Microsoft not trying to maximize profits by switching to a smartphone style upgrade model, Spencer insists.
A l0t has been said of the console upgrades at this point. While the concept found few takers when it was first discussed earlier this year, at this point, upgraded consoles in the guise of the PS4 Pro and the upcoming Xbox One Scorpio (and even the Xbox One S, to a lesser extent) are a reality, and one that the market largely seems to have embraced.
More than anything else, these upgraded consoles, as well as the product lifecycles that go with them, are often likened to the upgrade cycle that one often sees for smartphones, where a new flagship product comes out on an annual basis. Indeed, Microsoft are releasing an Xbox One S this year, followed by a Scorpio the next year. Is this an attempt to move to a smartphone style upgrade cycle for consoles, and maybe attempt to shore up some profits for the Xbox division, which has historically been very bad at that?
In an interview with PC Authority, Xbox head Phil Spencer insists that this is not the case. “Ah, no. The business model for console is pretty set,” Spencer says. “I like the relationship that it’s able to build with our customers and the number of consoles that are sold, really across the industry, it’s not really just a pure Xbox point. Y’know when you look at the number of consoles that were sold last year against what were sold this year, relative to any individual PC gaming spec that’s out there, you sell a lot more consoles.
“That opens up a great market, and those customers buy a lot of games, play a lot of online, buy a lot of content for those games, I think that business structure will stay. You’re absolutely right that if you’re losing money on a console and you have somebody upgrade that console every year, and they’re not your best game customer in terms of the games that they buy, that can be a struggle for the overall business. But I think what we’re going to find is that our early adopters for our new hardware are also our best gaming customers across gaming content, and gaming accessories, and everything else that they do. We’re going to learn as we go forward, but I’m confident in the activity that we have on our network from our consoles.”
Of course, it would be foolish to deny that there is a profit motivation here- corporations don’t do anything unless they can justify it with some sort of monetary gain. However, it seems evident that Microsoft’s reasons for the switch to this kind of upgrade cycle are not purely profit driven. Given that this seems to be the direction that the entire industry is moving towards for now, I can definitely see that being true.