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 13th

Fri, 7:16 PM
The Real Story Behind Apple TV+ 'Greyhound'
Fri, 2:37 PM
Apple AR Lens Development Reaches Key Stage
Fri, 2:18 PM
Ming-Chi Kuo Predicts First Apple Silicon Macs
Fri, 1:58 PM
Security Friday, App Store Turns Twelve – TMO Daily Observations 2020-07-10
Fri, 1:32 PM
Setapp (the Netflix of Mac Apps) Just Keeps Getting Better
Fri, 1:30 PM
Kinkoo Mini Portable Air Conditioner: $59.99
Fri, 1:24 PM
Happy 12th Birthday iOS App Store
Fri, 11:14 AM
Apple EU Tax Case Appeal Ruling Due Next Week
Fri, 10:39 AM
'Little Voice' on Apple TV+ Aims to Improve Autism Representation
Fri, 8:47 AM
Spotify, Waze, And Other Popular Apps Crashing in iOS 13 Possibly Thanks to Facebook SDK
Fri, 8:16 AM
Apple Registers UK Turnover of £1.37 Billion, £6.2 Million Tax Payment
Thu, 5:08 PM
Public Beta of iOS 14 and iPadOS 14 Now Available
  • __________
  • Buy Stuff, Support TMO!
  • Podcast: Mac Geek Gab
  • Podcast: Daily Observations
  • TMO on Twitter!