Can Xbox approach apply across Microsoft?
One of the big differences between Microsoft and Apple is that when one company announces a new product, it’s usually months before it becomes available. The other has a chief executive known for saying “boom,” with the gadget or software released soon after.
The difference stems from how the two create their products. Apple is an integrated company that designs its own hardware and software – almost always in utter secrecy – so when a product is ready to be announced, it is also usually ready to release.
Microsoft, on the other hand, has worked in conjunction with partners right from its very beginnings, when it created software for IBM’s hardware. Today, that dichotomy still holds true for much of its business, whether its computers, mobile phones or, eventually, tablets. Microsoft makes and announces the software, then companies such as HP, Samsung and LG spend the next several months making sure their hardware works with it.
The success of the Xbox, which is now the top-selling video game console in North America, and Microsoft’s lag in other areas such as mobiles and tablets raises an intriguing question: Might the company be better off in taking an integrated approach across all of its businesses, like Apple does?
Not necessarily, company executives say. Phil Spencer, corporate vice-president of Microsoft Game Studios, says the Xbox was something of an aberration spurred by necessity. When the company was designing the original Xbox more than a decade ago, there weren’t any other hardware makers it could go to, so it had to take an integrated approach.
“There wasn’t the partnership and rich development ecosystem that you see, say in the phone space today with companies like Samsung and HTC,” he said in an interview at last week’s E3. “Sony and Nintendo probably weren’t going to partner with us on the hardware.”
The company was able to release the slimmer Xbox quickly, meanwhile, because game makers were ultimately unaffected by the new hardware.
“For the developer, the fact that we went from the original Xbox to the new Xbox in a day, they didn’t have to do anything to take advantage of that,” he said.
Dennis Durkin, chief operating and financial officer for Microsoft’s interactive entertainment business, said much of Microsoft’s success over the past decades has been the result of going the partner route, rather than the integrated approach.
“Because we’re doing so many unique things with the hardware, it makes sense for us to design it,” he said at E3. “In other places that may not make as much sense, it may make more sense to ride an ecosystem of partners.”
Spencer stressed that although the Xbox is the product of an integrated approach, it is still dependent on partnerships with the likes of Activision and Electronic Arts, who create the hit games that sell the console.
Games consoles are still ultimately dependent on partnerships, since third-party companies such as Activision and Electronic Arts create the hit games that sell consoles. That’s why Microsoft announced its Project Natal motion system, which eventually became Kinect, more than a year before it became available.
As such, Microsoft is unlikely to stray further into fully creating its own products. “We understand as a company that support from developers is the key to success for any platform.”
- Peter Nowak