Microsoft’s Strategy is Rapacious

12 04 2010

The Xbox 360 is a huge success, mainly because of the strategy microsoft had when launching it, and the way they handle that strategy is working to gain more sales, but in the end it ends up hurting the user, while still getting money from it. Their strategy is very rapacious.

Launching a console at the cheapest price point possible was the first thing they did, and by doing so most of the console features became accessories, which Microsoft overcharges for to regain the costs lost from the console. The Wi-fi accessory is $100, yet you can get one for you computer for under $20. Xbox live is $50 a month, and every other game platform is free. This strategy makes the console appear that the console is a cheap buy, but you end up spending much more money in the long run than the other two consoles.

By rushing the console out to the market so quickly to beat out the competition, they ended up launching a very faulty product with a failure rate in the 30%-50% range. Ultimately this lead to more console sales, as people already have a ton of accessories and games for the system, they send it in, and it breaks shortly later, and this continues until they buy a new console, this yields more money for Microsoft, and more console sales than they should have, making them look good against the competition. Because of the fact that accessories cost so much, and people already have a game library, they don’t switch to another console, they simply buy a new one.

This strategy is also used with games, and is the reason Microsoft has not fixed the circle scratch problem. People buy a game, love it, and then bump their console scratching the disk. They then shrug, and go out buying a new game simply because they want to play it some more, yielding higher sales for games on the system.

In short the reason Microsoft refuses to fix these problems with their console is its unfortunately helping them in the long run, thanks to failures being so high they end up getting higher game and console sales than they should thanks to the stupidity of most people. The even more sad part is if the competition were to have this problem people should frown apon it, where as while the xbox has these problems, people laugh and say “Another read ring, time to buy another console!”.

Check back soon where i analyze Sony and Nintendo’s strategies in the current console generation.

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