The Week in Review: The Xbox Takes a New Direction

Two of the top men responsible for Microsoft's Xbox 360 strategy left the company this week, depicted as departing on good terms, but nonetheless announced as "retiring" from the company.

Robbie Bach, the former head of Microsoft's entertainment and devices division, and J. Allard, a 15-year veteran described as the father of the Xbox and Xbox 360, both on their way out as Microsoft's console leadership steers in a different direction. Bach will remain through the end of 2010; Allard will be on hand in an advisory role.

Though both men were later said to be interested in taking a break from the console wars, and finding fulfillment in charitable works, personal pursuits, or the oft-cited spending time with one's family, many readers were naturally suspicious that was all there was to it. Others accepted the news at face value, and figuring that bringing in fresh blood doesn't necessarily mean the old guard had no heart.

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niceguywii603069d ago

Simply hiring a new team for the 360's rebirth.

Anon19743069d ago (Edited 3068d ago )

Just look at the signs. Microsoft lays off thousands directly from the Xbox division a year ago. They then slash the 360's marketing budget by almost $100 million. 360 sales are down year over year every quarter for the past four quarters, 360 software revenue is down and Microsoft themselves said last quarter that 3rd party development is in decline for some reason.

Windows mobile hasn't been performing, we all know what happened to the Zune and the word is they might break up the entire division.
Rob Enderle, principal analyst of the Enderle Group wrote recently "Microsoft's refusing to tell me whether the Entertainment & Devices Division will even exist beyond July 1, when those two new executives (that are taking over the ED&D) begin reporting directly to Ballmer"

This certainly doesn't look like Microsoft "simply hiring a new team for the 360's rebirth" if you ask me.

Anon19743068d ago (Edited 3068d ago )

All my information comes from Microsoft's own financial update. Before you write off my statements as fanboy babble, take a moment to verify that these are all things Microsoft themselves have addressed. Nothing I said was untrue or embellished.

"EDD revenue increased primarily reflecting an increase in Xbox LIVE revenue and non-gaming revenue, offset in part by decreased revenue from Xbox 360 video games and decreased Xbox 360 consoles sold."

As I mentioned, 360 sales are down and have shown year over year declines for the past 4 quarters. 360 software revenue is down as Microsoft has noted for at least the past couple of quarters including this one. In form 10-Q filed with the SEC they make a note that 3rd party development for the 360 is down for some reason. All my statements are easily verified by examining Microsoft's own releases.

I'm certainly not saying that the Ent devision isn't profitable as that's simply not true. The recent layoffs and budget cuts to the Xbox division have certainly had a positive impact on the profit situation as we can see by the last few quarters.

That being said it's no secret that the division has struggled over the years and the recent profits we've seen are rare and likely unsustainable if the Xbox division's sales and revenue stay depressed. You can only cut so much and lay off so many.

If everything was clicking along tickety boo, we wouldn't be seeing layoffs, slumping sales, falling software revenue, decreasing 3rd party support, almost a decade without a single, profitable quarter, slashed budgets and now major management shakeups. None of this is indicative of a division that's humming along like clockwork. I'm just sayin...

captain-obvious3068d ago

i agree with you darkride66

"Microsoft themselves said last quarter that 3rd party development is in decline for some reason"

when the 360 came out there was like shit load of 360 exclusives from 3rd party
but not now

blackbeld3068d ago

@darkride66, I Agree with you.

Even MS stocks are down. Apple is now bigger then MS. Seems like they are in really deep sh!t.

Hallmark Moment3068d ago (Edited 3068d ago )

Yep and they will announce the new guys at E3 like they did with one of these guys and other heads. Ken Kutaragi figures are expendable. Fresh direction and fresh product=fresh bosses. The odds of them both changing jobs at the same time is unlikely. Shake it up!!!!! I hope Microsoft this time chooses somebody that not only is business savvy but also passionate about gaming and better understands it(chief technology officer/chief Xbox officer etc)

B-Real2063068d ago

I'm pretty sure this will heat up so I'm saving a spot.

commodore643068d ago (Edited 3068d ago )

Not sure where darkride66 is getting all that anti-ms stuff from.
I am guessing he just made it up?

The most recent MS financial report paints a very different story than the negative views Darkride66 presented above.

Let's consider the most recent financial report q3 2010, the quarter ended 31 march 2010.

If we look at the officially reported data for the EADD (the 360 and zune division), we can plainly see that revenue has INCREASED from the comparable quarter last year.
2009 march quarter revenue = $1629 (million)
2010 march quarter revenue = $1665 (million)

Not only that, but PROFITS for the EADD have improved markedly!
2009 march quarter Profits = ($43) (millions)
2010 march quarter Profits = $165 (millions)

Even better, if we consider a longer time frame, the most recent 9 months show a EADD profit of $851 Million, compared to $249 for the same period, a year earlier. That's more than TRIPLE the profit in the EADD for the most recent nine months, year on year.

I cannot imagine how Darkride66 twisted these numbers to conclude that this is "...evidence of a division in trouble"
From what I can see, the EADD (360 and Zune division) are posting increased revenue and substantially improved profit margins on their operations.
It's all in the report.

I know darkride66 is sensitive about being called out, so I won't harp on.

I invite you to reply, darkride66, in a civilised manner of course, to comment on the numbers I have presented.

Cueil3068d ago

people disagreeing with raw numbers... if you want an in depth read VGChartz always puts up some very good number crunching articles when the quarterly numbers come out

EVILDEAD3603068d ago

LMAO @ Commodore eating the fake 'eveidence' alive..

It doesnt take long to realize why the usual suspects spend 99% of their time on trying to smear the 360.

But, it is hilarious to watch how they will say ANYTHING to prove their point.

+ bubble for the retort


mookins3068d ago

Um...this is about their GAMING DIVISION, not their software division.

So Commodore, you're missing the point. :)

wxer3068d ago Show
thewhoopimen3068d ago (Edited 3068d ago )

Commodore64 I commend you posting accurate numbers in your post but i'd like to challenge your assertion that these are healthy numbers. Margins are less than 9% taking into consideration Profit/Revenue for the quarter and 13% for 9 months. I hardly think Microsoft spent the last 5 years trying to make a 9% off a whole division is "healthy".

Let's think about this for a sec and compare how this division as a whole is doing compared to Microsoft's other divisions. It isn't doing well. The Online services division is the new pet project with Bing, and MSN and is understandably taking a loss on a new investment. I guarantee you too that EADD selling hardware like Zune, MS Phones, and Xbox is a larger division. Yet numbers-wise it is the LOWEST excluding Online Services.

9 months ago $851 million profit meant Microsoft was earning = 280~ million per quarter. That means numbers this quarter are down ($165 million) when we consider averaging. Obviously you could offer that this is MS's slowest quarter from previous industry news, but it's not great by any stretch.

In light of news of thousands laid-off as well as 2 key executives, closure of one Ensemble Studios, and separation of Bungie as a First Party... how do you picture this is a good thing? Cost cutting measure are ALWAYS exclusively short term benefits. Most of these were done a year ago and they just started realizing some savings. But at what cost?

Let's also remember that this is a console that had a year's headstart...

mookins3068d ago

You need to read your own articles commodore. While they are accurate, this report was mostly talking about WINDOWS 7. Microsoft only mentioned XBox Live briefly and said it was doing well.

Seriously, what are you trying to prove? Hey, someone called. They said you need a 1-800-GET-A-LIFE.

+ Show (2) more repliesLast reply 3068d ago
TVippy3068d ago (Edited 3068d ago )

Hope for no RROD next time....

Obama3068d ago

There will be but it won't be called RROD.

Apocalypse Shadow3068d ago

new direction and pull a nintendo.

a female figurehead will be unleashed to try and get the wii moms and grandmas.get them and the family is on board the hype train.

prediction:female coming.......

Meryl3068d ago

oh well if what darkride said is true, i would not be surprised if when antal fails (and it will), that MS will pull the plug on the x360, next xbox will be born, but hey that should make all the hardcore user's happier, none of them want a casual based experience, they would rather have the next xbox and the next hardcore games

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