Bach on Sony: "They’re Spread Really Thin"

Robbie Bach, president of Microsoft’s entertainment and devices division, which includes Xbox and Games for Windows, has suggested in a new interview that Sony may be losing focus in attempts to support both the PSP and PlayStation 3. Talking to the San Jose Mercury News, Bach was asked about the new Microsoft portable music player Zune, and why it had avoided any significant games support. Bach claimed that there was a purposeful attempt not to create a new games machine and to focus attentions on the Xbox 360. “I need the people who are focused on gaming to focus on Xbox 360 … you have to distract a whole group of people that are doing content and the Live service and a whole bunch of other things to do that”, he said. “I think Sony, frankly, suffers a little bit from this problem, which is they're spread really thin across all these areas. And trying to do PSP, competing with Nintendo, PSP to DS; competing with us, 360 to PS3, I think it does strain -- it would naturally strain any organization." When asked about the current gift buying season in North America, Bach commented that, “The No. 1 thing happening in the holiday season is where is the content … The second thing is frankly our value proposition is just better. Our console is at $299 and $399. Sony is going to have a pretty limited supply of consoles at $499 and $599. Consumers want to buy during the holiday. We’re going to be a great logical choice for them.” When questioned as to how Microsoft would gain a theoretical 40 percent market share in North America, compared to 30 percent each for Nintendo and Sony, Bach replied, “There are a couple of things you have to look at. You do have to look at the content. Where’s the best content? Is it cross-platform? Where was it first developed? I think that does matter in the marketplace. The second thing you have to look at is economics. You have to ask the question, over the life cycle, who has the cost advantage? Who can price most effectively? Who can reach the price points quicker? That has a huge impact on what gets driven.” Finally, on the topic of profitability, Bach reiterated that the entertainment and devices division as a whole should become profitable by fiscal year 2008. At the same time, he pointed out that this would not necessarily mean that the Xbox itself would be profitable by this time. But the Xbox exec concluded by noting that driving down the costs of the Xbox 360 hardware was a top priority for the company, commenting: "Most publishers are doing their initial development work on the Xbox 360. That plays to our benefit. Because we are out there first, we have a bigger installed base of consoles. We can drive down the manufacturing curve sooner and faster. And because we designed a box that was fundamentally easier to manage on costs, we’re going to have that advantage."