Says the company trying to monopolize AAA gaming by literally buying the competition.
MS does the same thing Apple does. They just aren’t successful.
This is petty jealousy snd and anticompetitive behavior from Microsoft.
I read that MS will be #3 after the acquisition, so I don't think they are trying to monopolize AAA gaming.
If they were #1 then they'd be succeeding, not trying.
Xbox Series X is selling out, GamePass is at 25M subscriptions and games like Halo, FH5 and SoT are extremely popular in consoles and PCs. Even their games are selling extremely well in Steam. Don't you think they are succeeding, even though they are not #1?
You are forgetting that Microsoft do not make a profit selling their Xbox. Never had (so they say.). So selling out of their Series X Xbox results in a bigger loss, not more profit.
Plus Game Pass is not making a profit. If might be breaking even at its best.
So Microsoft depends on that 30% commission they charge in their Microsoft Store on an Xbox. It's that 30% commission on third party games, plus their Live subscription, that makes gaming very profitable for Microsoft. No way Microsoft will allow a third party store in an Xbox, to take away any of their 30% commission.
Just because they sell their hardware at a loss, doesn't mean that they are more entitled to charge a 30% commission in their Microdot Store on an Xbox, than Apple with their commission in their Apple App Store. Selling their hardware at a loss is the business model Microsoft chose, in order to gain marketshare over Sony as fast as possible. Not a business model that they were forced into. And it has been proven to be a very profitable business model, if done right.
And I'm pretty sure that Microsoft generate way more profit from selling games on each Xbox they sell, than Apple from selling apps on each iPhone they sell. If there were 1.5B Xboxes out there, Microsoft gaming division would probably be more profitable than all of Apple, Inc..
Like you said, MS makes money in software and services around the console. The console itself will be too expensive if MS had to sell it at full price. Just look at the cost of the Apple TV 4K. It has 64GB of storage, 3GB of RAM and no controller for $200. Compare that to the Xbox Series S, that has 3x the RAM, 8x the storage, far more advanced CPU and GPU and includes a controller for $300. How much do you think Apple would sell a device with the Xbox Series S / X specs? I don't think consumers will be attracted to a device so expensive, and that's the reason they absorb the cost of the device, and use games and services to make money.
IMO, one of the reasons they are pushing for GamePass is to stop making consoles, since you'll be able to play in any device, PC / Mac / Linux, smartphone, tablet and even TV apps. Let's see how it goes.
I'd like to see an actual breakdown of XBox hardware revenues, charges, R&D, etc across its lifetime. I took apart my XBox One about a year ago, and there looks to be only about $200 worth of hardware in that box. With controllers in the box, maybe the total BOM of the whole green box was $350. Depending on how the "cost of selling and servicing hardware" is book-kept, I wouldn't be surprised if MS has a 10% margin on it after several million units.
I don't totally believe the implications of Lori Wright's testimony saying MS has never made a profit on XBox hardware, and I'd like to see a breakdown. MS had a $1b or more costs for repairs of Xbox RROD in the aughts. They may have had others, who knows, it's been a long time. But if there are unplanned billion dollar charges for repairs, that can take what is planned to be a breakeven or marginally profitable hardware segment into a loss for every piece of hardware.
As for Apple hardware, barring actual evidence, I think every non-accessory piece of hardware (Apple TV, Watch, iPhone, iPads, Macs) are fully margined along a 33:33:33 ratio. 33% of the retail price is BOM, 33% is the cost of developing+selling+servicing the hardware, and 33% is their margin. The ratio is higher for some products, lower for others, and changes depending on the state of the supply chain and the sales performance of the hardware, but it is going to be somewhere along there.
Based on this, a $200 Apple TV has a BOM of about $67. The BOM for the A12, 3 GB LPDDR4 and 64 GB NAND would be, what, $45 combined. It's 3+ year old hardware, and I wouldn't be surprised if the BOM was even lower. Apple has sold a gajillion A12 SoCs. Depending on how Apple manages the soft costs and what margin they are willing to live with, they could sell the $200 Apple TV for $100 and still make a profit. A lot smaller than now, but a profit still.
This hardware business stuff is of course irrelevant to the rationale for charging a platform fee for digital goods. It's only used by people to make themselves feel better about this or that situation, but it is irrelevant to the business dealings between platform owners and 3rd parties. Or its only relevancy is as an emotional play. Eg, a game publisher has every right to ask MS for a lower platform fee. That MS may sell an XBox unit at a loss or a profit is irrelevant, MS also has every right to say take it or leave it. Somewhere between all these constraints, all parties have to design and manage their products for profitability.
I don't like the language here or the company making the statement. Apple does not need to be stopped. It just needs a behavior modification. Apple should not only respect the privacy of their customers, it should respect their freedom to make their own decisions about the apps they can run. Warn them and then allow them to side load any app they want with some important restrictions and limitations. For example, when side loading is enabled the phone is wiped and access to the traditional App Store and iCloud is disabled. You can run anything you want but you are on your own. It would be perfect for that older iPhone languishing at the bottom of a draw somewhere.
1) There's a term for exactly what you've described: Jail-break. A jail-broken iPhone allows for all the side-loading, etc, but voids its relationship with Apple and Apple support. This already exists in the messy, unsanctioned fashion that such an arrangement warrants.
2) Expecting that Apple should instead sanction that practice is to expect them to sanction an unsupported, janky iPhone that ruins their reputation based on core practices that ensure reliability and security.
The difference between #1 and #2 is one of expectations. If you jailbreak your iPhone under scenario #1 and the whole thing crashes, should you complain to Apple about it, Apple will say Sorry, mate. We told you not to do that and did not provide you with a means to do that, so your bad decision is your own mess. If you jailbreak your iPhone under scenario #2, where Apple was forced to provide a jailbreak toggle, no matter how blunt the warning is on that toggle, there will be people who loudly demand Apple be held responsible to fix their mess because Apple included the toggle to allow them to jailbreak their iPhone.
For the same reason, your local zoo does not provide a gate into the tiger exhibit, secured only with a sign saying tigers may kill you, enter at your own peril. You may believe that your zoo ticket means you should have access to any part of the park, but the zoo doesn't agree with you and is not going to sanction it. If you scale the fence to get into the tiger enclosure anyway, when the tiger tears your arm off, it's going to be crystal clear that you were not sanctioned by the zoo to be in the tiger exhibit having your arm torn off.
"I paid for my iPhone, I should be able to do anything I want on it. How dare this company try to prohibit me from directly installing potentially dangerous apps on it when I'm an adult and can take responsibility for my own safety. I'm suing."
"I paid for my zoo ticket, I should be able to go anywhere in the zoo I like. How dare these zookeepers try to prohibit me from directly interacting with the potentially dangerous animals, when I'm an adult and can take responsibility for my own safety. I'm suing".
Awesome analogy. Best explanation I've heard for this particular topic, ever, I think. Great job coming up with that, and thanks for sharing it.
You can access iOS and Android devices via the web and completely cut out Apple/Google. Either through PWAs or even just websites. You don’t need to be in The App Store or Google Play for the majority of tasks people do.
Now some idiot is going to say that PWA/web isn’t good enough. To that I say look at the porn industry. They are locked out of App stores so they rely on the web. And if there’s one thing the porn industry does well it’s to make sure their content is available to the widest possible audience. Which means cramming as much functionality as possible into web pages. Maybe those whiners should try to innovate (like the porn industry).
There are some things you can’t do on a PWA, but they are good for a great many things.
All good points.
Let me add, despite how good web apps are, native apps are still better in many ways, and there's a good reason for that. 150,000 APIs.... that Apple provides, (along with payment process, hosting, vetting, curation, delivery, and access to Apple's customers, etc.) all for the meager price of $8/month ($99/year) + 15% commission on sales. Sounds like a pretty good deal to me.
Or... if you're jumping up and down in court saying all those APIs and services aren't worth $8/month +15% commission on sales, then no worries. You have a choice. Don't buy those services, and provide your customers web apps and pay Apple nothing. Web apps can even have Home Screen icons, so getting into them is as easy as any other app.
Looks to me like developers have plenty of choice. For Epic, Spotify, etc. I don't get what the problem is.
You can access iOS and Android devices via the web and completely cut out Apple/Google. Either through PWAs or even just websites. You don’t need to be in The App Store or Google Play for the majority of tasks people do.
Now some idiot is going to say that PWA/web isn’t good enough. To that I say look at the porn industry. They are locked out of App stores so they rely on the web. And if there’s one thing the porn industry does well it’s to make sure their content is available to the widest possible audience. Which means cramming as much functionality as possible into web pages. Maybe those whiners should try to innovate (like the porn industry).
There are some things you can’t do on a PWA, but they are good for a great many things.
All good points.
Let me add, despite how good web apps are, native apps are still better in many ways, and there's a good reason for that. 150,000 APIs.... that Apple provides, (along with payment process, hosting, vetting, curation, delivery, and access to Apple's customers, etc.) all for the meager price of $8/month ($99/year) + 15% commission on sales. Sounds like a pretty good deal to me.
Or... if you're jumping up and down in court saying all those APIs and services aren't worth $8/month +15% commission on sales, then no worries. You have a choice. Don't buy those services, and provide your customers web apps and pay Apple nothing. Web apps can even have Home Screen icons, so getting into them is as easy as any other app.
Looks to me like developers have plenty of choice. For Epic, Spotify, etc. I don't get what the problem is.
Thanks. It might belabor the analogy, but one might extend it a bit by also noting the secondary damage to reputation that will occur if Apple is forced to allow side-loading. Using the same analogy, right now, zoos are seen as great places to visit, safe enough even to bring your small children. If zoos were forced to place unlocked 'enter at your own peril' gates into the tiger exhibit, the increased incidence of idiots getting their arms chewed off would damage the zoo's reputation as a safe activity, discouraging attendance even by people who would never be dumb enough to try to play with the tigers.
Says the company trying to monopolize AAA gaming by literally buying the competition.
MS does the same thing Apple does. They just aren’t successful.
This is petty jealousy snd and anticompetitive behavior from Microsoft.
I read that MS will be #3 after the acquisition, so I don't think they are trying to monopolize AAA gaming.
If they were #1 then they'd be succeeding, not trying.
Xbox Series X is selling out, GamePass is at 25M subscriptions and games like Halo, FH5 and SoT are extremely popular in consoles and PCs. Even their games are selling extremely well in Steam. Don't you think they are succeeding, even though they are not #1?
You are forgetting that Microsoft do not make a profit selling their Xbox. Never had (so they say.). So selling out of their Series X Xbox results in a bigger loss, not more profit.
Plus Game Pass is not making a profit. If might be breaking even at its best.
So Microsoft depends on that 30% commission they charge in their Microsoft Store on an Xbox. It's that 30% commission on third party games, plus their Live subscription, that makes gaming very profitable for Microsoft. No way Microsoft will allow a third party store in an Xbox, to take away any of their 30% commission.
Just because they sell their hardware at a loss, doesn't mean that they are more entitled to charge a 30% commission in their Microdot Store on an Xbox, than Apple with their commission in their Apple App Store. Selling their hardware at a loss is the business model Microsoft chose, in order to gain marketshare over Sony as fast as possible. Not a business model that they were forced into. And it has been proven to be a very profitable business model, if done right.
And I'm pretty sure that Microsoft generate way more profit from selling games on each Xbox they sell, than Apple from selling apps on each iPhone they sell. If there were 1.5B Xboxes out there, Microsoft gaming division would probably be more profitable than all of Apple, Inc..
Like you said, MS makes money in software and services around the console. The console itself will be too expensive if MS had to sell it at full price. Just look at the cost of the Apple TV 4K. It has 64GB of storage, 3GB of RAM and no controller for $200. Compare that to the Xbox Series S, that has 3x the RAM, 8x the storage, far more advanced CPU and GPU and includes a controller for $300. How much do you think Apple would sell a device with the Xbox Series S / X specs? I don't think consumers will be attracted to a device so expensive, and that's the reason they absorb the cost of the device, and use games and services to make money.
IMO, one of the reasons they are pushing for GamePass is to stop making consoles, since you'll be able to play in any device, PC / Mac / Linux, smartphone, tablet and even TV apps. Let's see how it goes.
I'd like to see an actual breakdown of XBox hardware revenues, charges, R&D, etc across its lifetime. I took apart my XBox One about a year ago, and there looks to be only about $200 worth of hardware in that box. With controllers in the box, maybe the total BOM of the whole green box was $350. Depending on how the "cost of selling and servicing hardware" is book-kept, I wouldn't be surprised if MS has a 10% margin on it after several million units.
I don't totally believe the implications of Lori Wright's testimony saying MS has never made a profit on XBox hardware, and I'd like to see a breakdown. MS had a $1b or more costs for repairs of Xbox RROD in the aughts. They may have had others, who knows, it's been a long time. But if there are unplanned billion dollar charges for repairs, that can take what is planned to be a breakeven or marginally profitable hardware segment into a loss for every piece of hardware.
As for Apple hardware, barring actual evidence, I think every non-accessory piece of hardware (Apple TV, Watch, iPhone, iPads, Macs) are fully margined along a 33:33:33 ratio. 33% of the retail price is BOM, 33% is the cost of developing+selling+servicing the hardware, and 33% is their margin. The ratio is higher for some products, lower for others, and changes depending on the state of the supply chain and the sales performance of the hardware, but it is going to be somewhere along there.
Based on this, a $200 Apple TV has a BOM of about $67. The BOM for the A12, 3 GB LPDDR4 and 64 GB NAND would be, what, $45 combined. It's 3+ year old hardware, and I wouldn't be surprised if the BOM was even lower. Apple has sold a gajillion A12 SoCs. Depending on how Apple manages the soft costs and what margin they are willing to live with, they could sell the $200 Apple TV for $100 and still make a profit. A lot smaller than now, but a profit still.
This hardware business stuff is of course irrelevant to the rationale for charging a platform fee for digital goods. It's only used by people to make themselves feel better about this or that situation, but it is irrelevant to the business dealings between platform owners and 3rd parties. Or its only relevancy is as an emotional play. Eg, a game publisher has every right to ask MS for a lower platform fee. That MS may sell an XBox unit at a loss or a profit is irrelevant, MS also has every right to say take it or leave it. Somewhere between all these constraints, all parties have to design and manage their products for profitability.
MS put up a long blog post today and its new App Store rules for Windows and Xbox. In my view, this is the right way to regulate an App Store in today's environment. I hope Apple is paying attention
"we recognize that we will need to adapt our business model even for the store on the Xbox console. Beginning today, we will move forward to apply Principles 1 through 7 to the store on the Xbox console. We’re committed to closing the gap on the remaining principles over time. In doing so, we will incorporate the spirit of new laws even beyond their scope, while moving forward in a way that protects the needs of game developers, gamers, and competitive and healthy game-console ecosystems."
A good write-up by The Verge and how these new rules affect Xbox going forward
Says the company trying to monopolize AAA gaming by literally buying the competition.
MS does the same thing Apple does. They just aren’t successful.
This is petty jealousy snd and anticompetitive behavior from Microsoft.
I read that MS will be #3 after the acquisition, so I don't think they are trying to monopolize AAA gaming.
If they were #1 then they'd be succeeding, not trying.
Xbox Series X is selling out, GamePass is at 25M subscriptions and games like Halo, FH5 and SoT are extremely popular in consoles and PCs. Even their games are selling extremely well in Steam. Don't you think they are succeeding, even though they are not #1?
You are forgetting that Microsoft do not make a profit selling their Xbox. Never had (so they say.). So selling out of their Series X Xbox results in a bigger loss, not more profit.
Plus Game Pass is not making a profit. If might be breaking even at its best.
So Microsoft depends on that 30% commission they charge in their Microsoft Store on an Xbox. It's that 30% commission on third party games, plus their Live subscription, that makes gaming very profitable for Microsoft. No way Microsoft will allow a third party store in an Xbox, to take away any of their 30% commission.
Just because they sell their hardware at a loss, doesn't mean that they are more entitled to charge a 30% commission in their Microdot Store on an Xbox, than Apple with their commission in their Apple App Store. Selling their hardware at a loss is the business model Microsoft chose, in order to gain marketshare over Sony as fast as possible. Not a business model that they were forced into. And it has been proven to be a very profitable business model, if done right.
And I'm pretty sure that Microsoft generate way more profit from selling games on each Xbox they sell, than Apple from selling apps on each iPhone they sell. If there were 1.5B Xboxes out there, Microsoft gaming division would probably be more profitable than all of Apple, Inc..
Like you said, MS makes money in software and services around the console. The console itself will be too expensive if MS had to sell it at full price. Just look at the cost of the Apple TV 4K. It has 64GB of storage, 3GB of RAM and no controller for $200. Compare that to the Xbox Series S, that has 3x the RAM, 8x the storage, far more advanced CPU and GPU and includes a controller for $300. How much do you think Apple would sell a device with the Xbox Series S / X specs? I don't think consumers will be attracted to a device so expensive, and that's the reason they absorb the cost of the device, and use games and services to make money.
IMO, one of the reasons they are pushing for GamePass is to stop making consoles, since you'll be able to play in any device, PC / Mac / Linux, smartphone, tablet and even TV apps. Let's see how it goes.
I'd like to see an actual breakdown of XBox hardware revenues, charges, R&D, etc across its lifetime. I took apart my XBox One about a year ago, and there looks to be only about $200 worth of hardware in that box. With controllers in the box, maybe the total BOM of the whole green box was $350. Depending on how the "cost of selling and servicing hardware" is book-kept, I wouldn't be surprised if MS has a 10% margin on it after several million units.
I don't totally believe the implications of Lori Wright's testimony saying MS has never made a profit on XBox hardware, and I'd like to see a breakdown. MS had a $1b or more costs for repairs of Xbox RROD in the aughts. They may have had others, who knows, it's been a long time. But if there are unplanned billion dollar charges for repairs, that can take what is planned to be a breakeven or marginally profitable hardware segment into a loss for every piece of hardware.
As for Apple hardware, barring actual evidence, I think every non-accessory piece of hardware (Apple TV, Watch, iPhone, iPads, Macs) are fully margined along a 33:33:33 ratio. 33% of the retail price is BOM, 33% is the cost of developing+selling+servicing the hardware, and 33% is their margin. The ratio is higher for some products, lower for others, and changes depending on the state of the supply chain and the sales performance of the hardware, but it is going to be somewhere along there.
Based on this, a $200 Apple TV has a BOM of about $67. The BOM for the A12, 3 GB LPDDR4 and 64 GB NAND would be, what, $45 combined. It's 3+ year old hardware, and I wouldn't be surprised if the BOM was even lower. Apple has sold a gajillion A12 SoCs. Depending on how Apple manages the soft costs and what margin they are willing to live with, they could sell the $200 Apple TV for $100 and still make a profit. A lot smaller than now, but a profit still.
This hardware business stuff is of course irrelevant to the rationale for charging a platform fee for digital goods. It's only used by people to make themselves feel better about this or that situation, but it is irrelevant to the business dealings between platform owners and 3rd parties. Or its only relevancy is as an emotional play. Eg, a game publisher has every right to ask MS for a lower platform fee. That MS may sell an XBox unit at a loss or a profit is irrelevant, MS also has every right to say take it or leave it. Somewhere between all these constraints, all parties have to design and manage their products for profitability.
MS put up a long blog post today and its new App Store rules for Windows and Xbox. In my view, this is the right way to regulate an App Store in today's environment. I hope Apple is paying attention
"we recognize that we will need to adapt our business model even for the store on the Xbox console. Beginning today, we will move forward to apply Principles 1 through 7 to the store on the Xbox console. We’re committed to closing the gap on the remaining principles over time. In doing so, we will incorporate the spirit of new laws even beyond their scope, while moving forward in a way that protects the needs of game developers, gamers, and competitive and healthy game-console ecosystems."
A good write-up by The Verge and how these new rules affect Xbox going forward
I'm rather nonplussed. It reads as a gospel to regulators to allow them to buy Activision-Blizzard. If MS becomes the dominant game publisher and developer, then applying Principles 8 to 11 (the actual principles of substance) become much easier to do. If they are making most of the digital goods money on XBox with their own games - and they stand to make a lot if they own Activision-Blizzard - a fee for digital goods starts to become less important as they are both the platform and its biggest game developer.
Then, they stand to gain a lot if these moves force Sony, Nintendo, Apple and Google to open up their app stores as they would be a top 3 game/app developer, with billion+ dollar per year properties that go on these platforms.
So, should MS be allowed to buy Activision-Blizzard as they own 2 of the largest platforms that games are played on? If not allowed, will MS voluntarily do fee-less in-app payments on XBox?
Comments
I don't totally believe the implications of Lori Wright's testimony saying MS has never made a profit on XBox hardware, and I'd like to see a breakdown. MS had a $1b or more costs for repairs of Xbox RROD in the aughts. They may have had others, who knows, it's been a long time. But if there are unplanned billion dollar charges for repairs, that can take what is planned to be a breakeven or marginally profitable hardware segment into a loss for every piece of hardware.
As for Apple hardware, barring actual evidence, I think every non-accessory piece of hardware (Apple TV, Watch, iPhone, iPads, Macs) are fully margined along a 33:33:33 ratio. 33% of the retail price is BOM, 33% is the cost of developing+selling+servicing the hardware, and 33% is their margin. The ratio is higher for some products, lower for others, and changes depending on the state of the supply chain and the sales performance of the hardware, but it is going to be somewhere along there.
Based on this, a $200 Apple TV has a BOM of about $67. The BOM for the A12, 3 GB LPDDR4 and 64 GB NAND would be, what, $45 combined. It's 3+ year old hardware, and I wouldn't be surprised if the BOM was even lower. Apple has sold a gajillion A12 SoCs. Depending on how Apple manages the soft costs and what margin they are willing to live with, they could sell the $200 Apple TV for $100 and still make a profit. A lot smaller than now, but a profit still.
This hardware business stuff is of course irrelevant to the rationale for charging a platform fee for digital goods. It's only used by people to make themselves feel better about this or that situation, but it is irrelevant to the business dealings between platform owners and 3rd parties. Or its only relevancy is as an emotional play. Eg, a game publisher has every right to ask MS for a lower platform fee. That MS may sell an XBox unit at a loss or a profit is irrelevant, MS also has every right to say take it or leave it. Somewhere between all these constraints, all parties have to design and manage their products for profitability.
"I paid for my zoo ticket, I should be able to go anywhere in the zoo I like. How dare these zookeepers try to prohibit me from directly interacting with the potentially dangerous animals, when I'm an adult and can take responsibility for my own safety. I'm suing".
Awesome analogy. Best explanation I've heard for this particular topic, ever, I think. Great job coming up with that, and thanks for sharing it.
Let me add, despite how good web apps are, native apps are still better in many ways, and there's a good reason for that. 150,000 APIs.... that Apple provides, (along with payment process, hosting, vetting, curation, delivery, and access to Apple's customers, etc.) all for the meager price of $8/month ($99/year) + 15% commission on sales. Sounds like a pretty good deal to me.
Or... if you're jumping up and down in court saying all those APIs and services aren't worth $8/month +15% commission on sales, then no worries. You have a choice. Don't buy those services, and provide your customers web apps and pay Apple nothing. Web apps can even have Home Screen icons, so getting into them is as easy as any other app.
Looks to me like developers have plenty of choice. For Epic, Spotify, etc. I don't get what the problem is.
https://blogs.microsoft.com/on-the-issues/2022/02/09/open-app-store-principles-activision-blizzard/
This part about the Xbox:
"we recognize that we will need to adapt our business model even for the store on the Xbox console. Beginning today, we will move forward to apply Principles 1 through 7 to the store on the Xbox console. We’re committed to closing the gap on the remaining principles over time. In doing so, we will incorporate the spirit of new laws even beyond their scope, while moving forward in a way that protects the needs of game developers, gamers, and competitive and healthy game-console ecosystems."
A good write-up by The Verge and how these new rules affect Xbox going forward
https://www.theverge.com/2022/2/9/22925591/microsoft-xbox-store-open-policies-business-model-changes-hints
Then, they stand to gain a lot if these moves force Sony, Nintendo, Apple and Google to open up their app stores as they would be a top 3 game/app developer, with billion+ dollar per year properties that go on these platforms.
So, should MS be allowed to buy Activision-Blizzard as they own 2 of the largest platforms that games are played on? If not allowed, will MS voluntarily do fee-less in-app payments on XBox?