Xbox chief Phil Spencer says that Microsoft originally planned to sell 200 million Xbox One units. Despite unlikely to meet that target, Spencer adds that the company is more committed to gaming than ever. The exec was speaking to Stevivor in Australia. He was Down Under launching Microsoft's own Forza Horizon 3, which is set in Australia.
Microsoft was hugely ambitious with the Xbox One from the start, it is hard to fault the company's scope. However, it is obvious now that some of the ambition was beyond what the console could achieve. For example, Microsoft alienated a lot of gamers by marketing the Xbox One as an all-in-one entertainment living room box.
That did not go down well with core gamers who wanted the emphasis of a console to be on games. The heavy emphasis on Kinect was also a problem for gamers who wanted a less-restricted experience. Microsoft backed down and made numerous strategy changes. The Xbox One now feels like a true gaming machine, with a bunch of extra trimmings.
While gamers are now on board, the market damage has been done. Sony's PlayStation 4 (a gaming machine from the start) has sold about double the units of the Xbox One. Microsoft is unlikely to claw back the deficit and will not reach its ambitious 200 million unit goal. However, Spencer says the company's early strategy came from a good place.
“There were some goals that were genuine and well-founded,” he says. “The goal that the team had was to figure out how could we sell 200 million game consoles. We've never seen a console sell that many units. The biggest individual console, the PS2, did 120 million or something like that. The approach the team took was people are moving to OTT Video Services [over-the-top, like Netflix and Stan] and television's getting disrupted — and if we could build a console that could be at the center of this transition and really embrace not only people playing video games, but also people with the changing habits in television, you really take the console market and the gaming market and you expand it potentially.”
“I look at all of those and from a pure business standpoint and goals, they're all completely sound ideas. It's not like somebody was out with evil thoughts or something. It's a rational approach,” added Spencer.
Down but not out
So, it may seem that we are negative against the Xbox One and the Xbox One S. On the contrary, we think this year Microsoft has finally nailed a modern console strategy. Indeed, the company is outpacing Sony in terms of innovation and features that it offers. We have mentioned before that this will unlikely stop the PS4 winning the 8th generation in terms of sales.
Spencer says his focus when he became Xbox head two years ago was to get back to gaming first, everything else next.
“When we came in after two-and-a-half years ago and started running the Xbox program, I centered us back on not trying to become something other than a game console. You don't earn the right to be relevant in other categories of usage for the console until you've earned the gaming right, so let's go make sure that's what we deliver.”
There is no doubt that the Xbox One is a compelling entertainment unit. In that guise, it was likely hugely important to Microsoft when the company was pursuing a hardware strategy. However, Redmond is back to being a software-centered provider, and a cloud-first one at that. In this grad scheme, where does a humble gaming console fit in?
The sale of the Xbox division is often rumored, by Spencer argues Microsoft is committed. More so than ever in fact.
“Today, if you sit down with Satya Nadella, the CEO, Amy Hood, the CFO of the company, they will talk about gaming as a core capability of Microsoft, not gaming as a bridge to somethings else, but gaming into itself. It's not just Microsoft, you see Google investing time in gaming, you see Facebook buying Oculus, you see Amazon buying Twitch, you see multi-billion dollar transactions going on at the gaming space, not so you can go be something else, but because gaming is a very high engagement, high monetization use on any electronic device that you see.”
Microsoft is certainly making the right moves to suggest it is sticking by Xbox. The company rolled out Windows 10 to the device last year, and in 2016 has tied the console to Windows 10 PCs, Mobile, and HoloLens. The company is creating one big ecosystem and the Xbox is a big part of that. Oh yes, that's another thing that the PS4 cannot boast right now.