The Perfect Plan For Destroying Microsoft
The perfect Plan-X has
just arrived for destroying Microsoft. All you have to do is purchase an Xbox
-- not one, but several hundred million of them, please. The parts costs of
the Xbox are estimated to be $330 according to a cost to build analysis done
by EE Times. Their estimate does not take into account Xbox labor, overhead,
marketing, etc. Altogether, that means Bill G. forks out about $400+ for each
and every Xbox that goes out the Flextronics door, the subcontractor that
manufactures them for Microsoft. Moreover, MS recently cut the Xbox’s
retail price to $199 in response to the new $199 price in the U.S. for the
Sony PlayStation 2. The dealer price for the Xbox game console is probably
about $135-$160 or so, which means Bill has to reach into his wallet for $250
or more for every unit sold by Microsoft. At this ridiculous burn rate even
that whopping $40 billion MS cash hoard will eventually whither. A few hundred
million Xbox units and ka-boom! Hello, Enron Redux. In fact, published reports
based on internal Microsoft estimates say that the company would lose $750m
on the Xbox this fiscal year and $1.1b in the next fiscal year, ending June
2003. No wonder Bill recently filed his intent to sell 1 million shares of
his MS stock.
Others in the Xbox Family and Friends Circle are also scurrying around trying
to heal the financial hemorrhaging caused by MS marketing fun and games. Cirrus
Logic (Nasdaq: CRUS), a company that makes Xbox components, made a dismal
earnings announcement on June 25, 2002. Cirrus reported figures of $74 million
to $77 million for the first quarter ending June 29th. Not good, especially
considering that only in May Cirrus gave guidance of $87 to $88 million. Cirrus
said the shortfall was due solely to lower demand by Thomson Multimedia, which
manufactures the DVD subsystems used by Flextronics in building the Xbox.
Cirrus concluded their announcement by stating they expect a loss per share
of 6 to 10 cents for the September 2002 quarter. "While we are disappointed
in the Xbox status, we are pleased to report that we expect double digit sequential
growth in our business excluding Xbox," said David D. French, president
and CEO of Cirrus Logic. Right, Dave. Add Cirrus Logic and Thomson Multimedia
to your Xbox hit list every time you buy one of these Redmond Rash consoles.
And the news doesn’t get any better for Microsoft as no one seems to
want to play on its new $1 billion cost to build Xbox Live gaming network.
Electronic Arts, one of the biggest games publishers, said nyet to Xbox Live
as the company apparently thinks having Microsoft controlling the gates to
EA customers was equivalent to playing Death Wish III. EA went with the upcoming
Sony gaming network instead. And the Xbox saga gets even crazier. French filmmaker
Audrey Schebat has now filed suit in a Paris court against Microsoft and its
London ad agency Bartle Bogle Hegarty, claiming that a TV commercial for Xbox
was copied from her short film "Life." The British Independent Television
Commission previously banned the ad from playing in the UK, which depicts
a baby boy being shot from its mother’s womb, fast-forwarding through
adult life and then slamming into his grave. This ad may ultimately turn out
to be the perfect metaphor for the short and nasty life of the Xbox.
Meanwhile, you did know that Sony has announced an official Linux porting
kit for their game console didn’t you? See http://playstation2-linux.com
The $200 Sony kit includes Linux system software for the PS2, a hard drive,
a USB keyboard and mouse, plus an Ethernet network adapter to connect the
game console to your home network or to the Internet. Also required, but not
included in the kit, are a PlayStation 2 memory card and a VESA monitor that
supports sync-on-green.. Two DVDs are part of the PS2 kit. One contains the
PS2 runtime environment and a system manual in addition to the written manual.
The second contains the Linux operating system, a Windows graphics synthesizer,
and various device drivers, tools and sample code.
The Linux kit has been on sale in Japan for some time now and has proven to
be very popular with the Open Source community over there. Better yet, all
you folks merrily writing and porting home entertainment Linux apps to the
Sony console have a great source of way below market cost PS2 expansion parts
they can hack courtesy of Xbox. What a wonderful two-fer: nice parts cheap
and it costs Bill billions to boot.
Sometimes life is good.
Francis Vale, Copyright 2002, All Rights Reserved
21st, The VXM Network, https://vxm.com