why do people assume there can only be one successful system? this is not the ps2 era where sony sold over 100 million and the other two are fighting for scraps. the xbox one sold roughly 8-10 million after it's first year, how is that time to think the war is over?

your whole blog points out what keeps happening in the forums and that is everyone keeps all their focus on this fight between sony and microsoft because they go after pretty much the same consumer. so they think only one can survive.

put things into context. nintendo is whom you should be aiming your sights at with the wii u, not microsoft and the xbox one. the ps4 is a huge success and that needs to be put into perspective when talking about how the xbox one is doing. do i think the xbox one has a chance to surpass the ps4? no, they don't have any hopes unless they drop it to $199. sony has always had a better worldwide appeal to their brand and now that the ps4 is outselling them in strong xbox areas then they don't have a chance.

you should stop thinking of this as a war where there is only one victor and everyone else must lose and give up.

The PS4 will end this console wars once and for all.

@below

"The Xbox one is selling well and doesn't need to be discounted"?
For who?
Maybe in your dreams but definitely NOT for Microsoft especially after a $150 discount throwing all the R&D investment for Kinect 2.0 and the millions spent on lobbying for cable companies before its reveal.

The Xbox One is dragged down by its own design and ambition.
It was designed with the mantra that the "US is the world"

@ moldybread

Interesting, I really wasn't thinking of it as a war, just said that because that's how people look at the console competition, (hence why people are always saying console wars)

But I guess if I would have said System Competition, it would have worked out better, get people to actually read the blog and not just the title.

Anyway yeah, I really don't think anyone is losing, they are all making money.

It's more like this - if I own a coffee shop down the block from someone else, they sell coffee too, but there store is always packed- what should I be doing to do as well as they are doing?

That was my only real business question, what does Xbox One do to get more systems in peoples hands? To compete effectively.

-thanks for the feedback

This is one poorly researched blog piece with lots of mis-information.

"Well I say that because I understand business and I understand that at this point they are facing a very uphill battle. And in business the best path to success is the path with less resistance. You don’t want to work harder, you want to work smarter."

So tells us more about this "uphill", because you understand business.

"Well I say that because I understand business and I understand that at this point they are facing a very uphill battle. And in business the best path to success is the path with less resistance. You don’t want to work harder, you want to work smarter. "

So your answer is MS shouldn't invest into current business, because they simply is not number one?

Did you consider that business is about making MONEY i.e. profit. Should Burger King stop making burgers because McDonalds is bigger?

"So what now, well I'm glad you asked. I think they need to cut the price… it needs to come down to $249. Why, because at this point it’s the only way to get the numbers back up to PS4 and not lose your fan base, which is happening as the gap gets bigger and bigger."

I'm sure MS will have promotions, but why compete on price. That is a whole $100 below MSRP right now when MS console is still selling well and getting a healty clip of new customers.

"Keep in mind the way they recoup money on the system is from games, both Microsoft and Sony make $20 dollars per game. So for the system to do well you need to sell a lot of units, so you can sell a lot of games"

Yes, but you also need to make sure you aren't loosing money on each console sold that you cannot reap back. At $250 there is almost certainly a loss.

Your reasoning needs a lot more thought behind it.

@ donthate

Yeah ok, thanks for the feedback

I don't think you understood anything I was saying but that's ok, just a difference of opinion.

But let me comment on what you said at the end -

"Yes, but you also need to make sure you aren't loosing money on each console sold that you cannot reap back. At $250 there is almost certainly a loss." --

Ok did you know, PS3 sold at a loss when if first came out, (today PS3 is very profitable) but back then Sony was losing money on every console sold. The reason they did that is because they knew the cost (of the systems parts) would come down later, but you can't wait to gain consumers - so you sell at a lost to make sure you get the sales. Then make the money back later, off the games. The average consumer is going to buy 5 games a year. That's $100 dollars right there. (since they make $20 dollars per game sold)

This is a race, why, because when someone does not buy a system, you run the risk of them moving on. -Meaning Maybe they buy a Wii U or a PS4, or maybe not even buy a game system anymore. (about to start college, don't' have the money anymore.. etc, etc) -Will they buy an Xbox One later, maybe but maybe not, so a sale lost is a sale lost.

So I think getting the system in peoples hands is better then worrying about losing a little money on the system right now, especially when you will most likely get that money back later from games.. (In business they call that the cost of customer acquisition)

A friend of mine when he left college went off to start a small business, he said to me that one lesson he learned in business is that you don't get a second chance to make a first impression, so if you want to be successful stay hungry, stay on top of your game. -So I just wondered what could Microsoft be doing that they are not?

That's really all the blog was about, but I guess some read it with a different view or bias. -they just assumed I was hating on Xbox or saying Xbox should be discontinued even though I never actually said that.

@crazy

When the PS3 first came out, it was reported that Sony was losing between $200-300 on each system sold. The expensive tech in the system was mostly new, the CELL processor and Blu-Ray laser alone was about $400-450 to put in the system. Integrated Wi-Fi was rather expensive at the time, and so were the small hard drives they were putting in, not to mention the hardware to drive backwards compatibility.

Over the first few years the system was sold, Sony dropped the price a couple times to remain competative, despite not really selling that poorly. Most of the profits that Sony made over two generations pretty much dried up in order to sell at a loss and keep the system competative. I don't think the system itself became profitable until late in it's 4th year. Even today, Sony isn't make a lot of profit on the system, and they're still selling for around $230 dollars.

Small losses can be made up rather quickly with subscription services and of course game liscensing fees. For instance, when the WiiU launched, Nintendo said they only had to sell one game with the system for it to be profitable. This is called the razor principal(or something like that), a metaphor that attributes razor companys giving you the handle for cheap or free to make the money off of the blades. Since someone is likely to buy at least one game with a new system, this means each system sold was profitable, even if indirectly.

In the case of the PS3, there were indirect benefits to taking a loss. The biggest was that Blu-Ray became the standard for HD discs, which benefits Sony as a whole since they have a stake in it being the standard, however, pushing that tech was a risk at the time due to there not being one standard.

So, while you are correct that taking a loss can ultimately be profitable, Sony itself is still recouperating from that loss. They in fact have not recuperated all the losses incurred with the PS3's early life, but the system today is profitable.

How does this relate to the Xbox brand? Well, MS has investors. These investors want to maximize their investment, and overall, the Xbox brand isn't a huge money maker compared to the other divisions that MS runs. There were some major investors pushing for MS to drop or spin-off the brand even before the X1 was released. While it was highly unlikely MS would do this as it has a part to play in their overall goals, the fact remains that if the XBox brand was taking a significant loss then the calls for dropping the brand would become more vocal. Even small losses can hurt the bottom line when added up over millions of units, and this is why dropping the price and taking even a small hit is bad for MS right now.

The X1 isn't doing terrible. Most of it's sales appear lackluster simply due to the fact that the PS4 is doing exceedingly well, beyond what anyone would have expected to be honest. X1 sales seem to be about what Sony was expecting the PS4 to sell at based off their original comments of wanting to sell I believe 10 million units in the first year.

So, no, the X1 doesn't need to drop the price(although as a consumer that'd be nice). It needs to find a way to keep on chugging and maintain it's status as a brand, and not worry about the competition to the degree that some people on these forums do. It'll be fine over the long run, and while it won't "win" the generation barring some huge turn around that has to happen very soon, it will maintain profitability and allow MS to justify it's next console where they can attempt to do better.