>Frankly I'm surprised that they keep sinking money into this, they've clearly failed to establish a profitable beach head, meanwhile google is making money hand over fist in the exact same domain.

This seems to be Microsoft's MO, and it seems to have worked with the XBox. Push hard, buy a second place position with massive marketing, investment, and underpricing, and continue to maintain it while losing billions and billions. Then the first place company inevitably, eventually makes a series of horrible, very public missteps, and Microsoft is positioned as "The Alternative."

On one hand, I think it's a pretty sleazy tactic, but on the other hand I rarely ever see any corporation thinking in the long term, especially to this absurd degree. I'm not exactly sure what the strategy is to defend against this, either.

3 comments

Microsoft deserves some credit for the XBOX.

They had the foresight to include a NIC (Network Interface Card) in the XBOX, right out of the gate. It was also the first game console to include a hard disk.

The PS2 did not initially include a NIC, and Sony offered the add-on PlayStation Network Adapter in order to compete with Microsoft. In addition, Microsoft launched XBOX Live approximately four years ahead of Playstation Network.

Regarding missteps, Microsoft has experienced their share of technical hurdles [1].

Regarding financial losses, Sony has experienced the same [2].

[1] http://en.wikipedia.org/wiki/Xbox_360_technical_problems

[2] http://www.engadget.com/2009/08/25/sony-still-losing-money-o...

Didn't Microsoft shun any mention of the word "Microsoft" in XBOX marketing, at least initially? That might've played a big part in it's success. Or at least a big part in giving it a fair shot.

Didn't Microsoft shun any mention of the word "Microsoft" in XBOX marketing, at least initially?

I do not know the answer to your question, but I would venture to say that the target audience would have known either way. The adult game cognoscenti are obviously dialed into magazines, blogs, etc. Kids are of course in the know as well, and in cases where they do not have purchasing power, they will undoubtedly provide the necessary counsel to those above them that do :)

That might've played a big part in it's success. Or at least a big part in giving it a fair shot.

My opinion is that the XBOX's success was largely due to the quintessential launch title, Halo: Combat Evolved. This is one of the driving factors behind the XBOX's sell-out launch in North America.

Bungie was always Microsoft's ace in the hole. Online gaming helped, but it was more incremental and more easily copied. Now that Bungie's out of Microsoft's grasp, I'm betting Sony takes back the lead (though in a much closer race) for the next generation of consoles.

Yes, it will be interesting to see how the Bungie-Activision relationship unfolds. I am sure that Bungie is happy to have moved on from the Halo franchise in order to work on new projects, but perhaps in a mixed-emotions sort of way that we all feel when we want to move on, but at the same time let go.

Meanwhile, the Halo torch has been passed to Microsoft's 343 Industries, with their sights set on developing Halo 4.

This is probably one of the main reasons why they switched the branding from "MSN Search" and "Windows Live Search" to "Bing".

Dreamcast came with a dialup modem out of the box and an adapter for a NIC. Most people were on dialup at the time but they knew network gaming was the future.

Dreamcast came with a dialup modem out of the box [...]

Yes, good point. The modem was an industry-first in a game console, and definitely forward-thinking on Sega's part.

Unfortunately, Sega was forced to cease production of the pioneering Dreamcast in 2001. At that time, the company refocused their resources on game development. This was sometime after the PS2 launched in North America, and sometime before the XBOX launched in the same territory.

On a related note, I remember playing Jet Grind Radio for the first time. The cel-shading was really cutting-edge!

I don't think you can compare the two situations, because Sony has gone to great lengths to demonstrate that it's a supremely incompetent company (which it is). Google has done nothing of the sort. Plus, people constantly expect innovation from the console makers, but for Google to hold on to its position in search, it just has to stay online.

While Google reputation has been superb so far, at least for normal users, their push for Google+ may change that.

It's kind of "all in" move by Google. If Google+ succeeds, their brand will be even stronger, and as king of data, search and social they will stay leaders for the long time, giving them possibility to attack other market segments too.

But if Google+ fails, Google brand will be severely damaged, and normals could go somewhere else.

All Microsoft has to do here is to wait for the outcome and actively try to sabotage Google+ efforts by working together with Facebook.

I don't think G+ failing really damages Google's brand that much. It will just be another service people don't use on Google while they are searching.

Yeah, the same that Wave damaged Google reputation.

/sarcasm

Wave failing is my only reason for not even checking out g+ until it is 9 months old.

"I'm not exactly sure what the strategy is to defend against this, either."

Beat Microsoft at their own game. Initially, people moved to MS-DOS because it was the cheaper computing environment. The first place company in the console wars currently is Nintendo Wii, and lo and behold it is cheaper than the rest.

Pretty damn good + cheap = winner

Nintendo is 1/2 the powerhouse with a 1/3 of the AAA titles, yet dwarfs MS and Sony in console sales (and, with DS portable, completely blows them out of the water).

Another example: Compare how utterly lost iPad competitors are in the tablet space. One had to completely exit the market and slash prices to below cost to even make a dent.

Yet, there is one tablet quietly garnering sales in the millions and is single-handedly keeping a billion dollar company afloat: The Barnes and Noble Nook Color. They're selling these Android tablets like hotcakes. It's well crafted and sturdy, and at a price point ($250) that makes it a compelling purchase. It's making B&N a fortune.

I would also add innovation to your equation as a prime-mover in Wii sales. The Wii Remote was like nothing before it; playing a four-player game of Wii Tennis was radically innovative (and an absolute blast!)