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Microsoft Xbox 360 March 28, 2007

Posted by Charley S in innovation, media, Technology.


The video game industry is a very competitive market.  Manufacturers don’t make money on actual console sales, they have to make all of their profits on the games that are sold at ridiculously high prices now approaching $60.  Realizing this, Microsoft with its Xbox 360 has moved to take advantage of this trend.  Through Xbox live, owners of the console can download movies, tv shows and complete games to play on the Xbox.  This program has been an unparalleled success, so much so that now Microsoft is releasing a beefed up Xbox system that has 100 more gigabytes of storage space for music and movies. 

What we are witnessing here is the increased trend towards technology combining into more integrated systems.  We’ve discussed the trend in cell phones that are now practically computers on their own, however the trend is evident in the video game arena now.  For companies like Microsoft and Sony this is a way for them to increase profits at very little cost to themselves because they are not enduring any of the creation costs of the media they sell and are basically acting as a middle man between media companies and consumers.  You can already link up your Xbox to your computer and tv, what’s next?  Before you know it alarm clocks, cell phones, stereos, game systems and refrigerators will all be linked together.  Microsoft is currently in the lead compared to rivals Sony and Nintendo when it comes to online content and as such they will probably enjoy considerable first mover advantages.  In addition, being the giant corporation that Microsoft is, I believe that they will be able to capitalize on this advantage and sink the necessary capital into this program to achieve market domination.



1. collage9 - March 28, 2007

It really is amazing how integrated all these video game systems are becoming. You can’t help but wonder what they are going to come up with next. One thing I didn’t know was that they don’t really make any money on the sale of the actual console. I always wondered why these games were priced so high. That really is the one thing that makes me not want to buy a system. Dropping the few hundred dollars to buy the system isn’t the bad part, it’s dropping an additional 60 bucks every time you want a new game. Being in college, that definitely isn’t something I can afford.

2. Jordi - March 29, 2007

Microsoft has had a long term strategy of trying to get their box into every home to be the one place you go for all content. This would give them a similar platform position to the way windows is the software platform that all other apps run on. They also started and failed at the MSN network in the eraly days of the web (its in our textbook).

But, the box is a physical product. How well can they compete and achieve a monopoly-like position not just in games, but as the one source of content for each household?

In a way, the companies aren’t expanding or seeking new niches, the niches are integrating. The technology of digitization is that liquid. This is the idea of disruptive technologies and what is called the Austrian school of economics.

3. Brian Mulligan - April 1, 2007

I agree with Professor Comas. All of these technologies are integrating. The iPhone is perfect example of how everything will be together in one device. The new Apple product will run on the Mac OS system will be able to watch TV, listen to music, access your email, use the internet etc. I think that Apple TV will do the same as being a storage unit for tv shows, movies, and other types of media. If Microsof continues in this direction, it could create a completely integrated entertainment system that can be controlled at one central unit and be able to access the internet and store all the meida that you have. It’ll be amazing.

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