The Mac Observer

Skip navigational links

You're viewing an article in TMO's historic archive vault. Here, we've preserved the comments and how the site looked along with the article. Use this link to view the article on our current site:
Blackfriars': Microsoft's Tuition in Hardware Hard Knocks

Blackfriars': Microsoft's Tuition in Hardware Hard Knocks

by , 3:45 PM EDT, July 6th, 2007

Microsoft is having some difficulties with the Xbox 360 red ring of death. They'll be spending over a billion dollars to deal with an extended warranty program and an estimated 30% failure rate out of the box. Year over year sales are declining, all according to Blackfriars' Marketing on Friday. The marketing consulting firm wondered how much longer Microsoft can toss around a billion here and a billion there.

"This exercise does prove, though, that building great consumer electronics products takes much more than lining up some smart designers and efficient Chinese contract manufacturers," Carl Howe advised. He continued: "Despite Microsoft's claim from its Vista experience that creating software is hard, hardware is harder, and no amount of marketing can really get around that."

Analyzing a chart of Xbox 360 sales, Mr. Howe also pointed out that Q2 2007 is the second quarter in a row in which year over year sales have declined for the Xbox. Meanwhile the Nintendo Wii will soon surpass Xbox sales, and do so profitably.

Especially compelling was this conclusion. "Microsoft is learning some hard lessons about just how challenging it is to create good consumer electronics. At a billion here and a billion there, pretty soon these billions of dollars add up to real money. Shareholders would be right to ask how long they'll have to pay for Microsoft's tuition in the school of hardware knocks.

By way of contrast, regarding Apple and the iPhone, some analysts have suggested that Apple, being new to the mobile phone industry, would not be able to equal the results and experience of the other manufacturers. That assessment seems to have overlooked that Apple is a pure bred hardware company that knows how to both design and supervise the building of quality hardware. Blackfriars' Marketing suggested maybe not so much with Microsoft lately.


Recent TMO Headlines - Updated July 1st

Fri, 3:16 PM
Steve Jobs to Posthumously Receive the Presidential Medal of Freedom
Fri, 2:43 PM
Former Apple Securities Lawyer Pleads Guilty to Six Counts of Insider Trading
Fri, 2:27 PM
Apple Has Interviewees Think Outside of the Box, Other Tips for Landing a Job with the Company
Fri, 2:21 PM
Apple Suppliers Are Already Working on Second-Generation OLED iPad
Fri, 2:11 PM
Apple Promotes the Apple Watch Series 7 as A Durable Device in the New 'Hard Knocks' Video Ad
Fri, 1:34 PM
My Penultimate Column
Thu, 4:12 PM
Apple TV+ Unveils Trailer for New Family Comedy 'Best Foot Forward' Premiering in July
Thu, 3:34 PM
Apple's Issue With In-House 5G Chip May Be a Legal, Not Technical Problem
Thu, 2:14 PM
Apple Planning to Launch M2-Powered MacBook Air July 15
Thu, 1:15 PM
CleanMyMac X Update Features New Menu App Functionality that Keeps Your Mac Staying Healthy
Thu, 12:59 PM
This Fall, You May Be Able To Pay For Fuel Through CarPlay
Thu, 11:43 AM
Cybersecurity Firm Identifies Critical Exploit of iCloud Private Relay
  • __________
  • Buy Stuff, Support TMO!
  • Podcast: Mac Geek Gab
  • Podcast: Daily Observations
  • TMO on Twitter!