A314InTheSky":2fsu4ao8 said:
Why is it that Microsoft manages to compete effectively in the complex business of gaming paraphernalia yet it is failing so badly with its music players and phones? The Zune and the WP7 are excellent products so bad quality is not the issue. I find the “too little too late” explanation too simplistic. But if it’s not that, what is it?
I have some ideas, but I don't work for them so this is just my take on it.
One thing I can say - from a pure business perspective, Xbox isn't successful.
It's only profitable due to massive write-offs (in the order of at least a billion, possibly multiple billions) on the development costs of the initial hardware, followed by massive write-offs of the costs of later hardware problems (RROD). Sure, it's had profitable times too - but if most other companies had these kinds of problems, they'd have had to kill Xbox or go bust. Only Microsoft's deep pockets, lined with Windows and Office-minted gold, kept Xbox from becoming Dreamcast Mk II.
But Microsoft has kept piling money into Xbox, because it's a vision thing. A key part of corporate strategy.
Bill Gates wanted a computer in every home. And later, he wanted that computer to be a media hub, a social/organisational hub - everything. The key thing to realise is that he wanted it in the living room, not the study.
In that sense, strategically, the Xbox is a trojan horse. It's in your living room, waiting for the day when Microsoft decides to turn it into a more fully-fledged computer that just happens to be plugged into your TV. It has a part in a strategy that dates back to when Bill was still heading the operation. Nobody, but nobody, is going to say "let's not fund XBox anymore". It'd be throwing away your own career.
But a phone or Zune hardware? That's nothing. "Bill never said anything about that, and that's not the strategy that got us to where we are today..." is probably the thinking.
It's a contrast to Apple. Look at Apple TV. (Don't worry, nobody will see you doing it, because nobody else is looking at it!)
Apple TV is part of Apple's big strategy. The fact that it hasn't found a widespread audience yet is irrelevant. They keep just plugging away at it.
Apple TV is Apple's Xbox. They'll fund it no matter what. Zune's problem is that it wasn't ever Microsoft's Apple TV...