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[Thirty7ven]

And how is this even possible in the first place? Like what? Did they think Series S would fly off the shelves?

It's not hard, Phil Spencer's strategy with the HW was to beat PS5 on price and on power. And they did, Series S got PS5 beat on price and Series X got PS5 beat on power.

Son of a bitch did it. And obviously in their experience console gamers are extremely price sensitive, but you also want to please the hardcore. Explains how they hedged their bets.

 

[gow3isben]

It's not hard, Phil Spencer's strategy with the HW was to beat PS5 on price and on power. And they did, Series S got PS5 beat on price and Series X got PS5 beat on power.

Son of a bitch did it. And obviously in their experience console gamers are extremely price sensitive, but you also want to please the hardcore. Explains how they hedged their bets.

His strategy failed. Series X can never make exclusives that will look as good as the big name Ps5 exclusives because Series S will limit it. And Series S is barely even next gen. It is a pointless limitation to current hardware. That is why Series S barely sells despite major discounts.

To actually beat the PS5 he would need the series X at a cheaper price point.

 

[TheUndeadGamer]

Hmmmm well unfortunately it looks like this will be a 2:1 in favor of PlayStation for this gen also. That's sad to hear.
While I do think the Series S was a mistake, I will say it looks adorable, like the Wii was.

 

[mckmas8808]

It's not hard, Phil Spencer's strategy with the HW was to beat PS5 on price and on power. And they did, Series S got PS5 beat on price and Series X got PS5 beat on power.

Son of a bitch did it. And obviously in their experience console gamers are extremely price sensitive, but you also want to please the hardcore. Explains how they hedged their bets.

But the price isn't the thing that moved markets in the console space.

 

[SportsFan581]

LOL at the overreactions here. There are literally no numbers. You could be talking single digit percentages in one direction or the other for all the systems in question.

Not even saying that the differences are that small, they could be larger, but still without numbers it's much ado about nothing.

 

[Daneel Elijah]

LOL at the overreactions here. There are literally no numbers. You could be talking single digit percentages in one direction or the other for all the systems in question.

Not even saying that the differences are that small, they could be larger, but still without numbers it's much ado about nothing.

The PS5 and the Switch have numbers. And the predictions for the PS5 this year are that it will continue to sell well. We will see if Sony change their plans but I see that their official objective is 23 millions, and the rumor is for a record 30 millions. what do you think will the Xbox do this year? The same ? Half? Or even more than Playstation?

 

[Nothing1234]

LOL at the overreactions here. There are literally no numbers. You could be talking single digit percentages in one direction or the other for all the systems in question.

Not even saying that the differences are that small, they could be larger, but still without numbers it's much ado about nothing.

From Aquamarine on Install Base

NPD 2022

PS5 US NPD HW:
Jan-22: 369K
Feb-22: 128K
Mar-22: 282K
Apr-22: 234K
May-22: 119K
Jun-22: 277K
Jul-22: 301K
Aug-22: 341K
Sep-22: 494K
Oct-22: 456K
Nov-22: 1328K
LTD as of Nov-22: 10592K

XBX US NPD HW:
Jan-22: 307K
Feb-22: 261K
Mar-22: 489K
Apr-22: 267K
May-22: 177K
Jun-22: 260K
Jul-22: 247K
Aug-22: 251K
Sep-22: 288K
Oct-22: 261K
Nov-22: 730K
LTD as of Nov-22: 8736K

Then you add in the fact PS5 best month was December. Yeah it's not pretty for Microsoft in the US at all. We know PS5 > 397k for Jan 23 and Xbox < 307k for Jan 23. Nov 22 was a bloodbath.

 

[SportsFan581]

Then you add in the fact PS5 best month was December. Yeah it's not pretty for Microsoft in the US at all. We know PS5 > 397k for Jan 23 and Xbox < 307k for Jan 23. Nov 22 was a bloodbath.

That's just the kind of numbers I was looking for, thanks for that.

So, we could be looking at 400k vs. 300k (almost an identical line from last year which would make the comments here completely laughable), or we are looking at 1m vs. 10. Realistically, probably something more nuanced in between.

Without numbers it is much ado about nothing.

 

[Nothing1234]

That's just the kind of numbers I was looking for, thanks for that.

So, we could be looking at 400k vs. 300k (almost an identical line from last year which would make the comments here completely laughable), or we are looking at 1m vs. 10. Realistically, probably something more nuanced in between.

Without numbers it is much ado about nothing.

Xbox being behind in their home market and declining marketshare this early in a console generation is a disaster. We know the PS5 is no longer supply constrained in the US so the gap is only going to grow until Starfield. It's very possible Xbox don't win an NPD this year.

 

[SportsFan581]

Xbox being behind in their home market and declining marketshare this early in a console generation is a disaster. We know the PS5 is no longer supply constrained in the US so the gap is only going to grow until Starfield. It's very possible Xbox don't win an NPD this year.

I think everyone expected the PS5 to outsell the Series systems once supply equalized. For MS it is more about, can they push forward over the X1 and improve units sold from where they had been. If they can get the software supply line working well, they might even be able to challenge 360 numbers. At the same time I expect PS5 to crush PS4 numbers, it isn't a zero sum game, both can grow. With the pricing of PC components the way they are, I expect total console volume for the generation to increase by a strong percentage.

Obviously, they need to avoid those 1yr first-party gaps, that's important to. They will bundle hard with Starfield, we'll see what they can do with that.

 

[Heisenberg007]

Well, I've read it from here (some other write-ups on the wafers for the systems are here as well, though this source seems to estimate more Xs than Ss at least for the time period the article was written), and it sounds like they know a good bit about the production process. The way MS have their wafer setup is allocating space for the S and X on one wafer to save costs, rather than having one wafer for S chips and another for X chips. Plus, each wafer has to be provided by TSMC, and they're in limited quantities varying depending on the node.

So basically, the wafer is taped out for 3x as many S chips as X chips; if Microsoft wanted to change that, they'd have to get a new wafer (whether a replacement or just an additional one) and have it taped out for a different ratio. Unfortunately for them, chiplets aren't a thing for RDNA2, otherwise I'm guessing they could have just arranged the wafer for CPUs (since the two systems basically use the same CPU) and GPU chiplet tiles where say Series X has 3 or 4 and the S just has one. There would still be logistical production issues to contend with, just not as early in the pipeline, so they'd of had more flexibility.

Sony doesn't have this problem because all PS5s use the same APU, so it's just a matter of making sure they have enough wafers (and I'm pretty sure Sony paid for more wafers than Microsoft did). MS's setup favors the S but it also means it's pretty inflexible; now that it seems S demand has been tapped out, they would have to increase Series X volume but it doesn't make sense to only use 25% of a wafer, now does it? So then they either eat the costs on not using 75% of a wafer, or they eat the costs putting that 75% in systems that don't have a lot of demand so they have to cut the prices on and lose out in revenue anyway. It's a lose-lose situation.

Or, they buy more wafer and use it solely for X chips, but now that'd be an extra cost in production. Do they then shut down the old wafers that have mostly S chips? They'd still probably have to make something to replace the Series S; even if they don't, they'd still have to maintain support for it through the rest of the generation for the people who purchased one. The logistical production problem for Xbox at the wafer level is even worst than I ever gave thought to before maybe a week ago.

That makes sense. Thank you!

In this case, the problems are even worse for Xbox, and it'll continue to hog the system down. Even if there were demand (which there isn't currently) after Starfield release, hypothetically speaking, they'd continue to suffer from this issue.

I think this may be a leading reason why they must increase their console cost this year.

 

[Nothing1234]

I think everyone expected the PS5 to outsell the Series systems once supply equalized. For MS it is more about, can they push forward over the X1 and improve units sold from where they had been.

Obviously, they need to avoid those 1yr first-party gaps, that's important to. They will bundle hard with Starfield, we'll see what they can do with that.

Before launch people thought this gen would be more competitive than last but it could be even less so. The Xbox 360 number dream is out the window. For context December 2015 was the best selling month for Xbox One at that time.

Thanks to our fans, continued support for the most critically-acclaimed holiday lineup of exclusives in Xbox history made December 2015 the best month yet for Xbox Live global engagement and Xbox One sales in the U.S. The total number of hours spent gaming on Xbox One worldwide nearly doubled compared to December 2014 and Xbox One exclusive game sales in the U.S. between July and December 2015 were up 61 percent compared to the same period in 2014. Revenue from Xbox Store's Countdown, the biggest Xbox Store sale ever, broke records with 69 percent growth year-over-year when compared to results from last year's sale. Xbox One is the best place for gamers and the only console that has all top 10 best-selling titles of this generation that launched in 2015.

https://venturebeat.com/games/decem...ty-star-wars-fallout-end-the-year-strong/amp/

 

[SportsFan581]

Before launch people thought this gen would be more competitive than last but it could be even less so. The Xbox 360 number dream is out the window. For context December 2015 was the best selling month for Xbox One at that time.

Thanks to our fans, continued support for the most critically-acclaimed holiday lineup of exclusives in Xbox history made December 2015 the best month yet for Xbox Live global engagement and Xbox One sales in the U.S. The total number of hours spent gaming on Xbox One worldwide nearly doubled compared to December 2014 and Xbox One exclusive game sales in the U.S. between July and December 2015 were up 61 percent compared to the same period in 2014. Revenue from Xbox Store's Countdown, the biggest Xbox Store sale ever, broke records with 69 percent growth year-over-year when compared to results from last year's sale. Xbox One is the best place for gamers and the only console that has all top 10 best-selling titles of this generation that launched in 2015.

https://venturebeat.com/games/decem...ty-star-wars-fallout-end-the-year-strong/amp/

One month puts nothing "out the window". LOL

X1 sales went through a dead period before the 1S release and the last year or two were horrific as well. They have plenty of months to catch back up. Plus, that article you linked is actually referring to a software sale and doesn't really reference the hardware, just sayin.

And also, before launch many were saying that the Series systems were DOA and would be outsold 5 to 1 at launch, it goes both ways there.

 

[Nothing1234]

One month puts nothing "out the window". LOL

X1 sales went through a dead period before the 1S release and the last year or two were horrific as well. They have plenty of months to catch back up. Plus, that article you linked is actually referring to a software sale and doesn't really reference the hardware, just sayin.

And also, before launch many were saying that the Series systems were DOA and would be outsold 5 to 1 at launch, it goes both ways there.

Thanks to our fans, continued support for the most critically-acclaimed holiday lineup of exclusives in Xbox history made December 2015 the best month yet for Xbox Live global engagement and Xbox One sales in the U.S.

 

[Heisenberg007]

That's just the kind of numbers I was looking for, thanks for that.

So, we could be looking at 400k vs. 300k (almost an identical line from last year which would make the comments here completely laughable), or we are looking at 1m vs. 10. Realistically, probably something more nuanced in between.

Without numbers it is much ado about nothing.

What we're actually looking at here is Xbox losing market share in its strongest market, the US.

Xbox One is dubbed as the worst Xbox generation that almost killed the brand. The PS4 outsold Xbox One by 53:47 in the US.

After spending over $10 billion into Xbox, Xbox Series is now performing even worse than Xbox One, and I think that's the biggest cause of concern for Microsoft. The market share in the US is now 55:45, and that was before Dec. 2022 and Jan. 2023. So the gap is widening fast with results like you can see in the OP.

If you want absolute numbers, PS5 outsold Xbox Series X|S by more than 1 million units in just 3 months (Sep. Oct. Nov. 2022). And PS5 then had an even better December and January.

 

[SportsFan581]

Thanks to our fans, continued support for the most critically-acclaimed holiday lineup of exclusives in Xbox history made December 2015 the best month yet for Xbox Live global engagement and Xbox One sales in the U.S.

I didn't even notice that last bit, the paragraph seemed to focus on software, the problems of not caring enough to read it all and just scanning. LOL

 

[Nothing1234]

Also the Xbox 360 was very strong in Europe the Xbox Series are not SportsFan581

 

[SportsFan581]

Also the Xbox 360 was very strong in Europe the Xbox Series are not SportsFan581

Was it? I thought it was just US and UK primarily for 360, and up till now the PS5/XSX are much closer than PS4/X1 were in the UK (with 2022 results almost identical - though that will likely change with improved PS5 supplies).

Like I said it's up to MS to get their software pipeline flowing and get their new SKUs on the market and in better supply. I know MS had thought that XSS would be the best seller of the systems, but I've always thought it would have its place but with final results more in favor of XSX (maybe 60/40 or 70/30). They might need to rejigger some things on the supply side.

 

[Nothing1234]

Was it? I thought it was just US and UK primarily for 360, and up till now the PS5/XSX are much closer than PS4/X1 were in the UK (with 2022 results almost identical - though that will likely change with improved PS5 supplies).

Like I said it's up to MS to get their software pipeline flowing and get their new SKUs on the market and in better supply. I know MS had thought that XSS would be the best seller of the systems, but I've always thought it would have its place but with final results more in favor of XSX (maybe 60/40 or 70/30). They might need to rejigger some things on the supply side.

You don't sell over 80m consoles in the US and UK alone. Microsoft misread demand for the Series S. The market is showing that demand for a powerful console is high. Maybe gamers see the Series X as more of a true upgrade than the Series S. The problem with MS supply is that the PS5 software library from 1st party is much more appealing than the PS4 launch aligned and we are seeing next gen 3rd party games more and more now. How long do people wait for a Series X to play Hogwarts Legacy or Dead Space remake for example?

 

[thicc_girls_are_teh_best]

That makes sense. Thank you!

In this case, the problems are even worse for Xbox, and it'll continue to hog the system down. Even if there were demand (which there isn't currently) after Starfield release, hypothetically speaking, they'd continue to suffer from this issue.

I think this may be a leading reason why they must increase their console cost this year.

Well, they're already doing that in markets like India and Japan .

I'm guessing what Microsoft are going to do, since they can't really justify a hard price increase in US or UK for a good while (lest they just lose even more market share to PlayStation), they will increase the price in regions where the consoles aren't doing well. Have them absorb the costs, increase hardware sales revenue in those markets, and stave off a price increase in the two main markets where Xbox is actually competitive for as long as possible.

Going back to the wafer stuff, I do want to suggest that the setup might be a bit different from what I said in the other post. Wafers themselves are still finite in supply, but Sony & Microsoft have a lot of wafers through TSMC. For Microsoft, they have a chunk of wafers for Series X, and a chunk for Series S chips. But the wafer supply is still split between X & S chips, and heavily favors S chips.

So the same issue I was explaining in that other post still exists, it's just not like a literal "each wafer is 3 S chips to 1 X chip" type of situation if that's how it came off. But they're still stuck with S chip wafers they have to make use of, so if they say want to increase X chip production, they're forced to sit on S chip wafers and basically waste money by not leveraging wafer pipelines they've already paid for in advance.

It's either that or utilize them, knowing they're going into a product struggling with demand.

Okay thanks. And the bolded is why I think we see Xbox where they are today, versus Nintendo and Playstation. Phil just doesn't have the skillset to push Xbox where it needed to be. He didn't seem to learn the proper lessons during the Xbox 360 era at all.

Phil was too busy shutting down Lionhead and making Rare make Kinect games while Peter Moore and Don Mattrick did the heavy lifting

You don't sell over 80m consoles in the US and UK alone. Microsoft misread demand for the Series S. The market is showing that demand for a powerful console is high. Maybe gamers see the Series X as more of a true upgrade than the Series S. The problem with MS supply is that the PS5 software library from 1st party is much more appealing than the PS4 launch aligned and we are seeing next gen 3rd party games more and more now. How long do people wait for a Series X to play Hogwarts Legacy or Dead Space remake for example?

I agree with the comment but I want to focus on the bolded for a minute.

This might be surprising, but US & UK actually accounted for about 65% of all 360 sales. 12.8 million were from the UK, and something like 41.8 million from the U.S. The ratio's even wilder for XBO: US & UK were closer to 75% of all sales!

Another thing about 360 sales; aside from the RROD (which did inflate a portion of sales that otherwise might not have happened, though I guess that depends on if MS counted replacements as another sale. Don't know if they did), a big portion of 360's sales came post-Kinect. I think by May 2010, they had reached 40.3 million worldwide, which is less than half the total lifetime sales.

It might be fair to say that about a quarter of the post-2010 sales were driven by Kinect; Kinect did around 25 million units in total, let's say half of those were by new 360 owners (mainstream & casual types). What I'm trying to say is, probably at least 11.25 million 360s sold simply due to Kinect. So remove the Kinect and that probably would've resulted in lifetime 360 sales closer to 74 million. However if more than 50% of Kinect sales were driven by casuals & mainstream just jumping into 360 for it, then 360 lifetime sales would have potentially been lower than that if Kinect didn't happen, maybe closer to something between 65 - 68 million for example.

Xbox doesn't really have a Kinect moment this gen, from what we can see. If VR/AR really blows up at some point this gen, they won't have anything in time because they just closed their Hololens & VR unit. They probably thought Game Pass was their Kinect for this gen, but it isn't. I doubt any studio at Xbox can product something with as big a mainstream draw as Wii Sports or Wii Fit, so that's not on the table. Personally I think even if Xbox does everything else right for the rest of the gen, they won't reach 360 numbers, but they can maybe get between 65 - 70 million lifetime.

And I think that's going to require another refresh for the Series S; maybe phase it out and replace it with what Project Keystone meant to be, drop the mandate for all games to have native Series S versions, and increase Series X volumes.

 

[Heisenberg007]

Well, they're already doing that in markets like India and Japan .

I'm guessing what Microsoft are going to do, since they can't really justify a hard price increase in US or UK for a good while (lest they just lose even more market share to PlayStation), they will increase the price in regions where the consoles aren't doing well. Have them absorb the costs, increase hardware sales revenue in those markets, and stave off a price increase in the two main markets where Xbox is actually competitive for as long as possible.

Going back to the wafer stuff, I do want to suggest that the setup might be a bit different from what I said in the other post. Wafers themselves are still finite in supply, but Sony & Microsoft have a lot of wafers through TSMC. For Microsoft, they have a chunk of wafers for Series X, and a chunk for Series S chips. But the wafer supply is still split between X & S chips, and heavily favors S chips.

So the same issue I was explaining in that other post still exists, it's just not like a literal "each wafer is 3 S chips to 1 X chip" type of situation if that's how it came off. But they're still stuck with S chip wafers they have to make use of, so if they say want to increase X chip production, they're forced to sit on S chip wafers and basically waste money by not leveraging wafer pipelines they've already paid for in advance.

It's either that or utilize them, knowing they're going into a product struggling with demand.

But I don't think Xbox can follow Sony's strategy of raising PS5 prices everywhere, except the US.

Think about it: Xbox's 75% console sales come from US and the UK. Xbox can't increase prices there because they would be less competitive there. And if they do not increase prices, 75% of their consoles will continue to sell at an enormous loss. How much money will they even recover by selling 25% of consoles at a marginally higher cost?

With Sony, the situation was different. PlayStation is a global brand, and they upped the price everywhere, except the US. But that also meant that the overwhelming majority of PS consoles is now being sold at a profitable price point -- except for maybe a smaller percentage that's sold in the US (in order to stay competitive with Xbox in its strongest market).

 

[mckmas8808]

From Aquamarine on Install Base

NPD 2022

PS5 US NPD HW:
Jan-22: 369K
Feb-22: 128K
Mar-22: 282K
Apr-22: 234K
May-22: 119K
Jun-22: 277K
Jul-22: 301K
Aug-22: 341K
Sep-22: 494K
Oct-22: 456K
Nov-22: 1328K
LTD as of Nov-22: 10592K

XBX US NPD HW:
Jan-22: 307K
Feb-22: 261K
Mar-22: 489K
Apr-22: 267K
May-22: 177K
Jun-22: 260K
Jul-22: 247K
Aug-22: 251K
Sep-22: 288K
Oct-22: 261K
Nov-22: 730K
LTD as of Nov-22: 8736K

Then you add in the fact PS5 best month was December. Yeah it's not pretty for Microsoft in the US at all. We know PS5 > 397k for Jan 23 and Xbox < 307k for Jan 23. Nov 22 was a bloodbath.

How do we know the January '23 numbers?

 

[Heisenberg007]

How do we know the January '23 numbers?

My guess: YoY % applied from the latest NPD results. That'd give us a fairly accurate range just like Poltz shared here.

 

[Nothing1234]

How do we know the January '23 numbers?

We don't know the numbers just this…

 

[Thirty7ven]

But the price isn't the thing that moved markets in the console space.

Well I don't know which data MS is working with. But the 360 beat PS3 to the market and on price, and Xbox One was beat on price by the PS4.

 

[mckmas8808]

Well I don't know which data MS is working with. But the 360 beat PS3 to the market and on price, and Xbox One was beat on price by the PS4.

But....

1. PS3 and CELL processor.
2. Price wasn't a factor in the Xbox One and PS4. If people liked the what the Xbox One offered more, they would have paid more for it.

 

[T_T]

(...) and MS can't simply "make more" Series X units because of how they have their wafer pipeline set up. It's 3:1 Series S chips for every X chip produced, so if they increase X chip production by say 200%, S chip production also increases by 200%.

And it's the S with the sharply declining demand. Dunno how MS can fix that without buying another wafer, and TSMC would have to provide it for them that's even if they have the space to do it. MS are stuck with what they have for the foreseeable future. They gambled big, and now they've lost big.

I think Series S and Series X chips are different dies. So a wafer either has X or S dies on it. It is not like Ryzen dies where from a single wafer they can get chips for server EPYC all the way down to low end Ryzen 3. So from a hypothetical 100 wafers that TSMC has allocated for MS, it could be 60 of them are for S and 40 for X. Of course the S being a much smaller chip will more unites per wafer and much better yields than X.
What is my personal view of the events with the X shortage is this:
X from the get go gets fewer chips than S due to the size and yield difference.
The gen started, people were buying everything, PS5s and SX dry up quickly so they just turn to the S.
MS sees this as a change in consumer demand (everyone loves the S), so they change the order with TSMC (having AMD as middleman naturally since it's their IP) to allocate more of their wafers to S than on X.
(In the meantime they also use X chips on server blades so that eats into the consumer X)
The honeymoon period is over, S stays on shelves.
Sony gets their shit together and massively ramp up production.
Now MS has to talk again to AMD to then talk to TSMC to change the allocation between S and X. This will take sometime, but the S models are still sitting on shelves and warehouses.

 

[T_T]

What was the plan for Xbox ? Go and push hard in new markets like India and China? Or did they really believe that Gamepass would be adopted so fast that Sony would find games like GOW ragnarok not giving them the returns they have planned? For me Xbox always do not make the same efforts in Europe that Sony and Nintendo does. And they should if they want to compete.

As far as Gamepass specifically is concerned, they definitely thought GP would have reached more subs. Don't remember specifics but they definitely failed to reach their GP sub projections many quarters in a row according to MS's own reports.

 

[thicc_girls_are_teh_best]

But I don't think Xbox can follow Sony's strategy of raising PS5 prices everywhere, except the US.

Think about it: Xbox's 75% console sales come from US and the UK. Xbox can't increase prices there because they would be less competitive there. And if they do not increase prices, 75% of their consoles will continue to sell at an enormous loss. How much money will they even recover by selling 25% of consoles at a marginally higher cost?

With Sony, the situation was different. PlayStation is a global brand, and they upped the price everywhere, except the US. But that also meant that the overwhelming majority of PS consoles is now being sold at a profitable price point -- except for maybe a smaller percentage that's sold in the US (in order to stay competitive with Xbox in its strongest market).

That's the "genius" of it, though; Microsoft seem like they're increasing prices in non-US & UK markets because they might have internally resigned to the idea of having massive install base growth in those very same ROTW markets! So, if they have to "sacrifice" other countries in terms of rising the price in those territories, to stave off a price increase in the two markets they're still mostly competitive in (though are showing signs of falling behind in even those), that's probably what they're going to do.

They may get sales drops in the territories the prices jump up in, but maybe the extra revenue from the higher prices in ROTW territories offsets the decrease in unit sales in those same markets. That's probably Microsoft's thinking. Meanwhile in US & UK they're probably going to do "soft" price increases like the Series X FH5 bundle; they'll probably even do bundles at some point with 512 GB expansion cards included to try selling the idea they have more storage, and people able to get a system with the card cheaper than buying them separately.

Like say they do a Series X, Starfield & 512 GB expansion card bundle in the holiday season for $599; yeah you can get Starfield for "free" in Game Pass but that 512 GB Seagate card would cost you $200 on its own, so you're still saving like $100 through the bundle. And then MS just...keep that bundle going in smaller quantities months later. That's what they'll probably do for the US & UK markets vs. increasing the price on just the non-bundled systems.

Honestly at the end of the day it's as you said; small to moderate price increases on just 25% of the stock won't do much to offset whatever losses are coming from sales in US & UK (especially in the case of Series S in those markets). So I was probably too bullish on that. However, if those same price increases can help reduce even some of the losses MS expect to take on hardware sales in US & UK, then they're going to do it. That way drops on hardware revenue don't look AS bad in following fiscal quarters. They may see hardware sales drops in territories with price increases, but that won't drop total hardware sales too much. If sales in US & UK continue to see heavy drops (probably due to Series S), then MS can still point to hardware revenue and try saying it's not AS big a drop as it would've been if those sales were dropping and they did no price increase in ROTW markets altogether.

I think everyone expected the PS5 to outsell the Series systems once supply equalized. For MS it is more about, can they push forward over the X1 and improve units sold from where they had been. If they can get the software supply line working well, they might even be able to challenge 360 numbers. At the same time I expect PS5 to crush PS4 numbers, it isn't a zero sum game, both can grow. With the pricing of PC components the way they are, I expect total console volume for the generation to increase by a strong percentage.

Obviously, they need to avoid those 1yr first-party gaps, that's important to. They will bundle hard with Starfield, we'll see what they can do with that.

Reaching 360 numbers is impossible unless Microsoft have a Kinect-like moment (or a Wii Sports-like moment) AND Sony just falls off a cliff with PS5 in the back half of the generation. Given Series S's existence, I'd even say they'd need Nintendo to have a more tepid Switch 2 rollout, they'd need ALL of these to happen in order to hope reaching 360 numbers by the end of the generation.

A lot of 360's early sales were thanks to poor PS3 launch, some of them were thanks to RROD, and a LOT of the sales in the back half were thanks to Kinect. Without those three factors I don't think it's hard to say 360 would've settled somewhere closer to 65 million or so in unit sales that generation. Maybe 70 million tops.

And that's where I think Xbox can probably land this generation if they do everything else right going forward. But personally I also think they need to do something to salvage the Series S and make it a more appealing product altogether. Either that or phase out the S, pump up the X and not screw up with consistently bringing big quality AAA and AA games for the rest of the gen (and make sure you have some mass-market appealing games among them).

They also better hope PC Game Pass doesn't become a huge thing because otherwise that'll also hurt Xbox console sales even further as the gen goes on.

 

[jroc74]

It's not hard, Phil Spencer's strategy with the HW was to beat PS5 on price and on power. And they did, Series S got PS5 beat on price and Series X got PS5 beat on power.

Son of a bitch did it. And obviously in their experience console gamers are extremely price sensitive, but you also want to please the hardcore. Explains how they hedged their bets.

Yeah he did it....but at what cost.

Each month it's looking more n more like Cerny, Sony were literal geniuses.

Just like getting the PS5 in devs hands early was more important than trying to get into a specs battle with MS.

Remember MS "waiting for pure RDNA 2?" Fun times.

 

[MasterCornholio]

Yeah he did it....but at what cost.

Each month it's looking more n more like Cerny, Sony were literal geniuses.

Just like getting the PS5 in devs hands early was more important than trying to get into a specs battle with MS.

Remember MS "waiting for pure RDNA 2?" Fun times.

I still get confused when people say we have to wait for RDNA2 games especially this long into the generation.

 

[Heisenberg007]

I still get confused when people say we have to wait for RDNA2 games especially this long into the generation.

Yep, so many buzzwords were thrown around that it got super confusing for the average user.

I was listening to this podcast by Digital Foundry. And they said that there are no games that use Sampler Feedback Streaming (SFS), and that was just a reminder for myself that it is always about games. No one cares about potential features or possibilities that may or may not come to fruition.

It is all about games and game developers/studios, and their track record that you can be confident about. That's all you need to have fun.

Timestamped video in case anyone wants to listen:

 

[MasterCornholio]

Yep, so many buzzwords were thrown around that it got super confusing for the average user.

I was listening to this podcast by Digital Foundry. And they said that there are no games that use Sampler Feedback Streaming (SFS), and that was just a reminder for myself that it is always about games. No one cares about potential features or possibilities that may or may not come to fruition.

It is all about games and game developers/studios, and their track record that you can be confident about. That's all you need to have fun.

Timestamped video in case anyone wants to listen:

To be honest from comparisons that I've seen both systems are pretty close. Each system has different strengths but neither is doing anything that completely blows the other away. The biggest difference that I've seen are the controllers when it comes to features.

 

[Ash Sparrow]

Wait so Xbox did over 300k I January? And thats bad,

Maybe it me, maybe I'm crazy.

 

[Woopah]

We already know that Gamepass negatively impacts buy to play games, therefore its not in MS best interest to show the results of multiplatform games on their platform or even exclusive games.

Recent examples of this for exclusive game is High on Life which was no where to be found in their individual charts and the combined charts, clearly indication that the game underperformed due to many factors including Gamepass which didn't increase the games sales contrary to their initial claims.

Now we have Hi-Fi Rush a game that again released on day one on Gamepass that didn't chart on the cumulative charts again which indicates the game underperformed. And if it didn't appear in the top 10 Xbox individual charts then it won't look good for MS and Gamepass, hence the need to hide the details.

Other examples of 3rd party games are Star Ocean, which was released on Playstation and Xbox. The game appeared on the total combined charts which indicated the game sold well. However, going into more details in the platform specific charts, the game charted on Sony platform while no where to be found on Xbox's platform. Clearly showing that the Playstation's version was the one doing the heavy lifting. You could aslo associate this with Gamepass effecting consumers purchasing habits of waiting for games to come to the service, instead of buying it, amount other factors such as the total player base.

Clearly less information is best suited for the platform that is under preforming.

Yes that's a good point, comparing games across the platform charts could give insights. Of course that doesn't mean that is was definitely MS that led to NPD making this decision.

Yes, but the FAAAAR majority sell on Playstation. It's still viewed as a Playstation franchise.

Quite ppossibly, but I don't think we ever got platform splits for the game last year so we can't say for sure

 

[demigod]

To be honest from comparisons that I've seen both systems are pretty close. Each system has different strengths but neither is doing anything that completely blows the other away. The biggest difference that I've seen are the controllers when it comes to features.

For now yeah. Wait until current gen only games from Sony drops. Spiderman 2 will be a showcase imo.

 

[demigod]

Wait so Xbox did over 300k I January? And thats bad,

Maybe it me, maybe I'm crazy.

How did you get over 300k if they are down yoy? By chance you failed math in school?

 

[Heisenberg007]

Wait so Xbox did over 300k I January? And thats bad,

Maybe it me, maybe I'm crazy.

Xbox did 307K in January 2022. Now it's down YoY, so it will likely be lower than 307K.

I don't think we know the exact percentages, but in other regions, Xbox has been down by roughly ~30-35%. If we apply the same % here, Xbox sold somewhere between 200,000 and 215,000 in January 2023.

That's quite low because Xbox sells ~55% of consoles in the US, which means worldwide, they would sell roughly 365,000 - 390,000 consoles in January 2023 or 1.1 million units total in Q1 2023.

For comparison and context, PlayStation is on track to sell 6.2 million consoles this quarter. Or 564% more than Xbox.

That's why it's bad.

 

[Luminoth-4545]

The XB360 sold around 25 million in Europe compared to 31 million for PS3 in Europe, so XB360 was very competitive. Then the 8th gen was 46 million PS4's versus 13 million XBone's in Europe, the Series X/S isn't going to do much better than XBone in Europe in my opinion.

 

[thicc_girls_are_teh_best]

I think Series S and Series X chips are different dies. So a wafer either has X or S dies on it. It is not like Ryzen dies where from a single wafer they can get chips for server EPYC all the way down to low end Ryzen 3. So from a hypothetical 100 wafers that TSMC has allocated for MS, it could be 60 of them are for S and 40 for X. Of course the S being a much smaller chip will more unites per wafer and much better yields than X.
What is my personal view of the events with the X shortage is this:
X from the get go gets fewer chips than S due to the size and yield difference.
The gen started, people were buying everything, PS5s and SX dry up quickly so they just turn to the S.
MS sees this as a change in consumer demand (everyone loves the S), so they change the order with TSMC (having AMD as middleman naturally since it's their IP) to allocate more of their wafers to S than on X.
(In the meantime they also use X chips on server blades so that eats into the consumer X)
The honeymoon period is over, S stays on shelves.
Sony gets their shit together and massively ramp up production.
Now MS has to talk again to AMD to then talk to TSMC to change the allocation between S and X. This will take sometime, but the S models are still sitting on shelves and warehouses.

That's a really good analysis into the possible sequence of events regarding the wafers and production flow.

Question I guess then becomes, are they going to just eat costs and continue to sell the S units at a loss? Shift to soft price increases through bundles masking the increase with a game? Would this even work?

It would be kind of funny if MS just have to write off say $1 billion again on hardware, this time not for hardware failures, but unsold Series S stock that has to be almost liquidated to move. Maybe MS actually buys back the unsold units from retailers; it's effectively still them eating a loss, but would be good favor with retail partners to make the exception, if they want to ensure good in-store sales promotion and shelf space for new systems entering the channels and flowing to retailers.

To be honest from comparisons that I've seen both systems are pretty close. Each system has different strengths but neither is doing anything that completely blows the other away. The biggest difference that I've seen are the controllers when it comes to features.

And, now, VR. Since VR on Xbox isn't even an option.

Xbox did 307K in January 2022. Now it's down YoY, so it will likely be lower than 307K.

I don't think we know the exact percentages, but in other regions, Xbox has been down by roughly ~30-35%. If we apply the same % here, Xbox sold somewhere between 200,000 and 215,000 in January 2023.

That's quite low because Xbox sells ~55% of consoles in the US, which means worldwide, they would sell roughly 365,000 - 390,000 consoles in January 2023 or 1.1 million units total in Q1 2023.

For comparison and context, PlayStation is on track to sell 6.2 million consoles this quarter. Or 564% more than Xbox.

That's why it's bad.

Yeah, Xbox's FY 2022 Q3 is looking like it's going to be very poor in terms of general sales and revenue. MS already said they were expecting low double-digit drops (or high single-digit drops) in hardware, software and services QoQ (or was it YoY?); honestly whatever their predictions were, I think they'll be doing somewhat worst in practice.

Just look at the Hogwarts Legacy sales ratio between PS and Xbox. The fact even games acclaimed like HiFi Rush, aren't charting whatsoever and haven't necessarily lit the Game Pass charts on fire (I'm not saying it's doing bad on Game Pass, I did though expect it to be in the Top 10 at least a week after its release given WOM. That hasn't happened though). Forza Motorsport not coming this quarter, same with RedFall (and RedFall seems like it's going to underperform once it releases).

They better be preparing to market the absolute hell out of Starfield and more importantly, make sure it's an unquestionable critical hit. Some screenshot of a cinematic trailer leaked; if the trailer's good, that'd be a nice start. Bonus points if they got George Clooney or Matthew McConaughey for a trailer promo .

 

[MasterCornholio]

And, now, VR. Since VR on Xbox isn't even an option.

I understand that VR will be an option on PlayStation and its the only VR option on consoles. So those who want affordable high end ish VR will probably get a PS5. I don't think it will make a massive improvement to PS5 sales but it will certainly interest some people.

Also I hope more games have dual support like RE7. If they can add a VR mode to your normal game (Like GT7 and RE7) that would be fantastic.

 

[DarthPutin]

Screenshot I think turned out to be fake. Doesn't mean that Starfield won't have badass trailer, of course. They need to advertise it right to the moon.

Kind of ironic that MS put in effort to outdo Sony on creating more powerful console with better specs - and then did their best to associate their brand with much weaker series S!

 

[T_T]

Question I guess then becomes, are they going to just eat costs and continue to sell the S units at a loss? Shift to soft price increases through bundles masking the increase with a game? Would this even work?

It would be kind of funny if MS just have to write off say $1 billion again on hardware, this time not for hardware failures, but unsold Series S stock that has to be almost liquidated to move. Maybe MS actually buys back the unsold units from retailers; it's effectively still them eating a loss, but would be good favor with retail partners to make the exception, if they want to ensure good in-store sales promotion and shelf space for new systems entering the channels and flowing to retailers.

Like you explained, MS could do a number of things for the S situation and none of them are ideal. At this point, if they've changed the order of X chips (and this is my hypothesis since we don't really know what is going on, especially with MS who release no meaningful numbers about the Xbox division for years now), it will take some time to reach the retail chain. The Series S units that are already in stores and warehouses will sell out eventually, as long as more of them are not pumped out of the factories like probably happened H1 last year. Until they sell out though, I guess retailers will bear the cost of keeping them in inventory. Maybe MS gives them a bigger % of each sale to compensate for the additional shelf-space time. I don't think MS will buy back stock, since it will be a huge blow to the public picture of their hardware. No matter what, MS with lose a fair bit of money from this ordeal, but they can afford it. Of course, retailers will have higher demands from MS in the future if they are to keep MS hardware that potentially can have similar problems.

 

[Ainem Enamas]

Gaming at this core. More good spreading games for gamers!

 

[Brucey]

His strategy failed. Series X can never make exclusives that will look as good as the big name Ps5 exclusives because Series S will limit it. And Series S is barely even next gen. It is a pointless limitation to current hardware. That is why Series S barely sells despite major discounts.

To actually beat the PS5 he would need the series X at a cheaper price point.

At this point MS could bring series X down to $400 and I doubt it would do much for their demand trajectory.

 

[Brucey]

So I think MS have made some comparisons with series s/x versus xb one, that series is ahead time aligned. But I don't think that gives us the full picture.

Xb one - Price of entry over time:

Nov 2013 - Launched at $500. initial price of entry to that generation.

June 2014 - Price drop to $400 with mando Kinect removed (Titanfall bundle?).

June 2015 - Price drop to $350.

May 2016 - Price drop on 500GB models to $300

June 2016 - Price drop to $279.


Now how about xb series gen over time?

November 2020 - Launched at $299 for series S.

November 2022 - Temp price drop to $249 for holidays, some retailers sweeten pot with a $50 gift card on top. I'm not sure if pricing actually dipped down to $199 or if that was very limited promos.


So looking at price of entry, the series generation is IMHO front loaded versus the xb1. Because it took 2.5 years for the xb1 gen price of entry to hit $300. While xb series gen had that price of entry right from launch day. I don't think we can expect the same tail for series gen as xb, as the price was already full accessible from day 1 versus xb1 gen where consumers had to wait for the price to drop to get to their particular buy in comfort level.

 

[thicc_girls_are_teh_best]

So I think MS have made some comparisons with series s/x versus xb one, that series is ahead time aligned. But I don't think that gives us the full picture.

Xb one - Price of entry over time:

Nov 2013 - Launched at $500. initial price of entry to that generation.

June 2014 - Price drop to $400 with mando Kinect removed (Titanfall bundle?).

June 2015 - Price drop to $350.

May 2016 - Price drop on 500GB models to $300

June 2016 - Price drop to $279.


Now how about xb series gen over time?

November 2020 - Launched at $299 for series S.

November 2022 - Temp price drop to $249 for holidays, some retailers sweeten pot with a $50 gift card on top. I'm not sure if pricing actually dipped down to $199 or if that was very limited promos.


So looking at price of entry, the series generation is IMHO front loaded versus the xb1. Because it took 2.5 years for the xb1 gen price of entry to hit $300. While xb series gen had that price of entry right from launch day. I don't think we can expect the same tail for series gen as xb, as the price was already full accessible from day 1 versus xb1 gen where consumers had to wait for the price to drop to get to their particular buy in comfort level.

Absolutely; not only did XBO simply had one hardware SKU but it took longer to see it have promo sales going as low as $200. We saw the Series S hit those types of numbers last holiday and some people were saying they still saw Series S units at holiday prices (~ $249) after the Christmas season. In NA no less (Xbox's strongest market, traditionally).

Then on top of that, Series S making up the majority of Xbox systems produced through most of 2022. So on the hardware revenue side, Xbox Series are making quite a lot less than XBO launch-aligned. But that's only if you also have an insight on the sold-through hardware sales. If you're interested, Heisenberg007 , myself, and a couple other users (I think Mibu no ookami , and a few others but I'm just trying to think of those around who have specifically been regularly trying to calculate Xbox sold-through numbers) have been doing calculations with as much info that's been made available to come up with realistic sold-through amounts for Xbox since the start of the generation. It's all sporadic through various posts, maybe a thread compiling the speculations and estimates on that front would be worth making in the near future.

Anyway, if we know XBO had 18 million units "activated" by January 2016 (26 months post-launch), have the leaked NPD numbers up through November 2022, have various sales estimates & volumes from MS themselves in trying to appeal to regulators, have reports from groups like Ampere, that helps with figuring out Xbox numbers as of January 2023. We also know the general ratio of US & UK vs ROTW for Xbox sales in the 360 & XBO generations, plus the lack of any PR in the recent earnings call to offset the revenue drops with something at least somewhat good news, also contributing to a high probability.

The probability being, Xbox were likely tracking behind XBO WW at least as of January this year. Maybe not by a massive amount (somewhere ~500K - 200K behind for an absolute high end), but still behind. And they're probably going to have worst drops YoY for this fiscal quarter than what they internally projected at their last earnings call. The only thing that does complicate if MS are making WAY less on hardware revenue vs XBO or not, is the fact Microsoft collect their money from retailers up front (as I've been told). So they could be selling at a fixed price to retailers and it could just be retailers optioning to sell even lower just to move units.

Considering though that Phil Spencer said they were subsidizing on Xbox units last year leading up to the holidays, I'm under the impression Microsoft were collecting less upfront from retailers in general. Reinforcing the possibility they are getting much less on hardware revenue compared to XBO launch-aligned.

 

[onQ123]

February will be something to see Hogwarts , God Of Way & Metroid Prime moving units + Xbox Series X Forza bundle also sold well but I'm not sure if it will make up for the drop off in Series S sales so they might be down from last year.

PSVR & $200 Edge controller should also take the revenue up from last year.

 

[Mibu no ookami]

It's not hard, Phil Spencer's strategy with the HW was to beat PS5 on price and on power. And they did, Series S got PS5 beat on price and Series X got PS5 beat on power.

Son of a bitch did it. And obviously in their experience console gamers are extremely price sensitive, but you also want to please the hardcore. Explains how they hedged their bets.

It's good strategy to out flank your opposition, but you can also spread your resources too thin and that's exactly what Spencer did here.

The question that has to be asked is whether Sony was going to be weak on either flank

PS5 DE is cheap and the PS5 overall is not significantly weaker than the XSX. So Microsoft has divided its resources to attack two flanks with each vector being weaker than what is necessary.

 

[mckmas8808]

It's good strategy to out flank your opposition, but you can also spread your resources too thin and that's exactly what Spencer did here.

The question that has to be asked is whether Sony was going to be weak on either flank

PS5 DE is cheap and the PS5 overall is not significantly weaker than the XSX. So Microsoft has divided its resources to attack two flanks with each vector being weaker than what is necessary.

Most of us that understand technology had a great feeling that Microsoft's approach with the XSS was a bad one. Just look at 35+ years of console history. There's was no precedent for it. And logically it never made sense at all! Many Xbox gamers that liked the idea were betting that most console gamers are stupid and poor. And that's just not correct at all.

People are willing to spend money on things that bring them great entertainment. And your average consumer is smarter today than in the 1990s due to the internet passing along basic information about stuff.