-what is the nature, scope, and mission statement of the XBOX 360?
Microsoft has three goals for the Xbox 360. The first is to gain a
significant portion of the rapidly growing video gaming market.
Microsoft's core PC software businesses have slowed, so moving into a
fast-growing and sizable market is very attractive to the company.
Second, the company would like to diversify beyond PCs by attracting
consumer home entertainment spending. Third, the company's reputation
has suffered considerably over the last few years as a result of the
litigation surrounding its Windows monopoly. The company hopes Xbox
360 will combat the impression it is not innovative and well change
the public's view of the company.
-What is the target audience? What is its positioning strategy?
Microsoft has multiple targets for the product. First the company is
trying to attract hard-core male gamers by offering "...the most
powerful computer ever sold specifically for gaming." "Putting the
New Xbox Through Its Paces" by Walter S. Mossberg and Katherine
Boehret, the Wall Street Journal (November 23, 2005)
http://ptech.wsj.com/archive/solution-20051123.html. However, the
company is also following Nintendo's strategy of broadening the appeal
of consoles to nontraditional demographics. Specifically, Microsoft
is targeting women who live with male gamers by incorporating
multimedia features. Not only can it play DVDs and CDs, but it can
also play media stored on its own hard disk, the hard disk of another
computer accessible over a network, or an iPod when it is plugged in.
-Evaluation of XBOX's product-market marketing plan including the
marketing mix (price, product, promotion, package)
An interesting decision Microsoft has made is to offer two versions of
Xbox 360 at the time of initial release. The $300 Core System is more
like a traditional console with wired controllers and no hard drive,
making it unable to play original Xbox games. A better $400 version
includes a wireless controller, a headset, a remote control, and
connection cables. The Core System has the same price as the original
Xbox at the time of its initial release, whereas the $400 version hits
a new price point for gaming consoles. How Sony elects to price the
PlayStation 3 will likely play a strong role in how long Microsoft can
maintain its pricing at these levels. Typically over the three to
five year lifespan of a console, significant price drops eventually
occur as the technology ages and the manufacturers seek to attract
more casual users.
Both packages provide everything you need to begin playing right out
of the box, but the Premium Pack is geared towards a more serious
gamer, including cables to connect to a high-definition display and
the hard drive to play older games as well as to store pictures,
video, and music.
An analyst indicates that Microsoft will lose at least $126 for each
Premium Pack sold. The company's goal is to make a profit on software
titles, royalties, and Xbox Live subscriptions. Selling more consoles
creates more developer interest in developing games, which in turn
encourages more demand for consoles and creates licensing revenue for
-how do playstation, nintendo, and PC (competitors) constrain XBOX?
Microsoft's competitors constrain the company in terms of both price
and performance. The company must provide a console that gives gamers
a gaming experience that is at least as good as its competitors at a
price that they are willing to pay. Managing the price/performance
ratio is critical to ensuring success. Because its PlayStation 2 was
much less powerful than the original Xbox, Sony has greatly increased
the capabilities of its forthcoming PlayStation 3. Microsoft needed
to offer a similarly compelling platform even though it was coming to
market six months sooner. Microsoft also has to provide a good reason
for gamers to prefer a specialized console over using a computer.
Providing connections to the latest televisions and specialized
controllers, along with unique technical capabilities, provide a
gaming experience that many view as being superior to that provided by
PCs. Microsoft has benefited from its competitors' establishment of
the video gaming market and the growing acceptance of video gaming as
a leisure activity worldwide.
-what external environmental trends affect the industry /firm /&
competition? relative importance of these trends?
A variety of environmental trends are affecting the gaming industry
and Microsoft specifically. Growth in interest in video gaming and in
home theater/multimedia is driving interest in the acquisition of
gaming consoles that can also act as multimedia hubs. Concerns about
violence and sexual content in games is creating the threat of
regulation (the "Hot Coffee" modification to Grand Theft Auto San
Andreas being a recent example). The continued advances in technology
and decreases in hardware costs make it possible for each generation
of console to provide an even better experience. However, the rapid
changes also make it easy to make a mistake when planning the next
generation of consoles, resulting in disastrous loss of market share
(Nintendo being a key example of a former market leader in serious
decline). The increase in consumer demand and the need to manage
technological change are both extremely important influences. It is
unclear whether or not regulation will play an important role.
Efforts to legislate restrictions in California in 2004 were not
successful, but newly proposed federal legislation may become
There are many good articles on the Xbox 360. I have also provided
links to two of my previous Answers on the subject which include
"Putting the New Xbox Through Its Paces" by Walter S. Mossberg and
Katherine Boehret, the Wall Street Journal (November 23, 2005)
"When Worlds Collide" by Dave Salvator (November 19, 2001)
"Xbox 360 Price Announced: 2 Packages, $299.99 and $399.99" XB360info
(September 15, 2005) http://www.xb360info.com/xbox/console/102
"Microsoft set to lose $126 on each Xbox 360 console" by Nicole Stiles
(November 25, 2005) http://www.xb360info.com/xbox/news/233
"Confirmed: Sex minigame in PS2 San Andreas" by Tor Thorsen, GameSpot
(July 15, 2005) http://www.gamespot.com/news/2005/07/15/news_6129301.html
"Federal Videogame Regulation Proposed" By Wade Steel, IGN (November
29, 2005) http://xbox360.ign.com/articles/672/672469p1.html
"The Ups & Downs of Microsoft's Xbox 360 Marketing" Game Daily Biz
(October 31, 2005)http://biz.gamedaily.com/features.asp?article_id=10977&filter=adwatch
"Xbox" by Wonko, Google Answers (November 11, 2005)
"Strategic use of IS by Microsoft and Sony for development of
consoles." by Wonko, Google Answers (April 4, 2005)
"California game-restriction bill floundering" by Tom Leopold,
GameSpot (April 9, 2004) http://www.gamespot.com/news/6093304.html