Ehrenberg dooms Xbox 360 but he's wrong

Alex Zaharov-Reutt
Monday, 23 April 2007 18:03

Your IT - Entertainment

Forbes’ Roger Ehrenberg thinks the Xbox 360 is doomed because it has cost a lot of money so far, and hasn’t been a huge hit in Japan, but he’s forgotten about the future.

If you believe Forbes’ Roger Ehrenberg and his prognostications on the performance of Microsoft’s powerful Xbox 360 console, you might just expect Microsoft to throw in the towel, bow down to the wisdom of the great Ehrenberg, and buy shares in Nintendo instead.

It’s well worth reading Ehrenberg’s article to get the full sense of what he’s saying, but in short, he says it has cost Microsoft $21 billion US dollars to create the Xbox and the Xbox 360, that is has lost US $5.4 billion dollars, and hasn’t been a success in Japan.

He even ends by cautioning Microsoft that they need to: “take a long, hard look at its gaming strategy--and, in fact, its entire H&E strategy. At what point, regardless of its virtually endless financial resources, does it say "enough is enough"?”

He then appeals to Microsoft’s shareholders, telling them that maybe they’d have been better off with some of that money returned to them instead.

Well, excuse me for saying that Mr Ehrenberg is just a tad short sighted. Microsoft has well and truly admitted since day one that creating a games console empire and platform to rival that of Sony would never be cheap, and that it would take years to reach profitability.

Sure, Nintendo may have sold plenty of Wii consoles in the last four or so months, but Microsoft has still sold more Xbox 360’s than Nintendo has sold Wii’s or Sony of the PS3. NPD figures for March just released (and reported on in my previous story) show that Microsoft and the Xbox 360 are doing quite well against the Japanese onslaught from Nintendo and Sony.

Yes, Microsoft may well have had a year head start, which some are quick to dismiss, but it has brought forth games such as Gears of War, a 4 million copy seller, and a true ‘next-gen’ game that takes advantage of the power within the Xbox 360. Surely, Gears of War isn’t the only next-gen game Microsoft and its gaming partners have up their sleeves – the best it undoubtedly yet to come, Halo 3 notwithstanding.

Look at the PS2, and of course, it’s a different story. But we’re talking next-generation games consoles here, the ones upon which the digital entertainment platform of the future is being built.

After all, the Xbox 360 is a true entertainment center. It plays the most popular type of movie disc today, the DVD. An HD DVD add-on is available, and Microsoft have even hinted that a Blu-ray add-on drive could easily be made available in the future if that’s the direction the market wished ultimately to go in.

It also plays next-generation games, quite a number of which are well recognized to be much better than what the PS3 is currently offering, although to be fair to the PS3, it too undoubtedly has a solid roster of ‘Mark II’ next-gen game titles coming over the course of the year that will truly start taking advantage of the PS3’s inherent power.

The Xbox 360 can download movies and TV shows, with standard and high-def offerings available, at least in the US. It will also soon be an IPTV platform that can intelligently replace the not as intelligent ‘set-top box’ that subscription television companies use to send TV programming to your big screen TV.

The Xbox 360 can also act as a media center (or rather a media center extender), pulling content directly from a Windows XP or Windows Vista computer, with up to 5 Xbox 360’s able to be connected to a single PC, each streaming different content – although if you wanted to use that many, I’m sure you’d want as powerful a PC as possible.

Of course, there's plenty more. If you want to know why else Enrenberg is plainly wrong about the Xbox 360, or you're a PS3 or Wii fanboi that thinks I'm wrong, read onto page 2 for the conclusion NOW.