Microsoft CEO Says Xbox is Key to Microsoft's Business

[Elijin]

I get the impression that Balmer doesn't really look at the numbers for the company he was running.

The entirety of Microsoft's Entertainment and Devices Division, which includes X-Box, Skype, Windows Phone, and (purportedly) Android licensing had total FY13 revenues of $10 billion USD.

Now, that's a lot of money, but that's only 12-13% of Microsoft's total revenues for the year. Heck, the Windows division and the Server and Tools division each had twice the revenue of the EDD. The Business Division brought in the bulk of the remainder.

Then when you look at profits, EDD made 10% profit over revenues. The other divisions had nearly 50% profit over revenue.

And let's not even get into how the Online Services Division (incl Bing) was the only part of Microsoft that lost money in FY13.

Objectively, X-Box and Bing are sidelines for Microsoft. Diversification is good, but the EDD and OSD are not "Key to Microsoft's Business".

I'd say its more of an image thing. While the other divisions make the money, the EDD is currently the very visible focal point, and Baller is working on repairing the image it is.

 

[Hawkeye21]

Stephen Elop the retard who ran Nokia to the ground

It's not retarded if you do it on purpose. He ran Nokia into the ground so Microsoft could buy it cheap.

CAPCHA: you don't say!

 

[O maestre]

Stephen Elop the retard who ran Nokia to the ground

It's not retarded if you do it on purpose. He ran Nokia into the ground so Microsoft could buy it cheap.

CAPCHA: you don't say!

Ah you've heard that conspiracy too, well nobody knows for sure except the big wigs at Msoft so I can't comment on that.

 

[O maestre]

1. Do you know what a monopoly means? its when you have a business or enterprise as the only supplier of a particular product or service. They dominate their market but they are not the only player.

Sorry to butt in here, but a more accurate term might be "virtual monopoly". At least for "traditional games" (non-service centric). Steam gets no takes from most MMOs out there, and technically still has (much much weaker) competition elsewhere, but it's shocking how little actual, beneficial, competition there is out there.
(GoG is the only other company that really compares right now)

Granted, it's a legitimate fear that one day Steam will "cash in their chips" and force something like a subscription fee or Always Online DRM, or such. Most of AAA gaming is trying to push for that dark future already, because it represents lucrative security for investors.

But right now, Steam has absolutely no reason to do anything of the sort.
They're making megabucks and have an incredibly positive standing with the PC gamer market; a market that is largely snubbed by the rest of the game world. They have absolute stability in an otherwise uncertain economy, and there's no chance they would piss it all away.

I concede they have a great market share and large customer satisfaction, but if they were truly alone on in their market, they would have no reason to court the good will of their customers, at least with some kind of competition they are still in the mentality that good will is a resource they must gather and cultivate.

 

[O maestre]

1. Do you know what a monopoly means? its when you have a business or enterprise as the only supplier of a particular product or service. They dominate their market but they are not the only player.
2. What are you talking about? how is Microsoft not a tech company?? If they are not tech then what are they, a furniture company?
In regards to licenses you prove my point, if Microsoft disappears from the game industry, what is going to stop Sony from purchasing their old gaming divisions along with their license deals?
3. Bingo, there is(was) no alternative, people, vendors and producers were forced to take whatever Microsoft did, that is why monopolies are bad, when someone has absolute power over a market what is to stop them beyond court cases.
In regards to EA every company is capitalistic, nobody is doing it for altruistic reasons. Microsoft isn't changing CEO due to a policy change, Steve Ballmer is retiring, Microsoft hasn't changed it's practices since the days of Bill Gates.

1. Surely i dont need to explain to you how majority of games for PC wont even run unless you verify them on steam, even if you bought it at retailer and all. you simply cannot be a PC gamer without steam now because the games demand you connect them to steam. Thats a monopoly.
2. Microsoft is a software company. they do not build tech. Outbox they outsource the building even. On the other hand Sony and Nintendo does build electronics. In fact MS being software company and Sony being hardware company is what creased comparison of "MS better at making games, sony at consoles" to begin with.
Nothing is going to stop sony from purchasing non-profitable part of microsoft or their games. This however does not matter for any possible new competitor unless you just want sequels forever and no new IPs. Well, unless you mean patent trolling agiasnt new competitors later on, in which case thats a broken law system not sony. by law they are required to patent troll of possible or they loose the patent.
3. And yet the end result is good here. Before windows we have very strange PC hardware market. Bill Gates managed to talk IBM and others to manufacture hardware that works for windows. The result is standartized PC components that has allowed PCs to be easily mass produced at low costs that pretty much revliutionized PC market. Meanwhile on the software side windows have allowed people to do what they were never even though possible. Windows are bad and evil, but at the end of the day its still better to use them than not to. And even then you are free to try using one of thousands other OS out there. They work, to a point, yet no reasonable competition even tried besides Apple, and these guys is a whole different level of evil.
And yes EA is capitalistic and so are other companies. They are just working in environment we created, not being evil for sake of evil.

Dude you post was kind of jumbled but I'll try and make sense of it.
In regards to Steam ill concede they have a large market share, but they are not by definition a monopoly, they have competition.

Msoft not being a tech company is nonsensical, you're dichotomy of tech being hardware and not being software isn't necessary. Beyond the fact that Msoft does make hardware under different names, there are all the drivers to interface with hardware and software that Msoft makes, then there is also royalties. The standardization you spoke of comes at a cost, royalties are paid to Microsoft every time someone makes anything using their drivers, interfaces and legacy costs.

They make 2 billion alone from android(2011) a supposedly open and independent system, still has to pay various royalty costs to Microsoft. By 2017 that number is going to be 8 billion, and that is from android alone. Essentially they are making money from doing nothing.

It is not fair and it stifles innovation. I think standards should only be placed either by ISO or IEEE or other international organizations, not one company. Because there is more harm done to the consumer through lack of innovation. How many potential start ups have been strangled in the crib by Microsoft due to anti-trust practices? If it wasn't for all the international court cases and regulations do you think Microsoft would have done anything different. The problem with legislation is that it is a slow process that doesn't work retroactively, especially in the tech world.

Monopolies are bad, and I cannot believe you are arguing otherwise. If a company gets near 100% of the market share and are guaranteed all future profit even if they don't make the technology, then why should they bother cultivating consumer good will? Why should they even bother building anything new when they are too big to fail.

We are getting a bit off topic here, but suffice it to say that in a creative medium such as gaming a monopoly is not a good thing at all. Innovation is essential, we need this companies clawing at each other for the latest and best out there.

 

[Strazdas]

Dude you post was kind of jumbled but I'll try and make sense of it.
In regards to Steam ill concede they have a large market share, but they are not by definition a monopoly, they have competition.

Msoft not being a tech company is nonsensical, you're dichotomy of tech being hardware and not being software isn't necessary. Beyond the fact that Msoft does make hardware under different names, there are all the drivers to interface with hardware and software that Msoft makes, then there is also royalties. The standardization you spoke of comes at a cost, royalties are paid to Microsoft every time someone makes anything using their drivers, interfaces and legacy costs.

They make 2 billion alone from android(2011) a supposedly open and independent system, still has to pay various royalty costs to Microsoft. By 2017 that number is going to be 8 billion, and that is from android alone. Essentially they are making money from doing nothing.

It is not fair and it stifles innovation. I think standards should only be placed either by ISO or IEEE or other international organizations, not one company. Because there is more harm done to the consumer through lack of innovation. How many potential start ups have been strangled in the crib by Microsoft due to anti-trust practices? If it wasn't for all the international court cases and regulations do you think Microsoft would have done anything different. The problem with legislation is that it is a slow process that doesn't work retroactively, especially in the tech world.

Monopolies are bad, and I cannot believe you are arguing otherwise. If a company gets near 100% of the market share and are guaranteed all future profit even if they don't make the technology, then why should they bother cultivating consumer good will? Why should they even bother building anything new when they are too big to fail.

We are getting a bit off topic here, but suffice it to say that in a creative medium such as gaming a monopoly is not a good thing at all. Innovation is essential, we need this companies clawing at each other for the latest and best out there.

Lets say i wanted to buy Borderlands 2. What are my options? oh, right, steam only. How about civilization 5? Yep, still steam only. Or how about every single game on this list that is forced stream authentification?
http://en.wikipedia.org/wiki/List_of_games_using_Steam_authentication
Competition? what competition? you must use steam or not buy at all.

By that definition of "TEch" any software company can enter the market, so your worries are ungrounded.

They dont have to use MS drivers. you can take standartized hardware and use costum software. Linux does it for example.

The android royalties are because apperently google stole something and integrated it into their system, then MS sued them and won the case, so now they have to pay for every android device sold. Also the 2 billion figure at least in 2012 was a guess due to how MS makes its financia reports (not clearly defined).

The problem with legislation is that legislation is made by companies like MS in US and we got laws created solely for benefit of such companies, making it a very shitty system for everyone but them. but thats the problem of lobbyism and not of microsoft.

Videogames are luxury item. As such, the choice to buy games at all is an option. therefore even monopolies have to look for most profitable way to earn money and that does not mean maximum prices, because then they will loose costumers. Besides, its not like consoles could ever be a monopoly since consoles dont exist in vacuum to begin with. cultivating good will makes you profitable. Steam reports says that msot of their profit comes from sales.

Companies clawing at eachother is the LAST thing we need. that never brings consumers anything good, it just create shitty stuff like DRM.

 

[O maestre]

Dude you post was kind of jumbled but I'll try and make sense of it.
In regards to Steam ill concede they have a large market share, but they are not by definition a monopoly, they have competition.

Msoft not being a tech company is nonsensical, you're dichotomy of tech being hardware and not being software isn't necessary. Beyond the fact that Msoft does make hardware under different names, there are all the drivers to interface with hardware and software that Msoft makes, then there is also royalties. The standardization you spoke of comes at a cost, royalties are paid to Microsoft every time someone makes anything using their drivers, interfaces and legacy costs.

They make 2 billion alone from android(2011) a supposedly open and independent system, still has to pay various royalty costs to Microsoft. By 2017 that number is going to be 8 billion, and that is from android alone. Essentially they are making money from doing nothing.

It is not fair and it stifles innovation. I think standards should only be placed either by ISO or IEEE or other international organizations, not one company. Because there is more harm done to the consumer through lack of innovation. How many potential start ups have been strangled in the crib by Microsoft due to anti-trust practices? If it wasn't for all the international court cases and regulations do you think Microsoft would have done anything different. The problem with legislation is that it is a slow process that doesn't work retroactively, especially in the tech world.

Monopolies are bad, and I cannot believe you are arguing otherwise. If a company gets near 100% of the market share and are guaranteed all future profit even if they don't make the technology, then why should they bother cultivating consumer good will? Why should they even bother building anything new when they are too big to fail.

We are getting a bit off topic here, but suffice it to say that in a creative medium such as gaming a monopoly is not a good thing at all. Innovation is essential, we need this companies clawing at each other for the latest and best out there.

Lets say i wanted to buy Borderlands 2. What are my options? oh, right, steam only. How about civilization 5? Yep, still steam only. Or how about every single game on this list that is forced stream authentification?
http://en.wikipedia.org/wiki/List_of_games_using_Steam_authentication
Competition? what competition? you must use steam or not buy at all.

By that definition of "TEch" any software company can enter the market, so your worries are ungrounded.

They dont have to use MS drivers. you can take standartized hardware and use costum software. Linux does it for example.

The android royalties are because apperently google stole something and integrated it into their system, then MS sued them and won the case, so now they have to pay for every android device sold. Also the 2 billion figure at least in 2012 was a guess due to how MS makes its financia reports (not clearly defined).

The problem with legislation is that legislation is made by companies like MS in US and we got laws created solely for benefit of such companies, making it a very shitty system for everyone but them. but thats the problem of lobbyism and not of microsoft.

Videogames are luxury item. As such, the choice to buy games at all is an option. therefore even monopolies have to look for most profitable way to earn money and that does not mean maximum prices, because then they will loose costumers. Besides, its not like consoles could ever be a monopoly since consoles dont exist in vacuum to begin with. cultivating good will makes you profitable. Steam reports says that msot of their profit comes from sales.

Companies clawing at eachother is the LAST thing we need. that never brings consumers anything good, it just create shitty stuff like DRM.

The same can be said for Origins exclusive games, no origin no Battlefield. What if we find ourselves in a future where Steam is the only game provider, and what if Steam turns evil. Nobody thought Google would turn but look where we are now.

Not any company could enter the gaming scene, only the large ones would have enough resources to compete.

If Microsoft has 90%of the market share then you can bet any sane hardware manufacturer is going to pay for the use of Microsoft developed drivers. It is ingrained in the way hardware interfaces.

Android is just one example of how Msoft can even profit from open source, they have several other royalty claims beyond android, they even have cross licence deals with Apple.

My worries are still grounded, if Sony gobbles all the Msoft licenses then whoever enters the market will have to get new IP's, unless the established company, Sony in this example, simply outbids them on the new IPs

I think you misunderstood what I meant by clawing at each other, I meant competition in regards to advancing technology, better graphics smaller hardware better GUIs, all in the name of one upping the other guy, if the other guy isn't there what is the point of developing new technology? I don't understand why I am arguing this, look at the technological level of the soviet union and the US at the end of the cold war, it is that simple.

In a capitalist system your purchase is your vote, if there is only one party what is the point of listening to the public.

I don't understand how you equate DRM with competition.

You do have a point that games are a luxury hobby product, and that you have to maintain a base level of customer satisfaction or else the market disappears all together. But you would still be at the mercy of the monopoly, you can't simply go game somewhere else, it is either the monopoly or not game at all. Kind of like computers not so long ago, its either windows or not use a computer at all.
Consumers should have a choice, not be hostage to a company, no matter how seemingly benign your captor may seem.

I don't think you will find many people who like monopolies, most people value making their own choices.
I'm don't think I can be any clearer monopolies should be avoided, you are putting too much trust in something you cannot control in anyway, not even a small way.

I see you are from Lithuania, I mean no offence but I would think a resident of a former communist state would understand why monopolies are bad for consumers.

 

[Antari]

Microsoft ran under a unified vision when Bill Gates was there. Its blatantly obvious the way things are running now is by committee. Roll over and die already Microsoft. You're never going to be an industry leader again.

 

[Strazdas]

The same can be said for Origins exclusive games, no origin no Battlefield. What if we find ourselves in a future where Steam is the only game provider, and what if Steam turns evil. Nobody thought Google would turn but look where we are now.

Not any company could enter the gaming scene, only the large ones would have enough resources to compete.

If Microsoft has 90%of the market share then you can bet any sane hardware manufacturer is going to pay for the use of Microsoft developed drivers. It is ingrained in the way hardware interfaces.

Android is just one example of how Msoft can even profit from open source, they have several other royalty claims beyond android, they even have cross licence deals with Apple.

My worries are still grounded, if Sony gobbles all the Msoft licenses then whoever enters the market will have to get new IP's, unless the established company, Sony in this example, simply outbids them on the new IPs

I think you misunderstood what I meant by clawing at each other, I meant competition in regards to advancing technology, better graphics smaller hardware better GUIs, all in the name of one upping the other guy, if the other guy isn't there what is the point of developing new technology? I don't understand why I am arguing this, look at the technological level of the soviet union and the US at the end of the cold war, it is that simple.

In a capitalist system your purchase is your vote, if there is only one party what is the point of listening to the public.

I don't understand how you equate DRM with competition.

You do have a point that games are a luxury hobby product, and that you have to maintain a base level of customer satisfaction or else the market disappears all together. But you would still be at the mercy of the monopoly, you can't simply go game somewhere else, it is either the monopoly or not game at all. Kind of like computers not so long ago, its either windows or not use a computer at all.
Consumers should have a choice, not be hostage to a company, no matter how seemingly benign your captor may seem.

I don't think you will find many people who like monopolies, most people value making their own choices.
I'm don't think I can be any clearer monopolies should be avoided, you are putting too much trust in something you cannot control in anyway, not even a small way.

I see you are from Lithuania, I mean no offence but I would think a resident of a former communist state would understand why monopolies are bad for consumers.

Sure, There are games where Origin has monopoly on.
If steam turns evil, we will find alternatives. Because thats what happens.
And where, exactly, are we not with google?

IF the main company is evil, the resources to compete is smaller, since you would have many fans just out of the fact you are not them (see: PS4 vs Xbox One).

Microsoft windows has 94% coverage on PC OS market. Hardware manufacturers do not pay microsoft to "use" thier drivers.

Android is an example of how microsoft can profit from broken copyright and patent laws, not how you profit from opensource. As far as apple goes, microsoft actually saved them from bancrupcy in the old days. Jobs and Gates struck a deal of MS giving them a loan to avoid anti-monopoly laws punishing MS as the only competitor would be out.

You cant "outbid" IPs. they are not auctions. What you can do is make yourself less evil and simple to deal with and the developer will come to you. And yeah, i think that would be good in a way since this whole sequalitis isnt helping the gamers. Let old IPs be old and retired.
the point of developing new technology was always two reasons: more power and more cheaper. And unless you can corner every single electronics market in the world as your monopoly, you will have to either innovate or paly catch up. you are looking with tunnel vision at one small part of the market and proclaim that its evil monopoly, when in reality console market is so irrelevant in electronics as to even if they all died today it wouldnt change the main trend.
SOviet union technological level is a different matter and its causes are different (for example cold war costs. US has put 3% of their GDP into space program. To level with them Soviets had to put 60%, not leaving much for the rest of the economy. Also there were things like computers were though to be evil in general populace, which livingi n ex-soviet state i still experience forsthand from older people).

In a capitalist system your purchase is your vote. That assumes two things: 1. you must buy a product. Gaming is a luxury item, you dont have to buy from the "Evil monopolistic company", and thus you'd still be "voting". 2. Companies interpret our votes correct. Reality has shown that they do not.

DRM was created out of competition because companies wanted to compete in more than just sales but in pretty much everything they could, including just how much money they can throw away to annoy legal costumers while making the joke out of themselves. (because lets face it pirates dont care about DRM)

You are saying that monopies shoudl be avoided, im saying that bad monopolies shoudl be avoided and not all monopolies are bad. Thats our main disagreement. You have the right to your own opinion and i have to mine.

Soviet union was never communist state. The term "communist state" itself is an oxymoron. Soviet union was a government controller extremely centralized capitalism. And there were many, many factors why it ended up as badly as it did, not all including government control. In fact considering what it had been like before, it actaully improved with Lenin (Stalin was a maniac though).
I do am from lithuania, and i am a communist. Not your red flag ruskie communist though. they werent communists. I hate them as much as the other guy. I am actual communist, you know, the one who wants people to have actual control of their livelihood (not to mix with anarchism). I also realize that world is far from ready for such system yet and wont start no revolutions. Instead ill start by trying to stop people mixing soviet union with communism. Thats as wrong as saying that facists were hippies.