jm9206755
01-19-2007, 05:25 PM
Q: Is there some potential that AT&T would give away an Xbox 360 in exchange for a long-term IPTV service contract?
A: I don’t know what they plan to do. We haven’t even signed the exact deal. But there is a lot of upside for AT&T and Microsoft in that customer in terms of the kinds of things they can do, including signing up for Live, buying more games. So there ought to be a great win win for us. The question is, “Is AT&T – most likely they will have a basic set-top box.” I can’t speak for them. Most likely they will have a basic set-top box and a fancy set-top box. That’s the kind of thing we’ll talk about. They have been very focused on rolling out. They have a lot of integration to do. Content licensing. Franchising. They have a ton to do. They have their merger to get through. They got locked down in 2006.
Q: You didn’t announce a larger hard disk drive (for the Xbox 360)?
A: We did not.
Q: No details.
A: If you’re in an IPTV environment, you can stream all of the videos. Today, with Windows Live Marketplace, when we do video, we overcome any broadband capacity things by bringing a video down and then playing it from the hard disk. If you download an HD video, it’s a cool way it does it in the background. You can go off and play games. But it’s not streaming today. In an IPTV environment, there is no reason to put anything down on a hard disk because you created a broadband infrastructure that has enough capacity to stream individual video streams to everybody on the network.
Q: So you won’t be downloading anything to your Xbox 360?
A: Well, interactive games from Live Arcade, you may want to do those because you may want a higher data rate than a video rate. But in terms of videos and music, there is no reason to put it on the local hard disk. This is one of the weird paradoxes. The DVR forces you to think in advance whether you want something. And you to manage the hard disk. And you to buy and listen to a hard disk. Whereas server-based storage has none of those characteristics. But the current rights model where you as a user can choose to store locally. There was that Cablevision model where they were testing whether logically where a user-segregated drive but centrally located drive. They weren’t even in a pool.
Q: You don’t need to change the Xbox 360 at all?
A: No, we don’t need to change it at all to do an IPTV thing.
Q: So it will be the same with AT&T?
A: We don’t know that. We can do it a lot of different ways. There is no missing capability in the Xbox 360. When they did that demo, if you buy a remote control, they’re probably have a special remote control because of the way they designed the service. They probably won’t use our remote control. But a lot of that is to be worked out. We have a year.
Q: The content guys must be happier if nothing is going to be stored on the hard drive?
A: That’s right, it means you can insert ads that are up to date. You can control how much ad skipping you allow. And you’re less vulnerable to getting at the bits. Xbox is a very protected environment. No one is going to go and get bits on an Xbox. If they want a DVD movie, the last place you would go and get it is an Xbox. By being more secure than anything else out there, it’s pretty good. It’s really just the simplicity. You have to get permissions to do server-based DVR. You have to get the copyright owner’s permission. So it could be a hybrid for a while. For some stuff that they don’t have the rights for may be local in there. At some point in time, having more capacity would obviously make more sense. Some things you don’t have to do that way.
Q: Are you saying AT&T is going to be a partner?
A: They have not announced anything. Tonight’s announcement was a Microsoft announcement.
Q: How is the Xbox 360 strategy working out?
A: It’s working perfectly. We wanted to be the guy with the small box that costs less. We wanted to have the most compelling or better than anyone else’s box. We wanted to have the most games. We wanted to play to our software strength, and tools and online. We wanted to get most respects, except for the online capability, we wanted to swap positions with Sony. We wanted to not be a year late, not be a big box, not be a more expensive box. How are we doing on that?
Q: The only worry is that Nintendo may have done a good enough box at a low price with the different controller. Maybe they might lead?
A: Sony has always been our most direct competitor. Nintendo of course is a competitor. But look at the resolution you get with a controlled experience like that. Say to yourself, how in terms of using a game for a long period of time, what kind of accuracy and capability do you want? Look at the classic Nintendo positioning. Look at the graphics. Look at Nintendo’s execution in terms of online capability. We have this thing that nobody has ever seen before. When you say to your friend, hey let’s play online, you say then you have to buy an Xbox. That’s what 10 million people say. If you want to play online, get an Xbox. We’re not standing still. Look at what you saw today connecting up the world to the Windows PC. Do you expect Nintendo to rev up a team to create cross-device gaming and tool kits to develop those things? Not very likely. We clearly think that Nintendo did some things right. This group Rare that we bought a few years ago really the gestalt of doing titles of a certain type that we didn’t have on our box. Viva Pinata has been a huge success. In my household, everybody plays Viva Pinata.
Q: What is IPTV going to do to Sony?
A: That’s kind of a wild card.The key things that matter are who has the most titles. Who has the best titles? Who’s got the best online? Who has the sleek box? Who has the tools to let people do something. Those things are already there for you to see. So you don’t have to think about IPTV. IPTV is super cool. But it is not a necessary element to say the last time we saw this movie.
Q: The IPTV demo looks awesome. Are you surprised how long it has taken IPTV to get here?
A: Well, sure. We started working on it ten years ago. We were completely over-optimistic. It’s never a problem for Microsoft to be early. Maybe we spent tens of millions being early. The thing that is bad for us is when we’re late. That doesn’t happen very often but people do remember when it does happen.
Q: With the relationship you have in IPTV with AT&T, could we see something like AT&T takes Uverse out and bundles it with Xbox?
A: AT&T did not announce anything tonight with respect to Xbox. Microsoft made an announcement that IPTV is a set-top box. Everything has to be figured out as to what has to be done. We’ll obviously offer to AT&T to use this as a set-top box. We can make a lot of these things and they’re cheaper and cheaper to make all the time. Just look at the normal price curve of these things. And it’s just silicon. They don’t even have in their entries – it’s just like we were last time. They have a hard drive in their cost-of-goods-sold in every SKU that they have. We said, “Hey, we tried that where you have this hard disk that you have to have.” Why have that dependency, particularly as broadband will let you do things. You want the games not to have a hard-disk dependency. So you can just use the broadband. But they have a hard-disk dependency. If you look at the COGS over time, not only are we here, our slope is here. Theirs is higher, just like we were last time. Look at the tail we get by having pure silicon.
Q: Why are you allowing the Xbox 360 to take on this IPTV role when it seemed like the job of doing that belonged to the Media Center PC?
A: Which job?
Q: The job of handling all of the other entertainment in the home besides gaming. Now it looks as if the Xbox 360 and the Media Center PC have duplicate functions.
A: Our movie download deals will span Media Center and Xbox. Xbox has a slightly better hardware protection model. We may have some content we don’t get for everywhere. It’s very valid to point out that some of the good things we are doing in Media Center we should share with Xbox and some of the good things we are doing on Xbox we should share with the Media Center. That’s what you saw with gaming tonight. You didn’t see that with everything. Some of those things we will get to. There are things that are cool that we are doing with Xbox that we should share with Media Center and visa versa. If we align the extensibility models there, there are some very neat things that come out of that. That’s work to be done. The Xbox gaming experience is something we announced a direction at E3 and then showed very concretely the actual running software.
Q: You don’t want people to say that, “I don’t need a Media Center PC anymore because I have everything I need in the Xbox 360.”
A: If people are comparing Microsoft to Microsoft, we have no concern. It’s OK. Should we pick one form factor and worry about that? Should we be concerned if someone puts their media on my Zune or media on my Blackjack? There is enough uncertainty about who wants PC coming down in the living room and Xbox coming up that I don’t mind them meeting and even overlapping as long as the point system, the user interface, the development tools – as long as we get this incredible aligment. The name spaces are the same. Your gamertag is the same on those two things. Likewise, take phones and PCs. Phones are coming up a little bit. PCs with ultra mobile are coming down. I’m willing to let them overlap a little bit as we drive the PC to be smaller, quicker boot, longer battery life and we drive the phone to have a larger screen, a more broad set of software running both locally and remotely. I want to fill that gap. I’m willing to have a little bit of overlap there. The software, if we do it right, a lot of it is just the same software. When we run the VC1 codec on an Xbox and a VC1 codec on a Windows Media Center PC. That’s the same set of code. That’s the same licenses, the same everything.
Q: Do you watch HD-DVD on your Xbox 360?
A: Absolutely. It’s good stuff. I love watching it. I download movies too.
Q: Do you think that with this generation of games, Sony is going to have anything that looks better than the Xbox 360’s Halo 3 for the PlayStation 3?
A: No. They were going to have the Cell be the video processor. But they didn’t know what they were doing. They said the Cell is the video processor. But they turned to Nvidia at the last minute, but Nvidia can’t do embedded DRAM. Go look at the bandwidth problems. Go ask the guys running … now. They took their year and burned it by not having a decent CPU strategy and then turning to Nvidia at the last minute. It’s a very unusual thing. Those processors are isolated from each other. You are seeing great game developers. Things will get better on us and on them. We think they’re get better on us. That is so close. We claim we’re better. It doesn’t matter. It’s just like pointing at the Xbox 1. We were 20 percent better. But it didn’t matter. We were a year late, didn’t have the best games. We had this bigger box. We did have online. We didn’t switch positions on that.
Q: Sony says they have an advantage in creating games at 1080p.
A: Go ask the game developers. 720p is great. We can do 1080p. But in systems with 512 megabytes of memory, there are trade-offs. 720p is great. These are 512 megabyte machines. They are not 4 gigabyte machines. 720p is fast.
Q: With IPTV, will you have to have a bigger hard drive on the Xbox?
A: When you have IPTV, it lets you stream video. So for video streams, it’s a server-based DVR.
Source (http://blogs.mercurynews.com/aei/2007/01/ces_interview_w.html)
One question: Is this guy insane? Didn't he call Nintendo their primary competitor like, last week?
A: I don’t know what they plan to do. We haven’t even signed the exact deal. But there is a lot of upside for AT&T and Microsoft in that customer in terms of the kinds of things they can do, including signing up for Live, buying more games. So there ought to be a great win win for us. The question is, “Is AT&T – most likely they will have a basic set-top box.” I can’t speak for them. Most likely they will have a basic set-top box and a fancy set-top box. That’s the kind of thing we’ll talk about. They have been very focused on rolling out. They have a lot of integration to do. Content licensing. Franchising. They have a ton to do. They have their merger to get through. They got locked down in 2006.
Q: You didn’t announce a larger hard disk drive (for the Xbox 360)?
A: We did not.
Q: No details.
A: If you’re in an IPTV environment, you can stream all of the videos. Today, with Windows Live Marketplace, when we do video, we overcome any broadband capacity things by bringing a video down and then playing it from the hard disk. If you download an HD video, it’s a cool way it does it in the background. You can go off and play games. But it’s not streaming today. In an IPTV environment, there is no reason to put anything down on a hard disk because you created a broadband infrastructure that has enough capacity to stream individual video streams to everybody on the network.
Q: So you won’t be downloading anything to your Xbox 360?
A: Well, interactive games from Live Arcade, you may want to do those because you may want a higher data rate than a video rate. But in terms of videos and music, there is no reason to put it on the local hard disk. This is one of the weird paradoxes. The DVR forces you to think in advance whether you want something. And you to manage the hard disk. And you to buy and listen to a hard disk. Whereas server-based storage has none of those characteristics. But the current rights model where you as a user can choose to store locally. There was that Cablevision model where they were testing whether logically where a user-segregated drive but centrally located drive. They weren’t even in a pool.
Q: You don’t need to change the Xbox 360 at all?
A: No, we don’t need to change it at all to do an IPTV thing.
Q: So it will be the same with AT&T?
A: We don’t know that. We can do it a lot of different ways. There is no missing capability in the Xbox 360. When they did that demo, if you buy a remote control, they’re probably have a special remote control because of the way they designed the service. They probably won’t use our remote control. But a lot of that is to be worked out. We have a year.
Q: The content guys must be happier if nothing is going to be stored on the hard drive?
A: That’s right, it means you can insert ads that are up to date. You can control how much ad skipping you allow. And you’re less vulnerable to getting at the bits. Xbox is a very protected environment. No one is going to go and get bits on an Xbox. If they want a DVD movie, the last place you would go and get it is an Xbox. By being more secure than anything else out there, it’s pretty good. It’s really just the simplicity. You have to get permissions to do server-based DVR. You have to get the copyright owner’s permission. So it could be a hybrid for a while. For some stuff that they don’t have the rights for may be local in there. At some point in time, having more capacity would obviously make more sense. Some things you don’t have to do that way.
Q: Are you saying AT&T is going to be a partner?
A: They have not announced anything. Tonight’s announcement was a Microsoft announcement.
Q: How is the Xbox 360 strategy working out?
A: It’s working perfectly. We wanted to be the guy with the small box that costs less. We wanted to have the most compelling or better than anyone else’s box. We wanted to have the most games. We wanted to play to our software strength, and tools and online. We wanted to get most respects, except for the online capability, we wanted to swap positions with Sony. We wanted to not be a year late, not be a big box, not be a more expensive box. How are we doing on that?
Q: The only worry is that Nintendo may have done a good enough box at a low price with the different controller. Maybe they might lead?
A: Sony has always been our most direct competitor. Nintendo of course is a competitor. But look at the resolution you get with a controlled experience like that. Say to yourself, how in terms of using a game for a long period of time, what kind of accuracy and capability do you want? Look at the classic Nintendo positioning. Look at the graphics. Look at Nintendo’s execution in terms of online capability. We have this thing that nobody has ever seen before. When you say to your friend, hey let’s play online, you say then you have to buy an Xbox. That’s what 10 million people say. If you want to play online, get an Xbox. We’re not standing still. Look at what you saw today connecting up the world to the Windows PC. Do you expect Nintendo to rev up a team to create cross-device gaming and tool kits to develop those things? Not very likely. We clearly think that Nintendo did some things right. This group Rare that we bought a few years ago really the gestalt of doing titles of a certain type that we didn’t have on our box. Viva Pinata has been a huge success. In my household, everybody plays Viva Pinata.
Q: What is IPTV going to do to Sony?
A: That’s kind of a wild card.The key things that matter are who has the most titles. Who has the best titles? Who’s got the best online? Who has the sleek box? Who has the tools to let people do something. Those things are already there for you to see. So you don’t have to think about IPTV. IPTV is super cool. But it is not a necessary element to say the last time we saw this movie.
Q: The IPTV demo looks awesome. Are you surprised how long it has taken IPTV to get here?
A: Well, sure. We started working on it ten years ago. We were completely over-optimistic. It’s never a problem for Microsoft to be early. Maybe we spent tens of millions being early. The thing that is bad for us is when we’re late. That doesn’t happen very often but people do remember when it does happen.
Q: With the relationship you have in IPTV with AT&T, could we see something like AT&T takes Uverse out and bundles it with Xbox?
A: AT&T did not announce anything tonight with respect to Xbox. Microsoft made an announcement that IPTV is a set-top box. Everything has to be figured out as to what has to be done. We’ll obviously offer to AT&T to use this as a set-top box. We can make a lot of these things and they’re cheaper and cheaper to make all the time. Just look at the normal price curve of these things. And it’s just silicon. They don’t even have in their entries – it’s just like we were last time. They have a hard drive in their cost-of-goods-sold in every SKU that they have. We said, “Hey, we tried that where you have this hard disk that you have to have.” Why have that dependency, particularly as broadband will let you do things. You want the games not to have a hard-disk dependency. So you can just use the broadband. But they have a hard-disk dependency. If you look at the COGS over time, not only are we here, our slope is here. Theirs is higher, just like we were last time. Look at the tail we get by having pure silicon.
Q: Why are you allowing the Xbox 360 to take on this IPTV role when it seemed like the job of doing that belonged to the Media Center PC?
A: Which job?
Q: The job of handling all of the other entertainment in the home besides gaming. Now it looks as if the Xbox 360 and the Media Center PC have duplicate functions.
A: Our movie download deals will span Media Center and Xbox. Xbox has a slightly better hardware protection model. We may have some content we don’t get for everywhere. It’s very valid to point out that some of the good things we are doing in Media Center we should share with Xbox and some of the good things we are doing on Xbox we should share with the Media Center. That’s what you saw with gaming tonight. You didn’t see that with everything. Some of those things we will get to. There are things that are cool that we are doing with Xbox that we should share with Media Center and visa versa. If we align the extensibility models there, there are some very neat things that come out of that. That’s work to be done. The Xbox gaming experience is something we announced a direction at E3 and then showed very concretely the actual running software.
Q: You don’t want people to say that, “I don’t need a Media Center PC anymore because I have everything I need in the Xbox 360.”
A: If people are comparing Microsoft to Microsoft, we have no concern. It’s OK. Should we pick one form factor and worry about that? Should we be concerned if someone puts their media on my Zune or media on my Blackjack? There is enough uncertainty about who wants PC coming down in the living room and Xbox coming up that I don’t mind them meeting and even overlapping as long as the point system, the user interface, the development tools – as long as we get this incredible aligment. The name spaces are the same. Your gamertag is the same on those two things. Likewise, take phones and PCs. Phones are coming up a little bit. PCs with ultra mobile are coming down. I’m willing to let them overlap a little bit as we drive the PC to be smaller, quicker boot, longer battery life and we drive the phone to have a larger screen, a more broad set of software running both locally and remotely. I want to fill that gap. I’m willing to have a little bit of overlap there. The software, if we do it right, a lot of it is just the same software. When we run the VC1 codec on an Xbox and a VC1 codec on a Windows Media Center PC. That’s the same set of code. That’s the same licenses, the same everything.
Q: Do you watch HD-DVD on your Xbox 360?
A: Absolutely. It’s good stuff. I love watching it. I download movies too.
Q: Do you think that with this generation of games, Sony is going to have anything that looks better than the Xbox 360’s Halo 3 for the PlayStation 3?
A: No. They were going to have the Cell be the video processor. But they didn’t know what they were doing. They said the Cell is the video processor. But they turned to Nvidia at the last minute, but Nvidia can’t do embedded DRAM. Go look at the bandwidth problems. Go ask the guys running … now. They took their year and burned it by not having a decent CPU strategy and then turning to Nvidia at the last minute. It’s a very unusual thing. Those processors are isolated from each other. You are seeing great game developers. Things will get better on us and on them. We think they’re get better on us. That is so close. We claim we’re better. It doesn’t matter. It’s just like pointing at the Xbox 1. We were 20 percent better. But it didn’t matter. We were a year late, didn’t have the best games. We had this bigger box. We did have online. We didn’t switch positions on that.
Q: Sony says they have an advantage in creating games at 1080p.
A: Go ask the game developers. 720p is great. We can do 1080p. But in systems with 512 megabytes of memory, there are trade-offs. 720p is great. These are 512 megabyte machines. They are not 4 gigabyte machines. 720p is fast.
Q: With IPTV, will you have to have a bigger hard drive on the Xbox?
A: When you have IPTV, it lets you stream video. So for video streams, it’s a server-based DVR.
Source (http://blogs.mercurynews.com/aei/2007/01/ces_interview_w.html)
One question: Is this guy insane? Didn't he call Nintendo their primary competitor like, last week?