Microsoft entered the console market to stop Sony and considered buying Sega

Why did Microsoft enter the game console market? It is still interesting to ask this question about what made the company that clearly dominated the personal computer market venture at its own risk into the world of consoles at the beginning of the millennium. And that it also did so not only as a software company, but with its own hardware. According to a former company executive, the main reason was to stop Sony

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That&39;s what, in an interview with IGN, Joachim Kempin, who for 20 years worked for Microsoft and came to be vice president of salesIn his own words, Sony and Microsoft never had a friendly relationship, although this was not the fault of Redmond. Despite collaborating on personal computers, Sony was reluctant to cooperate as soon as the topic came to consoles. Microsoft&39;s reaction was to create their own and try to beat them on their own ground."

Apparently the decision came from the same management of the company, with Bill Gates promoting the project. According to Kempin, once his initial reservations were overcome, Gates was convinced that the living room was going to be a battleground in the future and that it could become the Trojan horse to enter homes and threaten Microsoft's dominance in the world. personal computers. Initially they intended to cooperate with a manufacturer like Sony, providing them with an operating system for their equipment, but, given their refusal, the decision was enter on their own

The cost of manufacturing and the Sega option

The main problem with entering the console market according to Kempin was, and still is, fighting the huge loss of money that hardware manufacturing entails. Microsoft approached some of its 'partners' to help them deal with the financial difficulties of building their own console. Kempin himself tells how he tried to convince several manufacturers to join the project of the first Xbox, so that the manufacture of the console would remain outside of Microsoft. But no luck.

A constant rumor during those years was the option of Microsoft acquiring Sega to enter the market with force. There was even some attempt in the form of licensing Windows CE for the Dreamcast, but things didn't go beyond its use in some games.According to Kempin, if the purchase did not come to fruition it was because Bill Gates himself was skeptical about Sega's ability to compete with Sony.

As Kempin summarizes, Microsoft still loses money making Xbox The profits in that market have always been in licensing and sales software, not hardware manufacturing. In the case of Microsoft, revenue comes from two main areas. First of all, each developer pays a small license to have their game on Xbox; and secondly, Microsoft makes more and more money from the services associated with its console. Even so, as of today, Xbox is still far from being a profitable business for Microsoft.

Xbox and the change in strategy

For those of you who don't know him, Joachim Kempin isn't exactly the biggest supporter of the direction Microsoft is taking. In his recently published book and in various statements to the press, he has already shown his concern for the future of the Redmond company and for Xbox itself.For the former executive, the software and services associated with the console do have a place in the Microsoft product portfolio, but not the hardware.

Kempin shares the view that the company's biggest mistake is abandoning the business model that has worked for it for decades: focusing on software development and leaving hardware manufacturing to its partners. Surface and the reaction it has provoked in several of its 'partners' would be the latest example of this mistaken policy. And when it comes to pointing the finger, Kempin does not hesitate to point to Steve Ballmer

Via | IGN