Rob Enderle Says Microsoft Should Never Have Built the Xbox

[Jason Dunn]

<div class='os_post_top_link'><a href='http://www.digitaltrends.com/gaming/microsoft-should-never-have-built-the-xbox/' target='_blank'>http://www.digitaltrends.com/gaming...built-the-xbox/</a><br /><br /></div><p><em>"There is no argument that the Xbox 360 is a sound game system, and it isn't uncommon for a company struggling with its primary product to broaden their product portfolio and look to other areas for growth. The problem is that the opportunity cost is generally greater than the benefit, and that is the case here. As PRJ points out, PC gaming isn't what it should be, but that was a cost of doing the Xbox 360, so Microsoft effectively sacrificed a product that generates billions to assure the success of a product that makes millions."</em></p><p><img src="http://images.thoughtsmedia.com/resizer/thumbs/size/600/dht/auto/1267135542.usr1.jpg" style="border: 0;" /></p><p>I have to think that this is one of those articles that Rob Enderle writes to be controversial and get page hits - because it boggles the mind that he believes someone buying an Xbox 360 would have instead happily bought a computer running Windows instead. Enderle's basic point is that the Xbox 360 captured profits that should have gone to Windows, which he pegs at $200 million to $600 million per month. The stunning lack of logic in this line of thinking is almost hard to describe.</p><p>When the first Xbox came out (2001), a capable gaming PC was probably in the $1500 range (at the low end), easily 3x more than what the Xbox would have cost back then. So if you had $500 to spend and you wanted to play games on your TV, what were you going to buy? An Xbox or a gaming PC? Enderle talks about things Microsoft could have done to improve gaming on a Windows PC - virtual machines, etc. - but ignores the single most important factor in playing games: graphics processing. There's absolutely, positively nothing that Microsoft could do with software to magically enable fast hardware 3D acceleration. What do you think of Enderle's arguments?</p>

[randalllewis]

Jason's theory about page hits is probably more accurate, but this nonsensical artical is more proof of my theory that the easiest job in America has to be an "analyst." You can get paid big money to put stuff on paper (or the web) that you make up after a few drinks. Or a lot of drinks.

The X Box has created an entirely new ecosystem for Microsoft. The device is a platform for all kinds of new potential markets, particularly as convergence continues. The X Box technology has extraordinary value which the company has only begun to exploit. I would wager most X Box owners also have Windows PCs, so I doubt the game machine has canabalized too many sales of computers.

[doogald]

I have to think that this is one of those articles that Rob Enderle writes to be controversial and get page hits

Honestly, I thought that this is his M.O. for every article he writes.

[whydidnt]

He seems to think Microsoft has a monopoly on our home entertainment dollars and therefore can dictate where we spend. The Xbox was created to compete with Sony and Nintendo. Microsoft realized that gaming was moving from the PC to the living room and wisely decided to join the game. When consumers buy a Microsoft game console, at least Microsoft gets "something" out of the deal.

Rather than all those millions being spent on Windows machines, they simply would have been spent on a PS2 or Nintendo64. Shame on Enderle for posting meaningless garbage.

[Eriq Cook]

The average user could not and would not deal with the cost and hassle of using and maintaining a PC in their living room/bedroom/etc for gaming and entertainment. The cost of hardware and maintenance alone would "inspire" shotgun holes into their computers.

The 360 is a great entertainment device for our family. We regularly watch movies (Netflix and regular DVDs) and use the media center for playing music, and viewing pictures and videos. And the fact that all media is located on different computers in the house makes it even better. As for me I enjoy playing "hardware demanding" games without the worries of Windows crashing. Not to mention the tight integration of marketplace with the web and smartphones (thinking more of WP7).

It does a great job for what it does, as intendend. The PS3 will never achieve this. The (now) future of home entertainment will rely on "simple" entertainment devices like the 360. Not full blown computers that require frequent updates and maintenance!

So no, the 360 is not a mistake LOL

[Stinger]

I'm not sure if I'm happy or sad that Microsoft has neglected the PC as a gaming platform. On one hand, I'm very happy with my Xbox 360 and maybe Microsoft could have done an equally good job on the PC. On the other hand, Valve have stepped in to provide everything that Microsoft should have provided and they have done an amazing job.

Valve's Steam content delivery system blows Games for Windows out of the water. It's better implemented, better integrated and is better value for consumers.

[Hooch Tan]

Microsoft realized that gaming was moving from the PC to the living room and wisely decided to join the game. When consumers buy a Microsoft game console, at least Microsoft gets "something" out of the deal.

I have to agree with you here. The XBox is Microsoft's attempt to get into the living room. Even beyond gaming, there's entertainment and a wide range of other potential applications that the XBox can satisfy.

The same could eventually be said with Windows Phone 7 and the Zune. People used to play a lot of music on their computers (pre-iPod) and that has changed. Microsoft is trying to expand into other markets, not cannibalize existing ones.

[Felix Torres]

Microsoft has long been aware that living room gaming needed something other than a traditional PC. (Anybody remember MSX home compuers in the 80s?)
XBX exists because Sony made a lot of noise about how they were going to turn PS2s into a home computing platform with support for image/video editing, internet connectivity, and even home productivity apps.
By the time those overblown claims were revealed as smoke and mirror puffery, MS had established the XBOX as a credible player in console gaming and discovered there was real money to be made off a walled garden living room platform.
For all the talk of the money MS lost on the original XBOX, Sony has lost comparable sums on PS3 and, more imortantly, lost any chance the had of ruling the living room. Add in the blunting of Apple TV and XBOX is clearly a strategic victory for MS and well-positioned to not only defend MS's home computing domination but carve a reasonable share of the emerging digtal media markets.

The only people who honestly wish XBOX didn't exist are Sony (and maybe Apple) stockholders.

[Janak Parekh]

Honestly, I thought that this is his M.O. for every article he writes. Doogald has it just right. Enderle is absolutely the worst technology "analyst" in the industry, by a far margin. If you read his earlier columns, he's almost universally wrong on everything. So, if he's beating up on the Xbox 360, it means it's a good thing.

You might laugh, but I'm being very serious. No one should be quoting Enderle after his failure after failure after failure.

--janak

[c1oudrs]

If anything Microsoft wasn't/isn't aggressive enough as the competition in this area (gaming) still exists and arguably other sectors (phones, ipod, google, tivo, bookreaders, etc) have sprung up as well that could in their own way threaten Microsoft's existence in the long term. Microsoft's lack of aggressiveness is very nicely illustrated with what they have done (or haven't done) with Windows Mobile.

Whydidn't post above has it right--there were other companies contesting the gaming console fields already and microsoft was a relative latecomer.

I would also like to add that the analyst's argument presupposes a resource drain on the pc programming arena . . . a pretty big supposition. The software talent drain from Microsoft's bread and butter--office&windows--is arguably minimal if nonexistent as game designers are unlikely to go program for Office. Microsoft never was never much into the pc hardware, so no hardware drain. As far as the financial drain, Microsoft has one of the deepest pockets of any US company.