Microsoft Set To Leave The Console Hardware Market, Says Analyst DFC

Analyst DFC has issued a damning post-E3 verdict on Microsoft’s handling of the Xbox Scorpio reveal.

“The most immediate problem is Microsoft effectively killed the Xbox One Slim right out of the gate,” it said in an investor update. “If there were many Xbox 360, Wii U and even PlayStation 4 consumers interested in an Xbox One this holiday season they have now been told to wait until Scorpio arrives in 2017. Microsoft can only hope that the buzz around Project Scorpio goes away soon but with the cat out of the bag that is unlikely.

“There are all kinds of other problems with Microsoft’s mixed messaging. The pricing on the original Xbox One is great, and the Slim is wonderful, but all the important new games will be on PC, so why invest in a console? Just upgrade your PC. And if you do want a console why buy now when Scorpio will be here later. All of this is a net dampener on new hardware sales now and really opens the door wide open for Sony and even Nintendo for the NX.”

DFC notes that while Sony faces a similar problem with Neo, the machine’s no-show brings with it an air of mystery that could be of benefit. Plus, Sony has not wasted money and effort designing a PS4 Slim that would be potentially scuppered by a new console.

“The biggest issue is whether Microsoft will even have a game division by the time Project Scorpio launched,” it added. “It is no small irony that the E3 events went on at the EXACT same time as Microsoft CEO Satya Nadella was announcing the $26 billion acquisition of LinkedIn.

“

The overall question now seems to be not if Microsoft will exit the game business, but when and how. Of course, that leads to many other questions such as how is exiting the game business handled? Is Xbox spun off? Does Microsoft find a buyer? Or does the company just shut Xbox down? DFC feels the latter option will most likely not occur but it is clear something must be done.

“Unfortunately the value of the Xbox brand is in serious flux with much of its advantage tied to the Microsoft Windows 10 operating system.

”

http://www.mcvuk.com/news/read/dfc-m...e-gate/0168781

Personally, I am not convinced of this analysis, mostly because I think it is missing the point that Microsoft is de-emphasizing hardware to focus more on services and revenue from software sales, primarily digital sales. Within this context, while I can certainly see Microsoft not caring about hardware as much, they'll still definitely have flagship hardware on the market in some form- no different than their strategy for the Surface tablets, in a sense.

No exclusives means no more interest from us console fans. This was a clear move to PC for the Xbox brand. I fully expect the Scorpio to be the last Xbox console ever made by Microsoft.

Phil killed the Xbox.

Thats silly considering Neo is releasing this year which will directly compete with the PS4. This article just overlooks that. Sure, Scorpio mightve been announced early, but i think early is better rather than angering fans that just bought XB1 slim for christmas and then revealing Scorpio. MS doesnt have that brand luxury anymore. They screwed that up with the launch of XB1.

MS made the right move, this article completely ignores that play anywhere mindset MS has.

Yeah, not buying this after them revealing two new consoles lol

@SecretPolice: Even if, I think that this could lead to 3rd party vendors manufacturing systems under the Xbox umbrella.

So MS introduces play anyways but they are getting rid of the Xbox LOL? Makes no sense really.

That's just a ploy tactic to get any remaining mileage out of the Xbox One console. They're openly sabotaging the Xbox One S by releasing early news of the Scorpio: another Xbox One version, which shows they are going to milk the system as much as possible before cutting out Microsoft consoles.

MS is just trying to "reboot" their brand right now. They released an underpowered TV box that can also play games. It's initial push to be a multimedia box killed the Xbox One right out of the gate and it never recovered; thus the Scorpio and Slim.

I do agree that if the Scorpio/Slim don't meet expectations MS could pull the plug on future hardware and move to digital only through their Windows Store.

Sony is going that route as well as you can now Remote Play on PC/Mac, as well as buy PSNow on Smart Tv's. Eventually you might see every Playstation Game on a PSNow type service across PC/Mac/SmartTV/Phone/Playstation Console.

Just a changing Market that both Sony and MS have to adapt to.

well we know how accurate analysis's are.

That article is a bunch of nonsense. How is being spun off, "leaving the console market?" PlayStation was spun off from Sony and yet they talk about the success PlayStation has achieved. Why does it only work one way? Why is the LinkedIn purchase even mentioned in this article? Is that supposed to be a bad thing? There are like 20 other things wrong with the logic in this article so I won't pay it too much attention.

Microsoft leaving the console market by releasing a new console in late 2017? So i guess they leaving 2020 maybe?

@Salt_The_Fries:

3DO'ish eh? Dunno about that as well.

Sounds like a bunch of nonsense... and the argument that "why buy an Xbox when you could just upgrade your PC" is stupid (we hear it a lot on here too). Some people seem to just not be able to grasp that some people don't want to/can't afford to game on PC.

Really, you seem to have inside knowledge of what they are doing huh, just a ploy? Where is your proof of that?

Probably. The "xbox one family of consoles" as Phil said at e3, will undoubtedly be their last efforts with console hardware.

Whatever. Im buying the Scorpio.

The article is so full of fail, I don't even know where to start.

Giving every PC gamer a free Xbox and announcing 2 additional skus all at once seems kinda wreckless.

It just makes perfect sense when you look at the facts objectively.

Whoever expects a company to have a future with consoles without any exclusives? Why not milk as much as possible out of your existing console by making tweaks and alterations to a system you already have? Why make a new system when you've already committed yourself to the PC? Why announce Halo 6 is coming to PC so pre-maturely?

The answer is simple: Microsoft wants out of the console bizz.

I don't think it's going to happen soon, but the XBox division shouldn't get too comfortable. Where Steve Ballmer might be willing to spend billions carving a foothold into a market, Satya Nadella is a far more pragmatic and nuanced CEO. Everything Microsoft have done so far since he took charge, such as gutting the mobile division, embracing open source software with .NET, and porting Linux Bash to Windows, tells me he's thinking in terms of presence instead of footholds. Basically, to Nadella, it does not matter if Microsoft have no foothold in a market, just as long as they have a presence in some shape or form.

Which does not bode well for a traditional foothold-building business like XBox.

Xbox division is clearly desperate and Scorpio is the last ditch effort stay relevant in the console market. If it flops they are done.

Analysts said ENRON was good for investors, analysts said Lehman Brothers was too big to fail

Exit or not sure gives less incentives to buy a Xbox since you can play all the exclusives on a PC with better settings. This is not how you increase Xbox sales if that's their goal any more.

Neo is not competing directly with the OG PS4. House said the Neo is meant for hardcore gamers and compliment to the OG PS4, not a replacement. I expect at least a $200 gap between the two SKUs (Neo will be $499 and the base model will drop to at least $299) so the OG PS4 will continue to be mass market for the foreseeable future.

They are releasing two consoles....terrible prediction.

@charizard1605: they need to leave. They ruined the gen cycle and completely ignored regular console manufacturing tendencies. Talk about sore losers. A real company would have seen how good the slim does and then probably prepare for the next console at a proper time. What gets me the most is how ppl cant see throught desperate hanging off cliff bribery theyve been. How the hell is that attractive to ppl lol

I kind of see it like that. Last Xbox to run for 3 years, then just a slow death while PC eats up the MS IPs and end of Xbox console.

THIS ^

That's been my thought ever since they announced the Windows 10 program for their games....also my thought about announcing the Slim and the Scorpio at the same time. I think that was a huge mistake by MS for selling any consoles right now.

I can sure see parents starting to build gaming PCs because their young child wants to game in the greatest resolution possible. Hey look Timothy! A brand new gaming rig for christmas!

Lets be real, there are more gaming casuals than nerds. The only people I know that game on PCs exist on forums such as this one.

Really? Are these two consoles new consoles, or variations on an already existing one?

You don't actually have to have the most expensive PC to play games though. That means you can max out the games but it's not necessary. If the family has gamers then all they need do is buy the games for Christmas.

That's still a stupid marketing policy. If you making the Slim for this year....announce it and let it sell...don't overshadow it with a model for next year. That means you don't sell the first because people are waiting for the next.

I can't believe I have to say this since it's been reiterated a thousand times, but by some comments on here I can tell people are still confused. They are not killing off the Xbox One because they're still going to make games for it even when Scorpio comes out. It is completely forward and backward compatible. Which is awesome. No one left behind. Now as for MS leaving the console market? They're coming out with 2 new consoles, so a bad time to make that prediction. Lastly as said a thousand times also, a lot of people will not invest in a gaming PC, nor do they want to.

Not all families are equal. What about parents that don't game at all but their single child suddenly wants to? This is a lot of money youd be cutting yourself away from. Not only that, you also want to get the brand in the heads of kids at an early age. The Xbox brand is the probably the best way for MS to do that.

Most families have PCs now. If little Timmy wanted MS....he'd get PC games. Why spend the money on a console when the PC plays those games? Pick him a controller and butt load worth of games for the price of the console. He'd have more to play that way.

You might want to ignore it but the move to PC IS a move away from the xbox brand.

A lot of families have Macbooks. Do you want to cut yourself off from their money as well?

Some families have Macbooks. Mac isn't the preferred OS for gaming either. It lags behind. Some people have Playstations. Some have Wii Us......they are cut off from MS games. Same principal. You will never reach 100% saturation of any market. MS saves a shit ton of money if the stop making consoles. The One is the bridge to Windows gaming. It's coming.

Every PC gamer just got a free xbox for the price of an hdmi cable.

And if I must be honest, with online costing 50-60 a year, i dont see how console gamers cant afford to be pc gamers.

Another case of

This "article" shares the same reasoning as the rabid fanboys on this forum so you know it must be right. :P

MS is exiting console gaming by releasing two new consoles? What kind of moron deduce that conclusion? Fanboys. They can be found everywhere.

@Pedro: I don't know. If you're serious about your console you don't put your games elsewhere. It makes the console redundant.

This argument is so tired. If you are buying a console you don't care if the games are available elsewhere you care if it plays the games you want to play. Such a simple concept. I guess the millions of mutliplatform games sold have severely undercut the success of the PS4 because of their availability on the PC? :|

You're forgetting the simple concept that if one already has a platform to play the games they are NOT going to buy another platform to play the SAME games.

PC gamers =/= console gamers. I thought this was already clear. I guess this only applies to MS games and consoles. Not everyone is a PC gamer and I know not everyone wants to play on a desk or move their computers close enough to connect to the TV. Why is this concept so hard for people to understand.

It seems ONLY cows think everyone is a PC gamer. I know I'd rather get my kids a console than have them playing games on the PC.

I know this place is filled with Sony fanboys but I do not understand this. Everyone knows ( or at least should know) the money comes from games, so now Microsoft just increased their profit. Console and PC gamers are buying the games.

People that enjoy playing games on a console in front of a TV can still get that experience. I am one of those people. Only a very very small percent of the gamer population is going to drag their desktop into the living room to attach it to their TV when they want to play games. So now console and PC gamers get an option.

The term exclusive only means anything in fanboys wars or better yet when a fanboy feels threatened. A Sony fanboy can cry all he wants about that the Xbox games are on PC but that fact is they are not on the PS4 either. So if you are a Sony fanboy cheering you can play a Xbox game, shut up, no seriously shut up. It is still not on the PS4 so seriously why the hell are you happy. You still need a another system. That is like a Xbox fan saying Uncharted is no big deal because they can play it on one different system. You Sony fanboys are happy you can own two different systems to play games so that you do not need a Xbox. In saying that do you not feel it is only fair that Xbox fan can combine all PC games or PS4 games since they would only need one other system. Oh wait, let me guess PS4 and PC is not the same as Xbox an another System. There is some different rule when it comes to Sony needing two different systems.

Oh so you are trying to make the foolish implications that console gamers are PC gamers. Nice. Any nonsensical connection you would like to make?

That wasn't what I said. But it will erode the Xbox brand. There is no dispute on that. If you're a gamer that has a PC and an Xbox....you no longer buy the console. The more the market shrinks....and MS IS conditioning their console gamers to play on Windows 10 now.....the less likely it is that MS will support more consoles. If you don't think this will further shrink their market then you are misinformed.

Yes the money comes from games. So if MS can move their console base to PC then they save a ton of money in R and D and manufacturing while benefiting from the profit of games.

@hrt_rulz01: Can't afford it?

Some can't, and that's fine.

But this argument coming from console gamers who rush out to drop $400-500 on a new console every couple of years and buy 8-10 games a year at $60 a pop is fucking ridiculous.