Recently, Microsoft released their K10 report [1] which detailed how well Microsoft has done over the last fiscal year. The report details how much the Xbox brand has lost this fiscal year which a lot of users, even I, were shocked by. A lot of these losses can be attributed to launching a new console and even the report discuss a large amount of cost being attributed to hiring of new staff. All in all the news isn’t disastrous but nor is it confident news. But this isn’t the most worrying news; there are large parts of the report that could be a major cause for concern for the Xbox brand’s future. Microsoft is failing to make significant gains in the manufacturing side of the business.
To understand this we must go back to when Ballmer was in charge as under Ballmer’s leadership Microsoft loss important ground to Apple and Google. There are many instances, such as the laughing at the iPhone [2]; the failings of Bing [3][4] and their failures in the mobile os scene [5][6], where Microsoft has spent a lot of money making very little ground. Ballmer, because of these failings, resigned his position as CEO of Microsoft [7] which led to a share increase of 8 per cent [8]. Though this all interesting, there was an important discussion that came out of Ballmer’s failures and resignation. It was Microsoft’s direction to concentrate on hardware instead of software which some believed was a mistake. The more cited of these people is Stephen Elop, the Microsoft head who left the company to go and run Nokia [9]; ran it into the ground [10]; then Microsoft scooped it up [11] (I know fishy but that is another discussion entirely) . He was reported to be considering selling off these, smaller, Microsoft business and instead focus on Office [12].
Lucky for some this never happened as Satya Nadella was appointed instead [13] and he even showed a commitment to the Xbox platform; though this commitment seemed more focused on mobile gaming [14]. But despite this reassurance the recent K10 report points out a worrying issue that could actually affect the Xbox platform. This Surface, Microsoft’s attempt at the tablet market, is the biggest issue for Microsoft. Beyond Devices [15] produced an interesting article based upon their filings of the K10 report. The article shows how the Surface is a constant loss for Microsoft (both annually and quarterly) [16]. So far they have lost about $1.7 billion on the Surface endeavour which isn’t a small loss because they are still struggling for a good market share (As of 2013 it was 2.1% [17]). The news isn’t exactly positive with its mobile market share which is around 2.5% [18].
But what has this go to do with the Xbox brand I hear you ask? Well the Xbox platform is at risk of being swallowed up by the losses of other products/division. In the grand scheme of things the Xbox division makes small ripples in Microsoft’s pool of money. Microsoft has been losing money in other hardware adventures that could end up taking a fall. The issue with that is that it means a new focus for Microsoft. In the public letter sent out by Nadella 177 out of over 3,100 were spent talking about the Xbox [19] and far more space was spent talking about these other divisions. In the grand scheme of things, it is an interesting position the Xbox is in. It is low on the totem pole but there are more important division doing a hell of a lot worse. If Microsoft decided to cut and run (it didn’t get to where it is now by losing large amounts of money) would the Xbox brand be allowed to be left standing all by itself (when the company has taken a major shift in direction to avoid the losses).
I conclude that these Xbox One numbers in the 10k report are not the real threat to the prosperity or the survival of the Xbox brand (so people shouldn’t be concerned). It is common to see losses early in a console's life (just look at the 360 [20]) but the survival of the brand is going to be down to how much Microsoft can afford to lose, and for how long before things turn around, on its other ventures . Without them Microsoft is solely a software company, and would need a radical new direction. It would be more out of place. With the Surface and other products Microsoft is a perfect home for the Xbox.
Sources:
[1] http://api.viglink.com/api/...
[2] https://www.youtube.com/wat...
[3] http://bgr.com/2012/09/12/m...
[4] http://theweek.com/article/...
[5] http://upload.wikimedia.org...
[6] http://www.theverge.com/201...
[7] http://www.forbes.com/sites...
[8] http://www.cnet.com/uk/news...
[9] http://www.extremetech.com/...
[10] http://www.extremetech.com/...
[11] http://www.extremetech.com/...
[12] http://www.bloomberg.com/ne...
[13] http://www.microsoft.com/en...
[14] http://www.eurogamer.net/ar...
[15] http://www.beyonddevic.es/2...
[16] http://www.beyonddevic.es/w...
[17] http://tabtimes.com/resourc...
[18] http://marketshare.hitslink...
[19] http://www.microsoft.com/en...
[20] http://www.dailytech.com/Xb...
An existing community manager for Helldivers 2 has acknowledged the 'unfortunate' departure of Spitz following the whole PSN fiasco.
From what I see on Reddit, a lot of fans also hate him... it is just a guy that like the stir shits up, it is not good for both the Arrowheads and the fans.
Wccftech discussed the recent Xbox news with MIDiA Research analyst Rhys Elliott, who pointed out that a strong upcoming Games Showcase could help a lot with fans.
I was hoping for something different from Coalition, not Gears 6 so soon.
Their expertise in UE development could've propelled them to try out other IPs using the new UE5.
But guess, given recent MS' state, Gears 6 was the 'safer' call for the studio. But still hope they venture other IPs or even other genres ... at least FPSs in future?
Microsoft seems only interested in maximizing profits through its biggest IPs at this point.
So soon? Its been 5 years since Gears 5, longest gap between games in the franchise.
Why would people be less angry? If MS made it's own games instead of buying up what was already available then we wouldn't be in the situation that everyone is angry at.
MS is the problem.
Everybody pays for or uses MS in some form personally or professionally. If that’s considered supporting, it hasn’t been helping Xbox.
Fuck MS and Phil. I already told that shit bag off on Twitter, if the dumb ass responds I highly doubt it, I will go off much worse. What a fucking disgrace MS and Phil are to the gaming community.
Akimbot is an upcoming sci-fi action-platformer that shows its inspiration from games of the past.
Same. I am a big fan of the series and feel it is criminally underappreciated by the community at large.
Stop worrying so much about money that isn't part of your income.
If the dreamcast has taught us anything, it's that good and awesome consoles can get the axe even tho they don't deserve it.
In this situation, let's just hope for the best.
Anything else is a fanboy agenda, so why worry about it?
I think these statistics should say even MORE about Microsoft if they can take such losses for three generations, and NOT give up on trying to entertain us.
Like Sega.
At least Microsoft has a dream, and at least they aren't throwing in the towel. At least they DO have a success story in the Xbox 360, (for the Most part) and they have show that they can create and foster new and awesome entertainment. If life was only about being the BEST, or the GREATEST, then why doesn't everyone who knows they AREN'T as good at something as someone else just commit suicide? Because you'll never succeed if you quit.
I chose to stay optimistic, especially when it hasn't even been a year yet, and Call of Duty and Halo are yet to come.
This fall is when you'll see more gamers adopting new hardware in general, whether it is Xbox one or PS4, or Wii U is irrelevant. The point is the surge of Mass appeal to make the jump isn't quite there yet. Once we have more of these blockbusters out in the public, THEN, we will see the TRUE start of the new generation.
Let's just wait and see, like I have been saying since day one... to put in too much energy and guesswork is bound to end in disappointment, and THAT is half of everybody's problem.
Let's stop forgetting how to be patient.
The Xbox brand didn't lose ANY money, it generated 400 million less gross revenue than the previous year, NOT -400 million total revenue. There was an article on here that explained this until you helped ban it, you are the worst type of fanboy on this site iamnsuperman, and I hope that people do something about it.
I really like that you're adding your sources. I'll try something similar in the future. Just wanted to say that in advance.