The news flow is abuzz this week with stats about Microsoft Corporation (NASDAQ: MSFT) and its Xbox 360 console. According to reports, the company has sold 30 million units of the gaming hardware around the world. Nintendo Co., Ltd. (OTC: NTDOY) is still in first place with 50 million Wii consoles sold. And Sony Corporation (NYSE: SNE)? Well, the PlayStation 3 is decidedly third with roughly 22 million systems moved through retail channels. And don't give me that Xbox-360-had-a-year-over-Sony excuse. Doesn't matter. Microsoft has so far played it well.
But I'd like to see Microsoft do even better when it comes to the Xbox 360. I think, out of all the investments Microsoft makes that are outside of the core operating system asset, the Xbox 360 is the one with the most potential promise.
Of course, it's up to Microsoft to fulfill that promise. And I'd argue that worrying about things that might not matter does not bode well for the Xbox franchise.
What do I mean by that? Well, I was looking at Brian White's recent opinion on Microsoft's search-engine aspirations. He essentially said what I've been thinking lately: Microsoft may never really succeed in search.
And then there's the whole Zune thing. Can Microsoft really topple Apple, Inc. (NASDAQ: AAPL) when it comes to the iPod? Should Microsoft be trying? Okay, you can argue it was a worthwhile experiment. Shareholders deserve to have their company explore different business models.
At some point, however, there comes a time when you must focus on assets with the greatest likelihood of success. And by success I mean initiatives that can help generate cash over the long-term.
The Xbox 360 still has problems when it comes to hardware failure. That's the one thing that stops a lot of people (myself included) from buying one of the systems. There's still room for improvement in this area. Again, this is where the focus comes in.
So, Microsoft can celebrate its current victory over Sony. But don't celebrate too hard, Microsoft. I may buy your stock again soon (I've been looking at it closely for a trade and/or long-term investment), but it certainly won't be for the Xbox 360. I hope someday I can say that the Xbox 360 division is the big driver. That will never precisely happen, of course, but Microsoft should nevertheless work to improve the gaming system's contribution to shareholder value. To do that, it must forget about other stuff.
Disclosure: I don't own any company mentioned; positions can change without notice.
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Reader Comments (Page 1 of 1)
5-29-2009 @ 8:17PM
Mike said...
Don't hold your breath on failing units. I waited until a little over a year ago to purchase mine and it red-ringed on me 2 months ago. It was fixed within a month, but still a pain. I have about a dozen friends who have had the same thing happen. I love LIVE and the game library is great, but I recommend a Wii or PS3 to people who are looking to buy a new system. It's incredibly awful how often that system fails.
5-29-2009 @ 9:01PM
Doug said...
I wish the blogger here gave more insight into what he feels Microsoft should be doing with the 360.
The hardware issue has been reduced in latest designs, so it's hard for them to try harder there. They aren't going to redesign the system, so there isn't anything to be expected. I've had RRoD. You send it in, get it back.
This kind of blog post gets something off the blogger's chest, no doubt, however without pointing to the areas that Microsoft is overlooking with the 360, it's reads like one more guy complaining on the internet that something should be fixed. Yeah, what? Did you know that E3 is next week? Do you expect something to be announced, or wish something were? Please update with thoughts, if any. ;)
5-29-2009 @ 9:13PM
Beltway Greg said...
MSFT down 47% since May of 1999. "Try harder," or maybe try smarter. It was all so easy when they had a de facto monopoly.
5-29-2009 @ 11:15PM
Tim Larkin said...
Buy a 360 now. You have nothing to fear. I bought a launch 360 and had zero problems. I gave it to a friend about 1 year ago, and it still works fine today. My second 360 DVD drive failed after playing Fable 2. (I blame Fable 2 more since it spins the disk at a ridiculuous speed) It was under warrantee and it was fixed with no charges whatsoever.
5-30-2009 @ 1:37AM
sitruc said...
You must be new to bloggingstocks, Doug. ;)
5-30-2009 @ 4:29AM
Emrah Omuris said...
Microsoft may have done a good job on securing sales, but the console is at it's best now and can not go further, whereas SONY's console has started where Microsoft's console will END. Unless Microsoft comes with a new console with a completely new hardware interface, the end for Microsoft's game business is nearer than you think in my opinion.
6-03-2009 @ 9:51AM
kenc29 said...
Wow, are you saying MS has a "victory" with its Xbox 360 over Sony? Do you know that they LOST MONEY last quarter on its Xbox division? That's the kind of no-profit "victory" that runs companies out of business.