Microsoft Warns That The Hardware Business Is “Really Tough”
Microsoft’s Phil Harrison has issued a warning to new companies looking to jump into the console market: “the hardware business is a really tough business.”
This message comes after Valve’s Gabe Newell spoke about the Steam Box earlier this week, and while Harrison doesn’t call out Valve specifically, it’s evident that he’s addressing the Steam Box and perhaps the Ouya.
As a Microsoft Studios executive and ex-Sony PlayStation development boss, Harrison is a veteran of the console business. His exact words for would-be console makers are:
“Entering the hardware business is a really tough business. You have to have great fortitude to be in the hardware business and you have to have deep pockets and a very strong balance sheet. It’s not possible for every new hardware entrant to get to scale.
“They can be successful at small scale. But it’s very rare for a new hardware entrant to get to scale, and I mean tens or hundreds of millions of units. There are a very small number of companies that can make that happen.
“And it’s not just having a great brand or a great software experience. It’s about having a supply chain and a distribution model and a manufacturing capacity and all the things that go with it. It’s a non-trivial problem to solve and it takes thousands of people to make reality.”
When asked if Microsoft would be satisfied with attaining Steam’s level of success with its own cloud gaming platform within two year’s time, Harrison said:
“I admire Valve as a company and what they’ve achieved with Steam. So I wouldn’t in any way criticize what they’ve achieved and the role they’ve played in the industry. But I’m not sure we would choose Steam as a benchmark of success. We would always seek to innovate and push beyond.
“Xbox Live as a foundation, the reach we have and the experience we deliver is a great place to build on.”
Xbox Live currently sees over 40 million users relative to Steam’s 50+ million active users.