Final Xbox 360 Report

Xbox 360 Analysis
Team C
Peyman Ahmadi Shahrabad s108271 Pieter Oosterwijk s097231 Tessa van Doesburg s089211 Martijn Kors s101698 Zheliuyi Wang s101753
DG 511 Analyzing and Modeling NPD Assignor: M.E.H.G. Meuffels
[December 9, 2010]
Peyman Ahmadi Shahrabad, Pieter Oosterwijk, Tessa van Doesburg, Martijn Kors, Zheliuyi Wang DG 511 Assignor: Analyzing and Modeling NPD M.E.H.G. Meuffels
Table of Contents
The company background: ..................................................................................................................1 Mission: .........................................................................................................................................1 Values: ...........................................................................................................................................1 Size: ...............................................................................................................................................1 Organization: ..................................................................................................................................1 Core capabilities:.............................................................................................................................1 Design for X: ...................................................................................................................................2 Market segments: ...........................................................................................................................2 Products: ........................................................................................................................................2 Value chain coverage: ......................................................................................................................2
The current product:...........................................................................................................................4 Target group and geography: .........................................................................................................4 Product characteristics: ...................................................................................................................4
Hierarchical Value Map for Favorite Games: .........................................................................................5 Analysis of how the Xbox addresses these values: .............................................................................6
Ten innovation success factors: ...........................................................................................................7 Relative Advantage: ........................................................................................................................7 Trail ability:.....................................................................................................................................8 Observability: .................................................................................................................................8 Communication Channels and Homogeneous Group: ........................................................................9 Pace of innovation/reinventions: ...................................................................................................10 Norms, roles and social networks:..................................................................................................11 Opinion leaders: ...........................................................................................................................11 Compatibility: ...............................................................................................................................12 Infrastructure: ..............................................................................................................................13
Micro Business Environment: ............................................................................................................14 ii
Industry Competitors: ...................................................................................................................14 Potential Entrants / Threat of New Entrants: ..................................................................................15 Suppliers of xbox360: ....................................................................................................................16 Buyers: .........................................................................................................................................18 Substitute Products: ......................................................................................................................19
Macro Business Environment: ...........................................................................................................20 Political: .......................................................................................................................................20 Economical: ..................................................................................................................................22 Environmental: .............................................................................................................................22 Socio-cultural:...............................................................................................................................22 Technological:...............................................................................................................................24
SWOT analysis: .................................................................................................................................28 Strengths: .....................................................................................................................................28 Weaknesses:.................................................................................................................................30 Opportunities: ..............................................................................................................................31 Threats: ........................................................................................................................................33
Conclusions & Recommendations: .....................................................................................................34 Recommendations regarding the Microsoft Xbox: ...........................................................................34 Image (fame of the Company):.......................................................................................................35 Market: ........................................................................................................................................35
Division of work:...............................................................................................................................37 Parts Done by Tessa van Doesburg: ................................................................................................37 Parts Done by Martijn Kors: ...........................................................................................................37 Parts Done by Peyman Ahmadi Shahrabad: ....................................................................................37 Parts Done by Pieter Oosterwijk:....................................................................................................37 Parts Done by ZheLiuyi Wang:........................................................................................................38
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Appendix A Informed Consent Form: .................................................................................................39
Appendix B Value Ladder for Favourite Games: ..................................................................................40
Reference sheet: ..............................................................................................................................42 Company and Product: ..................................................................................................................42 Micro Business Environment..........................................................................................................47 Macro Business Environment.........................................................................................................49 Recommendations ........................................................................................................................51
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The company background:

Mission:
At Microsoft, the mission and values are to help people and businesses throughout the world realize their full potential. (Microsoft.com, 2010)
Values:
As a company (and as individuals) Microsoft values integrity, honesty, openness, personal excellence, constructive self-criticism, continual self-improvement, and mutual respect. Microsoft is committed to their customers and partners and has a passion for technology. They take on big challenges, and pride themselves on seeing them through. They hold themselves accountable to their customers, shareholders, partners, and employees by honouring their commitments, providing results, and striving for the highest quality. (Microsoft.com, 2010)
Size:
79,000 employees Location(s) Founded: Albuquerque, New Mexico April 4, 1975 Headquarters: One Microsoft Way Redmond, Washington, United States
Organization:
Microsoft is targeted at varying company types and countries, and limited to organizations which have fewer than 7,500 employees. Microsoft is run by a board of directors made up of mostly company outsiders, as is customary for publicly traded companies. Members of the board of directors as of June 2010 are: Steve Ballmer, Dina Dublon, Bill Gates (chairman), Raymond Gilmartin, Reed Hastings, Maria Klawe, David Marquardt, Charles Noski, and Helmut Panke. There are five committees within the board which oversee more specific matters. These committees include the Audit Committee, the Compensation Committee, the Finance Committee, the Governance and Nominating Committee, and the Antitrust Compliance Committee. (Microsoft, 2010)
Core capabilities:
Microsoft Corporation is a public multinational corporation that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through its various product divisions. Some of its various Industry sectors include: Computer software, Consumer electronics, Digital distribution, Computer, hardware, Video games, IT consulting, Online advertising, Retail stores, and Automotive software.
Design for X:
Design for public The mission and values of Microsoft are to help people and businesses throughout the world realize their full potential. We can see that Microsoft has the ambition to provide their products for the people all over the world and are a price wise company. For example, they make a low priced Xbox in order for many people to be able to purchase it, but in fact due to this Microsoft has a great deficit. They not only manufacture software, but also hardware, services, research, and more (Microsoft product, 2010). This means that Microsoft puts their product into different markets. They try everything and want to do everything good. They want the public to use their products as much as possible. They design for the public. Thus they make everything easy to use or to learn. The different kinds of products from Microsoft would be public tools which improves the normal man's life.
Market segments:
Established on April 4, 1975 to develop and sell BASIC interpreters for the Altair 8800, Microsoft rose to dominate the home computer operating system (OS) market with MS-DOS in the mid-1980s, followed by the Microsoft Windows line of OSs. (Bill Gates: A Timeline, 2006) The ensuing rise of stock in the company's 1986 initial public offering (IPO) made an estimated four billionaires and 12,000 millionaires from Microsoft employees. Microsoft would also come to dominate the office suite market with Microsoft Office and has diversified in recent years into the video game industry with the Xbox and its successor, the Xbox 360 as well as into the consumer electronics market with the Zune and Windows Mobile.
Products:
'' We do do softwarebut we also do hardware, services, research, and more. We work on PC operating systems and applicationslike Windows and Windows Live. Products for IT professionals and developerslike Windows Server and Visual Studio, Online services such as Bing and MSN and Business solutions like Office and Exchange. And devices like Xbox, keyboards, webcams, and mice. Were passionate about what we do." Business Software, Design Tools, Developer Tools, Entertainment Products, Hardware, Home & Educational Software, Mobile Devices & Software, Search, Advertising, Servers, Windows Operating System, Windows Applications & Platforms, Windows Live.(Microsoft product,2010)
Value chain coverage:

A value chain is a chain of activities for a firm operating in a specific industry. The business unit is the appropriate level for construction of a value chain, not the divisional level or corporate level. Products pass through all activities of the chain in order, and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of added values of all activities. (Porter, M. E. 1996) As one of big companies in the world, Microsoft covers all the activities in the Value Chain. For the ''primary activities'', they have different suppliers to input the elements they need, which belong to the ''inbound logistics'' part. In the ''operations'' part, they need to develop and produce new products. They also need to sell these products and provide services to the consumers, which belong to the ''marketing sales'' and ''services''. For the ''support activities'', they have infrastructure and large 2
amount of workers who need to be managed. There would be one or more departments which is responsible for technological developments that are where the new product comes from. And they also need procurement to be responsible for the input of primary element and materials.
(Dagmar Recklies, 2010)
The current product:

Target group and geography:
The Xbox 360 which had been released in Europe on 2 December, 2005 is the one 7th generation console and the second console of Microsoft. Microsoft aimed at people who where 18-34 years old and not at the children [Porcaro J. (2006)] but this is reinforced by the fact that the average gamer is 34 years old and has an experience of 12 years [Theesa.com. (2010)].The geographic target was all over the world, except for the mainland of China because of political issues [Kotaku.com (2007)], but with different release dates. The launch in Europe, North America, Australia and New Zeeland went good with some minor issues like not fulfilling the demand of consoles in Europe [BBC news (2005)]. In India where the Xbox 360 was the first console the sales were slow at start but with the release of the PlayStation 3 the sales increased. In the rest of the world there were no exceptional sales records of the Xbox 360. The Xbox 360 is also sold over the entire world and there is an estimation that there are over 1 million Xbox 360s in china but most of them are hacked.
Product characteristics:
The Xbox 360 had two versions when it came out: the Xbox 360 core edition and the Xbox 360 premium edition, there was only one difference in the console which was the hard drive. The premium version had some additional hardwares like a remote and a headset and they both came with a controller. The features of the Xbox 360 are mostly based on the online mode of the Xbox. When the Xbox is connected to the internet there is the silver internet which is free and the gold internet which people have to pay for. The silver internet allows you to go to the Xbox marketplace and communicate with friends; the gold internet on the other hand has no limitations so you can play games and do all the things you can do with the silver version. The Xbox marketplace is an interactive market where you can download demos, trailers and updates but for some of them you have to pay. When offline there are also some usable features, you can use the Xbox as a DVD/CD player which has two USB ports which allow you to store your own music on the HDD of the Xbox. The Xbox allows the owner(s) to entirely personalize their interface of the Xbox, the colour the pictures and the setting. Every player creates his/her own account which makes sure the players dont influence each others settings and save games [Msxbox-world.com. (2008)]. These are all the main features of the Xbox 360 and then there a still a lot of small ones like turning the Xbox on and off with your controller, use voice chat with friends and using the new controller Kinect to name a few.
Hierarchical Value Map for Favorite Games:
Analysis of how the Xbox addresses these values:

As seen from the above value map many interviewees place the most emphasis on having fun, enjoyment, happiness, satisfaction and accomplishment while playing games. Games are used as a tool to relax and wind down after a hard day of studying or school. They offer a challenge and initiate social contact as well as tactical thinking. Most of the people we interviewed preferred to play virtual games or games requiring make belief and not physical objects. When we look at the Xbox we find that most of these issues of having a social network with interaction have been addressed. Due to the abundance in the variety of games available most of the requirements that people want from playing have been satisfied. It allows people to interact with one and another through the means of their Xbox Live online gaming service. This allows their subscribers to play online Xbox games with other subscribers around the world as well as allows them to be able to download new content directly on to the system's hard drive, although this online service works only with a broadband Internet connection. Approximately 250,000 subscribers signed up within two months of Xbox Live's launch (Stephan Coleman, 2003). In July 2004, Microsoft announced that Xbox Live had reached one million subscribers; in July 2005, membership reached two million, and by July 2007 there were more than 3 million subscribers. By May 2009, the number had ballooned to 20 million current subscribers (Microsoft, 2010). On February 5, 2010, Marc Whitten posted on gamerscoreblog that Xbox Live support for the original Xbox games would be discontinued as of April 15, 2010 (abc, 2010). Another feature allowing Xbox users to have more control over their product was the introduction of the hard drive into the console and the allowance of being able to rip music from standard audio CDs on to the hard drive. These songs could then be used as custom soundtracks in some games (Microsoft knowledge base, 2007). The introduction of the Xbox 360 enabled the users to also become more physically active and interact even more with the console. The games adapted for this console required a certain amount of thinking, analysing and strategising capabilities; as manufactured according to their target group of people between 18 and 35 years old. This resulted in the games retaining their audiences by not becoming boring or to easy it still remained a challenge to them and incited their curiosity. For those with ambitions the system of obtaining points and high scores was still there thus offering satisfaction upon completion of certain tasks and levels. According to Microsoft, as of May 10, 2006, the Xbox has sold 24 million units worldwide (Microsoft, 2007). This is divided out to 16 million units sold in North America, six million units in Europe, and two million units sold in Asia. In 2009, IGN named the Xbox the 11th best video game console of all time, out of 25 other consoles (IGN, 2010). Therefore we can safely conclude that the Xbox was able to address all the above values dear to the users and gamers. This can be verified by the amount of their sales as well as their ratings.
Ten innovation success factors:

Relative Advantage:
As start we must acknowledge that the Microsoft Xbox 360, just like any other game console out there is not a device that can function on its own. It is highly dependent on the game development industry in order to keep a market position. Without a strong backup of game titles being released every year it would be close to impossible to survive. In this regards we might also take into consideration what the advantages of the Microsoft Xbox 360 are for game developers. Especially for the Microsoft Xbox 360 this might have been one of the reasons for its success and is from importance in order to understand how this eventually translates to the consumer. Microsoft, in contrast to Nintendo and Sony has a long history of being a software developer rather than a hardware developer and was not completely new to the gaming industry at the moment the first Microsoft Xbox was launched. At that time, a large share of video games were already developed and published on Microsofts Windows platform (Thurrott, 2003). And this is exactly where the advantage Microsofts Xbox system is noticeably superior to the other game consoles; their development platform. "On paper, the PS3 is more powerful. In reality, it's quite inferior to the 360" (Nelson, 2007a) Microsoft simply has the best game console development pipeline with the result that software development is easier and can eventually cut costs and limitations. Or as John Carmack, co-founder of ID software quotes: "The honest truth is that Microsoft development tools are so much better than Sony's" (quoted by Yam, 2007) The Sony Playstation 3 is by far the most powerful console on the market but due to its difficult architecture only first party developers are able to use it to an extent that it becomes an advantage. In the end this means that the Microsoft Xbox 360 is roughly half the price of a PS3 while providing close to the same performance when it comes to gaming. If we look at the relative advantages for the consumer we can find the following points that are in favour of the Microsoft Xbox 360: Performance-wise (graphical performance) the Microsoft Xbox 360 offers the same as the Sony Play station 3 at half the price tag and simply outruns the Nintendo Wii (Nelson, 2007b) . Microsoft is focused to have the most comprehensive online console gaming community (Hollensen, 2007 p.120) and is best rated (Dybwad, 2010) (Xbox World 360 UK, 2008). Seamless integration with Microsoft Windows and Windows Media Centre (Pash, 2007). Microsoft offers a couple of very popular exclusive Xbox 360 video game franchises like Halo and Gears of War (Desz, 2010). Microsoft invests in excusive and popular content for some of the most popular video games (e.g. Grand Theft Auto) (Greenberg, quoted by Hicks, 2010). 7
Microsofts newly released Kinect has a high potential to become superior to Wiis Wii Remote and Sonys Play station Move as being the first introduction to real controller-less gaming (Graft 2010)(Gibson, 2010).
Not everything is in favour of the Microsoft Xbox 360; the following has made a fair negative impact on Microsofts aim to become worlds biggest game console hardware developer: A subscription based online model compared to those on other game consoles being free of charge has always been a bottleneck in getting as many consumers online. While it might have ad up upon the reliability and possibilities of the system, returning fees is granted to make a lot of consumers not playing online. Unlike Sonys Play station 3, the console itself does not have the capabilities of playing High Definition Blu-Ray movies. After their failing HD-DVD format, as hoped to be the successor of the DVD the Microsoft Xbox 360 does not offer playback of nowadays HD movie standard. They did however release an external HD-DVD drive but since Sony won the competition of the DVDs successor it was practically useless (Parfitt, 2008). The Microsoft Xbox 360 has known an incredible high failure rate for their devices. Many heating and disc drive issues have been reported. It was also considered to be the noisiest video game console (Kuchera, 2008) (Peckham, 2009) (Rozkov, 2010). The Microsoft Xbox 360 is the easiest console to mod, making it relatively easy to play back illegal copies of video games. The Sony Play station in contract has proven to be very resisted to video game piracy (phgamer, 2007).
Trail ability:
Like almost every video game console it is possible to try out a demo (demonstration of a video game, mostly a playable fraction of a video game). Before online capabilities were added this mostly happened with demos being supplied at booths or through magazines. You will also find demo models in stores being able to try new video game released and in favour of the Microsoft Xbox 360 Kinect Microsoft is opening special demo stores (MSN Entertainment, 2010). More important is the digital online distribution of content which is going to be the main distribution of content in the future (Fakhruddin, 2010). Downloading a video game demo, extra content or using an on-demand video service is already normal, it will be a matter of time before consoles are following what for example Steam from Valve is doing for PC gaming (Steam, 2010), an online gaming platform support full PC video games to be downloaded and installed. As previously noted, Microsoft has high potential to become very powerful within this area of distribution as the online service is one of their top priorities when it comes to the Microsoft Xbox 360.
Observability:
Nowadays with the fast expanding availability of internet access around the world, social video gaming has become a different experience. On one side we might argue that video gaming became a whole lot 8
more social (online we can reach out to many.many more players than we ever would offline) but on the other side we can also state that this all happens virtually (and thus real physical interaction is still impossible). We can argue whether video games became more social in this respect. This not only depends on one persons perspective and motivation, it also has a lot to do with one persons intentions (Seay, 2006). Everyone has his own reasons to play either online or offline but the question that arises is what the influence is on the ability to be introduced to a certain video game or video game console. While video game consoles are more aimed to play locally (local multiplayer on a single game console and marketing aimed to play at home with your family are just a few example) then PC video games are more and more going towards online video gaming. We are then not anymore physically introduced by new games as often as we were years back. Then how do we know which games to purchase? With the integration of social network we are able to simply see what others (mostly those who we know as they are already present in existing social networks like Facebook and Twitter) are playing (Lowensohn, 2009). This is a great trigger to also purchase the same video game in order to join those who we know (Social Media Trader, 2008). Social gaming is incredibly powerful as people are often far more motivated to achieve certain goals when others are involved (Lovell, 2009). Microsoft again uses its strength as online service provider to bring a tight integration of existing social networks within the Microsoft Xbox 360 experience. Also its own social network with the ability to show your score to others on social networks are key to making others interested in joining a certain game or even buying a specific game console. Also magazines and events can be of great value when it comes to introducing potential buyers with new soft and hard ware. As previously noted, the downside of Microsoft Xbox 360 having a subscription based online service is that casual gamers are less triggered to continue paying and loose the potential of social networking at various levels. Another thing that Microsoft should probably be focusing on is providing more cooperative video games rather than competition based (Kuchera, 2009). As these kind of games tend to be more popular when it comes to involving close friends in a certain video game experience and since game consoles are more aimed at local gaming this could be of great importance to the observability by others (Chen, 2009).
Communication Channels and Homogeneous Group:

1. Spotlight: the gamer spotlight is a weekly feature on the Xbox website (xbox.com) and on inside Xbox on Xbox Live where they interview someone from the Xbox LIVE community. They have interviewed contest winners, podcasters, grandmas, soldiers, teachers, lawyers, students, rappers, artists, moms, dads and teenagers. What they all have in common is they play games on Xbox LIVE(1) 2. In addition to spotlight (the network which Microsoft has created) there are pages in social network websites like facebook, twitter, myspace for Xbox 360 and many forums in different special websites which investigate video game consoles, then gamers and fans can share their experiences and comment on different aspects of product. By using this communication channels people become familiar with advantages and disadvantages of a product and some other people who may look for information get to know aspects and qualities 9
of products ( in this case Xbox 360), then it can be valuable promotion to introduce an invention. Except for this function, they are able to improve this view that, you as a member of this social network have a lot of common points and may want to have the same experience or pleasure with this new product which the other members had before, because you are in a group of people with the same age or social level or the same point of view. This indicates information, behaviours, values and even innovations spread faster among a group which is homogenous. If we look at the Fans of Xbox 360 we can see a lot of homogeneous groups (in terms of age, interests, or ) have been the main parts of buyers of this product.
Pace of innovation/reinventions:
1. At first, Microsoft Xbox 360 was available in two configuration: the "Xbox 360" package (unofficially known as the 20 GB Pro or Premium), and the "Xbox 360 Core, but Microsoft has introduced new different models of Xbox 360 from its first appearance in 2005:
The table shown below indicates diversity and properties of each model (2) Model
Core
Storage
none 20 BG HDD
Appearance
Matte white Matte white Chrome disc drive
Accessories
Wired controller Composite video cable Wireless controller Ethernet cable Wired Headset Hybrid video cable
First available
November 22, 2005 November 22, 2005 September 1, 2008 October 23, 2007 December 2008 June 2009 April 29, 2007
Pro 60 GB HDD 256 MB memory unit Arcade 256 MB on board 512 MB on board 120 GB HDD Elite 250 GB HDD 4 GB on board S 250 GB HDD
Mate white
Wireless controller Composite video cable Xbox Live Arcade compilation disc
Ethernet cable Wired Headset Composite video cable 1 wireless controllers 2 wireless controller
Matte black Chrome disc drive
October 23, 2009
Matte black
Wireless controller Composite video cable Wireless controller Wired Headset Composite video cable
August 20, 2010
Gloss black
July 16, 2010
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Norms, roles and social networks:

One of the most important points to have an advantage in a competitive market is following and complying with the social roles as well as definite characteristics of that society to show the respect and convince the people to buy the product. One of the aspects of this subject is usage of entertainment basis which is existed and composed with the new product. With respect to this Microsoft has partnered with a number of content providers to provide thousands of hours of additional content in the Xbox Live video section. It has been announced that content from Netflix will be viewable via Xbox Live for Xbox Live Gold members. This deal allows users who subscribe to Netflix to watch movies and TV shows saved in their Netflix Instant Queue on their Xbox 360. You will have to visit the Netflix Web site to add or remove titles from your Instant Queue. Any Instant Queue adjustments you make through the Web browser will automatically update on the Xbox 360 within seconds. Netflix currently offers more than 10,000 movies and TV shows available for instant viewing. Video playback will stream at near DVD quality, and users will also be able to rate movies they have watched via Xbox Live. Content from companies such as NBC Universal, Universal Studios Home Entertainment, SCI FI Channel, USA Network and MGM will also populate the video marketplace. Videos will be available for purchase in either standard definition or high definition. (Sarju Shah, 2008) One of the most important actions which could be done in this context is preparing the Xbox 360 for specific markets that have different or distinctive taste we could not find any feasible evidence if Microsoft customized Xbox 360 to make it more acceptable for a definite society and it should be taken into account by the company to have a better policy to deal with this issue.
Opinion leaders:
Special interest magazines have a great influence on the consumer market as well as on the production side. Besides other tasks the main object for gamers is to get specific help for their decision in buying a game. With regard to video games today there are many special interest magazines, which make up a total of more than 50.000 issues per month worldwide3. This is the result of the game platform heterogeneity. In fact at least one special interest magazine exists for nearly every gaming platform. Most magazines are established for the pc, followed by special interest magazines for the major consoles Sony Play station 2/3 and Microsoft Xbox/Xbox 360. A few of them are called official which means that they are accepted and (strongly) supported by the manufacturers e.g. with demo versions of new games. Other magazines are normal ones, which mean that they have independent editorial offices but a (strong) marketing relationship with manufacturers and publishers. Then there are so called independent magazines with weak or even poor marketing relations. (Jrg Mller). Game magazines normally do have five functions, which are a little bit different from other information technology test magazines: 1. They inform the players about new games, test, and rate them; 2. They have an entertaining as well as information function; 3. They test game hardware (in combination with the newest games); 4. They give additional (technical) advices, cheats, and hints to win the games; 5. They offer advertising and promotion space. 11
Compatibility:
The game industry is constantly changing and is bound to an incredible competition. In this regard it is the highest priority to come up with new innovation to continuously satisfy the user and to be ahead of rivals. From a video game release point every game console is doing not all that different within its own segment, most top selling video games are multiplatform. When it comes to backward compatibility the Microsoft Xbox 360 is doing reasonably well. While the Nintendo Wii takes first place for its out-of-thebox compatibility to play Nintendo Game Cube video games, the Microsoft Xbox 360 requires an emulated to be downloaded in order to play Microsoft Xbox games (which is not that hard to do but requires an extra step). Sony Play station 3 on the other hand has been removing its backward compatibility in new revisions which makes it impossible to plat Play station 1 and 2 video games (OHara, 2009). A more interesting aspect is that original Microsoft Xbox video games can be downloaded for a fair price in Microsofts Xbox 360 Live Marketplace. This way there is a large selection of cheap priced game available for the consumer (Sinclair, 2007). What we cannot neglect is that game consoles are in general far more compatible than personal computers. Within a life span of a game console all released hardware and software in the same period are in almost all compatible and thus consumers do not have to worry about compatibility. Nowadays game consoles have the longest time span ever, no other predecessor was kept in the market for this long. It is not confirmed why this is the case but it happens to have to do with the much higher investment in the current game consoles on the market (Humphries, 2009). The biggest turn down for Microsoft has most likely been the fiasco with their HD-DVD standard. They lost the competition against Sony Blu-Ray for the successor of the DVD. Microsoft used the Xbox 360 to promote the HD-DVD (supplying external HD-DVD drives and HD-DVD format movies) but had to accept the loss at the moment Toshiba stepped out of the development. Due to this the Microsoft Xbox 360 is in contrast to its Sony Play station 3 rival unable to playback High Definition retail movies (Shilov, 2007). Instead you can see that game consoles are being released in a slimmer and lighter package, sometimes with extras. What really does make this generation of consoles different in comparison to its predecessors are basically two main things, first of that they are getting a more computer architecture and secondly a lot of investment is done on innovating the way people control video games (Parr, 2010). Sonys Play station 2 started this trend with its Play station Eyetoy camera which made it possible to play without a controller. But the real breakthrough came with the Nintendo Wii Remote, a controller for the Nintendo Wii which made gaming a whole lot more physical. The Nintendo Wii Remote had such an impact that both Sony and Microsoft were forced to come up with something similar. It did not take all that long before Sony came up with the Sony Play station SixAxis controller (basically a controller that sensed different axiss, like found in Nintendos Wii Remote) but due unpopularity and some design choices in regards to the rumble feature they discontinued the Sony Play station SixAxis controller (Totilo, 2008). At the time Microsoft did not join its rivals in competing with motion controllers. It was just recent that both Sony and Microsoft came up with additional motion controllers for their video game console, promoted at being far better than the Nintendo Wii Remote. Sony released a Nintendo Wii Remote controller like device called the Sony PlayStation Move, which is capable of doing quite the same as the Nintendo Wii Remote controller but quite a bit more accurate. Nevertheless, it has not shown to be very popular yet (Bath, 2010). It is up to Microsofts Xbox 360 to show if their newly released Microsoft Xbox 360 Kinect is going to rival. What is unique about this controller is that it is the first game console controller to make controller-less game play possible. By sensing a 3D image it can be incredibly accurate in detecting someones position in space (In fact, it can accurate track up to 25 body 12
parts) (Morris, 2010) (Stuart, 2010). This opens a whole new perspective of video game controlling but it is up to the video game line-up to make it a real success. Without proper video games it doesnt add a whole lot to the experience.
Infrastructure:
The retail market infrastructure for videogames as well as the devices themselves is loosely the same for every video game console as they all have to do with the retail industry. Nevertheless, since distribution is gong more towards the availability of on-demand services there is a slight advantage that the Microsoft Xbox 360 is bound to. They have invested quite some in their online service, already offer arcade video games, previous generation games, in-game content for video games and soon to come on-demand movies (Kalning, 2010). The Sony Play station 3 and Nintendo Wii are not offering these ondemand services (like on-demand movies) at the moment of writing. The breakpoint is moreover that Microsoft is asking a fee for their online services. To keep the service in good condition they have to but it could become a bottleneck as soon as people not only have to pay for the on-demand movies but also for the online service itself.
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Micro Business Environment:

Industry Competitors:
Looking at those companies who cover the largest part of the game console hardware market we find a total of three competitors in this area. As previously noted these being; Microsoft, Nintendo and Sony. Together with the sales of console games they are responsible for a total of $10.5 billion in revenue as of 2009. This in contrast with video games developed for the personal computer having only $538.4 million of revenue according to the Entertainment Software Association (Entertainment Software Association, 2010). With these amounts of revenue it is incredibly hard to enter the game console market without having to make a huge investment. This with the high risk of failure evolved makes it close to impossible for an unknown or young company to enter the game console market. Microsoft, who entered the game console market in 2001, is the youngest competitor of the three game console hardware developers. If Microsoft would have never had the money to invest it wouldnt have been possible to succeed. In fact, in June of 2006, after the launch of the Xbox 360, Microsoft has calculated a total loss of $1.26 billion on their game console hardware division (Ferry, 2006). The reason to continue their investment has to do with the fact that they hope to eventually make a growing profit over the future years to come. With such unprofitable investments the competition amongst the excising firms are at high stakes. Including the fact that even after hardware releases it is from great important to supply the customer with new and innovative updates to make sure that a console generation will be profitable in the end (Niccolai, 2006). Every move can have a devastating impact on the companys market share. The reason why such a loss is reported is not that difficult to explain and is comparable to the business plan found in the printer industry. Most profit comes from the after sales: In the printer industry being the cartridges and for the game industry being the video games (software). This is why most consoles are sold far below their actual value (in terms of hardware and research per unit) (with the exception for Nintendo, who often does make profit on their hardware). In this regard it is top priority to be the first who comes up with new products that will be of great interest to the consumer. Only this way it is possible to eventually turn this loss into profit. As video game developers are more multiplatform than ever the Microsoft Xbox 360 (just like the other console hardware developers) need exclusive content to make it stand out. Nevertheless, Sony and Nintendo already had exclusive titles, known characters and dedicated franchise brands. Microsoft did not so they were obligatory to enter the competition with video games that would be able to establish the same ground as its competitors (Ureta, 2010). Video games like Halo and Gears of War made the Microsoft Xbox extremely popular but required an incredible investment to make them console exclusive. Without the investment of $500 million only on marketing it would have been incredibly hard for Microsoft to rival against Sony and Nintendo. In fact, Microsofts successful move would have been devastating for any other company (Hesseldahl, 2001). The personal computer might be considered to be a rival but is built out of components that come from different manufactures. While personal computer video games are often cheaper, they do not offer the simplicity of video game consoles. In this regards we might exclude them as direct rivals. Nowadays we find as said a total of three different video game console hardware companies which are so strong that new potential rivals have an incredible hard time entering the market.
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Potential Entrants / Threat of New Entrants:

Microsoft was the first company to introduce the seventh generation video game consoles for the home on November 22, 2005 with the release of Microsoft's Xbox 360. This was a full year before its counter parts of Sonys PlayStation 3 on November 11, 2006, and Nintendo's Wii on November 19, 2006 (Lloyd Sakazaki, 2006). It was the first one to offer HD up scaling to 1080p. A year later when the PlayStation 3 came out they offered full 1080p high-definition graphics and Blu-ray Disc technology, whereas the Wii focused on integrating controllers with movement sensors as well as joysticks (Lloyd Sakazaki, 2006). The use of motion sensors in games was copied by Sonys PlayStation move and then the Xbox came up with its Kinect along the same lines. The only difference being that the Xbox Kinect does not use any controllers of any sort and makes the users the "controller" instead in a wired controller standalone product. Besides these major players in gaming consoles there are also other home consoles in the seventh generation like the EVO Smart console and Hyperscan. However their sales and impact on the market is nothing compared to the three giant companies of Microsoft, Sony and Nintendo and as such are no threat to the Xbox. Not comparing it with hand held devices of the Nintendo DS or portable gaming consoles (among which apple and its iPad might also fall under). It is safe to say that Microsofts Xbox has been able to carve a niche in the gaming industry. Due to its cheaper price range $199 (Cnet, 1010) as well as its Xbox Live online gaming system which was a major attraction at the time. Currently Microsoft shares games across many platforms and competes with the same companies as it did before. At the end of first half of 2007, the console stabilized at 11.6 million units shipped as sales dropped 60% while its rival, Wii, gained momentum and Sony announced a competitive price drop on the PlayStation 3 (Paul McDougall, 2007) (Marcus Lai, 2007). Franchises related to the Halo series has also resulted in the Xbox retaining its position as a giant in this market. By March 2008, the Xbox 360 had reached a software attach rate of 7.5 games per console in the US a record for any console in history; the rate was 7.0 in Europe, while its competitors were 3.8 (PS3) and 3.5 (Wii), according to Microsoft (Davis Torrence, 2008). From this it is clear that the threat of a new gaming console affecting the sales of the Xbox is very nominal. The danger can only come from the aspect of new games that are developed and released on their competitors system. However even this has been averted by Microsoft. In the case of the latest instalment of Grand Theft Auto IV, it arrived on day one on the Xbox 360 with the release of the PlayStation 3 version (Gamespot, 2008). Announced exclusives titles for the PlayStation 3 such as Assassin's Creed; Bladestorm: The Hundred Years' War, and Fatal Inertia were released on Xbox 360 as well as the PlayStation 3, with the latter making its release on Xbox 360 before the PlayStation 3 version (Emma Boyes, 2006). Another threat aspect could come from the increasing demand for cheaper (approximately $150) online live gaming. Where games are internet based and can be played on any pc or allowing a server to stream it on to your TV or iPad and your input is then sent to the server and are rendered. This cloud console and on demand game or rental system could be a potential threat in the prospect of new and current gamers. However the Xbox Live was an ideal solution for this yet on February 5, 2010, Marc Whitten posted on gamerscoreblog that Xbox Live support for the original Xbox games would be discontinued as
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of April 15, 2010 (abc, 2010). Thus, opening up a small gap for the possibility that more and more users might make use of this new trend, in online gaming. The benefit that the Xbox has is that it is a windows based gaming system which means that you are able to play with it on your pc as well or on any windows operating system.
Suppliers of xbox360:
Nvidia loses Xbox It is a significant blow to Nvidia, which is the world's largest graphics chipmaker that they are, looses Xbox from Microsoft. The inability of Microsoft and Nvidia to agree on the future development, manufacturing and pricing of the graphics chips apparently led to the choice of ATI.(Matthew Yi,2003) Microsoft in favour of the graphics chipmaker's main rival, ATI Technologies, for the software giant's next-generation Xbox video game console. The two companies have settled the dispute, after an extended arbitration between Microsoft and nVidia over the Xbox. The dispute arose over the amount of money that Microsoft would pay to nVidia for the Xbox GPU. nVidia had slightly underestimated the size of the die, and as a result each GPU was considerably more expensive to fabricate than anticipated. (Sander Olson, 2003) For nVidia, they wanted Microsoft to increase its payments for the GPU to compensate for the extra costs. For Microsoft, however, was already losing money on every Xbox sold, they didn't want to lose more money. The two companies agreed to take the matter to arbitration, with both companies continuing to lose money on the Xbox. One wonders if Microsoft agreed to pay nVidia more money in return for nVidia agreeing to be the GPU supplier for the Nextbox. Xenos from ATI The Xenos is a custom graphics processing unit (GPU) designed by ATI, used in the Xbox 360 video game consoles. Developed under the codename "C1".(Wavey Dave Baumann,2006) It is in many ways related to the R500 desktop PC graphics card series and therefore very similar to an ATI Radeon X1900 PC graphics card as far as features and performance are concerned. However, the Xenos introduced many new design ideas that were later adopted in the R600 series. The package contains two separate silicon dies, the GPU and an eDRAM, featuring a total of 337 million transistors. ATI Technologies Inc now is named AMD Graphics Product Group, which are a major designer and supplier of graphics processing units and motherboard chipsets based in Canada. In 2006, the company was acquired by Advanced Micro Devices (AMD) and was renamed to its present name. (Julia Talevski, 2010)
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Why change the name AMD dropped a boat load of cash and stock to purchase ATI in one of the largest mergers in recent times. (Brad Sams, 2010) AMD have announced that it will retire the "ATI" name and instead brand its graphics chipsets as "AMD" beginning in late 2010. Why they are going to change the name. For the reasoning, basically surmises that the AMD brand name is stronger and better recognized than its ATI counterpart. Also, the subcategory brands of Radeon and Fire Pro have solid consumer awareness without the ATI name being attached to them. From Intel to IBM Intel lost its Xbox contract as Microsoft and IBM announced a collaborative technology agreement for the silicon of the next-generation gaming platform, making Big Blue the semiconductor provider for all three major gaming consoles, including Sony's PlayStation and Nintendo's GameCube.(Jay Lyman,2003) Intel previously won the semiconductor design deal from Microsoft "at the eleventh hour with an extremely low bid," Mercury Research president Dean McCarron said. So it is not a surprise that Xbox shift from Intel to IBM. McCarron, who said Intel rival AMD had already won the processor design deal before Intel took it, downplayed the significance of supplying the embedded console processor. "The profitability is not substantial," he said. "Your primary gain is more being able to brag." There are differences from these companies. IBM is more suited to the console semiconductor segment, but Intel and AMD are more focused on consumer and business machines. Xenon and IBM The CPU used in the Xbox 360 game console is called Xenon. The original Xbox 360 configuration used in the initial Premium and Core machines released in the end of November 2005. These are also known as the RRoD (Red Ring of Death) machines because the GPU chip warps away from the motherboard because of excessive heat. The processor, internally codenamed "Waternoose" by IBM and XCPU by Microsoft, is based on IBM's PowerPC instruction set architecture, consisting of three independent processor cores on a single die.(Dean Takahashi,2006) The Xenon is designed by IBM, Which is the world's third largest technology company. IBM manufactures and sells computer hardware and software, and offers infrastructure services, hosting services, and consulting services in areas ranging from mainframe computers to nanotechnology.
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Director of Programming-Larry Hryb Larry Hryb who is the Director of Programming for the Microsoft gaming network Xbox Live. His blog "Xbox Live's Major Nelson" provides an "inside" look at operations at Microsoft's Xbox division. Prior to taking the position at Microsoft in 2004, he was a former programmer and on air host with radio broadcaster Clear Channel Communications.(Hillis, Scott,2008) Hryb graduated from Syracuse University in 1989 with a degree from the S.I. Newhouse School of Public Communications with a minor in Education. Not only other companies could be suppliers, the person who responsible for programming on Xbox are also important supplier. They are not providing their product but provide their professional skills and knowledge. .
Buyers:
Costumers for each company are the most important factors which should be taken into account by that company, getting to know what their characteristics or their demands are and which one can affect our product is one of the crucial acts should be done by company. According to Porters 5 forces industry analysis framework, buyer power is one of the forces that shape the competitive structure of an industry. The idea is that the bargaining power of buyers in an industry affects the competitive environment for the seller and influences the sellers ability to achieve profitability. Strong buyers can pressure sellers to lower prices, improve product quality, and offer more and better services. All of these things represent costs to the seller. A strong buyer can make an industry more competitive and decrease profit potential for the seller. On the other hand, a weak buyer, one who is at the mercy of the seller in terms of quality and price, makes an industry less competitive and increases profit potential for the seller. 2 Some factors affecting buyer power are: 3 Size of buyer - larger buyers will have more power over suppliers. Number of buyers - when there are a small number of buyers, they will tend to have more power over suppliers. Purchase quantity - When a customer purchases a large quantity of a suppliers output, it will exercise more power over the supplier. In this context Microsoft deals with two kinds of different buyers, first gamers and users of the video game consoles comprises the target groups which are going to buy Xbox 360, one of the aspects that they can impact on product can be the feedbacks which they give to company and base on this 18
information new changes on feature or content of a product will be executed. On the other hand, the purchasing power of this group could have a significant impact on price of the product. The second potential costumers which can have the most important role to set prices of any goods and products are mega retailers; consist of big chain stores and wholesales stores. These buyers have power of bargaining and they can pressure company to lower prices. Makro, the chain of self-service wholesale stores, are offering the Xbox 360 premium console, bundled with a wireless controller for the knock down price of 1994, this is a sample which shows the power of this kind of buyers and their effects on the selling price. This can consider as a danger which threatens the company because mega-retailers can strongly persuade the company to reduce the selling prices and decrease the profit. As a solution for this online shopping and auction websites such as eBay.com, Amazone.com, Shopping.com and PriceGraber.com are alternative distributers that company can omit the middlemen by them.
Substitute Products:
To find out what substitute product the biggest competition is for the Xbox 360 we first have to make a list of substitute products. The list of substitute product has to be made of products which have the same result as playing an Xbox 360 game. The main goal of playing a game we found out is relaxation, to put your mind off the daily worries. Books/reading Television/movies Board games/card games Instruments/making music Sports Some of these products are in no way a competition for the Xbox 360 since they are in a different league, for example sports which most people do for relaxation but also to stay in shape and to lose you energy. Making music is also in a different league for it is also used to release creativity. Books are a different target group, its an old school way of entertaining and relaxing your mind, this is something that will never die and you have to use your imagination which some people rather do. Television/movies are a passive way of achieving the same goals but passive. The board- and card games are basically the same accept you need some imagination since there are no animations, also there are a lot of hardcore board and card game players for example in the games warhammer (board game) and Dungeons and Dragons (card game) To conclude there are two substitute products which are a competition to the Xbox 360 but it depends from what angle you look at it. The Television/ movies are a competition since everybody has one and the achievements are the same as playing a game. People watch Television and movies together as a social activity and it is a lot cheaper than buying an Xbox 360 since you need the television anyway. If you look at an active way to compete with the Xbox 360 there are the board- and card games. These kinds of games also have the action of being busy like an Xbox 360 game so therefore it has all the same achievements which in this way is also a competition for the Xbox 360. 19
Macro Business Environment:

Political:
In the macro business environment the political aspect has not really affected Microsofts product the Xbox. Besides from little legislations that affect part of the software there have been no major setbacks for the launching or using of the product. For example in Germany there is a law that states that no game can have blood, so instead of having red blood the games have changed the colour to green. As for all other games every country has a restriction to nudity and the age requirement for certain games and this is also no exception to games played on the Xbox. Like for all games it is not permitted to buy games outside of the European Union then import or bring them into the union. Another aspect is the DVDs bought in America also do not function here due to the technological security afforded to ensure proper purchasing behaviour among the customers since there the price of the games are cheaper due to taxation laws within the European Union. The only area that the Xbox had any difficulty in its sales was in Asia, specifically in Japan. This was a result more due to the Japanese societal structure of giving more importance to its own countries production (Sony) products than to those of western origin. Another aspect was the non release in China and Iran due to political sanctions and restriction to US products. Like other products the Xbox has not been spared any modding (an unauthorized change made to a software or hardware). However, this is now being incorporated into new laws to safeguard this. Various forms of modding might (sometimes) infringe on the legal rights of the copyright owner. Due to this some nations now have laws prohibiting modding and accuse modders of attempting to overcome copy protection schemes. Within a few months of its release the Xbox BIOS was dumped and hacked by MIT student Andrew Huang so that it would skip digital signature checks and media flags, allowing unsigned code, Xbox game backups, etc., to be run. This was possible due to flaws in the Xbox's security (Michael Steil, 2005). The modding of an Xbox in any manner will void its warranty, as it may require disassembly of the console. If detected by Microsoft, a modified Xbox may be disallowed from accessing Xbox Live, since this contravenes the Xbox Live Terms of Use (Xbox, 2006). But most modchips can be disabled, allowing the Xbox to boot in a "stock" configuration. Softmods can be disabled by "coldbooting" a game (having the game in the DVD drive before turning the console on, so the softmod is not loaded) or by using a multiboot configuration. There are four main methods of modding the Xbox: Modchip: Installing a modchip inside the Xbox that bypasses the original BIOS, with a hacked BIOS to circumvent the security mechanisms (Jason Rybka, 2007).
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TSOP flashing: Reflashing the onboard BIOS chip with a hacked BIOS to circumvent the security mechanisms. The Xbox BIOS is contained on a commodity EEPROM (the 'TSOP'), which can be made writable by the Xbox by bridging points on the motherboard (SLuSHIE, 2004). Flashing is usually carried out by using a specially crafted gamesave to flash the onboard TSOP, but the TSOP can also be de-soldered and re-written in a standard EEPROM programmer. This method only works on 1.0 to 1.5 Xboxes, as later versions replace the commodity TSOP with an LPC ROM contained within a proprietary chip (Michael Steil, 2007). Softmods: Installing additional software files to the Xbox hard drive, which exploit programming errors in the Dashboard to gain control of the system, and overwrite the in-memory copy of the BIOS (Phoenix, 2007). Soft modification is known to be safe for Xbox Live if the user enables multibooting with the Microsoft dashboard and an original game disc is used. Game save exploit: Using select official game releases to load game saves that exploit buffer overflows in the save game handling (David Becker, 2003). When these special game saves are loaded, they access an interface with scripts for installing the necessary softmod files. Disassembly of the Xbox is not required when installing most game save exploits. Hot swapping: Using a computer to change the data on the hard drive. This requires having the Xbox unlock the hard drive when it is turned on, then swapping the powered hard drive into a running computer. By using a Linux-based Live CD, data on the hard drive can be read, altered, and deleted. In most cases, an automated script will automatically install the softmod files directly to the Xbox hard drive. This technique has been used extensively to harbour cheating on many online games. Disassembly of the console is required to perform a hot swap. The DMCA in the United States has set up stiff penalties for mods that violate the rights of intellectual property owners and in the European Union, member states have agreed the EU Copyright Directive and are transposing it into national law. In the United Kingdom in July 2005, a man was convicted for selling a modded Xbox with built in software and games. However, other European countries have not all interpreted the legal issues in the same way. In Spain, mod chips are seen as legal despite the EU copyright legislation. However Microsoft has explained that if any console has been modded then the warranty automatically becomes void. The increasing use of the internet as a base or platform for games and as a no border portal has increasingly made it harder to control all the laws that affect the copy right protection and consumer protection as well as made it difficult to enforce the law. As stated in most countries individual law each has a different meaning to these aspects and deals with them accordingly. Yet all these methods are there to protect the video gaming industry and not to restrict or hamper them. Therefore we can conclude that due to the political stability in the gaming industry and the countries own representations of the laws, policies, and enforcement there is no hamper to the development of a new product or line in Microsofts Xbox.
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Economical:
According to [CBS Eurostat (2010)] did the total expenditure per head of population in the EU grown from 1996 to 2005, even after 2005 this growth continued. In Holland the people spend over 10.000 on development, relaxation and traffic and others in 2005 which had a total of almost 29.000 which is a little over 1/3 of their spending capacity. In 2000 the people had spend 8.500 in this category but their total was about 25.000 which is also about 1/3 of their spending capacity [CBS (2010)]. Up until now the people of Holland still spend the same percentage of their total money on this area which points out that there were no particular financial problems in the Dutch population. To go back to the EU the total expenditure per head of population kept growing but the prices did too [CBS Eurostat (2010)] therefore we can assume that also in the EU there are no financial problems that Microsoft should have taken in consideration for releasing the Xbox 360.
Environmental:
The Xbox 360 is a recyclable product which minimalises the e-waist (as the waist of electronics is called) but within this recycle process the workers have to take out some hazardous chemicals which Greenpeace doesnt like. Greenpeace announced that the chemicals fit within the European regulations but that the chemicals are dangerous and come in the air and are inhaled trough this way. These chemicals pile up over time in the years. Besides the gamers who inhale the chemicals the people who have to take out the chemicals for recycling do work with great amounts of these chemicals and for them it can have real consequences. The chemical s we are talking about are: PVC, beryllium, bromine and phthalates. Bromine causes mainly memory problems and beryllium can cause reproduction problems especially with male mammals. Like mentioned before the Xbox 360 does fit within the European regulations but Greenpeace mentions that there should be changes to make it more healthy and safe[the age (2008)][cnet.uk (2008)].
Socio-cultural:
Xbox in Japan There is a chart shows the sales of the various game consoles in 2009.
Deleon, 2009) Look at this chart. You will notice that sales across all platforms are down in 2009. Maybe because the people who wanted a Wii, probably have a Wii by now. The best selling console was the Nintendo DS, no doubt helped by the release of Dragon Quest IX.(Nicholas Deleon,2009) So we realize that the companies are not just selling the console but also selling the game. A wonderful game would help you 22
( Nicholas
make the console popular as well. Followed by the Wii, PSP, PS3, PS2, and, lastly, the Xbox 360. It looks like 2009 was the year that the Xbox 360 finally died in Japan. For this reason, one is that there were not too many Japanese games released exclusively for the system this year. The other one is the Xbox 360 is so obviously a system designed and executed with the North American market in mind, and that Japan has always been an afterthought for the system. Cultural difference Xbox 360 games are region locked; very few of the discs are region free. We have a question according to the fact, why Americans buy tons of Japanese games, but the Japanese don't seem to buy that many American games at all? For my opinion, American is a large cultural pot, contrast with Japan. It has a short history and too many different races. This leads to American has a diverse culture, which has higher Inclusiveness or flexibility. For Japan, similar as China, they have a strict regulation. They have a long history tradition or custom, which is not easily to change or not that easy to adapt to new outside cultural. Similar situation with iPhone in Japan, its not selling as they hoped. (Brian X. Chen, 2009) Just few people own it and some people who bought it since day one sold it a month after. They have phones that compared to the iPhone are 5-10 years in technological advancement so the iPhone is to them a crippled phone compared to the cheapest model they can get from Panasonic, Sony Ericsson, Sharp & Casio. For Japanese people, Non-Japanese products are not a foreign concept to them. The vast majority of computers in Japan run Windows on the market. For the windows, it looks like that the whole world are using it. It seems arise with the born of personal computer, so the whole world accept Window very early. And it is very easy to control, no matter how you are good at computer technology, Windows helps you use computer easily. That is why almost everyone uses it. For the Xbox, western gamers value online far more than Japanese gamers. Xbox has a larger online community and is geared towards online so it is more attractive in the west. Take online out of the equation (as Japanese gamers do) and the ps3 seems the better proposition with blu-ray involved. (Nicholas Deleon, 2009) For west players, the Xbox live community is amazing. Compare with PS3, even PS3 has great games, but community does not have the atmosphere or vibe that live does. Culture lead to adjusting the product For example, the computer I use was brought from China, which plug has 3 legs. But in the Netherlands, all plugs have two legs. Then I have to use a transform plug to solve the problem. In a macro business environment, we need a "transform plug" for the product as well. For example, different country may have the different voltage limit inside, so the technology part should have difference when the product goes into different market. Sometimes, some colour may have special meaning in one region, then considering the colour of the product would be one important factor as well. For Xbox in Japan, Former Xbox boss Ed Fries has revealed a little about what went on before the first Xbox went on sale around the world, and in PlayStation's Japan. "We heard all kind of negative things from Japan, like we couldnt use the name Xbox because X means death, and the console couldnt be black, because that also was the colour of death," said Fries. "When I went to Japan to show the console, man, they really had a problem with it. I was told a number of crazy things, like the controller should weigh the same as water in your hands."(Simon Priest, 2010)
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Kinect for Xbox 360 Based around a webcam-style add-on peripheral for the Xbox 360 console, it enables users to control and interact with the Xbox 360 without the need to touch a game controller, through a natural user interface using gestures, spoken commands ("Project Natal" 101,2009), or presented objects and images. The project is aimed at broadening the Xbox 360's audience beyond its typical gamer base. (Pham, Alex, 2009) On the advertising video, there is on sentence "The only experience you need is life experience". It is a new way to play which is controller free entertainment, you can use your own body control everything. It has facial recognition and voice recognition, which brings a way you can easily interaction with the machine or the people on line. Speaking with Famitsu, the Microsoft man said that he feels Kinect will occupy a very important position in the Japanese market in future because many Japanese developers are also excited about our future developments. The company introduced the highly anticipated Kinect to the Japanese media Wednesday, touting its ability to broaden the Xbox's appeal to the entire family.(Joe Anderson,2010) "All you have to do is play (Kinect) or watch people play it," said Takashi Sensui, head of Microsoft's home and entertainment division in Japan. "It's nothing you've seen, and it's a brand-new experience that I think a lot of people will be attracted to."(Associated Press, 2010) So we could say, new technology may bring new business opportunity. Even there exist culture difference, but the whole world are making progress everyday and expecting new technology every day. Lifestyle of Microsoft MSN Lifestyle combines meaningful content, useful tools, and an active community of more than nine million monthly users who look to the site for inspiration. And windows also used by the whole world's people. We may say that Microsoft has a future lifestyle and a everyman/woman's lifestyle. They try to put their products into different markets. Not only different product specious but also different regions. In this case, Microsoft has to handle the culture differences and adjust their design in a proper way which will suit the customers form different culture.
Technological:
Before talking about the Xbox 360 platform, its important to give a quick overview of the past to fully understand the giant leap forward that the Xbox 360 represents. The first Xbox, launched based on this Idea that the Microsofts DirectX technology could power a home console. That was an ambitious vision because until then DirectX was a PC-only technology and, although Microsoft is king of that land, the software giant had never stepped into the videogame world where three Japanese titans have reined for the last few years. But the truth is that Microsoft was able to deliver the most advanced console hardware at that time, and in its first attempt, Microsoft gained a certain second place in the market. When you consider the fact that the Xbox is Microsofts first project into videogames and that the console launched well after the PS2, then you realize the success that Microsoft has had with the Xbox. What is important to understand is that first Xbox was a platform based on the DirectX technology and the new Xbox 360 represent the XNA Technology; an evolution of the Xbox platform as a whole. 24
After all, despite Microsoft is the worlds largest software maker but after a better investigation we will realize that the achievements gained by Microsoft with the Xbox are not because of their advanced hardware. It is the games (software) and Xbox Live (service) that have contributed to the success of the Xbox 360 platform. For this next-generation Xbox, Microsoft is not just building a great gaming system, but also a great entertainment platform. The Xbox 360 is not comprised of just impressive hardware, but also software and services. The new version of Xbox Live will be much more robust allows gamers to have video chat with the 360's optional camera, weed out annoying people from online play and feature an online marketplace that will allow you to download new game trailers and demos and purchase new content. (Berardini, 2005) In the table below we have compared the features and differences between the two generations of Microsoft videogame consoles (Xbox, Xbox 360) we should take into account that there is only Five years between these models: Xbox 360 Xbox DVD, Compact Disc, Download Add-on: HD DVD (discontinued)
Media
Media
DVD , CD
operating System
operating System
Custom (Based on Windows NT architecture and Windows XP (through Xbox LIVE) Custom 733 MHz Intel Pentium III "Coppermine-based" processor
CPU
3.2 GHz PowerPC TriCore Xenon
CPU
Detachable Hard Drives 20 GB, 60 GB, 120 GB, 250 GB Memory Cards (Removable) (Original design only) 64 MB, 256 MB,512 MB On-board storage chip *Arcade Consoles (later 25 8 or 10 GB internal Hard Drive (both formatted to 8 GB), 8 MB memory card
Storage capacity
Storage capacity
models) 256 MB, 512 MB *Budget level "Xbox 360 S" consoles: 4 GB USB storage device (requires system software update) 1 GB to 16 GB memory Graphics 512 MB of GDDR3 RAM clocked at 700 MHz 500 MHz ATI Xenos 4 maximum* (any combination): Xbox 360 Controller (USB wired, 2.4 GHz wireless) Xbox 360 Wireless Racing Wheel Rhythm game controllers Big Button Pads* Xbox 360 Arcade sticks Ace Combat 6 Flight Stick Kinect *)4 Big button pads may be used in addition to other controllers. connectivity Original models 2.4 GHz wireless, 3 USB 2.0, IR receiver, connectivity 100 Mbit Ethernet memory Graphics 64 MB of DDR SDRAM @ 200 MHz 233 MHz nVidia NV2A
Controller input
Controller input
4x Xbox controller ports (proprietary USB interface)
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100 Mbit Ethernet Add-on: Wifi 802.11a/b/g, Wifi 802.11a/b/g/n[4] Revised "S" models 2.4 GHz wireless, 5 USB 2.0, IR receiver, 100 Mbit[citation needed] Ethernet, Wifi 802.11b/g/n, AUX port Online services Online services Xbox Live
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SWOT analysis:
Strengths:
Liuyi: Socio-culture: Microsoft Windows (and its office software suite) is widely used in the world and this made the brand Microsoft much known over the years.
Martijn: Industry Competitors: Microsoft as the company behind the Xbox 360 has quite some backup money and thus certain expenses in which other companies would enter a danger zone can be covered without that much of a financial problem. Relative Advantage: Microsoft is able to put a device (the Xbox 360) on the market that can be sold for halve the price of the Sony Play station 3 but with comparable performance. Microsoft has in comparison to other game consoles one of the best and most extensive online service available. They were the first to include internet/network access on their game console. In a rather short time Microsoft has been able to come up with a bunch of strong exclusive franchises, they showed that they were able to in less than halve the time it took for example Sony Play station to do the same. Microsoft has been a software developer for decades and knows compared to other game console manufactures how to supply developers with a good development pipeline. They own the most used PC operating system which makes them known to almost any generation Compatibility: The Xbox 360 is in contrast to the Sony Play station 3 backward compatible with video games from the previous generation.
Tessa: Means end analysis: In keeping with the growing trend that people like virtual worlds where they can wind down relax after working/studying by having fun or for enjoyment purposes, happiness, satisfaction or accomplishments the games have been made accordingly for the Xbox via means of interaction and social networking as well as the strategically thinking and curiosity arousing games as well as the possibility to gain points and accomplish things.
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The including of the hard drive in order for the customers to use their own choice of music during game play. Threat of New Entrants: The introduction of the seventh gaming console ahead (a full year) of its competitors. As well as the launch of a controller less kinect. Cheap price which is easily affordable to all. On live gaming facility. And the AAA titles. Release dates of games alongside those of competitor releases. Microsoft Windows based gaming system.
Pieter: Current Product: The Xbox live is a good working systems which had a broad variety and is a real strength of the Xbox 360. This is a feature which they should maintain. Substitute Products: Xbox has almost all the achievements that all the substitute products also deliver. This is good and Microsoft should keep these achievements Economical / Environmental: Microsoft launched the Xbox financially correct in Europe there is a good financial situation and people have the capability to spend their money on these.
Peyman: Technology: Software (games) and services (Xbox live) have contributed to success of Xbox 360 platform and in this context Xbox 360 has surpassed its rivals.
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Weaknesses:
Liuyi: Socio-culture: Less control on culture differences and to be too confident. When your products are new, easy to use and cheap, of course lots of people are going to buy it. But even you are a big and famous company; you cannot make sure the products are always popular in the world. For Xbox in Japan, there already have strong competitors exist. So it is really dangerous to release to a foreign country. The whole world's taste is not always same. Even some product may success in West Country; it doesn't mean it will success 100% in Asian country. So you always need to do more work when you go into a new market area or a new culture.
Martijn: Relative Advantage: Microsoft has damaged its brand image quite some times. With not proper functioning operating systems, malfunctioning game consoles and a phone that was cancelled almost right after it was released, it all does not help Microsoft in making everyone believe that Microsoft is a quality brand. Microsoft still uses the DVD standard which is more open for piracy. Microsoft tends to focus on developing too many devices for too many markets and when this will also affect its Xbox branch it might get into trouble. Targeting sometimes at a too board market. Microsoft is with the Xbox the youngest game console developers and that does mean that there is still a lot of catching up to do in order to attract more users. Nintendo for example has character from the Mario franchise, such icons will be very hard to replicate for Microsoft. Microsoft is western and has a little more difficulty in contrast with Nintendo and Sony to enter the Asian market.
Tessa: Means end analysis: Image branding as the ultimate gaming console but due to the lack in games for every target group. Political: Security; in order to prevent game console modding. Pieter: Current Product: At the launch Microsoft couldnt provide enough consoles to fulfil the demand, this shouldnt have happened. This failure doesnt help the reputation from Microsoft and shows weakness. Economical / Environmental: It is bad that Microsoft uses components which contain bad chemicals this is bad for the health of many workers who recycle the console but also for the consumers who use them. 30
Opportunities:
Liuyi: As far as I know, there is a Microsoft China research and development group in China, which helps Microsoft in China long-term investment and development. The goal is to become a global foundation of scientific research, technology innovation and product development base. The group also established department of strategic cooperation, which focus on domestic outstanding IT enterprise in order to establish strategic partner relationship, such as software outsourcing, technology transfer and product cooperation. It is good example of foreign market. So cooperate with some foreign enterprises is also a good way for the foreign market. As we see, Microsoft already has a long-term plan in China.
Martijn: Relative Advantage: Microsoft has a solid technical architecture for their game consoles and they should embrace that even more now that game consoles are starting to look more like computers and thus making it easier to develop for (including indie development). Using their online service they are able to roll out all kinds of on-demand services (on-demand games, etc.) in short time. Developing their online service will help the Microsoft Xbox become more valuable.
Tessa: Means end analysis: The possibility to retain and gain new customers by addressing the issue of newer games more suitable for the kinect. Political: New market area in Iran and China after solving political issues. Serious offences/punishments to offenders using modded consoles worldwide consistent.
Pieter: Current Product: The high amount of Xboxes in China is a good sign since the government of China never approved Microsoft to sell the Xbox 360 in China. The fact that there is a high amount of Xboxes in China shows that the people in china have accepted the American product while China normally is very proud of their own brands. This could be a big opportunity but only if the government of China changes their view. Substitute Products: The achievement range is good at the moment and maybe Microsoft could try to capture the achievements that put, the substitutes that are a threat now aside. Economical / Environmental:
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The fact that Microsoft made sure they launched the Xbox in Europe at a financial good situation made sure that enough people bought it. If they keep doing this in the future people will have the money to spend on an Xbox and the sales will stay good.
Peyman: Buyers: Online shopping can be considered as a opportunity because the company can omit middlemen by that (online shopping)
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Threats:
Tessa: Threat of New Entrants: The on-demand games (cloud consoles). New Games developed and released on competitor consoles. Political: Modded consoles, piracy, cheaper illegal downloads
Martijn: Industry Competitors: The new Sony Play station might become a threat as it is unsure what Sony learned from the Play station 3 and whether it is going to do all it can to push Microsoft back in its Xbox market gain. Sony might be able to adjust its costs/market share ratio making it harder for Microsoft to compete.
Pieter: Current Product: If the government of China continues to refuse the sale of the Xbox in China there will be a lot of people trying to hack the Xbox in order to use it in China. If a lot of people try to hack it because they will more likely succeed. If they can sell it there will be less people who want to hack it. This could be a threat because if someone discovers a way to hack a console the entire world will know how. Substitute Products: The television/movie and board and card games are a threat already so Xbox should watch out and maybe try to put those aside too. Economical / Environmental: Microsoft should watch out for the chemicals they put inside the console since Greenpeace can greatly decrease the reputation of Microsoft which could negatively influence the sales of the Xbox.
Peyman: Buyers: Mega-retailers are one of the potential threats, they can strongly persuade the company to reduce the selling prices and decrease the profit
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Conclusions & Recommendations:

Recommendations regarding the Microsoft Xbox:
The foremost recommendation we can make towards the Microsoft Xbox division is aimed at the way of distributing new content to the consumer. The Microsoft Xbox game consoles are sold with a loss to make it affordable for consumers (Snow, 2005). In fact, at the time that the Microsoft Xbox 360 was released Microsoft had a calculated loss of $1.26 billion as a result of the required research, development, manufacturing, distribution and advertisement cost for their Microsoft Xbox division (Ferry, 2006). The software (video games), accessories and merchandise that are sold afterwards are there to cover the loss and eventually make profit out of it all. In this regard it is from essence to continue the development of distribution, especially at the moment of time. The unannounced successor of the Microsoft Xbox 360 has a couple of possibilities for the distribution of video games. First of all they would continue using the DVD9 standard but this seems practically impossible as it does not offer enough storage space to support the HD format as well as the required space for future games. Secondly they could go for adopting the Blu-Ray drive within their next game console. Nevertheless, doing so would make them in need to contract a license with their archrival Sony. Microsoft would most likely not do this as it will add costs to the successor of the Microsoft Xbox 360 (it is preferred to keep within the price range in which they are positioned at the moment) and they will moreover admit their loss to Sony (as of their failing HD-DVD)(Ricker, 2008). Next to this, as sources from Microsoft (Schram, 2010) indicate that the successor of the Microsoft Xbox 360 will never include a Blu-Ray player this possible step seems not like something that will happen. The best choice and our recommendation to Microsoft will be to invest in the development of ondemand services (Carnoy, 2010)(Oliver, 2009). While they are already focusing on these services it seems to be something that will make the successor of the Microsoft Xbox 360 a strong competitor towards the game consoles from Nintendo and Sony. Microsoft has the most powerful online service in comparison to those found on the other game consoles and as it is going to be the future of content distribution it should be Microsofts top priority to invest in. Steam (Steam, 2010a), a digital/online video game distribution platform and social network developed by Valve has shown to be extremely popular (Steam, 2010b). While many still like the physical content carriers like Boxed DVDs everything is moving towards the digital distribution. A good example is the change from physical music CDs towards online music services like Spotify (Spotify, 2010). And while some say a physical product is part of the experience, growth of these digital distribution channels seems to be exponential (Ullian, 2007). With the internet connection becoming more widely available and faster it will become the easiest and most convenient way to new content in the near future. And it has already shown to work on the Microsoft Xbox 360, both the distribution of digital video games copies as well as streaming of HD movies. Also, the Microsoft Live service would become more valuable and will most definitely attract more users and eventually there is no need any more for an optical drive. This will not only cut manufacture costs but also eliminates a component that is known to be one of the most fragile parts of the Microsoft Xbox 360 (Jared, 2008). In this regard we can say that Microsoft would make a good move to fully focus on on-demand services in order to make it stand out in comparison to the other game consoles. Nevertheless, it needs a grease period, Microsoft is making a good step to public experiment these ondemand services but it is fully depending on the moment of the Microsoft Xbox 360s successor to make
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it a success. Changing too fast might make people not able to adopt the system but it seems that the Sony PSP GO handheld which adopted an on-demand service is working out pretty well (Kuchera, 2009). I would help if Microsoft is able to provide digital video games for a lower price than found in retail stores to give people the option if they want to spend a little more money on a boxed version. A boxed version of the video game would then be nothing more than a boxed coupon for the digital version (with the same unique elements that normally comes with a retail version of a video game like a booklet, map, etc). Just like with Steam, although the same price has to be paid for the digital version some find it more convenient to opt for the digital version because of couple of reason: First of it is space saving (physical copies need storage). It avoids losing a serial key; it eliminated the possibility to damage the disk. There is no need to swap disks (videogames are all directly stored on the hard and can be played instantly. A hard drive is faster than an optical disk drive. It will make piracy more difficult as Microsoft has more control over the platform Microsoft might actually make it possible to take the Microsoft Xbox 360 Hard drive with video games to a friends Xbox and directly start to play as if it was your own. As a last note, if Microsoft would make the next Xbox a mostly on-demand based game console it would also be able to withstand the upcoming threat of the On-Live gaming-on-demand service (On-Live, 2010) which might become the biggest threat of the game console industry in short time (currently in beta but to be launched in spring 2011) (Terdiman, 2010).
Image (fame of the Company):

Although Xbox 360 gained an early lead in terms of market share (largely due to its ability Xbox Live online gaming system) the Xbox 360 has been subject to numerous technical problems from the beginning of launch time. This early launch has come with some trouble, as technical problems appeared in a portion of Xbox 360 units sold. The most well known problem is the "red ring of death", which received (and still receives) a great deal of attention due to some users' having to replace their consoles multiple times. Microsoft attempted to address this by offering a three year warranty on all affected consoles and repairing them free of charge. It also retroactively reimbursed owners of affected systems who paid for repairs (Bavis, 2010). It is completely understandable that Microsoft will confront with dropping in its selling rate while there are lots of possible errors you may run into with Xbox 360. Then it could have a major impact on the image of a big company like Microsoft in costumers mind. Therefore it can be wised that one of the most crucial movements of company should be preventing from such technical problems and by choosing proper components (while the problems come from these) try to avoid disrepute.
Market:
Shrink the target group For Microsoft Corporation, they don't have a strong focus on one market. It looks like that they want their various products quite lively in different market and used by the whole world, no matter you are children or old man. It is a challenge that you want do everything excellently. Even windows is very successful, it has a everyman/woman's life style. But it doesn't mean other product should have that 35
style. Like you can never make everyone likes you, when you please one group of people of course you will miss other group. For Xbox, you can never force some Asian countries like that as same as American or European countries. Don't release product to foreign region first Of course it is dangerous to release the Xbox to Japanese market first. And the fact has proved that they lost lots of money on Japanese market. Japan has strong indigenous companies of video game console, which means you have strong competitors. Furthermore, the players may be accustomed to one game style already. At the same time, completely avoiding the culture difference is a difficult thing. So first focus on one region and then develop it deeply could be a better choice. You can get experience through this market, at the same time the success of this region is a kind of Advertise for other regions. If putting the development of other region's market is the second step, all these experience and advertise would be the base of your second step. The Multinational at Work When we plan to release the product into foreign countries, we have to consider the culture differences. However, after you have done lot of research and made some adjustments of the product some problems still appear. For example, when the Xbox was bring to Japan to do some user test. The result is not that good. Then Microsoft made some adjustments of it. Like change the size of the handle, because Japanese people are not that tall and strong as west people; change the colour of the console, smoky instead the initial colour which is black since black means death in Japan. But someone just ask a question that "is play-station black?" So I think the core problem is not just the size, the colour or the game style. All the problems are not alone, they are connected with each other, and they all in a macro environment. So the multinational work should be a choice. There is a Microsoft China research and development group in China, which helps Microsoft in China long-term investment and development. The group also established department of strategic cooperation, which focus on domestic outstanding IT enterprise in order to establish strategic partner relationship, such as software outsourcing, technology transfer and product cooperation. It is a good example of multinational work. So when you want to open a market in foreign country, maybe cooperate with a domestic enterprise in that country would be a good choice. Try to cut the cost Even lot of Microsoft's product are not expensive, I still want to say, when the price is suitable for the developed countries it means the price is not for developing countries and underdeveloped countries at the same time. Lower the price is always a good way to sale your products. In China, lots of people are not going to buy a new released game console, even they want. Because one authorised game will cost around 100 Yuan in China, and the average incomes is around 2000-3000 Yuan. Most people will choose to wait the console cracked by crackers, when they can play pirate game which you just need to pay 5 Yuan then you can get at least 5 different games. Even everyone knows that buying pirate products is not legal, and the quality of pirate products of course are not good than the authorised one. But everyone can see the huge differences of the price as well. So for the company, trying to cut the cost may a choice to lower the price of the products.
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Division of work:
Parts Done by Tessa van Doesburg:
1.3 Means-end Analysis 2.0 New Entrants 3.0 Political Grammar Check and Spelling as well as minute keeping and organizing
Parts Done by Martijn Kors:

1.4 Ten Success Innovation Factors (Factors 1,2,3,9 and 10) 2.0 Competitors 3.0 Compiling of SWOT Analysis into recomendations Recommendation about onDemand gaming
Parts Done by Peyman Ahmadi Shahrabad:

1.4 Ten Success Innovation Factors (Factors 4,5,6,7 and 8) 2.0 Buyers (potential customers yearly) 3.0 Technology Recommendation about Image
Parts Done by Pieter Oosterwijk:

1.2 The Current Product 2.0 Substitutes 3.0 Economical and Environmental Layout and Formatting
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Parts Done by ZheLiuyi Wang:

1.1 Company Background 2.0 Suppliers 3.0 Socio Cultural Recommendation about Sales
For the SWOT Analysis everyone did their own portions. Based upon this we did the recommendations as a team. The presentation was also a group effort.
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Appendix A Informed Consent Form:

I, _________________________________hereby give consent to have my verbal answers given to this recorded interview. Only Peyman Ahmadi Shahrabad, Martijn Kors, Pieter Oosterwijk, C. Tessa van Doesburg and Zheliuyi Wang from the Technische Universiteit Eindhoven (University of Technology Eindhoven) in the Netherlands may use these answers for purposes of their research for an Assignment. I also allow them (Peyman Ahmadi Shahrabad, Martijn Kors, Pieter Oosterwijk, C. Tessa van Doesburg and Zheliuyi Wang) to disclose this information within the University of Technology Eindhoven (TU/e). However I do not consent to having my information used outside of the before mentioned institution.
Signed: ________________________________________ (Signature) Date:
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Appendix B Value Ladder for Favourite Games:

Attribute: Challenge Consequence: improves tactical thinking Consequence: helps me to solve problems Consequence: the games are uniqueness Consequence: provides me with a distraction Consequence: to recharge my self Value: Happiness, excitement and ambition Attribute: Fun and Challenge Consequence: it provides a challenge Consequence: makes me more alert Consequence: satisfies my curiosity Consequence: like earning money/points Consequence: interesting Value: Fun Attribute: It requires Stamina and Strength and is Fun Consequence: it puts me in a different set of mind and mood Consequence: switches my brain off and allows me to have some fun Consequence: relaxes me Consequence: brings a balance to life Consequence: allows me to recharge Value: Happiness Attribute: It requires Strength and thinking Consequence: it makes me feel strong Consequence: it allows me to think Consequence: for exercise Consequence: relaxes me Consequence: exertion of energy Consequence: allows me to recharge Value: Excitement Attribute: It a first person shooting game and has a story line Consequence: it is interactive Consequence: it allows variety to me and is interesting Consequence: you are able to do things in a virtual world which you normally would not be able to do in real life Consequence: relaxes me Consequence: allows imagination Consequence: challenge Consequence: relaxing Consequence: virtual world Value: Fun
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Attribute: It a futuristic game and racing Consequence: it is very creative Consequence: it is interactive Consequence: it has a nice story line and game play Consequence: it looks very real even if it does not exist Consequence: it allows me to strategize, is fun and easy Consequence: allows imagination Consequence: enables sharing social network Consequence: allows for movement, exercise Consequence: virtual world Consequence: trendy Consequence: Relaxing Consequence: challenge Value: Fun Attribute: Marvellous special effects Consequence: made me think I was in that virtual world Consequence: allows for social network (multi player) Consequence: it is a challenge Consequence: it is a virtual world Value: Exciting Attribute: Allows for interaction with other people Consequence: it is interesting and not boring Consequence: allows for creativity Consequence: allows you to be in control Consequence: gives a sense of ownership and deeper involvement Value: Happiness and satisfaction Attribute: Allows me to kill people Consequence: takes my mind off school and work Consequence: entertainment Consequence: makes it realistic to experience Consequence: freedom Consequence: relate to the story hero Consequence: recharge batteries Value: Enjoyment and competition Attribute: Story and Strategy mix is good Consequence: I learn Consequence: it is interesting Consequence: it is a challenge Consequence: to win Consequence: I am competitive Consequence: entertainment, enjoyment Value: Accomplishment and achievement as well as Enjoyment
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Reference sheet:
Company and Product:
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The current product Porcaro J. (2006) Xbox 360 marketing [online] [accessed 14th November 2010]. Available from: <http://www.johnporcaro.com/2006/03/xbox_360_market.html> Msxbox-world.com. (2008) Xbox 360 console [online] [accessed 14th November 2010]. Available from:<http://www.msxbox-world.com/xbox360-console.php> Theesa.com. (2010) Game player data [online] [accessed 14th November 2010]. Available from:<http://www.theesa.com/facts/gameplayer.asp> BBC news (2005) Xbox 360 sells out within hours [online] [accessed 8th Decmber 2010]. Available from:<http://news.bbc.co.uk/2/hi/technology/4491804.stm> Kotaku.com (2007) Microsoft looking to launch Xbox 360 in china[accessed 6th December 2010]. Available from:<http://kotaku.com/228853/microsoft-looking-to-launch-xbox-360-in-china> Values a b c (2010) "Xbox Press : A Letter from Marc Whitten: Discontinuation of Xbox LIVE for Original Xbox Games". Xbox.com. Retrieved 2010-12-09. Coleman, Stephen (2003). "Xbox Live Subscriptions Double Expectations". IGN. Retrieved 2007-09-30. Engadget (2010) "Microsoft touts 30 million Xbox 360s sold, 20 million Xbox LIVE members". Retrieved 2010-12-09. IGN (2010) "Xbox is number 11". Retrieved 2010-11-11. 42
Microsoft Knowledge Base (2007) "Xbox: Description of custom soundtracks". Retrieved 2008-01-13. Microsoft (2006) a b "Gamers Catch Their Breath as Xbox 360 and Xbox Live Reinvent Next-Generation Gaming". Archived from the original on 2008-06-21. Retrieved 2009-03-30.
Ten innovation success factors Relative Advantage KNITECROW007. (2005) 360 vs. Ps3 Advantages + Disadvantages. [online]. [Accessed 9 November 2010]. Available from: <http://www.gamespot.com/users/Nafix/show_blog_entry.php?topic_id=m-10021014335> Thurrott P. (2003) Microsoft Claims Xbox Success. [online]. [Accessed 9 November 2010]. Available from: <http://www.windowsitpro.com/article/video-games/microsoft-claims-xbox-success.aspx> Yam M. (2007) John Carmack Speaks on DX10, Vista, Xbox 360, PS3, Wii. [online]. [Accessed 9 November 2010]. Available from: <http://www.dailytech.com/John+Carmack+Speaks+on+DX10+Vista+Xbox+ 360+PS3+Wii/article5665.htm> Nelson, C. (2007a) Play station 3 vs. XBOX 360 One Year Later. [online]. [Accessed 10 November 2010]. Available from: <http://www.hardcoreware.net/reviews/review-348-1.htm> Nelson, C. (2007b) Play station 3 vs. Xbox 360: A Developer's Perspective. [online]. [Accessed 11 November 2010]. Available from: <http://www.hardcoreware.net/reviews/review-348-1.htm> Hollensen, S. (2007) Global marketing: a decision-oriented approach. Harlow, Pearson Education limited Xbox World 360 UK. (2008) Why Xbox Live isn't free. [online]. [Accessed 10 November 2010]. Available from: <http://www.gamesradar.com/xbox360/f/why-xbox-live-isnt-free/a-20080617101147502012>
Dybwad, B. (2010) Online Gaming Faceoff: Xbox LIVE vs. PlayStation Network. [online]. [Accessed 12 November 2010]. Available from: <http://mashable.com/2010/03/01/faceoff-xbla-vs-psn> Pash, A. (2007) Turn Your Windows PC into a Media Centre Powerhouse On the Cheap. [online]. [Accessed 11 November 2010]. Available from: <http://lifehacker.com/298408/turn-your-windows-pcinto-a-media-center-powerhouse-on-the-cheap> Desz. (2010) Top 5 Best-Selling Xbox 360 Exclusive Titles To Date. [online]. [Accessed 8 November 2010]. Available from: <http://www.tqcast.com/2010/04/17/top-5-best-selling-xbox-360-exclusive-titles-todate-360> Hicks, J. (2010) Top 5 Best-Selling Xbox 360 Exclusive Titles To Date. [online]. [Accessed 8 November 2010]. Available from: <http://www.oxm.co.uk/article.php?id=17461> 43
Graft, K. (2010) Ipsos: Kinect Will Be 'Big Winner' In New U.S. Holiday Motion Control War. [online]. [Accessed 10 November 2010]. Available from: <http://www.gamasutra.com/view/news/31202/Ipsos_Kinect_Will_Be_Big_Winner_In_New_US_Holida y_Motion_Control_War.php> Gibson, E. (2010) Microsoft's Aaron Greenberg. [online]. [Accessed 16 November 2010]. Available from: <http://www.eurogamer.net/articles/2010-10-28-microsofts-aaron-greenberg-interview> Parfitt, B. (2008) Microsoft's Aaron Greenberg. [online]. [Accessed 16 November 2010]. Available from: <http://www.mcvuk.com/news/29718/Xbox-360-HD-DVD-player-discontinued> Kuchera, B. (2008) Xbox 360 failure rates worse than most consumer electronics. [online]. [Accessed 14 November 2010]. Available from: <http://arstechnica.com/gaming/news/2008/02/xbox-360-failurerates-worse-than-most-consumer-electornics.ars> Peckham, M. (2009) Xbox 360 'Least Reliable' Console. [online]. [Accessed 20 November 2010]. Available from: <http://www.pcworld.com/article/171303/xbox_360_least_reliable_console.html> Rozkov, J. (2010) The Failure Rate of Microsofts Xbox 360 : UAT Research Article. [online]. [Accessed 17 November 2010]. Available from: <http://juleslessthanthr33.wordpress.com/2010/03/21/the-failurerate-of-microsoft%E2%80%99s-xbox-360-uat-research-article> phgamer. (2007) Top 4 reasons piracy hasnt hit the PS3. [online]. [Accessed 15 November 2010]. Available from: <http://phgamer.wordpress.com/2007/10/30/top-4-reasons-piracy-hasnt-hit-the-ps3>
Trial ability MSN Entertainment. (2010) Xbox 360 Kinect nu te spelen in 4 'tijdelijke' winkels (Dutch). [online]. [Accessed 15 November 2010]. Available from: <http://entertainment.nl.msn.com/specials/xbox_kinect/article.aspx?cp-documentid=155157052> Fakhruddin, M. (2010) John Carmack believes online distribution is the future of everything. [online]. [Accessed 29 November 2010]. Available from: <http://tbreak.com/megamers/16221/news/johncarmack-believes-online-distribution-is-the-future-of-everything.html> Steam. (2010) Steam, The Ultimate Online Game Platform.[online]. [Accessed 21 November 2010]. Available from: <http://www.steampowered.com> Observability Seay A. (2006) Project Massive: The Social and Psychological Impact of Online Gaming. Ph.D. thesis, Carnegie Mellon University. Lowensohn, J. (2009) Hands-on: Social networking on Xbox 360.[online]. [Accessed 17 November 2010]. Available from: <http://news.cnet.com/8301-27076_3-10375398-248.html>
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Social Media Trader. (2008) A Brief Introduction To Alternate Reality Games.[online]. [Accessed 20 November 2010]. Available from: <http://socialmediatrader.com/a-brief-introduction-to-alternatereality-games> Lovell, N. (2009) A Brief Introduction To Alternate Reality Games.[online]. [Accessed 16 November 2010]. Available from: <http://www.gamesbrief.com/2009/09/six-secrets-of-farmvilles-success-and-33-millionpeople-agree> Kuchera, B. (2009) Co-op gaming is here to stay: Ars helps you find players.[online]. [Accessed 14 November 2010]. Available from: <http://arstechnica.com/gaming/news/2009/01/co-op-gaming-ishere-to-stay-ars-helps-you-find-players.ars> Chen, S. (2009) The Social Network Game Boom.[online]. [Accessed 14 November 2010]. Available from: <http://www.gamasutra.com/view/feature/4009/the_social_network_game_boom.php>
Communication channels & Homogeneous groups 1 <http://consoles.technologylegion.com/page/xbox-com-voices-trixie-360-s-gamer-spotlight-1>
Pace of innovation/reinventions 2 http://en.wikipedia.org/wiki/Xbox_360 var authorId = "47061140" by Levi Buchanan (2010-06-14). "E3 2010: Xbox 360 Slims Down Today Xbox360 News at IGN".
Norms, roles and social networks Sarju Shah, Gamespot (July 23, 2008) Microsoft gives a new Xbox 360 experience http://www.zdnet.com/news/microsoft-gives-a-new-xbox-360-experience/211916
Opinion leaders Jrg Mller-Lietzkow and Sandra Urban (Friedrich Schiller University Jena), Article: the influence of advertising budgets on product ratings and consumer spending Compatibility OHara, R. (2009) Console Backwards Compatibility, Haw Haw. [online]. [Accessed 16 November 2010]. Available from: <http://www.robohara.com/?p=1661> Sinclair, B. (2007) Original Xbox games coming to Live Marketplace.[online]. [Accessed 16 November 2010]. Available from: <http://www.gamespot.com/xbox/rpg/fable/news.html?sid=6182794>
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Humphries, M. (2009) New game consoles not expected until 2013.[online]. [Accessed 16 November 2010]. Available from: <http://www.geek.com/articles/games/new-game-consoles-not-expected-until2013-2009054/4> Shilov, S. (2007) Microsoft Accused of Eventual Blu-Ray, HD DVD Formats Fiasco.[online]. [Accessed 17 November 2010]. Available from: <http://www.xbitlabs.com/news/multimedia/display/20071205123352_Microsoft_Accused_of_Eventua l_Blu_Ray_HD_DVD_Formats_Fiasco.html> Parr, B. (2010) The Motion Control Video Game War Has Only Just Begun.[online]. [Accessed 18 November 2010]. Available from: <http://abcnews.go.com/Technology/motion-control-video-gamewar-begun/story?id=10954533> Totilo, S. (2008) Sony Non-Shocker: Sixaxis Discontinued.[online]. [Accessed 18 November 2010]. Available from: <http://multiplayerblog.mtv.com/2008/04/02/sony-non-shocker-sixaxis-discontinued> Bath, M. (2010) Sonys PlayStation motion controls fail to Move me. [online]. [Accessed 18 November 2010]. Available from: <http://conversation.which.co.uk/technology/sonys-playstation-motion-controlsfail-to-move-me/> Morris, C. (2010) Why You'll Fall in Love With the Xbox Kinect. [online]. [Accessed 18 November 2010]. Available from: <http://www.foxnews.com/scitech/2010/11/06/fall-love-microsoft-xbox-kinect> Stuart, K. (2010) Wave hello to Microsoft's Kinect.[online]. [Accessed 19 November 2010]. Available from: http://www.guardian.co.uk/technology/2010/jun/15/kinect-xbox-microsoft-e3> Infrastructure Kalning, K. (2010) Microsoft partners with Netflix on Xbox Live. [online]. [Accessed 20 November 2010]. Available from: <http://www.msnbc.msn.com/id/25680004/ns/technology_and_science-games>
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Micro Business Environment

Industry Competitors Entertainment Software Association. (2010) Sales & Genre Data. [online]. [Accessed 24 November 2010]. Available from: http://www.theesa.com/facts/salesandgenre.asp Ferry. (2006) Microsoft lost $1.26 billion launching the Xbox. [online]. [Accessed 20 November 2010]. Available from: http://www.videogamesblogger.com/2006/10/13/microsoft-lost-126-billion-launchingthe-xbox-360.htm Niccolai, J. (2006) Sony Losing Big Money on PS3 Hardware.[online]. [Accessed 20 November 2010]. Available from: http://www.pcworld.com/article/127906/sony_losing_big_money_on_ps3_hardware.html Ureta, J. (2010) Serious Business of Gaming - Vendor Lock-in.[online]. [Accessed 20 November 2010]. Available from: http://www.ggbeyond.com/article/3 Hesseldahl, A. (2001) Xbox Success? Not So Fas.[online]. [Accessed 20 November 2010]. Available from: <http://www.forbes.com/2001/11/16/1116xbox.html>
Potential Entrants / Threat of New Entrants a b c "Xbox Press : A Letter from Marc Whitten: Discontinuation of Xbox LIVE for Original Xbox Games". Xbox.com. 2010-02-05. Retrieved 2010-11-11. Boyes, Emma (2006-11-22). "More PS3 exclusives head to 360". GameSpot. Retrieved 2007-12-18. Cnet news (2010. Microsoft Trims Xbox Price. [online]. Retrieved 2010-11-28. Available from: ) http://news.cnet.com/2100-1040-913832.html Gamespot (2008) a b "Grand Theft Auto IV Comes to Xbox 360 on Day One". Retrieved 2008-05-24. Lai, Marcus (2007-08-30). "Wii, Xbox 360 sales up; PS3 down at Ebay". Punch Jump. Retrieved 2007-1122. McDougall, Paul (2007-07-20). "Microsoft Xbox 360 Sales Plunge 60% As Problems Mount". Information Week. Retrieved 2007-11-22. Sakazaki, Lloyd (2006-12-11). "Seventh Generation Gaming Consoles: Thinking Outside the Box". Seeking Alpha. Retrieved 2008-06-08. Sakazaki, Lloyd (2006) "Seventh Generation Gaming Consoles: Thinking Outside the Box". Retrieved 2009-01-12.
47
Torrence Davis (2008-04-17). "Xbox 360 Comes In 2nd For March Sales". The Bitbag. Retrieved 2009-0323.
Suppliers of xbox360 Matthew Yi, Chronicle Staff Writer (August 15, 2003), ''Nvidia loses Xbox / Microsoft turns to chipmaker's competitor'', . [online] Available at: http://articles.sfgate.com/2003-0815/business/17502789_1_nvidia-corp-microsoft-and-nvidia-nvidia-shares.[accessed 2010/11/30] Sander Olson, (Feb. 6, 2003)"Microsoft and nVidia end Xbox dispute".[online: weblog] Available at: http://www.geek.com/articles/games/microsoft-and-nvidia-end-xbox-dispute-2003026/.[accessed 2010/11/30] Wavey Dave Baumann,(2006) "ATI Xenos: Xbox 360 Graphics Demystified". Beyond3D. http://www.beyond3d.com/content/articles/4/. [Accessed 2006-04-11] Julia Talevski,(2010/8/30) "ATI to be re-branded as AMD", [online] Available at: http://www.arnnet.com.au/article/358774/ati_re-branded_amd/. [Accessed 2010/12/8] Brad sams, (2010-8-30) "AMD kills off the ATI brand name".[oneline: weblog] Available at:http://www.neowin.net/news/amd-kills-off-the-ati-brand-name. [accessed 2010/11/30] Dean Takahashi, Electronic Business, (May 1, 2006) "Learning from failure - The inside story on how IBM out-foxed Intel with the Xbox 360" [Accessed 2010/12/8] Jay Lyman, (2003-3-11). "IBM Gets Xbox, Intel Wins Gateway and Dell", [oneline news: ECT News Network],Available at: http://www.linuxinsider.com/story/32030.html.[accessed 2010/11/30] Hillis, Scott (2008-01-03). ""Major Nelson" emerges as face of Xbox".[online] Available at: http://www.reuters.com/article/technologyNews/idUSN0265215120080103?pageNumber=2&virtualBr andChannel=0&sp=true. [Accessed 2008-05-18]
Buyers 2 http://www.wikicfo.com/wiki/Buyer%20Bargaining%20Power%20%20one%20of%20Porters%20Five%20Forces.ashx 3 Porter's Five Forces Analysis (By Chris Mallon ) http://ezinearticles.com/?Porters-Five-Forces-Analysis&id=15116 4 Steven Williamson, Published: Mon 19th Feb, 2007 http://gaming.hexus.net/content/item.php?item=7898
48
Macro Business Environment

Political: Becker, David (2003-03-31). "Hacker cracks Xbox challenge". News.com. Retrieved 2007-07-18. Phoenix. "Phoenix Bios Loader". Xbox-HQ.com. Retrieved 2007-07-18. Rybka, Jason (2007) "Modchips - What Are They and Should You Use One?". About.com. Retrieved 200707-18. SLuSHIE (2004-03-30). "Flashing TSOP With ANY Version XBOX V1.0-V1.5 For Noobs". I-Hacked.com. Retrieved 2007-07-18. Steil, Michael (2005) "17 Mistakes Microsoft Made in the Xbox Security System". Chaos Computer Club. Retrieved 2010-08-16. Steil, Michael (2007-02-07). "Xbox Hardware Overview Xcalibur". Xbox Linux. Retrieved 2007-07-18. Xbox.com (October 2006) "Xbox Live Terms of Use". Retrieved 2007-07-18.
Economical CBS Eurostat (2010) Total expenditure on social protection per head of population. [online] [Accessed 2nd December 2010]Available from: <http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&language=en&pcode=tps00099&tableSelec tion=1&footnotes=yes&labeling=labels&plugin=1> CBS (2010) Bestedingen; beknopte indeling naar huishoudkenmerken. [online] [Accessed 2nd December 2010] Available from: <http://statline.cbs.nl/StatWeb/publication/?VW=T&DM=SLNL&PA=60046ned&D1=0&D2=0,2,10,15,18, 22,28&D3=a&HD=101202-1417&HDR=T,G1&STB=G2> CBS Eurostat (2010) all items - annual average indices [online] [Accessed 2nd December 2010] Available from: <http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&language=en&pcode=tec00027&tableSelec tion=1&footnotes=yes&labeling=labels&plugin=1>
49
Environmental The age (2008) Toxic chemicals found in game consoles [online] [accessed at 29th November 2010] Available from: <http://www.theage.com.au/articles/2008/05/21/1211182842431.html> Cnet.uk (2008) Greenpeace finds hazardous chemicals in PS3, Xbox 360 and Wii [online] [accessed at 29th of November 2010]. Available from: <http://crave.cnet.co.uk/greentech/greenpeace-finds-hazardous-chemicals-in-ps3-xbox360-and-wii-10001194/>
Socio-cultural Nicholas Deleon,(December 8, 2009). "Xbox 360: Not big in Japan", [online:weblog] Available at: http://www.crunchgear.com/2009/12/08/xbox-360-not-big-in-japan/ [accessed 2010/12/3] Brian X. Chen, (February 26, 2009) "Why the Japanese Hate the iPhone" [online: weblog] Available at: http://www.wired.com/gadgetlab/2009/02/why-the-iphone/ [accessed 2010/12/3] Simon Priest,(01.11.2010) "Japan 'negative' over first Xbox". [online] Available at: http://www.strategyinformer.com/news/9714/japan-negative-over-first-xbox.[accessed 2010/12/3] ""Project Natal" 101". Microsoft. (2009-06-01). Archived from the original on 2009-06-01. http://blog.seattlepi.com/digitaljoystick/archives/169993.asp. [Accessed 2010/12/3] Pham, Alex (2009-06-01). "E3: Microsoft shows off gesture control technology for Xbox 360". [online: news-Los Angeles Times.] http://latimesblogs.latimes.com/technology/2009/06/microsofte3.html. [Accessed 2010/12/3]. Joe Anderson, (June 18th, 2010) "Microsoft hoping to Kinect with Japan", [online] Available at: http://www.vg247.com/2010/06/18/microsoft-hoping-to-kinect-with-japan/ [accessed 2010/12/3] "Xbox hopes to Kinect with Japanese market", Sept. 16, 2010 [online: Associated Press] Available at: http://www.deseretnews.com/article/700066035/Xbox-hopes-to-Kinect-with-Japanesemarket.html.[accessed 2010/12/3] Technological Csar A. Berardini (May 12th, 2005) The Xbox 360 Dissected, <http://features.teamxbox.com/xbox/1145/The-Xbox-360-Dissected>
50
Recommendations
Snow, B. (2006) Xbox 360 costs $715 to make.[online]. [Accessed 2 December 2010]. Available from: http://www.joystiq.com/2005/12/28/xbox-360-costs-715-to-make Ferry. (2006) Microsoft lost $1.26 billion launching the Xbox.[online]. [Accessed 20 November 2010]. Available from: <http://www.videogamesblogger.com/2006/10/13/microsoft-lost-126-billion-launchingthe-xbox-360.htm> Ricker, T. (2008) Official: HD DVD dead and buried, format war is over. [online]. [Accessed 7 December 2010]. Available from: http://nexus404.com/Blog/2010/09/23/blu-ray-on-xbox-360-never-says-ukmicrosoft-director-stephen-mcgill-says-that-blu-ray-will-be-outdated-by-digital-distribution-no-needfor-blu-ray-drive-on-xbox-360 Schram, K. (2010) Blu-Ray On Xbox 360? Never Says UK Microsoft Director. [online]. [Accessed 6 December 2010]. Available from: http://nexus404.com/Blog/2010/09/23/blu-ray-on-xbox-360-neversays-uk-microsoft-director-stephen-mcgill-says-that-blu-ray-will-be-outdated-by-digital-distribution-noneed-for-blu-ray-drive-on-xbox-360 Carnoy, D. (2010) The case of the missing Xbox 360 Blu-ray player. [online]. [Accessed 8 December 2010]. Available from: http://reviews.cnet.com/8301-21539_7-20007826-10391702.html Oliver, S. (2009) GameStop To Test Digital Distribution Game Strategy. [online]. [Accessed 8 December 2010]. Available from: http://hothardware.com/News/GameStop-To-Test-Digital-Distribution-GameStrategy Steam. (2010a) Steam, The Ultimate Online Game Platform.[online]. [Accessed 8 December 2010]. Available from: <http://www.steampowered.com> Steam. (2010b) Steam, The Ultimate Online Game Platform.[online]. [Accessed 8 December 2010]. Available from: <http://store.steampowered.com/news/3390> Spotify (2010) Steam, Spotify is a new way to listen to music. [online]. [Accessed 9 December 2010]. Available from: <http://www.spotify.com> Ullian, J (2007) How iTunes Saved the Music Industry.[online]. [Accessed 9 December 2010]. Available from: <http://www.bu.edu/today/node/5041> Jared. (2008) Unreadable Disc Error Xbox 360 DVD Drive .[online]. [Accessed 9 December 2010]. Available from: <http://www.geekinspired.com/computer-hardware/xbox-360-dvd-drive-unreadabledisc> Kuchera. (2009) Ars talks digital distribution with Sony, plays with PSP Go .[online]. [Accessed 7 December 2010]. Available from: <http://arstechnica.com/gaming/news/2009/06/ars-talks-digitaldistribution-with-sony-plays-with-psp-go.ars> On-Live. (2010) Introducing the On-Live Game System: Instantly play, watch, demo, choose and share the games you want.[online]. [Accessed 9 December 2010]. Available from: < http://www.onlive.com> 51
Terdiman, D. (2009) On-sLive could threaten Xbox, PS3, and Wii.[online]. [Accessed 9 December 2010]. Available from: <http://news.cnet.com/onlive-could-threaten-xbox-ps3-and-wii> Beavis, Gareth. (2010-11-11). "Xbox 360 Slim announced by Microsoft | News | TechRadar UK". Techradar.com. http://www.techradar.com/news/gaming/consoles/microsoft-announces-new-slimxbox-360-696530.
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Xbox 360 Analysis

DG 511 Analyzing and Modeling NPD Assignor: M.E.H.G. Meuffels

Micro Business Environment: ............................................................................................................14 ii

Appendix A Informed Consent Form: .................................................................................................39

Appendix B Value Ladder for Favourite Games: ..................................................................................40

The company background:

Value chain coverage:

(Dagmar Recklies, 2010)

The current product:

Hierarchical Value Map for Favorite Games:

Analysis of how the Xbox addresses these values:

Ten innovation success factors:

Communication Channels and Homogeneous Group:

Matte black Chrome disc drive

October 23, 2009

August 20, 2010

July 16, 2010

Norms, roles and social networks:

Micro Business Environment:

Potential Entrants / Threat of New Entrants:

Macro Business Environment:

3.2 GHz PowerPC TriCore Xenon

4x Xbox controller ports (proprietary USB interface)

Conclusions & Recommendations:

Image (fame of the Company):

Parts Done by Martijn Kors:

Parts Done by Peyman Ahmadi Shahrabad:

Parts Done by Pieter Oosterwijk:

Parts Done by ZheLiuyi Wang:

Appendix A Informed Consent Form:

Signed: ________________________________________ (Signature) Date:

Appendix B Value Ladder for Favourite Games:

Communication channels & Homogeneous groups 1 <http://consoles.technologylegion.com/page/xbox-com-voices-trixie-360-s-gamer-spotlight-1>

Micro Business Environment

Macro Business Environment

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