Thurrott Daily: October 25

Thurrott Daily: October 25

Good morning from a cold and rainy New England. What else is happening today?

10/25/2015 10:35:04 AM

Microsoft to focus on Xbox Live membership, not console sales going forward

During the Q&A portion of its post-earnings conference call this week, Microsoft was badgered (and rightfully so) for not spelling out exactly how many Xbox consoles it sold in the quarter (let alone differentiating between Xbox One and Xbox 360). This is by design—as I’ve noted in the past, Microsoft’s new organization is designed specifically to hide sales of poorly-performing products—but the lack of transparency sucks.

(Side-bar: You will notice that Microsoft did provide Lumia sales figures, which some might find odd. But this is actually consistent: Microsoft has given up on this market, so it was able to use the low number of Lumias sold as “evidence” that it’s new phone strategy—e.g. not selling Windows phones in volume—was underway.)

As Forbes reports:

Consoles shipped will no longer be a “primary metric for success” from now on, with the company instead using high-margin Xbox Live usership as its primary stat.

Focusing on Xbox Live also lets Microsoft show great growth. After all, Xbox Live encompasses both Xbox 360 and Xbox One, but also Windows 10, and the latter is growing dramatically. Looking forward, Microsoft can speak of great growth in Xbox—via Xbox Live—thanks almost exclusively to Windows 10. Yes, this is what it’s come to.

As Satya Nadella said during the call:

Gaming is the other place where we talked about Xbox Live now that spans both console and PC. We see increased engagement, because of that. We see, in fact, increased engagement with titles like Minecraft. So we have some high hopes for what we can achieve with engagement around Xbox Live across the console plus PC.

It’s hard not to see this as a “moving the goalposts” moment, but at the very least this shows me that Microsoft is implicitly admitting that Xbox One sales will never catch up to those of PlayStation 4. So they’re redefining what success means for this generation.

That said, if Xbox One sales this holiday quarter are particularly good—and given the console bundle mix they have, plus upcoming blockbusters like “Halo 5,” that is certainly possible—I wouldn’t be surprised to see at least a combined Xbox One/360 number in the next quarter.

Xbox Live architect exits from Microsoft

Eric Neustadter, famous for architecting Xbox Live and, perhaps more important, creating the first-ever Xbox Gamertag (“e”), has left Microsoft after over 18 years. He tweets:

After 14.5 years working at Xbox (18.5 at MS) today is my last day. It’s been an amazing ride. So Long, and Thanks for All the Gamerscore!

As his LinkedIn page notes, Neustadter has had numerous jobs within the Xbox organization over the years, including Architect, Xbox Live Operations; Gaming Ninja, Xbox Live Operations; Director of Architecture, Xbox Live Operations; Operations Manager, Xbox Live Operations; and Operations Program Manager, Xbox Live Operations. It’s not clear why he’s left.

Of Android, iOS and market share

When it comes to the relative success of the top mobile platforms, many people like to point to Android’s obvious dominance, since it controls over 80 percent of all smart phones sales worldwide, while Apple fans gleefully point to guesstimatey and less provable figures like profitability, because of course in that metric there is Apple and then there is everyone else.

I focus on the former—market share—because it’s easily and accurately measured, and I feel like the success of any platform starts and ends with sales: It’s a virtuous cycle that gets developers on board, and those new apps attract new users, and on and on it goes. Point being, market share matters, and matters the most, no matter how much those on the raw end of that stick would like to argue otherwise. (Fortunately for Apple, it has established itself as a major force in mobile, so it’s lack of worldwide market share is nicely offset by two things that also matter: iOS is almost neck-and-neck with Android in the US, which is the second largest market in the world, and it is an established and credible second platform elsewhere, and one might argue that the market can easily sustain both players.

If you think more visually, The Motley Fool has created a handy and probably accurate chart showing how Android came to dominate the worldwide market for smart phones over the past five years. A corresponding line for iOS would have been nice though.



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