I’ve held off commenting about this book because I wanted to read a good chunk of it before I started critiquing it. You would think that I’d be all excited by a book about our flagship game console however Dean Takahashi has shown from his previous scribbling and publications that he’s something of a wild card.
His previous book, "Opening the XBox" was a tome about the development of the original console. While I will grant that he wrote it to be a humanistic tale as well as a technical one, he certainly made the console out to be a sad loser, despite it’s success relative to the former #2 console player in the industry, Nintendo, and the fact that it was only our first entree into the market place.
Much emphasis in fact has been put on the fact that Sony’s sold far more consoles than Microsoft, and this fact is true. Xbox sold 22 million consoles over 3 years which isn’t a bad start at all for a v1.0 product. Sony had 100 million consoles sold over 4 1/2 years which is obviously significant and seemingly dominant, however there are several facts that need to be considered when trying to understand WHY Sony had such as lead over the XBox with PS2:
1) Sony had a full year longer to sell the PS2
2) Sony was "first to market" with the PS2
3) Sony had an established brand with the Playstation 1
4) Sony dramatically reduced the cost of PS2 during the last year of sales
5) Sony never brought out PS3
This last point is important: The failure to release PS3 resulted in the need to dump annual marketing dollars and manufacturing/production runs on the 4 year old console. Essentially, the only way Sony was going to make any noise was to continue to really dump money on an old console, so they did. They continued to drop money on the older generation console in marketing and advertising, and slashed prices on the PS2 to make it attractive for people that ‘hadn’t bought one yet’.
What they don’t talk about is the most important part of any business: MONEY.
- It doesn’t matter how many consoles your customers buy. Ultimately, what matters is how much money you make off your investment. The ROI for consoles comes in with the games that are sold, and XBox had 5.1 games sold for every XBox console that went out the door – at a loss. PS2 on the other hand, while selling 5x as many consoles, had an attach rate of only 1.5 games per console.
- The bottom line was that the "quality" of the XBox customer was higher for game manufacturers. Customers that bought XBox’s were proven to be good customers for game developers – they bought games and were a focused crowd they could target, reducing marketing and advertising costs. Meanwhile, PS2 customers tended to be lousy customers for game developers – they didn’t buy many games and were a diffused crowd making advertising and marketing costs much higher because of their broader scope.
…this was important because it helped reduce the cost burden on game developers. And this industry is all about games, games, and more games.
- Additionally, selling XBox’s to only "good, game buying customers" established not only a reputation amongst developers, but it reduced costs for Microsoft: The Xbox was a loss-leader, meaning that Microsoft lost a considerable amount of money (reportedly $150 a console) everytime someone bought a console. They intended on making it up on game sales, and as we discussed earlier, XBox owners BOUGHT games.
Meanwhile, Sony sold 100 million consoles, losing an estimated $150 on each console as well. With each owner buying few games, making up those losses was not a good proposition for Sony. The quality of their customer simply wasn’t the same as Xbox.
Anyway, long story short, the story continues in this recent book of Dean’s where he goes over the Xbox360’s development. Again, keep in mind that a negative slant is virtually guaranteed with this book being that Dean’s not only writing a book for the masses and not just technophiles…
…but also he’s an avid Apple Macintosh fan. Need I say more?
LINK: Dean Takahashi – The XBox 360 Uncloaked
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