New report concludes Xboy to drop in 2008
by Christopher Grant 
{ Jun 2nd 2006 at 10:07AM }
Ubi fumus, ibi ignis. When there's smoke, there's fire. And there's a ton of smoke pouring out of the Xboy rumor, so how far behind can the fire be? According to a new report (available here for the princely sum of $2490) released on Tuesday by analyst firm The Diffusion Group, Microsoft is planning to join the portable gaming market by 2008, giving the 360 some time to pick up steam. TechWeb lists several key reasons why MS would want to enter another gaming market when they're still relative newcomers to the one they're in:
- All the other kids are doing it: both Sony and Nintendo are doing quite well for themselves in the handheld gaming space.
- More platforms for software means more potential software sales which means more royalties and more outlets for their recent in-game ad buy.
- Oh yeah, the iPod. Educated guessers everywhere are saying the Xboy ain't gonna be just for games; expect a PSP-styled iPod killer. Good luck with that, fellas.
Smoke:
The Engadget & Joystiq Interview: Microsoft's Peter Moore
Takahashi: Microsoft portable coming halfway through 360's lifespan
Xbox vets behind MSFT's portable game device
Microsoft working on plans for portable gaming device
Xbox portable: fall 2007, spring 2010, somewhere in between, or never?
Portable Xbox mockups
[Thanks, cringer8]
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Reader Comments (Page 1 of 2)
Jonathan Greene @ Jun 2nd 2006 10:15AM
Im calling a B.S. on the I-pod killer rumor, for one Microsoft cant actually make an ipod killer that doubles as a game console, it wont work, second of all Microsoft is loaning out its media OS to other dap's such as the gigabeat, lg pmp, and tatung, in doing this they also promised a no competition from microsoft directly, im sure itll probably play some music, but more the way like the original xbox did, just as kind of a gimmick. My .02 cents.
GlitchCog @ Jun 2nd 2006 10:17AM
Xboxes are large, power-hungry and delicate. That's not going to work for a portable.
Jose C @ Jun 2nd 2006 10:19AM
If it's true then it will probably be yet another name in Nintendo's rather long list of handheld rivals that failed trying to dethrone them
voice of reason @ Jun 2nd 2006 10:23AM
i have a feeling its going to fail.
JodyAnthony @ Jun 2nd 2006 10:30AM
not to be "that guy" #1. but when you say "my .02 cents" that actually means 2 hundredths of a cent
meanwhile, DS will be better.
Anonymous @ Jun 2nd 2006 10:35AM
While I did just buy an Xbox 360, I doubt the Xbox brand will carry much weight in the handheld sector. They can add additional functionality to pick up votes, but then is it really a game machine? I wouldn't buy one for a handheld Halo. It would have to be genius, like the DS Lite, and by then Nintendo will have its own upgrade.
Seeing how poorly the PSP is doing compared to Nintendo's DS (losing by 9 to 1 in Japan this week), I don't think a Sony copycat is the way to go.
Anonymous @ Jun 2nd 2006 10:37AM
I don't want another convergence device. I want fun.
Nintendo DS and Nintendo Wii are the only choices in that department right now, though I do enjoy Geometry Wars. I can't see it being as fun on a small screen, though.
Canadian Geese @ Jun 2nd 2006 10:42AM
At first glance I thought this would fail. Not interested....
...then two little words came to mind... Live Anywhere... suddenly I'm extremely intrigued.
Playing at work on my lunch break, connected to LIVE through the companies wireless access point, racking up achievements...
I'll agree that it seems very unlikely that MS could pull off a successful handheld, but Live Anywhere might just change all of our minds.
sandro @ Jun 2nd 2006 10:44AM
I can not understand how someone could mention the Xbox project as a success, yes it sold more than GC, but it is far from PS2, and as far as I know Nintendo & Sony are profitable in the market. Granted, the ability to sell units and create a brand its been done, but frankly at a steep price of billions of loss.
PS; I have all the systems and plan to buy them all again *-)
Ciao,
Ben Hobbs @ Jun 2nd 2006 10:51AM
a PSP with a hard drive would have been the ipod killer, the PSP has a fantastic screen, you can fit a movie onto around 500mb - wasted chance IMO.
We could do with a new player on the block.
mocax @ Jun 2nd 2006 10:54AM
a Xbox360 controller with LCD screen that doubles as a handheld game console, now that's a good idea :D
Isurus (at work) @ Jun 2nd 2006 10:58AM
When they announced that Live Anywhere is going to work with mobile phones at E3 it solidified to me that Microsoft has NO intentions of entering the handheld hardware market. I think this is just pure speculative nonsense.
ry @ Jun 2nd 2006 11:01AM
Microsoft could easily tie in the new Urge service to qa portable, along with a nice portable MCE extension, and some good portable online gaming, this could be a recipe for success. I'm a staunch Ninty-fanboyzor, but if they can one-up the PSP, who wouldn't be all for it?
Pedro @ Jun 2nd 2006 11:17AM
If MS were to make a handheld you'll probably need a backpack for the batteries. Also what succeses are you talking about, maybe the 4 billion dollar losses.
32_Footsteps @ Jun 2nd 2006 11:21AM
Personally, I think it would be more instructive to look at what would make a porta-Xbox a viable option.
First big thing is affordability. I think that a portable system, at this time, could not afford to launch above $200, especially for the first system, or else you're going to stumble. Like the PSP.
Second is durability. Portables are exponentially more likely to deal with rough handling - and they need to be prepared for that (in other words, they should be ready to pass the Flush Test).
Third would actually be to resist adding too many features. Ultimately, people will want your device only if it plays good games and plays them well. To that end, forego a movie player out of the box. Unless the music player is basically the same as what you'd use to play music in games (which actually leads to a different little rant, for another time), don't worry about that. If the system is a success, then worry about developing all of those features. Before you create a ton of features, you want to make sure you have an installed user base for them.
Fourth, Portable Geometry Wars. I don't think I need to elaborate.
Fifth, make sure you solve the energy hog issue immediately. I'm personally convinced that this, more than any other reason, is why Nintendo has dominated the handheld market for so long. Longer battery life equals longer playing time, and longer playing time equals greater attachment for a gamer to the system.
If Microsoft plays their cards right, they could at the very least make themselves into a credible second place in the portable market, something that nobody has really pulled off (for anyone who tries to argue in favor of the PSP - did you see the PSP's pitiful showing at E3 this year?).
Mike Ray @ Jun 2nd 2006 11:25AM
If they do in fact make a portable, it will be really ugly.
greenfly @ Jun 2nd 2006 11:27AM
If it is anything like the origami, I ain't in.
funkonaut @ Jun 2nd 2006 11:30AM
"...but the successes thus far of the Xbox project have proven this teams ability to get stuff done..."
How is losing almost $5 billion a success?!
JCA @ Jun 2nd 2006 11:35AM
Hmm....whether or not this could be successful is definitely up for debate but does anyone think that if these rumors carry serious weight, then nintendo will release the much rumored portable GameCube? Cuz frankly by 2008, XBOX (original) Hardware will be cheap enough and small enough to portabilize. With its vast library it could possibly do some serious hurting on the DS and the PSP no?
Basically I'm just conveying my gadget-lust for a portable GameCube is all. :)
benjamin @ Jun 2nd 2006 11:48AM
The two most important factors with a portable gaming system in my mind are price and playability.
I will not pay more than $150 for a portable. No way, no how. It's too risky for one thing. I've left my bag at work with my GBA in there before but I didn't stress 'cuz I can pick up a new one for $79 bucks- not an amount I can just write off, but no tragedy either. Same thing if I drop it and break it.
I found the PSPs $249 price absolutely laughable. Not even within the realm of consideration for me. Combine that with $39 games and that is competing with home console prices. Ridiculous for a portable.
BTW, if I wanted a portable movie player I'd get a portable DVD player with at least an 8 in. screen. For $100 less, and a bigger movie library too.
As far as playability is concerned- I want games with super fast loading times and auto save features. I don't mean to sound so pro-Nintendo and anti-Sony- I'm not. But I can snap on my GBA and play a level or two of an old platformer, or a few minutes of old school pac-man while I wait for food to arrive at a restaurant or while I'm on a 15 min. break at work or while I wait in a line somewhere- whatever. That's the usefulness of a portable to me. Turning a boring wait into a fun little gameplay session.
If MS came out with something that could do those things, I'd be all over it. I don't mind if it has other features, I may not use them, but as long as it provides quick, inexpensive fun that's all I care about.
Scooby Doo @ Jun 2nd 2006 11:53AM
I should really go looking for the actual research report. I read the basic overview of this, but it's hard to tell if we're dealing with the truth or a red herring. In particular...I want to know their sources. By giving an exact year, it makes me think that Microsoft already has this product in their business plan, but there's just not enough information to go on how much of the report is speculation.
I can't say if I like the thought of Microsoft getting into the handheld market. While I do enjoy my Xbox and I actually think their development studios make great games, they tend to be very controlling and make you pay for every little thing. I would be a little worried that they'd start trying to flex their muscle and money to make the market the way the want it. (I know it's only a risk and that there's no solid foundation for my worry, but look what they've done to us PC users.)
Pip @ Jun 2nd 2006 11:55AM
Keeping the price close to $100 as possible will be what it'll take to get into the market decently. Then trying to keep the games down to $30 each tops as well. Then make the system last for over 8 hours on a charge.
And still actually fit in your pocket.
I have a feeling Microsoft will have the WindowsCE type thing going on where it'll be a PDA/Game/Phone/whatever device and it'll fail.
If they stick to just games, a low low price, and great portability with long battery life then they might get somewhere. Otherwise dont bother.
SuicideNinja @ Jun 2nd 2006 12:04PM
"Xboxes are large, power-hungry and delicate. That's not going to work for a portable."
I just ordered an Xbox for the g/f (I wanted my Ninja Gaiden skinned one back). The ebay seller sent it in a stock USPS Priority mail box with NO padding whatsoever. Talk about a tight fit. And making me nervous.
Surprisingly, it worked! Hardly fragile I'd say. I've had PS2s in boxes WITH padding that didn't make it. Those were brick PS2s though. The slims have a lot less parts to break inside.
Anyway, I like my PDA for MP3 playback better than an iPod. I've even got an iPod skin for it (although I don't use it). If MS can pull a decent PDA/Game player...I'm sold. The PSP just isn't doing it for me. *rubs eyes from using its horrible LCD screen*
C. Grant @ Jun 2nd 2006 12:14PM
funkonaut: are you kidding, or is it all really that simple for you?
mr_joneses @ Jun 2nd 2006 12:45PM
So this research company started doing gaming research about a month ago, and they all of a sudden are privy to what Microsoft is doing? Give me a break. They basically took the claim by Dean Takahashi (who really knows what is going on because he DOES have access to key Microsoft execs, made about three months ago on his blog, and put into a report. Wa-la, they have Joystiq (and countless other gaming sites) printing their PR and now they're selling reports. Has anyone asked them what the basis for their claim is? Is it they read the Internet and just made the claim in the report? Probably...
Tom @ Jun 2nd 2006 12:54PM
Yea i have to agree with people who say how can you call xbox a success. There aim was to apparently capture market share only in which case they failed as they could have simply thrown money at developers and got major exclusives but they didn't. Btw as far as im aware we have shipped units for xbox and sold units for gamecube so its very hard to tell which actually did better.
And the people who made the xbox (huge!), xbox controller (INSANELY HUGE!) and the 360 (pretty huge) are making a portable? erm yea.... guess we better all start doing some weight lifting as this thing is going to be massive.
C. Grant @ Jun 2nd 2006 1:16PM
Tom, I just threw up in my mouth a little bit. Your logic is horrible! The PS3 is even larger than the 360, yet no one would argue that the PSP is an amazing piece of engineering (if not an amazing game system, ymmv). Try again.
Microsoft has, in just a couple years, become a dominant force in the fastest growing entertainment media in the world. How is this not a success?
Jonathan Greene @ Jun 2nd 2006 1:18PM
Hey That guy #5, Its fine, but actually you mis-read it, I only wrote cents because i cant make the cent version of the $ symbol very easily. it didnt imply .02 of a cent. Its fine though, we all got it.
Ben Hobbs @ Jun 2nd 2006 1:48PM
Sony reckon they will lose $200 per PS3 sold, they plan on selling at least 10 million units, Wouldnt that be a 2 billion loss straight off?
I'm pretty sure that the worlds richest man knows what hes doing financially, more than a snotty nosed kid posting on a blog.
benjamin @ Jun 2nd 2006 1:51PM
I'm going to go ahead and assume that size really isn't all that important. Sure it shouldn't be enormous but it doesn't need to be GB Micro-sized either.
Just look at how well the DS has done. Or the PSP. They're both huge. That hasn't seemed to have made any difference at all. I imagine MS could pack quite a bit into a package not any larger than those. And the xbox doesn't establish precedent- it wasn't meant to go anywhere.
billychaos @ Jun 2nd 2006 1:53PM
I dont really like the idea. I think what microsoft should do is scrap the gaming idea and just make an ipod killer. Windows Media player and MSN music is already in competition with i-tunes. Microsoft does not have a media player with their name on it though.
Why wont they just make a MS handheld media player that is 100% compatible with Windows Vista and Xbox 360???
Shiro @ Jun 2nd 2006 2:00PM
"22.
Keeping the price close to $100 as possible will be what it'll take to get into the market decently."
A Microsoft game console at $100? Good one. That'll happen when Hell freezes over.
Ian @ Jun 2nd 2006 2:05PM
@#6 "Seeing how poorly the PSP is doing compared to Nintendo's DS (losing by 9 to 1 in Japan this week), I don't think a Sony copycat is the way to go."
Its true that the DS is dominating in Japan and crushing not just the PSP, but their pretty close in NA, I'm not sure about Europe though. Plus MS will never have Japan anyway, they can't even compete with the Xbox there. I just want to see the iPod die, and MS is probably the company that could do that. Sony is just doing terrible at marketing the PSP, its like they have no idea who their audience is.
aparrish @ Jun 2nd 2006 2:14PM
Just an iPod killer? I have to carry around other stuff too! I won't be satisfied unless it's a movie player, a cell phone, an ebook reader, a GPS, a PDA and a ham sandwich.
Jeff @ Jun 2nd 2006 2:19PM
"Microsoft has, in just a couple years, become a dominant force in the fastest growing entertainment media in the world. How is this not a success?"
Microsoft has proven that if you throw $5 billion at a product, you can gain 20% market share. This is not really earth-shattering news to anybody, if you ask me.
The proof of success comes in sustaining and growing that market share *and* in profitability. MS has demonstrated none of these things so far. So the jury's really still out; you can't say one way or another at this point whether they're successful on the whole. What you can say is that they are billions of dollars and millions of units behind their own projections, because this is a fact. They had never predicted $4 billion in losses, nor had they predicted such failure in Japan. They're about where they thought they'd be for the US and Europe, but overall, they are behind. When you fail to hit your own targets, you cannot consider yourself a success.
As for the "Xboy", I have no doubt they're planning it. Joystiq is right - at a certain level, where there's smoke, there's fire. I mean a few wisps - a rumor here and there - doesn't mean anything. But when you've got thick, black smoke billowing - when you just see non-stop talk from credible people - then you can bet there's something going on.
I don't think there's room in the market for three major handhelds, and MS would be wise to learn from both Sony's stumbles with the PSP and their own stumbles with the tablet and UMPC's. But my feeling is they won't. When MS (by which I mean Bill Gates) becomes convinced that the public wants something even when all evidence suggests otherwise, they will just keep jamming it down people's throats until it either finally catches on or goes down in flames in spectacular manner. MS's idea of what people want in portable products is pretty obvious. But nothing I've seen so far has convinced me that they're right.
Derek @ Jun 2nd 2006 2:33PM
Has MS paid any attention to the portable market? If they had, they would know that these jack-of-all-trades-master-of-none portables are not what people want. ( cough, PSP, cough ) I predict its imminent failure now.
32_Footsteps @ Jun 2nd 2006 2:57PM
Pardon me for the disagreement, but Christopher, I'd hardly call Microsoft's position in the video game industry "dominant". Are they a force? Yes. But only the top company can truly say they are dominant - that's Sony in the console business, and Nintendo in the portables. While I'm certainly willing to agree that MS is taking a long-term view with the Xbox (much more long-term than nearly anyone in video gaming history), so far it has not paid any sort of dividends to Microsoft.
Also, could someone familiar with reading financial statements actually take a look at Microsoft's Xbox division? From what I understand, $5 billion is just what they've spent on the system - they have made at least a portion of that back through console sales and licensing. They might still be at a net loss, but I wonder if it's really a full $5 bil in the red.
"I don't think there's room in the market for three major handhelds..."
You may be right there, but then Microsoft might not be looking to overthrow Nintendo in the portable realm just yet. Look at it this way - the PSP is currently a financial sinkhole for Sony, between the hardware not pulling a profit and sluggish software sales. And Microsoft (at least publically) views Sony as their main rival in the video game industry.
Now, it might be that the DS is near-unassailable at the current time. However, a well-made handheld system could easily provide the death blow to the PSP and establish itself. It would require considerably less expenditure on Microsoft's part and would probably do more to establish themselves in the video gaming market than the original Xbox.
I certainly have no proof that Microsoft is going one way or the other in regards to portable gaming... but sheer logic does indicate that they'd take the plunge.
B @ Jun 2nd 2006 3:03PM
Presenting the new Neo-Geo pocket.
jay @ Jun 2nd 2006 3:06PM
if it has original xbox graphics and the ability to play against people or 360, then im interested. It should be market as a portable 360 and not another seperate portable. Your not going to beat nintendo in gameplay, and sonys very tought to beat in terms of multimedia and style. Both sides of the sprectum is taken. shuving decent power into a huge box is not an option this itme.
Sjohn @ Jun 2nd 2006 3:12PM
We've actually had a member of our community build his own portable Xbox, we've got several photos of it and his description, it looks like it may work out to be pretty nice and have decent batterylife.
http://360.xbox-hq.com/modules.php?name=News&file=article&sid=716
IAMTHEJESUSOFSUBURBIA @ Jun 2nd 2006 3:15PM
If it doubled as a cellphone I'd buy it in a second.
Scooby Doo @ Jun 2nd 2006 3:29PM
32_Footsteps...
I actually took a look at the Edgar filings for Microsoft, but what you're asking for may not be available. One main problem is that Microsoft's Xbox division is lumped in with the following:
(Taken word-for-word from an Edgar filing)
"Consumer Software, Services, and Devices operating segment includes Xbox video game system, MSN Internet access, MSN network services, PC and online games, learning and productivity software, mobility, and embedded systems."
Basically, while you can do cost analysis and get sales figures to get an IDEA of how good/bad Microsoft did with the original Xbox, the fact that it is lumped with so many other revenue generating products means that you'd have to see the books to know for certain. I've never heard of Microsoft opening up their books to ANY research firm so I don't think you're question will ever be truly answered.
I CAN tell you that it is widely known throughout the securities industry that their "Entertainment" division of Microsoft has been steadily losing money in the hundreds of millions of dollars almost every quarter since the Xbox has been out. This is NET PROFIT/LOSS, so it represents both income and expenses. Halo 2 did not make news *just because* it sold so many copies so quickly...but rather, for us in the Financial world...because it was the first time in a LONG time that the Microsoft Entertainment division actually posted a profit.
A 4 billion loss sounds about right when you look at their quarterly Edgar filing statements. However what cannot be answered is how much of that loss is attributed stricly to the Xbox versus the other products and services in that division.
Pretty Obvious @ Jun 2nd 2006 3:38PM
Imagine 2 things....
1. Halo in your pocket.
2. Live anywhere.
If Microsoft can launch their portable with these two things simultaneously and have good battery life to boot. Theres no reason they wont succeed in this market.
superjoe @ Jun 2nd 2006 3:48PM
An Xboy would fail considerably in the handheld wars and would only add to nintendo's list of vanquished competitors. Also the next incarnation of the Game Boy would already be in the marketplace by then. Game over.
Scott @ Jun 2nd 2006 4:02PM
Well if it was live anywhere, I'm guessing the connection would suck.
But if they can make this work, groovy. If not, least they got 360.
I doubt it'll be an "ipod" killer though.
32_Footsteps @ Jun 2nd 2006 4:17PM
Maybe I'm off-base here... but if you're going to make an iPod killer, why not just focus on somehow delivering a better music player than Apple? Make a music player such that it has better quality, better storage, and/or a better price than the iPod.
It seems more than a little absurd to me that everyone suggests a game platform should be going against the iPod. It's apples and oranges... and any company that tries to make a game device compete with the iPod is practically asking for red ink.
Of course, any genius that builds a gaming platform that works with an iPod (such as allowing you to build playlists for in-game action) might have a good thing on their hands.
James @ Jun 2nd 2006 4:17PM
Well see.
If it's really a high quality media player first, has an online music/video store, and can play simple live arcade games like geometry wars, then great, I'm all for it.
If it's something like PSP, I don't want it (or the PSP).
I don't want a portable xbox.
Capt. Castellanos @ Jun 2nd 2006 5:42PM
to #33.
i wanna ham sandwich portable gaming console...
Bert Young @ Jun 2nd 2006 5:42PM
My guess,
So here is the deal. This thing will be a phone. It just will. They know everyone carrys a phone these days. By 2008, you could should be able to cram a Motorla Q, IPOD Nano, and a PSP all into one device the size of something like a more recatanulgar (read psp like) SLVR thin device. You download and purchase games over the net. You save huge distribution fees for the media. Everyone carries it all the time and get addicted because its a phone.
B
Jerome Demers @ Jun 2nd 2006 5:58PM
from a sony fanboy, I say GO MICROSOFT!!!
that is cool! This will make sony come up with something cooler!
The psp2 will come out at the same time the Xboy comes out!