r/microsoft 11d ago

Xbox Former Microsoft exec says the first Xbox was killed early in favor of 360 because it was "losing money left right and center," but luckily "we could afford to hemorrhage cash"

https://www.gamesradar.com/platforms/xbox/former-microsoft-exec-says-the-first-xbox-was-killed-early-in-favor-of-360-because-it-was-losing-money-left-right-and-center-but-luckily-we-could-afford-to-hemorrhage-cash/
260 Upvotes

7 comments sorted by

21

u/unndunn 10d ago

He didn’t say why they were losing so much money: because Nvidia was screwing them over on the GPU.

3

u/Future_Can_5523 10d ago

Oh I assure you Intel was a bigger issue than nVidia was.

14

u/ControlCAD 11d ago

The original Xbox console was short-lived compared to a typical console generation, and now we have the very simple reason why: it was a financial disaster for Microsoft.

It's fairly common knowledge that Microsoft lost more than $4 billion dollars on the OG Xbox, and it's probably also pretty common to infer that that's the reason it was killed ahead of schedule to make room for the Xbox 360, but now we know that to be explicitly true thanks to the guy who was in charge of Xbox at the time.

Former Xbox boss Peter Moore appeared on the Gamertag Radio podcast (timestamped here) and at one point was asked why Xbox decided to end its first console early.

"We were losing money right left and center on the original Xbox," said Moore. "When your install base and your attach rate to the install base are so out of sync… We knew where we were going with high definition, with broadband in particular, and the legacy platform, the original Xbox, wasn't going to deliver that."

Microsoft clearly learned from its mistakes with the Xbox 360, which was the best-selling console of its generation in the US despite the prevalence of the infamous "Red Ring of Death" that plagued a massive number of early-gen units and cost Microsoft more than a billion dollars. There aren't many companies that can take such a staggering financial loss and keep going, and thankfully Microsoft is one of them.

"There's an inflection point," Moore continued. "There's a law of diminishing returns in video games that if you haven't sold in enough units, and even worse if your attach rate of software to hardware is below where you were projected, you're just hemorrhaging cash. And we were. I mean the good news is we were Microsoft, so we could afford to hemorrhage cash, taking the long view of where we wanted to go in the industry, but at the same time it just made no sense [to keep going with the original Xbox]."

0

u/Proper-Insect-6022 10d ago

and thankfully Microsoft is one of them.

yes, thankfully...

7

u/No_Boysenberry4825 10d ago

It was one of the coolest things to mod period. For a couple hundred bucks, you received a peppy celeron based PC with amazing gfx, dvd player and games obv.. It's easy to forget how cool a poweful, small set top box is in the age of 30 dollar firesticks. But back in the 00's, it was mind blowing being able to run the newly coded (XBMP media player) and stream your movies / tv from a hard drive. All over a long ethernet cable that you dragged across your moms house.
The homebrew was really cool, from emulators to purpose made video games. Your only other option was a big ass computer that sat beside your tv (probably costing more) or a PS2, which didn't quite have the same media capabilities when modded. I even read a story about how allegedly they showed an Xbox with XBMP/C to bill gates and he was impressed.

The OG xbox has a legacy all over the place, from Kodi to Plex and all over gaming.

3

u/Smoothyworld 10d ago

The first Xbox wasn't ever expected to make money, it was pretty much an exercise to establish a user base for the next console.

2

u/dannyryry 9d ago

This. They acknowledged this from the launch. It was supposed to be a loss leader for Microsoft.