Microsoft's XBox 3 Could Give It Market Supremacy

The following is just speculative fun. But it is based firmly in reality.

The Microsoft (MSFT) Xbox 360 is very, very well designed. Part of this design genius is ease of manufacture and potential for cost reduction. So I see this console as having a ten year life. This should easily see it up to 2015.

This year Microsoft will use their manufacturing cost advantage to use the price mechanism to build market share in the face of Sony (SNE)’s AAA game releases. This will leave headroom in the market for them to introduce a new premium console giving them a two model range, just as Sony have had for a few years now. It will also make the 360 a cheap mass market machine which will have the effect of growing Xbox Live enormously. And this is the most important thing for Microsoft. It is the online platform which, ultimately, will be the main event.

The new premium console (Xbox 3) will feature a gesture interface and probably integration with a new handheld game console. Microsoft have a great incentive to go for this two model (plus handheld) strategy sooner rather than later because Sony are currently too weak to respond. So it would be a knockout blow that could give them market supremacy.

The new Microsoft handheld will be son of Zune, with iPhone and Nintendo (NTDOY.PK) DS features. This device looks pretty inevitable and will give access to Xbox Live anywhere and everywhere and with its integration to Xbox 3 it will bring a whole raft of new capabilities to the consumer.

Another factor to remember is that Nintendo will have to do something about the Wii. This machine is really Gamecube 1.5 with a gesture interface. Its old technology will find it out. So Wii2 cannot be too far away, and it is something that Microsoft must have an answer for.

So when will we see Xbox 3? The normal console cycle is for new models every 5 years. Which would put availabilty at the end of 2010. I can see Microsoft bringing this forward a year to 2009. The current year year is too soon as they still have to build the market position of the 360. So next year it is then! And rememeber that for just about every new product area that Microsoft has entered, it is their third generation of that product that gives them world domination.

Comments

[tendoboy1984]

You really think the 360 is well designed? Sure the outer casing may look nice, but the heardware is rubbish. The console freezes up, crashes, overheats, etc. All of this causes the dreaded 3 Red Lights scenario that many 360 owners have had, forcing them to send the system in to Microsoft in hopes of getting it repaired... or at least getting a refurbished system returned in it's place.

2008 Jan 13 04:08 AM

[cp21yos]

I'd normally let this article going given the opening statement but then you went and added :
"But it is based firmly in reality."

This had the ufortunate side effect of turning the rest of the article into total horse shit.

2008 Jan 13 06:10 AM

[Objective Gamer]

"The Microsoft Xbox 360 is very, very well designed." Wow, you're full of horsesh*t.

The Xbox 360 is perhaps the most poorly designed MAJOR console ever. That statement you make is just ludicrious, NOT based in reality (Red Ring of Death, many reports saying the Xbox 360 has a failure rate close to 30%) and borderline-fanboyish.

(I say major because there undoubtedly have been many consoles developed by less well known companies that have also been poorly designed, ie Nokia NGage).

2008 Jan 13 06:50 AM

[Objective Gamer]

Off-topic: BTW, you look like Jim Calhoun. UCONN men's basketball coach. At least in the picture you do.

2008 Jan 13 06:54 AM

[Monsignor]

I don't know how any electronic that has a 33% failure rate can be considered "Well Designed". It seems they'll let anyone pretend to be a journalist, but not require them to do a lick of research anymore. I'm not even going to get into the whole XBL debacle. M$ will never have supremacy as long as hardware is involved.

2008 Jan 13 07:41 AM

[arcadeblender.com]

As a PS3 fan, I agree with everyone that Microsoft's Xbox360 needs improvements.

What the author, Bruce, is talking about is the guts of the system; the components built are relatively cheap compared to the innards of a PS3.

Microsoft is also the king of bringing back a product, newly improved. Who would have thought that Windows would have succeeded with the first launch and all its faults?

Microsoft actually listens to it's customers and uses that information to improve their products. I don't doubt that a future Xbox 720/1080 will really give Sony a run for their money.

I think it's going to be a fun gamble to see what Microsoft will do about future games that will need larger disc space. Microsoft has been supporting the Hd-Dvd system but with Blu-ray all but having won the movie market, Hd-Dvd will be dieing out. Will Microsoft start supporting the Blu-ray format by it's competitor Sony?

The only way for HD-Dvd to last a while longer, at this point, is to become a burning solution for PC users.

PC users will always need larger discs to hold all the data that they accumulate. With Blu-ray burners available and no Hd-DVD burners yet that I have seen, even this might be a hard battle...

2008 Jan 13 11:00 AM

[TA]

Expect the Blu-ray/HD DVD fight over by the end of this year/early 2009. With a clear winner, MS will have time to equip it with one of the formats.

One of the main reasons people speculate that MS went with HD DVD was to sabatoge the Blu-ray in favor of downloaded games.
That probably won't make sense for XBox 3 but probably XBox 4.

As for the hardware reliability comments, they are valid. MS is new to this game and needs to ramp up. Having a clear lead in excellent games and superior online does not fix everything.

2008 Jan 13 12:49 PM

[Kring]

The next Xbox is going to be a crushing blow to Sony if they do 1 single thing. Make it the same as the Xbox360 but with more power, so that it plays all existing games, and by play them, I mean they are flawless, not backward compatible. and the console adds it's own increased 8x AA to make these games look better. Then new games could be build that detect if the console is an Xbox360, then it would run in 360 mode. or if it detects it's an Xbox 720 it would add in all additional game effects, bump the resolution up, etc...

But the key to the Xbox720 is all about keeping the platform exactly the same, just boosting CPU, Memory & Video card capability.

2008 Jan 13 05:10 PM

[BartLee]

Is it just me, or this article read like it was translated from English to Japanese and then back to English?

There's no way the Xbox 360 will last until 2015 with a technically superior competitor in the PS3 and a cheaper, more innovative competitor in the Wii. The impending death of HD-DVD is a huge blow to Microsoft as well.

2008 Jan 13 07:35 PM

[tyrantofwallstreet]

I'm with Monsignor, I guess anyone can write about things they don't research well. The XBOX 360 has sold well however with about 17.7 million units being moved, so I guess it's manufactured quality doesn't really matter. As for the ten year life span, I have to disagree, especially with Blu-Ray's new 2009 future takeover now firmly staked. Still the XBOX 720 should have great numbers despite its quality and defeat Sony's new conception unless Sony comes up with SOMETHING...

PS: By the way, Sony reported good numbers from both their PS3 and PS2 units. And we all know about Nintendo's big gains. World domination probably won't come for Microsoft in the next console generation if ever.

2008 Jan 13 09:58 PM

[Nitro]

********** "There's no way the Xbox 360 will last until 2015 with a technically superior competitor in the PS3 and a cheaper, more innovative competitor in the Wii." **********

- Wow, if thats not fanboy reasoning, i don't know what is....
if you look at last gen sony DID clearly win out, despite the Xbox being the technically superior competitor, as well as being the most innovative console of the gen. with a well working online system.
So I ask, how does any of that determine who'll TRUELY come out ahead???

It's all about the quality of the games man.... NOTHING else when it comes to a GAMING console. Price plays a role in how early it's adopted, but even the cheapest console dies without good games.

2008 Jan 13 11:04 PM

[danwaywff]

A 1.2 billion dollar charge for hardware failure warranty repairs is not the hallmark of a well-designed machine. The end of HD-DVD is just another in a long list of failures for this poorly managed company, which seems to make all of its decisions while looking in the rearview mirror. Microsoft should get out of the hardware business.
My prediction: this stock will go nowhere in the next decade. Get out while the gettin's good.

2008 Jan 13 11:29 PM

[Sidion]

Wow...MS has announced to investors that they aren't interested in handheld gaming. They've mentioned that the zune is doing fine, and while interested in possible gaming being available on it, that's not their focus at all. They have also said in the address, that they do not have a definite number for carrying the 360 forward and if need be WILL shorten the lifecycle of the 360 much in the way they did with the original. The 360 has been quoted as having a stellar year based on a key component: AAA titles. With the PS3 releasing a strong lineup MS no longer has the edge with 360 and their E&D. MS us also lagging behind with their system in international numbers and they've admitted to it. While your article has a fanciful twist and is somewhat steeped in current industry headwaters I doubt it will carry through to fruition.

2008 Jan 14 12:23 AM

[User 139553]

1.2 Billion Dollar Mark for repairs...boohoo. Lol. Sony has BARELY even achieved that status in Sales for the PS3.

Blu-Ray is gonna beat HD-DVD...Not likely. Paramount/Universal has a HUGE stake in the movie industry, and they are staying with HD-DVD. Warner Bro.'s? Dont need them. All they have is Batman. A strong presence, true, but HD DVD still has Transformers, which has out sold every version of the Batman Series, COMBINED. But lets just say Blu-Ray, DOES have some advantage in the format "war"....thats like being the prettiest kid with down-syndrome. Why? Because HD content can be streamed from almost every new device. HD movies will be downloaded straight to our HDD's, eliminating the "disc" forever. How many of you still buy CDs? How many of you bought HD-CD's or SA-CD's? Exactly. MP3's took over? And for those of you who dont know what those formats are---look it up. Who wins the format war? NOBODY. Because within the year that format will be next to obsolete. The Reason alot of studios jumped onto the Bluray band wagon, is because of strength in numbers. It doesnt matter which side they choose, as long as they ALL choose the same side. Why? Because that way you ensure victory. Why is it so important to have this victory? Because you might as well be on the winning side while they last(are going strong)----which will be another full year at best.

Do yourselves a favor. Stop buying into speculation, and look at the facts. Have you read the specs on the 360's and PS3's hardware? PS3 has more power when it comes to stuff like, making spreadsheets. 360's power lies in math, and processing on a visual level----pretty much what every game consists of. Nothing is wrong with PS3, but it just takes alot longer to make these games....but once they are made--they look stellar.

If your seriously concerned about power and versatility---build or buy a PC. Throw in some serious Hardware, run a liquid colling system, and overclock it. There is NOTHING a PC cannot do. Plus "Games For Windows" has a GREAT library of titles, and most of them come with a TON of extra content and extras---plus they have dedicated servers for free online play.

Steve C

2008 Jan 14 12:30 AM

[Monsignor]

User 139553:

Do you really believe digital downloads are the next media? I wouldn't. You use MP3s as an example, but the truth is, MP3 sales only make up about 11% of music sales. CDs sales are still strong and still breaking records. Trust me, CDs aren't going anywhere anytime soon. The same is going to be true for Blu-rays. HD-DVD has lost this war, and the sooner you realize this, the sooner you can move on like the rest of us. Paramount and Universal are huge studios, but they only make up a combined total of 30% of the industry. It isn't looking good at all, especially with rumors, they are both no longer exclusive to HD-DVD (they may release in both). As you wait for these digital downloads, we'll all be buying the next media format (Blu-ray). Digital download is very far away, my friend. The infrastructure is not in place to do this and won't be for several years (maybe 10 or more). Think about it. An average 1080P movie will take about 30Gs. The average download speed in America is 1.5Mbps, with many still using dial-up. It would take hours to download that movie. Sure, they offer HD downloads now, but as far as I know, they are not full 1080P (they are 720p) and compressed with quality loss of both video and audio. Not to mention, I have about 550 movies. If these were in 1080P, it would take 16,000 GBs of space. Now where the hell am I going to get that from? People still want a hard copy of movies, just like people still want hard copies of CDs. It won't change for a very long time. So you sit back and wait for these downloads and the rest of us will watch our movies in glorious 1080P. Your console argument is also sickening and leads me to believe you are a lot younger than I am. You are presenting the same arguments that were presented when the PS2 launched. I'll post a link to the irony.

archive.salon.com/tech...

2008 Jan 14 01:09 AM

[Tom B]

"Paramount and Universal are huge studios, but they only make up a combined total of 30% of the industry."

And, don't forget, Universal is run by Zucker, a demonstrably incompetant idiot.

"Digital download is very far away, my friend. [bandwidth concerns]"

Correct. That's why Apple's NON-HD downloadable video is outselling everybody else, by far. Also, Apples movies will play on portable devices, unlike AMZN Unbox.

"The new premium console (Xbox 3) will feature a gesture interface"

Whoa-- like some putrid MSFT knockoff of Wii technology will matter? I think we know the "gesture" everyone will be using, when their XBox's overheat/burst into flame!

"The new Microsoft handheld will be son of Zune"

Gee. That means, maybe sales for everybody who works at Microsoft and their immediate families. There'lll be much "squirting" in Redmond!

Mr. Everiss should comment on Pork bellies or some other subject where he may have a better grasp of the facts.

2008 Jan 14 08:58 AM

[arcadeblender.com]

Read this article from the NYT. Paramount and Universal have finished with their commitments to HD-DVD.

bits.blogs.nytimes.com...

They will finish publishing a couple more titles in HD-DVD format to finish their contract and that sounds like the end of a hammer hitting the nail in the coffin.

2008 Jan 14 03:14 PM

[Gaucho420]

Well designed? Is this a joke? It maybe well designed in thought, but in actual dependability, the Xbox 360 is far from dependable. I know 8 different people who own one and 50% have had there's breakdown, one person had his breakdown twice. Furthermore, when does MSFT expect to make sustained money on this past a Halo-led quarter? Won't MSFT shareholders demand some money at some point or is MSFT interested in permanently becoming the HUD Section 8 maker, whereas the company subsidizes gaming for its "tenants"? Add to the fact that Xbox Live has had tons of problems since the holidays and this continues today, I find this article ridiculous. There's 0 chance of MSFT dominating gaming, ever, period.

2008 Jan 14 05:39 PM

[ybutton]

umm, nitro the xbox didnt just die, it was killed- by microsoft, and the ps2 still lives because sony still supports it.
i have no doubt microsoft will also kill the 360 to direct attention to the next xbox, sadly its probably true.
i also have no doubt sony will continue to support the ps3 for a long time

2008 Jan 19 07:39 PM

[The Externmater]

wait...so does that mean that the new x-box will be a handheld system like the DS or PSP? or a totally new system in itself plus the heandheld for travelling?

2008 Mar 29 08:34 AM