The biggest business in Robbie Bach's Entertainment & Devices Group at Microsoft is the Xbox 360 video game business. After many years of losses, the game business is poised to turn a profit, as is the E&D group itself, for the fiscal year ending June 30.
Of course, one of the reasons is that the one-time $1.15 billion write-off to repair defective Xbox 360s was included in last year’s fiscal results. In spite of that debacle, Bach is more excited about this business than ever. He actually believes it’s possible for Microsoft, Sony and Nintendo to succeed in the games business in spite of the serious competition because of the broadening of the game market. This is the second edited transcript of an interview Bach did with a small group of reporters in San Francisco.
Here’re some snippets:
Q: Doesn’t it surprise you that fans are saying I want my third or I want my fourth replacement console?
A: It speaks to the power of the product offering and service we provide. That’s my point. In the ordinary course of something like this, you would expect it to show up in the customer reaction data. We just haven’t seen that. It speaks to the fact that they love their games and Xbox Live. Does it frustrate them? Yes. On the other hand, they know we’re taking care of them. People have a certain amount of respect for that. If it had happened on a product that had less baseline customer satisfaction, it would have had a bigger impact. We really haven’t seen that.
Q: What about touch screen or multitouch screen technology with Xbox?
A: New input is always something we look at in general. The Microsoft Surface technology we are pioneering has game elements to it. There is one crazy experience on Surface where you take a full-motion video, divide it up onto blocks, put pieces of video on both sides of the block, and then ask three people to put the puzzle back together again. It’s a pure free-for-all.
Q: What is your expectation for the timing of the next console introduction?
A: The last cycle for the original Xbox was a little shorter than typical (at four years). We started way late. Sony launched in Japan in 1999. We launched in the U.S. in 2001. They are still selling PlayStation 2s. You see cycles are lengthening and the ability to have overlapping consoles in the market is growing. For a long time, after Sony shipped PS 3, PS 2 was outselling it. It helps when you have a portfolio business.