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Former Xbox head says Xbox as a standalone business would experience challenges

As a business, Xbox started out wadding through some tough waters, losing millions upon billions of dollars initially, however, as the business grew and Microsoft continued to invest in it, Xbox has become a household brand and an iconic name within gaming. So with all of the success Xbox has enjoyed, would it ever make sense for Microsoft to split it off and make it a standalone business?

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Thatguy-310893d ago (Edited 893d ago )

This is the same reason why Playstation won't survive away from Sony. These companies are adding these consoles into their ecosystem of devices/services and making them an integral part of it.

Dlacy13g893d ago

100% agree...these console business units are benefiting from a larger eco system that they are able to pull things like OS resources or established hardware manufacturing that comes at a fraction of the cost it would if these were start ups / small fish.

donthate892d ago

I don't believe Playstation is benefiting from Sony at all!

Sony's other division has almost nothing to do with Playstation as we know it today, and the hardware design skills doesn't require Sony. In fact, the architecture of PS4 was designed by a consultant, Mark Cerny. Last time Sony themselves designed a console it was both a financial and developer disaster.

I see no real interplay between any of Sony's other division and Playstation. In fact, Sony's poor software development skills are holding back Playstation.

In terms of manufacturing, Playstation sells so many consoles annually that it is a humongous contract for even the smallest part. I don't see how they can be considered a "small fish".

In fact, Sony is holding back Playstation as evident by PS3 being used as a vehicle to push blu-ray that costed major marketshare for Playstation.

Sony wanted to push PS Now on their TVs and that is now resulting in major loss and resources siphoned away from Playstation including staff to Gakai.

Playstation would be way better of spinned off as a fast paced startup in my opinion!

Let the rest of Sony rot on it's own and go bankrupt. Shedd the fat!

Dlacy13g892d ago (Edited 892d ago )

@donthate So you think Sony just magically were good at hardware? Playstation has benefited from all the years of Sony making hardware...had Sony not done hardware before....had Sony not been a giant prior to playstation they would have struggled much more than they have with form factor and position in the market. Sure currently playstation has a strong footing and it's other divisions have struggled of late...but its those other divisions prior success that afforded Sony the ability to create Playstation on a whole.

donthate892d ago

@Dlacy13g:

"Playstation has benefited from all the years of Sony making hardware...had Sony not done hardware before"

Well, for computers which is what a console really is, the architecture is far more important than almost anything beyond reliability.

As MS proven with extreme limited experience creating hardware, MS architected, designed and manufactured the Xbox One.

So you tell me, does PS4 really need Sony's hardware "design" expertise? It merely resulted in a smaller console, that mind you is louder than the Xbox One. The architecture itself was done by an outside consultant. To boot, the design of PS4 was done in Japan, whereas the consultant is American!

Look at Nintendo, they are also designing great hardware without the same massive experience that Sony has. If anything, on the other hand a common theme is both Sony and Nintendo struggles far more with software design.

All evidence suggests, MS is benefitting Xbox massively, whereas Sony is the benefactor of Playstation, and Playstation is being drained of resources.

In fact, on it's own Playstation (and liberated from Sony) would likely be more like Nintendo. Full of cash, and take risks that aren't detrimental to the company for the sake of pushing basically unrelated technology on the mother company's behalf.

"but its those other divisions prior success that afforded Sony the ability to create Playstation on a whole."

This was only true during the first Playstation, and the after that crazy success means Playstation on it's own would have been far better for them. They had all the resources they need, and never would have designed the PS3 as it was if it weren't for Sony/Ken Kutaragi.

rainslacker891d ago (Edited 891d ago )

None of these systems, new or old, are designed in a vacumn of a single person or company. Maybe back in the very old days with Atari and Coleco, but both of them had ample computer expertise, and realistically, the average person could build the same thing with parts from Radio shack.

Nowadays, consoles are extremely complex. The PS3 was a collaboration between IBM and Sony. The First Xbox was just off the shelf parts with NVidia providing support on how to set it all up. The PS4 AND the X1 were both collaborations between their respective companies and AMD, who it would appear did a bulk of the design work with the console makers simply supplying their needs checklist, along with numerous consultants and system engineers working on it for years to arrive at a finished product.

I challenge either of you to open up both consoles and find a single part on the main board which is made by either MS or Sony.

The only thing that a console needs to come into existence is a plan, a goal, and money. Technical knowledge of the hardware is a rather moot point. Knowing what to do with that hardware is much more important, and I think when it comes to the actual games, both companies have a good handle on the situation.

Sony is not lacking in experience on the software front, they have some of the best game engineers and designers in the world working for them. MS is not incapable of creating good hardware...they have some of the best system engineers in the world working for them. What screws up any hardware is the suits, and the possibility of over-ambitious goals, or making mistakes in order to compete.

+ Show (1) more replyLast reply 891d ago
AngelicIceDiamond893d ago

For that reason it wouldn't make sense now to separate either console from the main buissness,

Godmars290892d ago

Aside from at one point the Playstation division held up the rest of Sony, whereas Windows has allowed Xbox to write off billions. Likely would have had to close their doors after RROD or been able to respond to when and how they did.

Charybdis892d ago

True I defenitly gained additional respect for steve balmer when I heard in a pod cast how he handled this billion dollar decision.

892d ago
mcstorm892d ago

@mixdup your spot on. But People forget the PS3 was losing Sony a lot of money the start of last gen too. Its just how it is at the end of the day. Microsoft would not be who they are today if they did not have Windows and office at the start. Apple would not be as big as they are today if it was not for the IPod, Google is the same and so on. Sony sold a lot of its business to put its self on the right track again and this is why the PS brand is now their buggies because back when Sony were doing very well the PS brand was a very small part of this.

freshslicepizza892d ago

well in sony's case you can settle out of court and not admit the system itself is faulty which is what they did with the ps2 and the disc read error lawsuit. on the contrary microsoft rushed the xbox 360 to market without testing it as much as they should have.

microsoft is also financially stable to get through tough times which is why there is likely a lot of pressure on nintendo's next console to be profitable.

892d ago
Godmars290892d ago

@Mixdup:
People refuse to see that the first Xbox didn't do very well, the 360 had a dubious lead and general bad conditions, or that MS sabotaged the X1 as it was originally intended. That if not for revenue they get from patients and licenses they hold rather than the products they make that they wouldn't have the money to make up for their mistakes. That regardless they can't keep making the mistakes that they do.

@moldybread:
What does MS's financial situation have to do with Nintendo? They might be well behind in regards to consoles but dominate handhelds hands down. Hold IPs that MS and Sony would fall over themselves for should they stop making consoles and go 3rd party.

The only thing really hurting them now is the way they're treating Youtube streams.

donthate892d ago

mars:

The PS3 wiped out everything the PS1 and PS2 profits combined, and likely far more than that. The PS4 is the only one generating profits for Sony that are now being siphoned away, because of how poorly Sony is being managed.

The exception is of course PS Now and the Gakai purchase. I expect that to be a major writedown that is going to be hidden.

The Xbox 360 made lots of profits for MS in it's later years, and Xbox One like the PS4 is making a huge profits for MS devices division as well. Xbox Live Gold, games and so on generates massive profits.

You have to look at it as a platform, not based on certain parts that fits your agenda.

I mean is it that inconceivable that if Sony can make money, somehow MS can't? Especially after the huge pricing advantage MS had with the Xbox 360 and sold at least equal amounts to PS3 while reaping additional profits from XBL Gold?

That said, it would be better for Playstation to be separated from Sony. I believe they are holding back the brand, and infusing Playstation with a negative culture. Playstation need to operate like a startup.

On the flip side, Xbox has reaped massive benefits being part of MS including massive research and development, finance, positive culture (agile software techniques for monthly feature updates!) and cloud services and infrastructure.

That is apart from DX12, Windows 10 with OneCore, cross-play/buy and PC integration.

I don't see how Xbox division can be split up. It is integral to each other.

Godmars290892d ago

"I don't see how Xbox division can be split up. It is integral to each other."

From something they've not only just now done but are in the process of doing?

892d ago
Godmars290892d ago

@Mixdup:
You are dyslexic: Don't have undying loyalty towards Sony - closest they came was the PS1 and PS2 when being creative and diverse was cheap and easy. Not a social gamer, so much of what MS have done since getting into gaming, since its been online/multiplayer related, made me less of a fan of them as they went that direction. Ignored certain types of games or put/imposed multiplay "twists" to single play titles.

Integrating their console brand into their PC OS, because like Explorer they can't figure out how to improve it so they're just going to shove it in people's faces because of monopoly mentality, likewise means jack to me.

+ Show (7) more repliesLast reply 892d ago
miyamoto892d ago

Sony execs used to despise the PlayStation venture back in the early days of its conception.

But boy did PlayStation turned the tables upside down. PlayStation proved to be the vital life blood of Sony Corp. CDROM, Blu-ray big Sony investments PlayStation helped propagate to popularity.

PS4 is now the face of Sony and is very important to its survival.

Unlike Xbox where MS is just fine without it and can still be a billion dollar giant just with Windows OS.

nitus10892d ago

Actually the PS2 popularised the DVD. In 2000 DVD players were quite expensive and you could easily spend over $1000.00 for a DVD burner.

Likewise the PS3 popularised the Bluray market.

Microsoft is now in a very competitive market and their main cash cow which is Microsoft Office is having to compete against other Office suites some of which are actually free and are functionally very similar.

One area where Microsoft has a huge advantage is the operation system market namely Microsoft Windows since most PC's come with it and it has be called sarcastically "The Microsoft tax".

Microsoft is still worth billions but it is under attack from all sides. Gone are the days were it could dictate to the market.

rainslacker891d ago (Edited 891d ago )

I don't recall it being despised. I know Ken Kataguri couldn't get Sony proper to approve the creation of the PlayStation. This was partially due to the fallout with Nintendo which left a sour tastes in the suits mouths, and partially because they were riding high on other tech at the time and didn't see that gaming could be much more than it was at the time.

Kataguri ended up bypassing all that by going to SCE, a subsidiary company of Sony, and they approved the creation of it.

I think it's obvious now though that Sony backs PS pretty handily. It plays a key part in their overall future strategy, and had Kataguri not been able to get it off the ground, Sony would be a much different company today, and likely be dealing only in the professional markets where they are hugely popular.

@Nitus

I think MS still has a lot of command of the market in both OS and their Office type software. I think on the productivity front though, they certainly have a lot more viable competition than before, and I do believe a lot of businesses are seeing that it may be better to go with one of the alternatives.

MS is competing by offering these software as services now, sometimes free, just to retain mind share. Azure is a huge boon to this, as it allows for companies to escape the office, so to speak, and it's a huge advantage that their competition mostly doesn't have...at least for now.

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FoxyGotGame892d ago (Edited 892d ago )

So the ex-Xbox head Robbie Bach is basically confirming the Xbox Brand would have difficulty surviving without being propped up by Microsoft (other) divisions...Who knew??.

I find it hilarious that the 1st comment mentions 'Sony/PlayStation'. True or not, I guess it's cool to mention the competition when convenient or if it makes you feel better, right? Yet for all the complaints about Sony fanboys ...wait, the article is about Xbox is it not?

Hypocritical Much? /

Thatguy-310892d ago

What are you taking about??? Why wouldn't one bring up Playstation? Both of the consoles have been an important part of the connected ecosystem that these companies have built. If they were to go off on their own they simply wouldn't make it.

22CobraKing892d ago

This is like the PS3 when it launched it was overpriced. But the Xbox one required kinect and all these other issues like no used games policy etc.. Microsoft is slowly turning it around but are still struggling since they have to sell the Xbox one at $350. I know they could take a loss but it looks bad for the Xbox division.

nitus10892d ago (Edited 892d ago )

The launch PS3 was basically four machines in one. It could play PS1 games and in fact all PS3's to-date can play PS1 games. It could also play PS2 games either by full hardware support (NTSC regions) or by a combination of hardware and software (PAL regions). Of course it could play PS3 games and it could also play DVD and Bluray movies.

In addition the PS3 came with wired and wireless Ethernet connection. It also had a HDMI connector and initially four USB connectors (in later releases of the PS3 it become two) as well as 3 card readers (not installed in later PS3's), it also supported Bluetooth devices, had an optical out port and a hard disk. Oh I almost forgot it like the PS1, PS2 and PS4 had an internal power supply (ie. No Brick).

Basically that $600.00 price tag was actually very good value considering all the hardware and software.

Of course the "I hate Sony faction" is going to disagree but any simple search will show that what I have just said is correct.

Note: The only thing Sony removed from the PS3 via an update was the "Other OS" option due to security concerns. Lets be honest here, home many people actually needed this feature?

ShadowWolf712892d ago

It wasn't bad for everything it came with, but it was still super expensive, especially compared to the competition. Did hurt 'em for a while.

rainslacker891d ago (Edited 891d ago )

I don't think the price was that much of an issue. At console launch, die-hards will buy it at inflated prices. Something more had to turn off the Xbox fan base after that first week, and it was pretty bad pretty quick after launch. The PS3 itself was always sold out for almost a year after launch despite the price tag...although some of that was due to manufacturing issues.

MS of course are doing much better now, and I do think this whole, "turning it around" is a bit of a misnomer. I think they already did concisely and clearly what they had to do to remove the problems that customers had with the original launch versions, and thus, it's turned around already.

MS is doing better than they did last gen...at least as of the last year or so when they were doing poorly. They're sales for the same time frame are higher than the 360, so that's a good thing. What it comes down to though is that it looks like it's doing poorly because the PS4 is setting records and is gaining back that popularity it had back in the PS2 days...after taking a hit last gen because of manufacturing problems, and a rather vicious cycle of media downplaying of the brand as something not worthwhile anymore.

There comes a time when it may just be time to accept that the Xbox brand just isn't as strong as the PlayStation brand overall. There's no shame in not selling as much as your competitor, so long as you sell well enough to make a profit, support the customers you do have, and do what you can to try and gain new customers. To me, MS is doing all these things, and it shows because their numbers are increasing, and better than the predecessor.

More on topic...what's it matter if it's a separate company or not at this point? PlayStation isn't part of Sony proper, it's a division within a subsidiary that Sony owns. Sony proper provides funding to this subsidiary in an amount which is justified by it's performance to the company as a whole. If MS spun off the Xbox brand, it would be the same deal. The corporate structure may be different, but MS would still own that company, and would provide the funds for it as it saw fit based on their performance....same way as it's done when it's a division of the company proper. The only real difference is that the company may operate autonomously, much like SCE does within Sony, which can be either beneficial or harmful depending on how it's structured. It could actually hurt MS proper though, because they wouldn't have direct control over the brand, and MS brand is very important to their success.

Father__Merrin892d ago

I think PlayStation and xbox separate would still do well

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