Pebkio said:
Narcogen said:
Sniped because my post is too long...
Okay, let's go through a few basics with you:
Consoles seem more powerful than lesser rigs, true, but because they're made to be specialized. Meaning that they can ONLY do the small amount of tasks a console is designed to do, generating less software overhead and letting the processor run more efficiently. The invisible hand of money didn't make it that way, it was just the design of the hardware.
No, that's wrong. Consoles seem more powerful than comparable priced rigs *at launch* because they are subsidized. Before economies of scale kick in, before the refined designs and processes make the manufacturing cheaper, before later in the cycle, consoles cost the manufacturers more to make than they sell them for. That, combined with being single purpose devices lacking many of the parts and features that general purpose computers have, is what allows for hitting the $300 and below price points that enable both mass adoption and repeated upgrades for users who are not PC gamers. It is unlikely that one or the other alone would achieve it. The revenue is eventually made up because the platform holder gets revenues from developers in various ways, without which, those developers cannot access the market.
Console makers subsidize their hardware development and initial deployment with the portion they get from being the single channel through which software can be made available.
Pebkio said:
You say that like it's supposed to make sense. That's insane. Acer isn't losing mad cash by selling personal computers so why is Microsoft losing mad cash by selling proprietary computers? This is one of those "God works in mysterious ways" statements. You aren't really thinking about it, you just accept that companies HAVE TO use exclusive software because hardware is too expensive for them.
Case-in-point: PC users didn't put up with that nonsense from Microsoft in the 90s.
I say that like it's supposed to make sense because it has, and does, and likely for the foreseeable future will make sense. In this case, "makes sense" means that it functions in the marketplace, not that you personally like it.
I've worked in mobile communications for several years, working with manufacturers of mobile devices. That market also heavily subsidizes devices. The majority of users for both of these services will not pay the manufacturer's full price (cost plus margin) for these devices. A third party-- in one case, the console platform holder, in the other, the mobile operator) needs to make that up with a subsidy. That party needs to make up the difference somehow, which is what leads to distribution channel monopolies and consoles that have a single manufacturer rather than an open design and many OEM partners.
I am really thinking about it. I've thought about it and dealt with these pricing issues every day for years. The razor and blade model is still around after all this time because it works. It hasn't gone away because no matter how many pundits have put forth this "universal machine" idea, it hasn't gone away. That's because the universal machine was always here: it's the PC. The parties that have been trying to add the console's advantages to the PC market (ease of use, curated distribution channels, stable hardware targets) end up making that platform more like a console. First, Valve introduced Steam, which is a curated channel, and now they're working on hardware. It's possible that Valve's warchest may allow them to take that step without making Steam the only distribution channel for the platform may be true, but it doesn't mean anyone could do it; it may also just be a vote of confidence that they believe Steam is the only digital distribution channel on the PC that matters anymore, and therefore is a de facto monopoly anyway. Given that the Piston doesn't have an optical drive, that may be restriction enough. We'll see.
Acer isn't losing mad cash? Are you sure about that?
http://www.engadget.com/2012/04/26/acer-2012-q1-financials/
In the first quarter of last year, Acer made a mere $11.2M in profit while being a top 5 computer manufacturer. They are absolutely one of the best examples of a victim of the race to the bottom, along with Dell and HP. Other preeminent makers, like IBM, got out of the business already.
Q3 got even worse, as net profit dropped to a mere $2.3M:
http://www.engadget.com/2012/10/22/acer-q3-2012-financials/
Given that Acer lost $212M in 2011, those kinds of results are a move in a positive direction, but it may be too little, too late. Q4 results are not out yet.
Raise the fees, and you'll have no OEMs, so the openness of your platform is for nought. Lower them, and your partners will kill you.
Pebkio said:
Well gee, Batman, why doesn't every company ever just form a small monopoly then? I'm pretty sure if we made a road system that only let American cars drive on it, GM wouldn't have needed a bail-out. Let's just forget the fact that GM needed that bail-out because it's competition was better in the eyes of the market.
Why don't they? Because not every company can. There's no need to invent an imaginary and impossible-to-build "GM-only" road system when you can have import tariffs on foreign automobiles-- which we do. Of course, US citizens who want to purchase foreign cars, or be in the business of importing foreign cars, don't want those tariffs to be too high, so it's not a monopoly, just a barrier to entry.
Even if such a road could exist, GM would have to spend money to "upgrade" enough of the roads to this new system for the monopoly to exist. They'd have to pay for it themselves, or find revenue for it. That brings us back to subsidy. If there's no incentive for end-users to pay the "GM road toll" to drive their GM automobiles on, then they won't. If not, then you need someone else to subsidize you, and in this case, that's the US government, because they have an interest in not seeing GM become insolvent and put all of its workers out on the street (just the ones it wants to, when it wants to, when it's profitable for GM to do so).
Creating a walled garden ecosystem on the internet, by contrast, is not technically difficult. Convincing users to invest in it is difficult, and convincing developers to create apps or games for it without users is impossible.
Again, if what you doubt is that a subsidy is necessary, look at the discussion at NeoGAF. Valve and xI3 I think have miscalculated a bit given that they've announced no final specs or pricing, which means that journalists have filled in the gaps by looking at current offerings. PC and console gamers alike are scoffing at the specs and pricing of those offers-- console users because the prices are too high ($500 and $1000) and PC users because the specs are too low. Without a subsidy, there is no market for this product at those price points. xI3 either needs to lower their margins and eat the difference, and without volume guarantees there's no reason for them to do so, or Valve needs to subsidize them. Perhaps that's what their investment is, a form of subsidy. Obviously they don't know how much of a subsidy is involved here, or they'd have announced pricing-- or perhaps they didn't anticipate current reaction; but they should have.
Pebkio said:
Finally, Valve is a publisher who is dealing mainly in digital distribution. Nothing about that automatically forms the same monopoly as Microsoft's Xbox, Sony's PS3 and Nintendo's Pile O' Poo. They just happen to be the most successful broad-range digital distributor and shouldn't be compared to what consoles are doing.
Not automatically, no. Although without an optical drive, there's a slight (very slight) barrier to entry for your traditional PC gaming brick and mortar distribution. Of course, there are plenty of other digital distribution channels as well.
The real question is just whether or not Valve makes enough from its existing streams of revenue to pay a subsidy on Steambox hardware, and whether that will grow Steam enough to make it worthwhile or not. It may be that they're willing to make less in order to steal marketshare. It's interesting to note, though, that so far the big 3 console manufacturers have not. Sony and MS both use the razor and blades model, while Nintendo makes its hardware specs low enough that subsidies are not necessary to hit the low price points (and consequently are far more dependent on first party development and close partners than either MS or Sony are).
As I wrote above, Valve may consider Steam to be so dominant in digital distribution that it doesn't need a technical exclusive to function; a de facto one may be good enough. That's a clever strategy, in that it allows them to tick the "we're an open architecture" checkbox that's politically important in certain segments of the market (PC gamers) and save the cost of actually maintaining any technical barriers to entry. Of course, they're still spending on just about all the other things that those platform holders have to do, except API development. MS is still doing that, and perhaps if Steambox owners end up shelling out for a Windows license, they'll be happy with that take.
It's still an open question whether the Steambox will really grow the market for Steam, or just cannibalize existing PC gamers. We'll see.
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Pebkio said:
But since you asked, okay, I'll give you a system:
In a world, in which all consoles could play all games. Each company would have to hire an analyst. That analyst runs several tests of their particular target consumers (every year) and comes back with a sliding scale of features-to-cost... with the mean of the scale being what their patrons would most likely be willing to pay for. (We'll guess as to what each company would be doing)
Nintendo would make the cheap pieces of crap. [snip]
Xbox would be in the middle. [snip]
Sony would be the high-end producers. [snip]
Then there would be the pretentious open-source console, Ouya. [snip]
Now, since exclusivity is a lie in this world, each company would do the same thing: Make a child company to publish games.
Each company would have it's own market, not through exclusivity, but through what that market's consumers wanted from the console. There would still be new controllers and even motion control, but it would be up to game developers to provide working facsimiles. And they would be able to, because the encoding for each console would have to be the same. There would be those gimmicky games, but efficiency would drive true innovation.
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There, a system that works. Sure it doesn't produce the most amount of profit, but I think we're worshiping money a bit too much as it is. We don't need the MOST profit... just profit. Oh yeah, and consoles wouldn't be under-priced. Remember when I brought up that console producers are losing money on every console? It's because consoles cost more than what they're selling them for. Ask yourself why they're doing that. This post is long enough as it is, so I won't get into it here. But I'm hoping you can come up with the reason yourself.
Just like Yahtzee, you've described the surface appearance of how a system works-- who makes what, and who sells what to whom and how much for.
If I'm Microsoft, why do I like the above model better than the one I have? What would possibly make me switch to it? What about Sony?
That's what I mean by a model that works. It has to be a model that is demonstrably better than the current one, not just for the end-user but for the manufacturers and developers as well. Since you've admitted above that this model doesn't maximize profit, those guys are out and this whole idea is a pipe dream. Even if the companies above entered into a anti-competitive cabal to divide the marketplace-- which is exactly what you've described above-- unless they could keep everybody else out, you'd have a new entry in to use the old razor blade model and undercut them on price right away, and nothing would have changed.
While that's going on, you'd probably have at least MS and Sony trying to figure out how to cannibalize each other; MS would come out with a high end unit to try and steal some of Sony's margin, and Sony would come out with a budget unit to take some of Microsoft's volume. Current exclusivities are what allow both companies to play around with similar price points without diversifiying their product lines too much, but if everybody's on the same software platform, that goes right out the window.
Your model also completely fails to account for platform development costs and online services. Since there are no Xboxes or Playstations anymore, what do these new machines run? Who develops it? How do they get paid, and by whom? Who develops platform-wide online services for these games? This is essentially having Sony and MS divest themselves of their OS and online services division and spinning them off into an integrated unit. How will they be compensated for that? Wouldn't each seek to exert undue influence over the actions of this newly independent third party that has such sway over this new supposedly open platform?
The stratification of hardware capabilities above will lead to user dissatisfaction; think of the flamewars we see now regarding the varying performance of cross-platform titles, and now factor in the idea that these differences are intentionally created by the hardware manufacturers in order to hit price points). It also adds additional complexity for developers who no longer have static targets to work on. Again, we have this magic universal platform already-- it's called Windows (for better or worse). The model you suggest above isn't better than either of the existing console or PC gaming system. It combines the best and worst of both in a way that maximizes user convenience, minimizes user cost, and shifts those burdens onto the manufacturers and developers, without compensation.
Unless forced at gunpoint I think the industry would evaporate first-- there's simply no reason to do it. None at all.
