[Am-info] XBox Economics

[Sujal Shah]

On Tue, 2002-05-21 at 16:13, John Poltorak wrote:
> On Tue, May 21, 2002 at 09:28:01AM -0400, Fred A. Miller wrote:
> > -----BEGIN PGP SIGNED MESSAGE-----
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> > XBox Economics
> > 
> > http://red-mercury.com/mmceo/mmceo05_20_2002.html
> 
> I had a read of this and th prospects for the Xbox do look dismal, but I 
> think it's all about the long term objectives for the Xbox. There's an 
> Xbox story in TheREG today which outlines Microsoft plans for providing 
> online gaming which is where it would start to make real money. 
> Microsoft is already planning four data centres for handling the load so  
> I don't them pulling out of the games market any time soon, although it 
> would be interesting to see just how long they give it before pulling the 
> plug.
> 


The problem is that they have to be able to absorb the long term costs
of being in this for the long hall.  Having 30 billion in the bank
doesn't help them if they keep falling short of their quarterly earnings
mark because of greater than anticipated losses on the XBox.

4 Datacenters cost a lot of money, especially when they're planning for
the loads they are hoping for. 

The real question is whether the games will be there for Microsoft in
the end.  One important aspect of Microsoft's model is that all the
games will run on Microsoft's servers (servers run by MSFT, not just
running MSFT's OS).  EA has already raised a warning flag (although I do
believe in the end that they will fall into line), saying that they
don't like this arrangement.  This means a bunch of EA titles may only
come out for the PS2 in Online editions.

I don't really believe that MSFT will let this happen, and stuff I've
read from ZD and elsewhere seems to indicate the same thing, but it's a
big question.

Sujal

> 
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>  
> > - -- 
> > Fred A. Miller
> 
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> John 
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