In My Experience... | The Xbox is a Trojan Horse (9757)

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The Xbox is a Trojan Horse
[ Posted by Dan on December 14, 2001 | 19 Comments ]

Sony sells the Playstation as a loss leader, which means it sells the hardware a lower price than what it cost them. They lose money every time someone buys a Playstation. The idea is that the software sales, and lots of them, of games like Tony Hawk Pro Skateboarding will make the money back, and then some. This business model has been around for sometime and has been practiced by Nintendo, Sega, Atari, et al (except 3DO which charged $700 for their 16 bit system back in the early 90's).

So these days, Sony goes thru the trouble of squashing folks who make Playstation emulators. I have commented on this before, as has Zimran at winterspeak dot com from the stance that Sony 'doesn't get it.' The idea is that if Sony allowed emulators to be sold, the user base for the game system would grow, with out having to take a loss on the hardware due to sales of the emulation software. Bleem and Connectix are the two best examples of this emulation dance. Both of which Sony sued, and eventually squashed. Why? The answer begins to reveal MSFT's plans for the Xbox.

First, I can only imagine that Sony understands the economics of thier situation, and thus has another good reason for doing what they did. I imagine it has something to do with one or both of the following. The first issue is the Sony and Playstation Trademarks, Copyrights and patents. If you don't protect your trademarks, you lose them. It's as simple as that. So why not just buy the emulators are release them? Imagine the support nightmare when buyers eventually find out that not all games work under the emulators :^)

The other huge (and tightly linked) issue is the control of the franchise. Without the control over the franchise, and its users, the impending 'digital hub' strategies are hobbled from the start. MSFT's strategies for the Xbox will more clearly illustrate the power of control more effectively because Sony's strategy seems to be non-existent beyond selling games.

Microsoft has a trojan horse it wants to sell to you as a loss leader. It's the Xbox, and it's not just a game system (no matter how much they try to convince you of that). The system is after all, a PC with less PC-like features and more game-system-like features, such as graphics processors from NVidia (who I am a fan of). But the system still has ethernet, a hard drive, an Intel CPU, and Win2k kernel (although it is a totally stripped down version). This makes it nice and easy for MSFT, and the many software companies out there that build applications for Windows, to write PC like games and applications for the Xbox.

Now, let's for a second revisit the loss leader issue. If Sony is taking a hit on every PS2 sold along and MSFT is taking a more substantial loss (estimated to be around $100 per unit, multiplied over the 1.3 millions units shipped in 2001 = huge amounts of money) you might wonder why they don't just band together, make one unified system, and sell software for that system. They could save millions on R&D, marketing, distribution, and avoid losses on hardware sales. This might also bring down the number games per unit sold that they need to sell to make a profit.

Well, MSFT, being of proprietary mind and body, wants the control, which is why they are willing to lose an estimated one billion dollars over a two year period on the Xbox a loss leader. But not just for video game software sales, because there is a 'broader concept.'

Witness the debacle of the demand from MSFT that users move to Passport/.net accounts for use of the MSFT online gaming network. It is foolish to think this won't be the way things are done when the Xbox goes online in early 2002. I assume this has been a test run for the impending release of Xbox online. And this is where the Trojan Hourse spills its occupants via the Passport account.

Millions of users will own the Xbox by Summer of 2002, and you can expect many of them will sign up for the online-gaming-service/Passport-account for a few reasons. First, sign up will likely be free, and even incentivized, and second, online gaming is a for more compelling experience than playing alone against the computer. Han Solo said it best when he said 'good against remotes is one thing, good against the living is another.' Apply the concept of replaybility/fun to that quote, and you will see why games like Myth, Quake, Unreal Tournament, Counterstrike, Tribes2, et al, are so popular. All of these games show thousands of people playing online every day; even years after the game was released. The replayability factor (and thus value) of a game scales on orders of magnitude when online play becomes possible. Robust support in terms of 'mod'-able frameworks is a multiplier of that value in evidence in the Quake modding community. Expect the hard drive in the Xbox to make console games moddable.

For Xbox owners, the compelling features and games will be there, and Passport/.Net accounts will be made, and MSFT will control it. Services that dovetail off of the critical mass will be the fruit of the Trojan Horse in the form of people buying products and services which they were directed to from the marketing materials associated with their Xbox.

The emulators would seem to increase the games sales at first, but you're talking about people that are also more likely to burn their own warezed copies of these games, which emulators allow them to do.

-Posted by Tobin on December 15, 2001 01:21 AM

Were you under the influence of any mind altering drugs when you though up your "banding together" plan? Sony has a much larger chunk of the pie, and they are making more money off of the PS2 alon e thn they would with a business partner like MS. And 3DO used a 32-bit ARM CPU, making it a 32-bit console.

-Posted by Tobin on December 15, 2001 01:27 AM

Tobin, I stand corrected on the 3DO bit-ness. On the issue of Sony/MSFT collab question, it was rhetorical (ie, not serious) and meant to illustrate the point of control in the face of serious cash loses due to a loss-leader biz plan.

-Posted by Dan on December 15, 2001 10:50 AM

Does this mean i shouldnt let the xbox in my house? im scared

-Posted by Odin on December 16, 2001 12:51 PM

This is ridiculous, the number of people who are first online gamers and second have broadband acess is a tiny number compared to the total number of people with consoles. The Xbox has a much simpler though perhaps even more nefarious purpose. Microsoft, wants to break into A)Consoles, and B)Hardware sales

A, is the way in and B is the real goal. MS has been trying to sell hardware for years, it has been largely unsuccessful in it's ventures (WebTV and UltimateTV) both of these products look like jokes when compared to what MS has been able to do in weeks with the Xbox. MS may eventually want to be able to track your every move, but they aren't going to do it by targeting a niche market and attempting to expand it.

-Posted by Cunbelin on December 17, 2001 03:30 AM

Cuni, so you think Microsoft wants to go with the Apple business plan of high margin hardware sales? I know you know they LOSE money on every sale of hardware, so I have no idea why you think they would want to lose a billion or two on hardware sales over the next 2 years. I can only guess the motivation is to sell software to the hardware owners in a way that they spend ALL of their money on console games on the Xbox (due to the fact that they need to sell about *nine* titles per system sold to make a profit (see the first link in my story)). Passport accounts/subscriptions is part of that strategy.

-Posted by Dan on December 17, 2001 09:50 AM

http://www.actsofgord.com/Proclamations/chapter02.html

-Posted by wm on December 17, 2001 12:45 PM

http://news.com.com/2100-1040-927559.html

Here's the first eveidence of my theory...

"An online survey conducted recently by a Microsoft partner indicates that the software giant is considering producing a kit that would let people use an Xbox video game console and a TV to access entertainment files stored on their PC."

-Posted by Dan on May 29, 2002 03:17 PM

i think you are all full of BS. Sony hurts them selves and its not the 5% of the population that pirates games or software. Sony makes cheap products that always seem to break (PLAYSTATION ANYONE?) i bet none of you knew that sony doesnt wash their boards. This makes them ruin and you have to drop money on a new psx or ps2. Where as microsoft is losing money on its xbox it costs them exactly $232 to make an xbox. Xbox will rule the video game world. And dont think im biased i own a psx myself :) im going to shut up now ive said enough

-Posted by Bob on September 25, 2002 10:36 PM

XBOX rules, I don't care if it's a PC in console disguise, make it lean, and make it green, XBOX is great, and make no mistake.....Playstation 2, and whatever else stinkin Sony wants to come out with can't touch the X, not even with a big long stick......I've had both systems, and I sold my Sony PS2 to buy more XBOX. Another fact, is that most gamers who ACTUALLY HAVE an XBOX are crazy about the thing and have atleast 20 games like me....and we go live today, so all you sookies will just have to wallow in your skin oil, while we greeners rock on in X land....
SEEYA WOULDN'T WANNA BEYA
Gen-X

-Posted by Gen-X on November 15, 2002 07:47 AM

I actaully just had a debate with another about Xbox being better or worse than PS2. He states that PS2 is far greater because the Xbox dosn't have a replaceable hard drive and PS2 does, so when it burns out or becomes defective you can buy a new one and change it out. He also states that Xbox dosn't utilize all of its 733MHz processor cauasing PS2 to have better processing speed. The one thing I mainly tried to defend is the graphics produced by Xbox are far greater in comparison to PS2. The graphics on PS2 are extreamly sketchy, especially on first person shooter games. He dosn't agree with this. Give me some T-F to this so I can defend the Great Green Machine. Or so I can ditch it.

-Posted by Otacon on December 12, 2002 09:00 PM

For a moment I thought you had some economics sense. I guess I was wrong. Protecting your own trademarks? heh. I guess your better than those 10year olds on GameFAQs who simply post crap like this guy http://s2.cgi.gamefaqs.com/boards/genmessage.asp?board=213&topic=5805305

-Posted by gloBal_enemy on December 31, 2002 11:18 PM

cool for kids

-Posted by on March 4, 2003 03:04 PM

if macintosh is a maker of x-box isnt there a virus goin around?

-Posted by denis on November 15, 2003 07:09 PM

if macintosh is a maker of x-box isnt there a virus goin around?

-Posted by denis on November 15, 2003 07:09 PM

if macintosh is a maker of x-box isnt there a virus goin around?

-Posted by denis on November 15, 2003 07:09 PM

dans fruity

-Posted by juju on November 15, 2003 07:12 PM

if you really think online gaming is the future (as i do) you can't really think that xbox rules. Xbox live is so gay cause they make you pay for that service. As if dishin' out $50 bucks isn't good enough! And because MS's stingy stance, you can't play EA games online on the xbox, which obviously SUCKS. PS2 on the otherhand doesn't have these problems. But what do i care? I have all the consoles, so no point in hatin'. I love em all.

-Posted by yogi bear on December 7, 2003 10:04 PM

we need a picture of a horse

-Posted by brent on May 5, 2004 09:39 AM

Comment posting has been turned off because I don't have enough time and will to deal with the constant comment spamming. I'm very sorry and will fix this sometime soon (soon = before 2004 ends).