Analyst talks about the end of Xbox 1 production

[Anthony1]

Ok, this is a fake headline. But it could turn out to be real. I actually talked about this in another thread, but nobody picked up on that, instead the discussion focused on other things and I think this is a very important discussion that should take place, so let me break down my theory and the very interesting ramifications of that possibility:


1. Microsoft is set to release their next gen system, the XBOX 360, sometime in November of this year.

2. Microsoft continues to take a small loss on every XBOX sold. It isn't as bad as it used to be, but it's still a loss.

3. Once the XBOX 360 is available in stores, there really isn't a huge incentive for Microsoft to continue to manufacture the old system at a loss, no matter how small the loss might be. (remember, Microsoft is a publicly traded company)

Ok, now let's take a look at the three options that they have regarding the production of the original XBOX unit "after" the 360 is available at retail:


1. Halt production of the XBOX 1 sometime in 2006. This would avoid a huge consumer backlash by starting early and having no old XBOX systems to sell for Xmas. The old XBOX is still a very hot item, and consumers still want it. If they stopped production right now and didn't have any XBOX 1's to sell this Xmas, there would be alot of pissed of customers that most likely would either turn to PS2 or if they had a PS2 already, boycott the XBOX 360 and wait for PS3. By waiting till sometime in 2006, at least they avoid the consumer backlash for the 2005 holiday season.

2. Once the XBOX 360 becomes available, they actually increase the price of the old XBOX 1 system to $199.99. Now certainly, this would be unheard of, but they could rationalize this if they had to. They could explain that they lose money on every XBOX sold, and that they have conceded the current generation to the PS2, and they are moving on with the XBOX 360. They will continue to produce the first XBOX, but they are no longer going to take losses on every unit they sell, so they actually increase the MSRP to $199.99. Certainly, alot of people will be real pissed, but they can take it or leave it. It's actually a interesting thing to figure out if there would be more consumer backlash from them raising the price or for them to stop production.

3. Sometime in the very near future, possibly even at the e3 show they announce that in addition to the XBOX 360, they also have a redesigned XBOX 1 unit. This unit won't come with a hard drive, and it will include some other type of technology that will allow it to still work fine with the "majority" of XBOX games, but not all of them. This new redesigned unit will allow them to manufacture it with considerable cost reductions, allowing them to sell it at $149.99 and actually make a small profit off of every unit sold. Personally, I see this as the most unlikely scenario, considering the cost and effort it would take to come out with a redesign and all the time and money they are spending on launching the 360. Not a likely scenario, but you never know.

[Anthony1]

oops! This is in the wrong forum. Sorry bout that, Please move it over to the "Video Game" forum. My bad.

[pacmanhat]

MS has already stated that it's going to continue production on the Xbox through 2007. So...there's really no speculation.

[Anthony1]

MS has already stated that it's going to continue production on the Xbox through 2007. So...there's really no speculation.

I haven't heard that, but even if I did, I would take that with a grain of salt. No way they are going to continue to loose money on old XBOX systems for two more holiday seasons.

[Leo_A]

I don't really understand the purpose of making this thread, but I disagree. I think they will continue beyond the date you stated.

[InsaneDavid]

I don't really understand the purpose of making this thread...

To earn meseta.

[Nez]

Why stop?
Its still a powerfull system, I could understand stoping game porduction if the system was much weaker then the PS2 (making porting jobs much more difficult). But as is the system is still viable plus there are many units in households thoughtout the world.

[GrandAmChandler]

Damn this heading freaked me out! I think they will make it smaller, honestly. Unless Microsoft uses there checkbook power and takes the extra hit on the profit loss of the console.

[MegaDrive20XX]

When I saw the date, I thought it was serious news, only to figure out it was a Poll. Damn my eyes! "Too late!"

That's the last time I listen to a date stated on a poll! yeesh

Seriously, I'm going with the 2007 theory, sounds more solid.

[Anthony1]

Why stop?
Its still a powerfull system, I could understand stoping game porduction if the system was much weaker then the PS2 (making porting jobs much more difficult). But as is the system is still viable plus there are many units in households thoughtout the world.

Why stop?

Did you read my post? They are still losing money on every XBOX system they sell. Once somebody can go into a store and buy a XBOX 360, then what is the motivation for them to continue to produce the old system that causes them to loose money?

Now, are they going to stop making games for XBOX 1? No. Of course not. They will still make games for the old XBOX, probably all the way into 2007, (by the way I'm talking about 1st party Microsoft games, not 3rd parties. 3rd parties will probably make games for it all the way till 2009 or so). But why would they continue to make the old hardware, if they are losing money on the old hardware, and they would actually rather have somebody buy a 360. In a way the old XBOX would actually be competing with the new one.

It just doesn't make sense for them to continue to produce old XBOX systems, unless they either raise the price so that it's actually profitable for them, or if they totally redesign the unit and save a ton of money in the manufacturing process and therefore make some actual profit on it's current price.

[Nez]

Why stop?
Its still a powerfull system, I could understand stoping game porduction if the system was much weaker then the PS2 (making porting jobs much more difficult). But as is the system is still viable plus there are many units in households thoughtout the world.

Why stop?

Did you read my post? They are still losing money on every XBOX system they sell. Once somebody can go into a store and buy a XBOX 360, then what is the motivation for them to continue to produce the old system that causes them to loose money?

Now, are they going to stop making games for XBOX 1? No. Of course not. They will still make games for the old XBOX, probably all the way into 2007, (by the way I'm talking about 1st party Microsoft games, not 3rd parties. 3rd parties will probably make games for it all the way till 2009 or so). But why would they continue to make the old hardware, if they are losing money on the old hardware, and they would actually rather have somebody buy a 360. In a way the old XBOX would actually be competing with the new one.

It just doesn't make sense for them to continue to produce old XBOX systems, unless they either raise the price so that it's actually profitable for them, or if they totally redesign the unit and save a ton of money in the manufacturing process and therefore make some actual profit on it's current price.

Ok they should continue making the Xbox becouse companys will still create more games for the system, there for need a licence from Microsoft to do so. That is why I dont think theyll stop anytime soon.

[-hellvin-]

Why stop?

Did you read my post? They are still losing money on every XBOX system they sell. Once somebody can go into a store and buy a XBOX 360, then what is the motivation for them to continue to produce the old system that causes them to loose money?

Now, are they going to stop making games for XBOX 1? No. Of course not. They will still make games for the old XBOX, probably all the way into 2007, (by the way I'm talking about 1st party Microsoft games, not 3rd parties. 3rd parties will probably make games for it all the way till 2009 or so). But why would they continue to make the old hardware, if they are losing money on the old hardware, and they would actually rather have somebody buy a 360. In a way the old XBOX would actually be competing with the new one.

It just doesn't make sense for them to continue to produce old XBOX systems, unless they either raise the price so that it's actually profitable for them, or if they totally redesign the unit and save a ton of money in the manufacturing process and therefore make some actual profit on it's current price.

Well, considering how long I saw sony ship us playstation one units to our store since I've worked there from 2002, it's probably safe to say Microsoft will continue making units for a little while. The more important question though is why ask? All answers are useless speculations. Let's just wait and see.

[Anthony1]

Why stop?
Its still a powerfull system, I could understand stoping game porduction if the system was much weaker then the PS2 (making porting jobs much more difficult). But as is the system is still viable plus there are many units in households thoughtout the world.

Why stop?

Did you read my post? They are still losing money on every XBOX system they sell. Once somebody can go into a store and buy a XBOX 360, then what is the motivation for them to continue to produce the old system that causes them to loose money?

Now, are they going to stop making games for XBOX 1? No. Of course not. They will still make games for the old XBOX, probably all the way into 2007, (by the way I'm talking about 1st party Microsoft games, not 3rd parties. 3rd parties will probably make games for it all the way till 2009 or so). But why would they continue to make the old hardware, if they are losing money on the old hardware, and they would actually rather have somebody buy a 360. In a way the old XBOX would actually be competing with the new one.

It just doesn't make sense for them to continue to produce old XBOX systems, unless they either raise the price so that it's actually profitable for them, or if they totally redesign the unit and save a ton of money in the manufacturing process and therefore make some actual profit on it's current price.

Ok they should continue making the Xbox becouse companys will still create more games for the system, there for need a licence from Microsoft to do so. That is why I dont think theyll stop anytime soon.

Publishers are going to continue releasing XBOX 1 games regardless if any more XBOX 1 systems are sold. There are enough XBOX systems in the U.S. already to ensure that new software will come out all the way to at the very least 2008.

[Anthony1]

Why stop?

Did you read my post? They are still losing money on every XBOX system they sell. Once somebody can go into a store and buy a XBOX 360, then what is the motivation for them to continue to produce the old system that causes them to loose money?

Now, are they going to stop making games for XBOX 1? No. Of course not. They will still make games for the old XBOX, probably all the way into 2007, (by the way I'm talking about 1st party Microsoft games, not 3rd parties. 3rd parties will probably make games for it all the way till 2009 or so). But why would they continue to make the old hardware, if they are losing money on the old hardware, and they would actually rather have somebody buy a 360. In a way the old XBOX would actually be competing with the new one.

It just doesn't make sense for them to continue to produce old XBOX systems, unless they either raise the price so that it's actually profitable for them, or if they totally redesign the unit and save a ton of money in the manufacturing process and therefore make some actual profit on it's current price.

Well, considering how long I saw sony ship us playstation one units to our store since I've worked there from 2002, it's probably safe to say Microsoft will continue making units for a little while. The more important question though is why ask? All answers are useless speculations. Let's just wait and see.

Comparing the PSone to the current XBOX really isn't a valid comparison. When Sony redesigned the playstation they saved alot of money in the manufacturing process and they actually made a nice little profit on every PSone that was sold. But with the XBOX, it's a totally different scenario. Microsoft is still losing money on every console they sell. The only way they can make a profit is to raise the price to $199.99 and even then the profit wouldn't be very significant.


And the reason that I'm asking this question, is because I personally think it's a very interesting situation that Microsoft is creating for themselves. Although I plan on buying a XBOX 360 the day it comes out, I personally think it's a mistake by Microsoft to come out so early, and I find it to be a very interesting pickle that they are going to be in, in terms of how to handle the whole XBOX 1 and XBOX 360 situation.

Normally it's not that big of an issue when a company decides to release a new system. Usually they continue to make the older system for a couple of years more, but with the XBOX this is totally uncharted territory considering the fact that they are actually losing money off of every unit sold.

[petewhitley]

I hope they keep making them, if only because I would like to see the online community on Xbox (1) keep going for some time. If Microsoft is smart they'll have individual Xbox Live accounts work with both the Xbox and the Xbox 360.

[Cryomancer]

I'd imagine that to be very probable. Supposedly Live will be part of longhorn as well...so I'd say eventually all microsoft games, xbox or pc, will be part of Live. It's hard to say how they'll handle the PC side of that though...

[Jasoco]

I picked option C because I truly would like to see them try to cram an Xbox into a smaller case. I doubt it will happen, but it's the only one I can see happening.

What's with "Raise the price"? Why would they raise it? Not as long as Sony's costs $150.

To earn meseta.

You didn't make much with that post.

[hezeuschrist]

The console will run the course of it's life like any other console. They'll follow the same model Nintendo did for the N64, or the SNES, or what Sega did with the Saturn when the Dreamcast came out. It'll run the course of its useful life and that'll be the end of it. Its useful life does not expire in 2006, thats a garantee.

The issues of profitability was a non-factor for Microsoft in this round, and just because the next round will begin in November doesn't mean the theory changes for this generation.

They'll probably re-release the system at some point as most major US consoles go through some kind of revision over the span of their lives.

[Gemini-Phoenix]

Ok, firstly, is the November launch accurate? I have a feeling that teh date will slip to closer to christmas, if not after the new year.

Secondly, I assume it will get a launch in Japan first - If that is the case, then is this November date for the Japanese launch, or for the US / European launch?


Ok, down to the matter at hand - I reckon they will probably do a redesign (A la PSone / PStwo) but maybe cut out teh hard drive feature. Or, they will just condense everything into the size of a DreamCast.


Honestly - Is there even any real reason why the Xbox is so huge three years after it was launched? Just look how much smaller they made the PS2 (Bearing in mind half the original PS2 was just an empty space)

[Captain Wrong]

I don't really understand the purpose of making this thread...

To earn meseta.

You don't suppose, do ya?

I keed I keed.