01.11.10
People Are Getting Rid of Xbox 360 as Sales Drop to 7th Position in Japan
Summary: Early signs of permanent death for the Xbox franchise, caused by faulty hardware, massive losses (billions of dollars), and failure to compete
XBOX 360 is probably known best for its record-breaking error rates, which made it a laughing stock from a financial perspective. Yesterday we wrote about Microsoft's admission that there might not be another Xbox. There are multiple sources for this this and Xbox 360 has just sunk further and is now ranked only 7th (yes, seventh!) in Japan:
Sales for Microsoft Corp.’s Xbox 360 fell in Japan in new retail data from the region.
Media Create Co. on Fri. reported that the Xbox 360 sold 6,489 units between Dec. 21 to Dec. 27 to rank No. 7 in overall hardware sales.
This is pathetic. As mentioned yesterday, Microsoft cites US-only surveys when it comes to Xbox 360 because everywhere else in the world the picture is very different (far less flattering to Microsoft). Here is a new editorial titled “Why I Bought a PS3″; it speaks about ditching Xbox 360 for a PlayStation 3 and it says:
But despite my heavy investment in Microsoft’s gaming platform, something about a proper new Final Fantasy game appearing on the Xbox 360 felt horribly wrong, like dropping a Ferrari engine into a Buick body. Sure, she’ll run, but the soul of the machine would just be off somehow.
Associated Content has another new article:
Red Ring of Rant – a Mad Gamer’s Opinion of the Xbox 360
Imagine the horror of any gamer when he sees three blinking red lights on his Xbox 360 staring back at him. Well, it happened to me about a year ago in my college dorm room. The problem was that my warranty had expired on my console and guess what, Microsoft makes you pay them $100 to repair the console. So, for about 1/3 of the cost of a new Xbox, the same company that caused the hardware failure in the first place wants you to pay them to fix the problem they created. It’s like some guy coming up to your car, smashing the windows, and then wanting you to pay him $50 to fix the same windows he had broken.
[...]
Unless you have a warranty on your system, don’t bother paying Microsoft another dime of your money and instead, get a PS3. I’ve even heard that Microsoft repairs aren’t permanent and that even the new systems are loaded with technical problems. Save yourself that bottle of Advil and instead, buy a better piece of hardware like the PS3 or Wii. Here’s one gamer hoping that in the future, Microsoft gets the red ring of death and can no longer pollute the world with its malfunctioning products.
Some Web sites are suggesting home repair, but it’s hardly a solution to inherently-faulty hardware design. Our reader Ryan, who is a former Microsoft MVP, sold his Xbox 360 last month; he is moving to the Wii and yesterday he told us a lot more in the IRC channel.
“I’m not the only one finished with XBOX,” he wrote. “I’m sure that sales of their next system will suffer because of people like me that remember how unreliable their last one was. I replaced it with Wii for a number of reasons, 100% backward compatibility was one of them and another was they have like 1/30th the failure rate of XBOX 360. 30 XBOX 360s die per 1 Wii, that’s just too damned funny. It’s like Microsoft is saying ‘You’re 30 times more likely to experience a failure with our system that costs 3 times more. Buy XBOX.’”
“I had kind of wondered how long they would tolerate a product that does nothing besides burn cash.”
–Ryan FarmerHe later added: “Their shareholders must have had enough of quarter after quarter of lost money since 2001. I had kind of wondered how long they would tolerate a product that does nothing besides burn cash. apparently 10 years of bad product is their bullshit threshold. When I say 3 times more, I mean not just the initial price, cause that’s easy to manipulate, I mean the $100 wifi, the $60 a year XBOX Live… the[n] $10 more for every game, added onto the $300 console.
“Initial price point is what makes or breaks a sale, I know that from being in retail. You have to price things to where they look affordable even when they aren’t, and then shove everything else in as an “accessory”. Like, you see retailers selling Blu Ray Disc players well below what they bought them for, but a new release movie will be $30 or higher. Video game consoles have always been loss leaders, but leave it to Microsoft to really start making you bleed for games and accessories later, even stuff that should have been part of the console. It really tells you how poorly managed their XBOX division is if they take in that kind of money and can’t post a profit. Most of the things they sell you are imaginary! like “Microsoft Points”. They don’t even incur any expenses to make or distribute or retail that stuff.” █
williami said,
January 11, 2010 at 12:12 pm
Like I said before, I’m buying the PS3, not the Xbox360 to play Street FIghter IV.
Needs Sunlight said,
January 11, 2010 at 2:34 pm
Hey, that’s selling the Xbox short. Xbox is also famous for power supplies that catch fire and burn down apartments and houses.
I didn’t follow as closely this year as last year, but Wii sold out first before Christmas followed by PS3 which has only a few examples left locally. Xboxes are still stacked by the full palette.
Roy Schestowitz Reply:
January 11th, 2010 at 2:40 pm
Microsoft is quickly running out of statistical measures it can exploit to sell an illusion of Xbox success.
NotZed said,
January 11, 2010 at 4:45 pm
Hmm, those punchjump links are useless. A number and a grade, but nothing to compare to.
http://www.joystiq.com/2010/01/10/japanese-hardware-sales-dec-28-jan-3-year-of-the-dog-editi/
Well in that respect it isn’t really 7th – handhelds aren’t the same market, particularly when they’re counting each iteration of DS separately. That really makes it ‘only’ a three – out of four. They’re pretty much in the same sad position they’ve always been, although they’re finally ‘outselling’ PS2.
Still, the figures for the USA *were* ok, but we know they count their wholesale sales, so I guess they `stuffed the channel’ like they did with their ‘10 million in the first year’ figure, but it’s not like they can force retailers to stockpile more from year to year though. And given much of the coverage and buzz in the USA, they do seem to still be selling there. A large chunk might just be replacements for people’s ‘investment in games’ though.
Anecdotally … I only personally know 1 person who has an xbox 360 and m$ gave that to one of their friends, and they live in the USA. 4 people I know around here have a wii – one has kids, one has a ‘usb loader’, one has kids and a ‘usb loader’, and one is a nintendo nut (yet barely uses it). At least 9, including me, have a ps3, 6 of which are pre-slim models – and I think everyone uses them for watching (non-disc) movies as much as playing games. Average age about 35, and 4 never had a console before (at least not ps2-era machines).
I just can’t fathom why anyone would buy such an unreliable piece of junk like an xbox 360 in the first place – and my anecdotal evidence suggests nobody would, at least it validates my world view on that one. Although M$ seems to be pretty good at training people to accept sub-par products, and still come back for more.
Wii’s are not that cheap either, when you add on the (for now?) 3-part controllers, and other expensive add-ons.
Chips B. Malroy said,
January 11, 2010 at 6:30 pm
http://digitaldaily.allthingsd.com/20100106/ces-steve-ballmer-keynote/
Quote from the link appears to be the Ballmer one:
“Today, there are over 39 million Xbox 360s around the world. And more than 500 million games. The console has generated $20 billion in total game revenue.”
The 39 million I would guess includes those stuffed in the channel, those sold, and those replaced under warranty, is my guess. When you have people that have gone though more than 8 of them, makes you wonder exactly how many xbox360’s there are out there still functioning, and for how long after the 3 year warranty period ends.
Since Ballmer is known to greatly extend and extinquish (but not embrace the truth) the facts, I would question the 20 billion in revenue figure as well. But maybe he is embracing fuzzy new math and counting more than just games here. Maybe he is adding in the sales of the consoles too, and even counting all those “RROD/E74 replacements” under warranty as sales and revenue too? Just like MS used to count sales of XP when downgraded from Vista sales, as Vista sales, to make MS look better. But lets for the sake of argument give Ballmer the the benefit of the doubt, and go with the bogus $20 billion figure. Let see, that net revenue, not profit. What is the profit? About a big mark up for the retail stores, so MS take reduced to half or less, down to 10 billion, now about 6 billion for development, but wait, what about cost? It must cost something to actually make the defective xbox360 product, ship it, box and label it? It is well known that both MS and Sony sell their consoles below cost and try to make money on the games. Yes the games, cost less to box, ship, label, but there is some cost to develop as well.
MS budgeted 1.25 billion for replacements of RROD units. Guessing that will be nowhere near enough. I don’t see anywhere that Xbox360 has been a profitable product. Revenue (20 billion dollar figure) does not equal profit, and Ballmer is just trying to spread more lies.
Roy Schestowitz said,
January 11, 2010 at 6:39 pm
That’s when Robbie Bach got caught inside-trading. He was never taken to trial for it. Rich important people never go to prison, just hungry shoplifters.
Chips B. Malroy said,
January 11, 2010 at 7:06 pm
Roy says: “Rich important people never go to prison, just hungry shoplifters.”
I would say that is very true. With one major exception, Billionaires with political connections (lobbies, bribes) do not, but some Millionaires, like Madoff, (read less money, less power) do.
The problem with those who ran MS, was during the Antitrust law, they corrupted the political races with campaign contribuations, and other lobbies. Looking at the last really big case of the Sherman Anti-Trust laws, was AT&T, which did get broken up. MS was friends with the incoming Bush Administration, which it had helped, and therefore, did not get busted up. M$ corrupted the system of the republic, others had done so before, but perhaps not on the same scale as Gates and his followers. And they continue to do so, withoug being taken to trial for it.
Also they continue to produce xbox360 that are most likely still defective by design, without being held as of yet, accountable. True, they have been sued, but lets see what happens, if anything.
The Sherman Anti-Trust laws were originally made to prevent unhealthy monopoly like companies gaining power over part of the economy. Since M$ beat the system, and did not get broken up, no major corporation has been broken up here that I know of. The problem of this is, that now the taxpayers have to support corporations, banks, insurance companies, auto makers, airlines, and who knows what next, because our bought and pay for politicians, have decided that these are “too big to fail.”
On another note, with Novell and MS, there are some deadlines coming up, that may hurt them. One is the end of the deal between MS and Novell, which did put some money in Novell’s pocket. With Novell being run badly, and losing even more money, will MS dig deeper and come up with more money to bail Novell out? I think not.
Another deadline is the end of life for XP in 2014, which is about the same for Vista, oddly enough. MS does not realize that its users still reject the newer offerings, and has failed marketing 101. That is give them what they want.
The other deadline for MS Xbox360 users, is 3 years after they buy it for the RROD/E74 overheating Warranty. MS is going rip a lot of users off if they do not extend the warranty past the 3 years.