Top 7 Reasons OnLive Won't Kill Xbox 360, Wii

A start-up recently announced a system called OnLive monday night that aims to distribute games digitally, then host these games on their own servers so that all players could use their system without having game consoles, but merely an broadband internet connection. However, there are too many reasons for OnLive's failure that we simply cannot ignore, no matter what their demonstrations seem to show. The following is an excerpt from CNET news that summarizes the OnLive announcement.

Quote from CNET:

OnLive, which was started by WebTV founder Steve Perlman and former Eidos CEO Mike McGarvey, is aiming to launch a system--seven years in the works--that will digitally distribute first-run, AAA games from publishers like Electronic Arts, Take-Two, Ubisoft, Atari, and others, all at the same time as those titles are released into retail channels. The system is designed to allow players to stream on-demand games at the highest quality onto any Intel-based Mac or PC running XP or Vista, regardless of how powerful the computer.

While they may be dreaming of a great future where all gamers can play with consoles, without expensive systems, and without having to upgrade all the time, this dream cannot and will not ascend into reality for a number of reasons. At least not at the current time. Even though they've been working on it for 7 whole years, and their demonstration looks good, there's just no way this will become viable at least for several years. And until them, they won't be making much money. Here are 7 reasons why OnLive will not be able to kill the likes of Xbox 360, Wii, and the PS3.

7. Casual Gamers can't afford the Internet usage
First off, I'll say that it won't be hardcore gamers that will like this, and why that's so will be explained in the next point.
Now, with the current state of the USA, most people will not be able to afford the cost of using this system to stream video. They claim that a 1.5 Mbps connection will be enough for the lower quality version (which they claim to not really be lower quality), yet we also know that the bandwidth required for playing high quality games with detailed graphics is massive, so even if customers could get the streaming available at those speeds, their bandwidth can't support it. The case is different for hardcore gamers that can afford higher speeds and bandwidth, but it's unlikely that hardcore gamers will want to use this system.

6. Hardcore Gamers want their own equipment
Most serious gamers would much rather have their own equipment, games, and basically stuff that's in front of them, and not located somewhere else and isn't really theirs. They probably don't want to use some system that lets them play games, but the games aren't really fully theirs because they don't have a hard copy of it in front of them. Plus, they want their own hardware to operate their games, without having to rely on somebody else. Just take a look at the criticism of Spore to understand how gamers don't want to deal with "digital" copies of games and limited installs, etc. While OnLive might offer unlimited gaming, there's no transferability, no chance of reselling, and technically they wouldn't own their games because they'd have no hard copy of the game. What will happen if the company goes bust? They won't be able to play the games anymore then.

5. Resolution Difference
They talk about Standard Definition with a speed of 1.5 Mbps, but standard definition is actually quite low when compared to PC resolutions. Most games can support HD resolutions and higher when played on PC, and gamers have gotten used to that. If 1.5 Mbps can only support 760p, then not many people will be happy about that kind of quality. Then, if gamers can spare the money for higher speeds, then they probably won't mind just buying games and getting the hardware outright. The current median download speed is about 2.3 Mbps for the US, not including dialup users. That means that to get HD, people need to download at more than 2 times faster than the national median speed.

4. Lag time on fast reaction games
With games that move with lightning fast action and require reactions of the same calibre, then there must be significant lag time for customers that are farther away from the servers. For normal FPS (First Person Shooter) games played on consoles or PC, the time difference between the button signals reaching the server and the video sent out to the systems receiving must be extremely small lest the players notice the difference. If we assume that a game can play at 60 FPS, which isn't high by most measures, then we can say that if it takes a quarter of a second for the button signals to be received by the server, and another quarter second for video to be streamed back, thats a half a second delay. At a rate of 60 FPS, with a half second delay, what you get is 30 FPS, but every 30 seconds it lags. That means that there's a delay every second, and the video will move every half second. That is really enormous lag.

3. No Internet, no Game
While most people use the Internet nowadays, the reason many people don't play exclusively on the computer and/or online games is because they just don't want to play online. Consoles are evolving to allow multiplayer gaming, but many people still play console because they may not have an internet connection, or just because they don't want to connect to the Internet. That means that many people who prefer playing solo games will not want to connect to the Internet all the time, and use up their bandwidth when they can just use their own console to play offline.

2. Multiplayer unsuitable
While it may seem easy for multiplayer to thrive with this kind of system, it really is irrational. Even if we assume that only 10,000 instances of the same game are being played at any one time, they still have hundreds of other games out there that are also being run. The biggest problem with this is that most multiplayer games have a central server to process data, with each computer creating the packets and receiving them, but here, we have one server that is doing all the work. Yes, everything is on one server, so the data doesn't have much distance to travel, but just think of 10,000 games being processed, plus the data exchanged on all of these games in various "rooms" in each game, then being transfered to the people using OnLive's system. That would require absolutely tremendous amount of processing power and ability to host perhaps more than 1,000 rooms for different players. And that's just for one game. This sounds quite ridiculous to be able to have such advanced technology at such a time. There's no way they could possibly support that kind of processing power without having extraordinary new technology, which they can't possibly have stored for 7 years without anyone knowing about it.

Now, finally, the top reason this just won't work. Perhaps this is truly the one that will say it all, all I'll just sum this one up in a sentence, then explain what I mean.

1. Run 1000+ instances of Crysis on the same computer?

I don't think much needs to be said here, but even the greatest of super-computers probably won't be able to support 1000+ instances of Crysis while having multiplayer. Even if they could, what kind of money would they need to support this vast data transfer and processing power? If you could fill up several buildings with pure servers hosting 1000+ instances of Crysis, that's still ridiculous. Plus, if you take into account the video streaming and button jamming signals, as well as how they could host this along with other games + multiplayer, and what you have is a technology that we are FAR from achieving! This is just plainly unfeasible and it won't work. Not until we get fibre-optic internet connections and/or DOCSIS 3.0 and/or the type of connection in the likes of the Large Hadron Collider Computing Grid (LCG). Obviously, we are many years away from this Internet technology, and possibly even farther away from having the processing power necessary to run everything mentioned in one server. The only way I see this could become possible, is if they use a vast cloud computing network with networking capacities of the LCG, and then combine it all together into one massive super computer that spans all of the USA.

Unless they have that kind of technology backing them up, OnLive is unlikely to kill Xbox 360, the Wii, or even PS3.

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What will come of Microsoft Retail?

It seems that Microsoft has also decided to get into the retail business, and will be selling Microsoft products at retail outlets at various locations. Some say that this is a mimicking of Apple Stores, and some say Microsoft can also succeed where others have failed. The question before us today then, is whether or not Microsoft can make their retail stores successful, and if this will help their overall business. It is my belief that Microsoft should abandon the idea of Microsoft Retail, and stay focused on making software, and distributing the software to vendors.

I don't know exactly what caused this notion to start up, but it's bordering on the ridiculous. The only reason Apple stores are successful is because you can't buy Apple computers anywhere else, save for a few retailers. The fact is, Microsoft products are already at practically every retail outlet that carries computer products, and most of the time Microsoft products are already bundled into computers, so there's no need to specifically look for Microsoft products. Microsoft products are the norm, and so there really isn't a reason to get new retail stores that specifically sell Microsoft products. I have some serious doubt about how successful these Microsoft stores will be, because they are essentially competing with themselves, and the people who market their products. There's really no reason for this. A better idea would be to ask retailers to make a Microsoft only section, and even then I don't think it is necessary, because most of Microsoft's products come with the products, without anyone having to ask for it.

If Microsoft were to open its own stores, chances are, nobody will go there, because you can already get Microsoft products everywhere else. It's not a matter of helping customers getting more convenient service, but simply that you are putting together a whole bunch of Microsoft Products in one store, and not sell anything else. If we look at history, most retailers have failed, and Apple is the only one that hasn't. Why is this? It's not because Apple is great at retailing, it's simply because there's demand for Apple products, and you can't get them anywhere else, so people go to Apple stores. If Apple allowed many more stores to sell their products, I suspect Apple would see significant increase in sales, but then their own Apple stores will see same store sales decline.

We can already see that these Microsoft stores will not be helping Microsoft gain more sales or customers, and so the next question is, can it help Microsoft's business?
The answer to this is most likely a no as well. Every retail store that Microsoft has to operate will increase Microsoft's expenses, and thus increased their fixed costs, which amounts to lower profit every year. The greatest businesses are able to generate maximum profit and a high rate of return on equity, whereas the poor businesses have to continually increase fixed costs in order to grow, without actually increasing profit potential. Microsoft has always been one of the best businesses around, largely because it focused on software, and thus their fixed costs were extremely low, while production costs were practically non existent once you factor in the volume of software being sold. This allowed them to continue to reap hefty profits, without the hassle of having large expenses and/or production costs and price competition. Microsoft has been able to follow this philosophy, and thus generating many cash cow products that bring revenue without Microsoft spending on them heavily. The biggest cost that Microsoft had was research & development, but once you had the product, you could product it without incurring more production costs. Now that Microsoft wants to enter the retail market, they need to rent more, buy land, pay more employees, and they also have increased production costs by having to put their products at every store, unlike when they just loaded copies of software onto hardware from other manufactures.

This all adds up to the fact that, Microsoft will have a difficult time to make their retail operations successful, and if they ARE able to, then they have some VERY talented management. With the hire of a Wal-mart veteran, and the Microsoft internal reforms, they may be able to pull it off, and allow easier access to everything Microsoft, while increasing their brand name value, but that road will be long and hard. Fortunately, they may be able to snatch up land and lower some of their long term costs by starting this operation during a depression. Unfortunately, if they start in the middle of a depression, they won't see powerful results for a while.

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Microsoft cuts jobs in cutting-edge profitable strategy

It was just this morning that Microsoft released their earnings report for the second quarter ahead of schedule. Originally, they were supposed to release the report later today, but they came out with the report and have announced a job cut of 5000 positions. It seems that the rumors about a 17% job cut were in fact wrong, but Microsoft has indeed suffered slightly in this depressing economy.
Yesterday, I wrote a post on how Microsoft couldn't possibly lay off 17% of its workforce, and it appears that I was slightly correct, and also slightly wrong.

While Microsoft has blasted ahead with profits from its Xbox division, and sustained profits from many other divisions while retaining investment, they too have suffered from the bleak economy. Due to businesses and consumers cutting their spending, Microsoft's Windows sales have been going down, and caused Microsoft's earnings per share to be $0.02 lower than analysts' expectations.
Microsoft managed to obtain slight revenue growth, despite the economic conditions. Throughout this quarter, Microsoft has showcased plenty of new software innovations and continued to invest in new products. From what we can see, although Microsoft was affected, they will continue investing in the long term, and has practically 0 chance of failing.

I said yesterday that it was highly unlikely for Microsoft to really cut massive amounts of jobs, however, the figure of 5000 jobs is still slightly disturbing. But Microsoft also says that they will continue to hire more, so in actuality the amount of workforce they are reducing is about 3000 positions. 1400 jobs will be cut immediately, and the rest will follow over an 18 month period. From my opinion, Microsoft has made an excellent choice. Cutting 1400 jobs right now will help them to sustain profits in the short term. Meanwhile, cutting the rest over a long period of 18 months will help Microsoft to make themselves more profitable, while keeping less staff. The announced hiring by Microsoft will also help Microsoft continue their position as the industry leader, because Microsoft definitely has enough cash to invest aggressively in new products, while competitors are in weaker positions. Microsoft should take this time to invest heavily in their existing product lines, and invest more into their new ventures. Even though in the short term they may have a lot of spending to do, this will undoubtedly put them in far better position in the long run.
The strategy Microsoft should take right now is to invest in products, while cutting down on marketing and other similar expenses. Microsoft doesn't have to market its products heavily right now, because there are far less people trying to buy new things, but they should resume heavy marketing as soon as the economy lights up just a little, and especially when they release Windows 7. From what Microsoft has done so far, it appears they are following this strategy quite well.

An interesting fact I noticed was that Microsoft started their massive advertising campaign just before and during the start of the major depression we're experiencing right now. Whether this was intended or not, this definitely helps Microsoft, by having marketed right before the depression, and not many other companies will be advertising during or even a little after, thus, Microsoft has gained an advantage here. Plus, from what I can tell, the use of Seinfeld in the ads while the ads weren't exactly perfect, may also contribute to reminding customers of Microsoft during dark times. It's unlikely for other companies to start massive ad campaigns during the depression, so as customers go through the depression, they will be reminded of Microsoft's ads that don't necessarily target Microsoft products in general. Then Microsoft can resume mass advertising after the depression and continue their marketing without further problems.

The outlook for Microsoft is highly positive over the next few years, from my point of view, seeing as Windows 7 is a huge improvement from Vista, and will ultimately net Microsoft some serious cash. Then, with their strategy in place, Microsoft will be in a strong position as they emerge from the depression. The only problem is we don't know how long the economic turmoil will last, so the rebound may take quite a while, and outlast the release of Windows 7. But I'm confident that customers will be itching to get Windows 7 regardless of the economy, after what happened with Vista's image (even though it wasn't all that bad as an OS).

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No way Microsoft is laying off 17% workforce

Recently the rumors have escalated enormously concerning whether Microsoft would be laying off 17% of their workforce. The FudZilla blog was the one who originally reported this outrageous rumor, and some other blogs/news sites claimed to have confirmed it and/or predict the same.
Very soon, Microsoft will be releasing its earnings report, and that's what has caused all these rumors to spike, in discussion of exactly how much Microsoft has been impacted by the depression.

Now, first of all, Microsoft has been barely affected considering some of the problems in other industries and companies. Seriously, Microsoft has a huge $19Bil + in their bank, no wonder they don't have that many problems. If anything, they're probably trying to take advantage of the issues currently in its competitors, and attempting to improve themselves.
I highly doubt Microsoft profits will have gone down by a large margin, albeit it will have been affected somewhat, considering that consumers are no longer buying as much, and businesses will not be investing as much either. However, the nature of their business causes many businesses and consumers to continue purchasing their products even during a downturn in the economy.
Microsoft most likely has weathered the economic problems so far much better off than other companies, and I believe they will exceed analyst expectations in terms of earnings and profits. Unlike other companies, Microsoft has continued to invest in new products and research to develop new product lines or continue old product lines. They have also improved various existing betas and services. In fact, you can even see the vast list of beta applications and platforms they have available on their Microsoft Connect website. Just this past half of 2008 and now 2009, Microsoft released beta versions of notable products including Internet Explorer 8 Public Beta 2, Windows Live Essentials, Windows 7, Windows SDK and others. It's obvious that Microsoft isn't going to stop their R&D anytime soon, nor are they cutting back on expenditures by a large margin.
Also taking a look at Xbox 360's enormous success this holiday season compared with other products during the recession we've experienced, Microsoft still holds major advantages and they are complying with customer demands for cheaper products, while sustaining viability and increasing market to defeat the competition. Plus, I think Microsoft is in excellent position to take maximum advantage of the depression with the release of Windows 7. From my experience, Windows 7 is already fine and ready to go whenever Microsoft wants. All they're looking for is some feedback and perhaps minor bug fixes.
With Windows 7's massive performance upgrade and improvement from Vista's issues, most customers can't wait for getting their hands on Windows 7. Especially now that there's a depression going on which might last quite a while, Microsoft's plan to market cheaper products will definitely help them. Customers no longer desire expensive computers as much as before, so many are getting the low-cost laptops/desktops with as much performance as they can pack without upping the price. Thus, Microsoft's Windows 7 improvements allow them to be in excellent position to market to these customers and will ultimately make Windows 7 highly successful, as well as get rid of Vista's tainted brand.

In such a situation where their money is plentiful, having tiny debt compared to their vast reserves of capital, and where they are in a great position to be marketing and creating new products, they can't possibly be seeking to downsize by 17%. that rumor is absolutely outrageous. While it may be true that Microsoft has slowed on hiring, that's just a part of the way a depression works. Nobody wants to overspend during such times because you never know when it'll really end. Microsoft may be looking at small layoffs in certain sections that aren't proving to be profitable, in the manner that they have always used to deal with economic issues. I highly doubt they will engage in massive company wide layoffs, unless they think they can become even more profitable, in which case I still doubt the layoffs will be as large as 17%, because such numbers are generally only shown by companies in serious debt and are failing in some way. This is one of the most profitable companies in the world that we're talking about here, and they have practically no debt, while their cash reserves are enormous.

Obviously, Microsoft isn't going to lay off 17% of their work force, but only time will tell, and we will find out their situation as the earnings report comes in. I feel inclined to believe their earnings may have increased, rather than slowed down.

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5 Reasons EU plan to cut IE from windows will fail

Recently, the European Union (EU) has decided to take serious legal action against Microsoft, by claiming their Internet Explorer (IE) should not be bundled with Windows, because it is anti competitive and is taking advantage of Microsoft's immense market power. They want Microsoft to stop immediately, and change their marketing tactics so that Internet Explorer will no longer be bundled with future releases of Windows. They have not made any statements concerning whether Windows can come with different versions with and without IE.
Now, it may sound fine, but this logic is seriously flawed. There are too many reasons why Internet Explorer is essential to the Windows OS, and taking it off will not help consumers at all. Here's a list of reasons for why this plan must and surely will fail.

1. Internet Explorer is a part of OS
Unlike many other programs, Internet Explorer is not just any other program, but rather a part of the windows environment and operating systems. There are a variety of functions in Windows that are based on Internet Explorer, and cannot be done with Internet Explorer or another browser, and even sometimes, only Internet Explorer will suffice. Windows uses Internet Explorer to read .xml files, to set up configurations settings for various functions, to set up router settings, and much more. If we take out Internet Explorer, we are taking out a vital aspect of Windows.

2. All browsers need to be downloaded
Internet Explorer comes with Windows for one main reasons: to let users use the Internet quickly, and without hassle. Now, where do we get new browsers? Obviously, the INTERNET! And how are we supposed to get these browsers if we don't have one to begin with? There are some methods, including possibly ftp and other protocols available with command prompt, etc, but will NORMAL users be able to do this? The answer is no. They rely on the simplicity of web browsers to get around, and they probably can't get a new browser, without using Internet Explorer to download one! Thus, we have a computer that is cut off from the Internet, unless we hire somebody or ask somebody else to use sophisticated methods of downloading software.

3. Users want simplicity
For most users, the hassle of getting a new browser is far too great, and that is exactly why IE holds so much market share. The fact is, people don't want to download new browsers because there's too much hassle! Everybody just wants to get on the Internet, and be done. They don't care how bad Internet Explorer is, as long as it gets them to where they want. This is precisely why taking off Internet Explorer is not helping the consumer, and in fact causing a vareity of problems in accord with problem 2.

4. If Internet Explorer can be cut off from windows, then so should the browsers from other Operating Systems right?
Well if it really were this case, why don't the EU chase after every company or operating system? All they want, is to take off and unbundle Internet Explorer from Windows because the EU is a big Microsoft hate group. All the operatings systems around come with a browser, because it's the only natural thing to do. Most people use the computer because they want to access the Internet, so we shouldn't be impeding their desires. Of course, a computer can do many things without the Internet, but our world revolves around the Internet! Most average consumers even use the computer solely for that purpose! Thus, the EU can't strip every Operating system of their browsers, and they shouldn't strip Windows of IE.

5. Without programs like IE, Operating systems could end up with nothing left
If they can really take off IE, then in theory, they should take off every program every OS comes with. What's left of that? Maybe the recycling bin, control panel, and basic system features such as the registry. Perhaps not even that. Registry editor is a program by windows too no? So is recycling bin and all the tools in control panel. Why don't we get rid of those? Then whats left? It's very simple actually. By removing every software except the OS, what we have left is the command prompt, if you can really call it an "operating system". Here's an idea, how about Microsoft lose this case on purpose, then make a version of windows called Windows 7 Command Prompt Basic, and include nothing but command prompt in that version? I'd like to see how the world and the European Union would react. I doubt the anyone will buy this version, and even complain about it to Microsoft or the EU. Then Microsoft will just issue a statement saying they are trying to abide by the EU's laws, and making a version of Windows with just the core. In fact, this will barely affect Microsoft if they did this anyway, because people will only buy the "premium" version.

Conclusion
The EU has absolutely no grounds to be complaining about Microsoft's marketing tactics, because it's not really marketing, it's just putting a piece of software where it belongs. Internet Explorer isn't being bundled WITH Windows, it is a PART of windows. The EU cannot do anything to Microsoft, and even if they did, they would have no public backing at all. There is no way this case will go through, and I'm surprised such a ridiculous notion has even been proposed. It goes to show what Microsoft hates will do.

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