IGN News – Why Microsoft Got Into The Console Business

IGN News – Why Microsoft Got Into The Console Business


According to a former Microsoft exec, Microsoft
entered the console market because Sony refused to work with the company. Joachim Kempin, who was VP of Windows Sales
at Microsoft for 20 years starting in 1983, made the claim in a recent interview with
IGN. When asked why Microsoft decided to enter
the console space, he asserted that, “The main reason was to stop Sony. You see,
Sony and Microsoft…they never had a very friendly relationship, okay? And this wasn’t
because Microsoft didn’t want that.” Sony did license Windows for its PCs, but
Kempin says the two companies were never friends. But Microsoft wanted to cooperate because
Sony was, in part, an entertainment business — an area outside of Microsoft’s expertise. According to Kempin, as soon as Sony released
the PlayStation, Microsoft said, “We have to beat them.” Bill Gates himself was apparently worried
that a “living room PC” could eventually threaten Microsoft’s traditional market.
As a result, Gates and Microsoft felt they had to try and tackle Sony head-on. With hindsight we can see this worked out
well for Microsoft, but there were many roadblocks encountered along the way. Kempin explained
the main problem that still exists today is the huge loss made on hardware manufacturing.
This means companies like Microsoft and Sony are reliant upon software sales to make a
profit. Having witnessed Sony experience this issue
at the time, Kempin went out in pursuit of a PC manufacturer willing to take on the burden
of making the Xbox in an effort to spare Microsoft the financial apocalypse that accompanied
it, but was unsuccessful. He recounts, “I went out to several PC manufacturers
and tried to beg them to do the Xbox thing and keep the device manufacturing out of Microsoft.
The guys were smart enough not to bite, because they studied the Sony model and saw that Sony
could not make money on that hardware model, ever. So they supplemented it with software
royalties, and Microsoft copied that model.” Kempin continues: “Every developer who now
has an Xbox game pays a small royalty to Microsoft for the honour of having it on that system.
The other way they make money is that they finally got their act together on the services
and actually that’s where the money is being made. So they’re just maybe a little bit
above break even, that’s all there is. This is not a big money-making machine for Microsoft.” What’s interesting about this story is that
Sony got into the console hardware market for similar reasons. Sony had been working
with Nintendo on an attachment for the Super Nintendo that would play games off CD. But
when Nintendo canceled the agreement unexpectedly, Sony
decided to soldier on alone and released the PlayStation. For all your video game news, stay tuned to
IGN.

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About the Author: Oren Garnes

100 Comments

  1. hacks dont make the system go down, its up to ms or sony to turn it off to prevent any further damage. ms did nothing so hackers kept going. sony stopped it.. voluntary

  2. lol yeah right i see nothing about that game that cant be dont on the 360 if our cpu is garbage compared to ps3 then ps3 gpu is trash compared to the xbox360 cpu. sorry fan boy but i think you drank to much of sonys love juice. although i will agree the ps3 cpu is better but it is not the revolution sony promised. hell they not even gonna use the cell tech in the ps4.i mean why not developers had 6 years to learn it and now you are dumping it…..dont fall for marketing gibberish.

  3. you dont 'hack' sometime for 2 months.. a hack is an instant. it's sony shutting down psn which was 3 weeks excuse me is what the smart thing to do was. sony voluntarily shut down psn so no further hacks can be done. when XBL got hacked MS did Nothing, they didnt even shut it down to stop it and over a million dollars of ms points were stolen. There has been $0 stolen from the psn hack. credit cards were encrypted. more damage has been done to XBL than PSN. do some research

  4. sony did not 'reveal' anything… retarded ign speculated that ps3's had OUTSHIPPED more ps3's to retailers than the xbox… check vg charts and see the sales for yourself.

  5. im so sick of this lazy third party excuse. granted you could use that in the beginning. but its been six years now give me a break.and i havbe looked at the exclusives on both systems .dont get me wrong they look amazing on the ps3. but most of those games benefit from blue ray which means they do not have to compress their textures like xbox. from a technical standpoint it can be done we have the better graphics card and sony has the better cpu. its a wash.

  6. i dont see what so funny sony wanted to join nintendo and nintendo told them to kiss their ass. which why sony went into business for themselves same with xbox.maybe you should do some research before you throw stones. i bet you will refuse to believe what i just told you.

  7. I do believe that because I already knew all that since last gen. So i dont care if Sony wanted to join Nintendo, and i dont care if Microsoft wanted to join Sony. Im not a Fanboy i dont give a dam. Its funny because here are all these Microsoft Fanboys making a huge deal out of this, its Hillarious.

  8. I would buy a playstation if som1 gave me the money for it. Thats one expensive blu ray player 😉 took sony like wut, 2 years to make a decent exclusive? Even if my xbox dies on me (whice it has several times) my money would go into a replacement xbox, cause the overall user experiance and huuuuuuge selection of amazing games as well as indie xbl games is just superior hands down. The support is great. I miss max, the automated female voice is annoying but I can deal.

  9. thank's Nintendo for PlayStation. its ur own loss for not uniting with Sony simple as.

    ALL HAIL PLAY STATION 4 LIFE.

    also i am really enjoying ni no kuni. again thank you Sony.

  10. the emption engine on the ps3 was nothing but propaganda and so is the cell processor. the only thing that separates the ps3 from the xbox is the blu ray drive.thats it. even the bluray was a let down because with all that space games stilll average 10-12 hours of gameplay.all this money and time on a proprietary processor and then dump it after boasting how great it is.ps3 has great exclusives but nothing revolutionary, nor does the xbox. peace

  11. So…Sony got into the console business because of Nintendo, and Microsoft because of Sony? Heh, you Xbox & Playstation "fanboys/girls" need to pay your respects to the father and grandfather of console gaming: Nintendo + Atari.

  12. xbox and xbox 360 and xbox 720 are all shit and trash.

    playstation 1 2 3 4 are better and great quality.

    you yourself is naive and idiot.

  13. Xbox has been the top selling system for a straight 25 months and it is definitely a good choice they did not join Sony in the 1st place because now Xbox is doing better than Sony and all im seeing is Sony supporters getting jealous of Microsofts success

  14. Yea and your here trying to prove how xbox is better and getting mad because you know Sony is the best. and if you reply i'm not going to even argue with you because i'm no the butthurt one here 🙂

  15. I don't hate Microsoft. But I think that their company is very cocky. Just because they have more money doesn't mean they can make the best console. The 360 only sold the most in the us. In Europe and Asia the ps3 continues to outsell the Xbox. And now with the ps4 coming, and the "rumored" new Xbox coming. We will just have to see what happens. But from what I saw in the ps4 reveal is that it is most likely going to be the best selling home console.

  16. Xbox is a stupid console, thats why immature and disrespectful kids play on it and thats why a greedy pc company decided to make the worst console ever made. Microsoft will regret making xbox they will just die as sony are the kings in gaming and entertainment so much for forza, kinect, original xbox model, xbox smartglsss and of course xbox live for windows phone which are all copys of what sony has made.

  17. Even jack tretton CEO of SCEA said that sony being before microsoft in gaming will lightly stay in gaming way longer than microsoft so maybe expect the last xbox console as the 720 ps4, ps5 or maybe a PlayStation 5 built sony vaio pc, ps6, ps7, 8 and so on. A gaming world only possible if created by sony. Sony make.believe

  18. ok.. wait.. so Microsoft release the xbox because they had a grudge on Sony and Sony release the playstation because they had a grudge on nitendo

  19. Hey there! Have you heard regarding the Tube Cash Exposure? I revealed it on Google Search and found out many fantastic stuff about it. Some of my buddy also highly recommend me to look at it

  20. I don't know if it is going to be the best selling home console. Keep in mind that the Xbox 360 has been the best selling console for the last 25 months. As for Sony, they weren't the smartest with the way they presented some of their things for the PS4, not saying the console looks bad (can't say I've even seen the console at all), but there were a few hiccups. But like you said, we will just have to see what happens. I'm a multiplatformer, so I hope both are exceptional pieces of hardware.

  21. xbox fanboy, you seem to ignore the fact that Microsoft reported a quarterly loss for the first time in its 26 years … and i don't even understand why u bring up Sony and Microsoft business profit thing .. its does not make sense at all

  22. I know that money is not what making a xbox or ps good but the money is nomalt which sets the limit¨

  23. The video only tells why Microsoft got into the console business, it doesn't show which console is better. Go have sex with you PS3 considering how much you will love and defend it. You make no arguments, all you do is insult people who don't agree with you with nonsensical and vulgar language. You are the literal definition of a fanboy, someone who defends something disregarding many other factors, usually logic, to the point where it becomes an obsession. Open your eyes and get a life.

  24. *Nintendo wants CD peripheral for SNES ==> Sony refuses ==> PlayStation is born.
    *Microsoft wants Sony to work with them ==> Sony refuses ==> Xbox is born.
    *Nintendo dominates handhelds for years ==> Sony wants in ==> PSP is born.
    *Nintendo makes Wii ==> Sony & Microsoft want in ==> PS Move & Kinect are born.
    *Nintendo makes Wii U ==> Sony and Microsoft jumpstart ==> PS Vita Cross-Play and Xbox Smartglass are born.
    The vicious cycle of the console wars…

  25. I like Sony better but lets face it. We need the Xbox. Without competition the quality of games would suffer.

  26. Way to reply to a 2 month old comment. Keep fanboying out, it will get you so far in life. All you do is take something I said and then say it again and just scream profanity. Get a life you adolescent shit.

  27. From an artistic and business sense Microsoft are no Sony,by stating this I'm not undermining microsoft but outside of windows they have had little success whilst Sony has revolutionised televisions and home appliances for decades….they could be still operating of they're "Walkman" money for all we know lol

  28. Even that the Xbox One already has been revealed the PS4 is gonna be the best home console! PS4LIFE long live PS!

  29. The most funniest thing is that. Sony was not making a lot of money on the PS3 but on the PS4 you actually have to pay memebership… Sony finally copied of Microsoft idea.

  30. Internet Explorer, Windows Vista, Windows 8, Bing, Hotmail, Zune, Xbox One…

    Microsoft, why do you suck?

  31. By you replying you are just dragging out a pointless argument over opinion and not fact and you just can't accept the fact that some people have a different opinion. You trying to win a argument that has no purpose whatsoever. There is literally no point to insulting others just because they play on another platform. Someone playing on another platform doesn't affect you at all.

  32. Don't know how that makes me a dumb sissy but okay. You have a valid reason to care what console people play on, doesn't give you the right to insult people who play on a different console.

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