Business guru labels Xbox 360 a disaster
By John Pospisil
Business guru, Roger Ehrenberg, has concluded that the Xbox 360 has been a “disastrous endeavor” for Microsoft after reviewing Microsoft’s financial statements and comparative sales figures.
Ehrenberg is a Wall Street business guru who’s behind the influential Information Arbitrage blog.
Writing in Forbes, Ehrenberg said that the Xbox360’s early failure in Japan, and game developers’ lack of willingness to invest in high-risk Xbox 360 projects, has made the Xbox 360 less attractive compared to rival consoles.
During his review, Ehrenberg found that that Microsoft has invested over $21 billion in Xbox over five years, with $5.4 billion of cumulative operating losses.
“Xbox 360 doesn’t appear to be the silver bullet to turn things around,” he concludes.
Irrespective of whether Microsoft is targeting mainstream gamers or hardcore gamers, Ehrenberg believes that the company has a big problem on its hands:
“Sure, the Xbox 360 can be righteous and cool with hard-core gamers, but this is not a sufficiently large user base to recoup the magnitude of investment Microsoft has made in its gaming platform. So if this is Microsoft’s strategy, it’s got a problem. And if the strategy is really more mass-market, then it’s got some serious repositioning to do relative to the Wii, which is both cheaper and more accessible to Ma and Pa and Timmy and Tammy gamer.”
Ehrenberg looked at how well each of the next-generation consoles did in Japan in the first 18 weeks, and noted that even the much-maligned PlayStation 3 did better than the Xbox 360. He says that this does not bode well for the Xbox 360.
Without question, Japan is an important and critical market for building a globally successful gaming platform, and an early read of the tea leaves does not bode well for the Xbox 360.
Ehrenberg concludes his analysis by telling Microsoft to have a long, hard look at its gaming strategy:
At what point, regardless of its virtually endless financial resources, does it say “enough is enough”?
Other commentators have railed against Ehrenberg’s analysis, arguing that Microsoft has long acknowledged that developing a gaming platform was going to be an arduous and expensive process, and pointing out the benefits of the Xbox 360 over its rivals.
However, Ehrenberg does raise a valid point.
While Microsoft does have deep pockets, it does also have to deliver profit to its shareholders.
Unless it can deliver a decisive blow in the increasingly competitive games console market, it will have to start considering whether it is actually throwing good money after bad.
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April 24th, 2007
“the Xbox 360 less attractive compared to rival consoles”
you ****ing joking right? a gimmick system with nothing but party games and that other flop lmao sorry you made yourself look like a moron
“Ehrenberg looked at how well each of the next-generation consoles did in Japan in the first 18 weeks”
japan is not even the second biggest market for gaming numb nuts, sorry i dont care for guys who look like women in games.
point blank you are stund get a new job tard
April 24th, 2007
Pffft. We had financial and gaming industry analysts say the same thing about the PS3.
The fact remains that the Xbox has sold something in the order or 10.6 million consoles worldwide, I believe 3 million in the U.S alone. A slowing in Xbox sales is expected, after all the system has been available for a whole year thus far.
To site Japan as an example is a fallacy, there have been countless amounts of books written on the consumer behaviour in Japan. Nationalism and foreign suspicion plays a large large part in how many Japanese consumers operate, and what they choose to purchase. As a result, Xbox’s sales have always been abysmal in Japan. The original xbox only sold in the thousands of units. And in my opinion, the actual increase in sales of Xbox 360’s in Japan really demonstrates a change in consumer behaviour in Japan.
What about Sony? Sony’s sales have been outstripped by the Wii in Japan! I mean this is Sony’s home territory! The PS2 dominated the Japanese market! And the Wii is changing that. Doesn’t that really signify which console is the most attractive to the consumer?
April 24th, 2007
I’m tired of heraring how great the Wii is! The Wii isn’t very good for loners and social outcasts. If you don’t like people, or people don’t like you, the console is a real disappointment.
April 24th, 2007
Some market analyst, completely missing the big picture.
MS have got a good install base going.. things arent going to kick in for the xbox till Vista sink in as a gaming platform, wich is still a year offf. Its all about the iter-system multiplayer.
On top of this they are pvaing their way for their next console, (wich any market analyst would know ) is going to be pretty much 100% MS console, as they have bought so many companies to create the hardware, including a hardware direct X of sort.
Now I agree, XBOX360 is far from the best of dreams, but disaster? What do you call the PS3 if this is a disaster!?
Anyway eventually MS will bring down the cost of their XBLA dev kit and allow game sharing, and then were off again!
April 24th, 2007
what? Japan favored Sony and Wii over 360?? what a suprise..
April 25th, 2007
MS will deliver, they always have.. eventhough it takes a couple of tries, haha… they are already making a profit per box. Hell this guy thinks he can run a business better than MS? failure in Japan, yeah… different tastes and different games, who wants to play games where guys look like girls? hell I can’t tell anymore unless they start talking… hahaha…
April 25th, 2007
Microsoft always do stupid products, that are NOT future proof just TRYS, and TRY again, and TRY again, until they get some useful to sell, lucky for them theres millions of microbrains that buy their patetic TRYS.
Im not a microbrain anymore, a decade ago i was until i open my eyes, lucky for me i dont buy a xbox 360 that last only 1 year, a close friend did and it become another patetic TRY, that overheat, scracht disc, stop working, loud and brick, well now you can get a new TRY the xbox elite.
Be prepared for new TRYS, zune 23, vista sp1, office vista, etc.
Sadly you never will buy a finished product that last as other similar products do, you only will buy TRYS.
April 25th, 2007
MS FANBOYS - wah wah wah ” uncle billy told me he was gonna rule the world!” WAH WAH WAH- Now eat my fresh steaming hot turd and grin whilst doing so!
April 27th, 2007
[...] No doubt doomsayers such as business guru Roger Ehrenberg will seize on the latest figures as proof that the Xbox 360 has been a disaster for Microsoft. [...]
April 29th, 2007
[...] As for the XBOX 360, the console hardware is not a profitable venture for Microsoft as they are taking a loss on the console. That’s nothing new, Sony takes a loss on each and every PS3 sold as well. Though, Sony and Microsoft might be able to argue that’s made up with the sales of games. And still Microsoft decides to add a third model of 360 to choose from. It’s not priced competitively enough, if you’re looking at the XBOX 360 Elite a jump in price from $480 to $600 is not such a great leap to pick up a PS3. [...]
August 15th, 2007
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September 25th, 2007
[...] the current buzz around Halo 3, the Xbox 360 itself has been labeled a disaster by some industry experts, such as business guru, Roger [...]