Surface and Xbox One Hits With Buyers During the Holidays

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JD88

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They failed to mention they spent more on the Surface than they took in. Surface division costed MS something like $940 million due to low margins and an extremely high advertising budget for a net loss of around $40 million.

Those OEM Windows numbers are also troubling.
 

back_by_demand

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They failed to mention they spent more on the Surface than they took in. Surface division costed MS something like $940 million due to low margins and an extremely high advertising budget for a net loss of around $40 million. Those OEM Windows numbers are also troubling.
MS has big pockets and lots of patience, probably only IBM is better at playing the long game. Exactly the same could have been said with the outlay in the first couple of years of the original Xbox. If they keep getting serious market penetration they the advertising costs can basically be swept into the margins as it helps to advertise all their other products (OneDrive, Office, etc). I'm sure Apple were saying exactly the same thing about Android just before it exploded.
 

stevejnb

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Ironically, I was going to chime in similarly to Back. At this rate, it will take them *far* less time to get returns on their tablet division than it took to get returns on the XBOX division - and that is now looked at as one of their most successful endeavours. Also, saying "well, it's been two years and still no profit!" is a very, very short sighted statement - did anyone really expect a break in to a saturated and competitive market in a large way without eating some losses for a few years?

I wouldn't even call OEM numbers troubling so much as expected. Precisely that general trend is what moved them towards becoming a "devices and services" company, and the future likelihood of web OS's being a major thing - something you have pointed out yourself many times JDS - makes this, again, quite expected. MS is battening down the hatches and changing course to compensate for this already noticeable trend... We'll see if it works long term. As it stands, this is a good sign their Surface line is headed in the right direction - though I personally think that, while it's a good product, it is generally overpriced.
 

Sakkura

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Bing also saw growth, taking 18.2 percent of the search market and the revenue stemming from Bing advertisements growing to 34 percent. Overall, the Devices and Consumer revenue grew 13 percent to $11.91 billion.
The Bing advertisement revenue grew BY 34 percent, not TO 34 percent.
 

bubbathaluva

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I'm sure we'll hear from Apple fanboys about how these numbers aren't a true indication of how well MS is doing. I'm sure PS4 fans will chime in with the same. Here's the reality.... XB & PS are still neck and neck with units sold over equal amount of days released. Both consoles are virtually the same as far as graphics and processing power. The only thing that sets either of the two apart are the software that runs them and more importantly how well the software integrates into the rest of your living room/entertainment hub/home theater. I've played with both companies consoles from their original versions. Microsoft creates the most seamless experience in terms of media sharing, game playing, tracking achievements and multiplayer games. Couple that with how well Windows 8.1 has finally made it easy for multiple PC's on the same network to share files, media, printers and other devices. Yes, Apple has been making it easy for years. MS has tried for years and it has been doable for a while, but not very easy or user-friendly. 8.1 has made it user-friendly and easy. I've used the base level Surface RT and for the money, it is an amazing piece of hardware. Once MS's phone OS is fully integrated into that seamless home network scheme, I'll very likely transition away from all Android. That's saying a lot considering how much I have loved my Android devices.
 

Sakkura

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PS4 had sold 4.2 million units as of December 28, 2013. Xbox One had sold 3.9 million units as of January 23, 2014. That's 95k PS4 sales per day and 62k Xbox One sales per day.
 

bubbathaluva

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Sakkura, thank you for supporting my argument. Looks neck and neck to me. When the amount of units number in the millions and the distance between the two are in the thousands, that's what we mean by neck and neck. Give it another year and see if PS4 is still leading my .3 million units. Either way, lots of people are already trying to call PS4 the winner of a battle that really doesn't even exist. Both companies are trying to make money and both companies are making money.
 

bubbathaluva

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By the way, here's some math for you...4.2 million x $400 = 1.68 billion3.9 million x $500 = 1.95 billionWho's winning this race again? Prices of the XB1 will most likely drop by next Christmas, thus eliminating the biggest advantage the PS4 had.
 

Sakkura

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The distance is in the tens of thousands PER DAY. At that rate, after a single year the difference would be 12 million units. Most likely will be less because sales of both consoles will slow down, but still - the PS4 has outsold the Xbox One 3:2 so far.
 

bubbathaluva

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I suppose we can twist the numbers to support any argument. PS4 wins with units, MS wins with total revenue. We could also divide the sales by market saturation. PS4 is selling in way more countries than XB1 so the argument could be said that if MS was for sale in the same markets PS4 was in, MS would likely be winning. Again, we're in the first 3 months of a 5-7 year life-span of the consoles. Way too early for PS4 fanboys to be calling a winner.
 

antilycus

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stop the console war crap. This is the last year for consoles. Everything will be "streamed" (live TV) from these computers in a box called consoles. Personanlly I think that NVIDIA and AMD will release streaming servers (NVidia already has GRID) so these 300+USD chipsets called GPU's won't kill the consumers. Onlive isn't far off, they just need more games and less support for XBOX only controllers. Let's put that into perspective. Lets say ONLIVE comes up with games that look BETTER thtan the next consoles, next year, for 15 a month and your $50 OUYA playeer can use it.... the big 3 don't stand a chance and developers get UNLIMITED power to do what they want with on GPU/CPU power.
 

JD88

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I agree for the most part. I really think the Surface could do a lot better if it had full Win 8 on it, but that's rehashing an old argument.

I was in Best Buy the other day looking at computers in all forms with my Fiance. She needs a Windows machine to use ONE obscure legacy program for a class. She liked some things about the Surface, but it was out immediately due to lack of x86 compatibility. She likes to use her PC on her lap in bed so the keyboard and stand design were also not great. I still think a clam-shell type docking setup is a lot more functional.

The build quality on the thing was actually pretty good though. A bit bulky when compared to something like the iPad Air, but it felt sturdy. Much better than the Asus T100 which we will probably end up getting. Where I think the Surface is overpriced is the keyboard. An extra $80-100 is frankly nuts. If it included one cover of your choice at the $450 price point it might not be so bad. At $450 with the keyboard, this thing could be cross shopped with the Air. At $550 with keyboard dock, it's really not a good value. Someone could buy a Chromebook, Nexus 7, and Moto G for that.

I'm not crazy about the T100, but it seemed to get the job done at a decent price. Plus the design of it makes sense.

 

JD88

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The Xbox division is still barely profitable 10 years later. It certainly is a long game. In fact, last time I checked Microsoft was making more money off Android licensing fees than it was the Xbox division on average. Microsoft isn't going away anytime soon, but its days of dominating consumer PCs are over. It will continue to thrive in the business world though as long as its next operating system doesn't alienate the business market like 8 has. They got off pretty easy this time as most businesses had just upgraded to 7 and didn't need to get 8. With 9, businesses will be looking for an upgrade and not one that puts a tablet OS in front of their employees.

 


And you REALLY believe that, huh? Clearly you have never dealt with streaming games and tried to play online with players who all have different ISP speeds. And I assume you are referring to that same "ONLIVE" that was originally forecast to be worth nearly $2 billion (US) two years ago and sold for just a few million after laying everyone off. Oh and good luck with streaming true 1080p-developed games, let alone in the future 4K games where the next major revolution will occur with consoles (yes, you can bank on the fact that the "big three" are already working on their next generation consoles).

 

back_by_demand

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JD88, Amazon is barely profitable too but its all about market penetration and leveraging it. Xbox can afford to make minimal profits as long as it stays right up there as a top console. Cross selling other services and products is also key, but seriously you think MS is doing bad?
 

JD88

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No. Microsoft is fine. At least for the next 5 years or so. Anyone saying they are dead is living in a fantasy world. My only point is that I think they missed a big opportunity with the Surface. I really think it could have been a hit had it been priced right and were running the correct OS. Then again, they are taking a loss on each one. My guess is a lot of that is due to advertising expenses and not manufacturing cost.
 

Sakkura

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The Surface Pro is the device to look at there, and it is AFAIK doing better than the Surface not-Pro. IMO what they did wrong was split the Surface brand between two very different devices. The criticism of the Surface not-Pro rubbed off on the much better Surface Pro.
 

JD88

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The main advantage of Windows over other operating systems (Chrome, Android, iOS, OSX) is that it can run all of the legacy software that people need or at least think they need to run. Taking that away with RT left pretty much no reason to buy one of these. The app library is pretty bad. The UI offers nothing new and is clumsy at times. The design of the tablet itself is pretty bad, particularly the way the keyboard attaches. It's about $150 too expensive, especially with the keyboard sold separately.

The better idea would have been to get people into the ecosystem by pushing legacy app compatibility then slowly move them over into the metro interface as new apps arrived for it. The problem was likely that x86 chips like Bay Trail weren't available so Microsoft was forced to go ARM to get the form factor and power consumption right with the first gen RT. However, that excuse doesn't hold for Surface 2.

The Surface Pro is way too expensive to gain any real sort of market penetration. I would also argue that very few people are doing anything on a 10" tablet that requires that kind of CPU power to begin with. They exist, but it's a very niche market.
 

back_by_demand

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Niche markets are good for some companies, high value items with powerful specs. Alienware is a good example. If the Surface had been made by a company like that it would have got a lot less abuse, but MS invites a lot of extra attention. I personally love the way the keyboard attaches, I have seen Bluetooth keyboard for iPads stuck in cases and the users tap the onscreen keyboard because the Bluetooth one hasn't been charged. More fool them but clipping in a type keyboard does away with that. Price has been a sticking point for the Pro however, compared against non-convertible Ultrabooks it is pretty good, but against the tablet market as a whole definitely not. Do I need x86 on the go? Will an Android app suffice? Maybe, but if I ever had a laptop then a Surface Pro should replace it and maybe even the Office PC as long as I can dock it to a monitor, keyboard and mouse. It will never replace the Home PC for gamers, but could do for console gamers. I can see a place in the world for a Surface Pro, it just needs to be subsidized a little.
 

Sakkura

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That's exactly what I was saying - the Surface Pro is the device running Windows 8 and thus the one you should be looking at. It has a lot of promise, while the regular Surface was pretty lame.

The Surface Pro may be too expensive, but at least it's got some value. The regular Surface is just a waste of money. Maybe they could have made a cheaper Surface Pro with a weaker CPU but still running Windows 8. That might have worked.
 
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