Microsoft only entered the console market to stop Sony ...

[RoyalX]

source: http://www.ign.com/articles/2013/02/06/ ... e-business

Microsoft only entered the console market because Sony refused to work with them, according to a former Microsoft exec.

Joachim Kempin, who was VP of Windows Sales at Microsoft for 20 years starting in 1983, made the claim in an interview with IGN that will be published in full on Friday.

When asked why Microsoft decided to enter the console space, he asserted that, "The main reason was to stop Sony. You see, Sony and Microsoft…they never had a very friendly relationship, okay? And this wasn’t because Microsoft didn’t want that.

"Sony was always very arm’s length with Microsoft. Yeah, they bought Windows for their PCs but when you really take a hard look at that, they were never Microsoft’s friend. And Microsoft in a way wanted them to be a friend because they knew they had a lot of things we could have co-operated on because they are, in a way, an entertainment company, you know? I mean, at least a portion of Sony is and they had some really good things going there, but as soon as they came out with a video console, Microsoft just looked at that and said 'well, we have to beat them, so let’s do our own.'”

This decision supposedly came right from the top of the company, with Bill Gates himself even chipping in. Despite initial reservations, Kempin claims that Gates always had qualms that the living room computer would, at some stage, metamorphosise into an alternative PC that could threaten Microsoft's dominance of the traditional market. As a result, it was eventually felt the company had to try and tackle Sony head-on.

While with hindsight we can see this worked out for the best, a huge amount of teething issues were encountered along the way. Kempin explained that the main problem that still exists today is the huge loss made on hardware manufacturing. This means companies like Microsoft and Sony are reliant upon software sales to make a profit.

Having witnessed Sony experience this issue at the time, Kempin went out in pursuit of a PC manufacturer willing to take on the burden of making the Xbox in a bid to spare Microsoft the financial apocalypse that accompanied it, but was unsuccessful.

He recounts, "I went out to several PC manufacturers and tried to beg them to do the Xbox thing and keep the device manufacturing out of Microsoft. The guys were smart enough not to bite, because they studied the Sony model and saw that Sony could not make money on that hardware model, ever. So they supplemented it with software royalties, and Microsoft copied that model."

According to Kempin though, Microsoft never really managed to nail the whole software-supplementation thing, with Halo ending up as the only exclusive software franchise they could depend upon. This meant in the end they had to look elsewhere.

"There are actually two things," he explained. "First, every developer who now has an Xbox game pays a small royalty to Microsoft for the honour of having it on that system. The other way they make money is that they finally got their act together on the services and actually that’s where the money is being made. So they’re just maybe a little bit above breakeven, that’s all there is. This is not a big money-making machine for Microsoft."

For the full interview with Joachim Kempin, which deals with long-rumoured acquisitions and the Xbox 720's interface, be sure to check back on IGN on Friday.

[Dan Dar3]

I think the main reason why MS went into console is that they've seen the money in services - think Xbox Live fees, store purchases (avatars, games etc), and cause they wanted another ecosystem to connect with your Windows PCs. They've always tried to take over your living room and tap into your wallet (like any other company really think Windows Media Center, playing your own content as well as other paid / on-demand content (movies, music etc), this last one only became relevant in the last few years.

Sony would've been the easier choice for them cause they are a PC manufacturer, they had the whole logistics covered and Sony is a well known and liked brand name. At the same time though, Sony is not really a OS / software company and I'm sure MS only wanted Sony to make the machines and have MS control the platform (OS internals, game development using DirectX, store etc). Obviously Sony's seen the market as well and it would've been stupid for them to have that arrangement, so they went on their own. Then it became the "MS stop Sony" game. In the end, it's probably better for you, the consumer, you have more choice.

At the same time it's not that great for you cause you probably end up buying both for as some publishers may produce exclusive titles for one or the other. In the end, I think MS will probably win the game, not only cause they cash to afford the long run "console war", but mainly because they are a OS / software company they understand better the game / app development process and can make it easier through tools (obviously) on Windows, although nowadays games are not everything, internet is getting faster and streaming on-demand media is more affordable, and Sony's got Sony Music and Sony Pictures...

Ah, we'll see - the interesting part is that the "console war" is not that much about the console itself it's about what they can sell you once you've got it in your living room.

[xman]

You may not be aware, Micro Soft was actually heavily involved with Sega in the DreamCast program so MS were not exactly Noobs to console development. There is much talk of Sega rejoining the console market of which I really hope as the company are true innovators, not merely copiers. It was the Sega Dreamcast that was the 1st console to have "Live" ability. The CD player used in the Dreamcast was a special made and is actually 1.2Gb not 600- 700mb like other CD players. The graphics and sound chips, specials again, are still capable of higher quality video and audio than some of the current consoles on offer. The only reason Sega is not still around is because although it was huge in Japan, once the PSII was released with it's ability to play DVDs, it was quickly dropped as the major console by the population. Sega had always and still is the makers of some of the highest earning arcade games in history...Everyone knows the Daytona arcade car game along with Sega Rally and the gun game, House Of The Dead. This adds to Segas appeal as it has the rights to many arcade popular games still to this day. Even games Sega has allowed other console makers to use, the games are not quite the same for good reason. While talking consoles, how many of you know the story of Nintendo and that the company is actually an arm of a US poker machine manufacturer that simply bought a poor performing Japanese company named Nintendo so it would have good acceptance in the Japanese market, something it's widely know US poker machine and arcade manufacturing name would not have had. Sort of explains why Nintendo gambling horse racing games are some of the best available in this area in the world.

[asbo]

I'd love to see a new SEGA console, still got my Master System 2 and they're a part of some nice PC games, like the Total War series.