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<< How do you conclude the X-Box isn't doing well from the fact that one of the people working on it got bored with his work and decided to do something else? >>
From the fact that PS2 (which supposedly is inferior to Xbox) outsells Xbox, even in USA, from the fact that Xbox flopped badly in Japan and Europe, from the fact that MS has already had to cut it's price overseas to make it even remotely appealing and from the fact that MS is way behind it's sales-forecasts. >>
It doesn't outsell it in the USA, it just had sold a lot already before the X-Box got on the market. If 8 million PS2s are sold already in a year time, and X-Box is selling at 2 million/day then sure, there have been sold more PS2s still after X-Box is on the market for 3 1/2 days (Ok, so it's slightly exagerated, but you hopefully get my point), but anyone claiming PS2 is outselling X-Box at that point and believing it is on crack. X-Box is selling much faster, so unless it is brought to a halt X-Box will outsell PS2. Microsoft has enough gaming companies willing to code games SOLELY for X-Box (It's called threatening and bribing) to ensure a constant stream of high-quality games which aren't available for PS2. I don't like that method, but they use it anyway.
In Europe X-Box was released with a much higher price than the US, probably cause they presumed that anyone willing to pay those rediculously high prices the software and music industry asks in Europe would also be willing to pay a lot for the hardware. They also noticed that this doesn't work (the prices is the reason there is a lot more piracy here than in the US), and therefor they dropped the price of the X-Box here by 180 Euros. Still it's 299 Euros, compared to the Gamecube being only 199 Euros. Don't know if they follow the same tactics in Japan, but if they do it's no wonder they sell a lot less than expected, if they put a console into an market where the established names (with more games available) are a lot cheaper to start with.
They wanted to put a far better console on the market than their competitors, but failed to see that the reason consoles are so popular is that it's a cheap machine with which you can play the latest games. Instead they released a console for the price of a low price computer, which means that anyone who wants/needs a computer for wordprocessing/emailing/downloading pr0n anyway will instead buy a medium or high price computer, and just copy all the overpriced games to safe money. (Not arguing the legal side of it, it's just what people do.)
Of those who want a console only those with too much cash and a liking for certain X-Box only games will buy it for that price.
P.S. They didn't advertise the games much here anyway, just the console (with a commercial that didn't even show a game). If you want to give people a reason to buy it, at least bother to show them what they will get.
P.P.S. Never thought I'd give lessons in Marketing to Microsoft 😉 >>
Something else you need to add:
Microsoft is and has not made any money from the Xbox. They are spending money.
Just like they did with the WebTV.
They aren't even breaking even. Journalists have only guessed that Microsoft must be expecting to make money from the games instead.
The xbox is a fully functional PC, with a builtin network adapater, which would have been great to use to hook up to cable modems for internet use... but they didn't even add that feature. Some opensource developers have created a TCP/IP module to run on it, for online gaming capabilites... but that's it