Where's J Allard?
J was just, umm. J was doing a BMX event or something. I don't know. He's back in Redmond now.
It's just that he's been MIA since launch.
J's working hard. J runs the platform. J has his engineers. He's been working hard on Live updates and what have you. Live as a platform is something something to J. It's just that the difference from pre-launch, where we saw him in the ourcolony video. He was the face of the Xbox 360.
Remember, you were there Tuesday right? I started off saying we had an organizational change. I run the business from the point of view what people have to do. One thing it means is a singular face. One thing we figured out was that the J/Robbie/Peter thing probably wasn't working. J's incredibly busy. J is one of smartest guys on the face of the Earth, and developing platforms is what he does. From that point of view ... I don't know. J's a very active young man and ... snowboarding season's over. There's a rumor that he's maybe working on the Xboy, a portable Xbox.
I think J was actually on the grassy-knoll in '63 in Dallas. Was he also responsible for hiding all those Xboxes at Area 51?
He actually hid the E.T.
cartridges, that's how far back he goes.
If you're really serious about the whole games thing, don't you think portable's a part of that?
Portable's a part of everything, but there's a billion cell phones now that I don't think that in any way our industry is doing a fine job of exploiting what's possible on mobile phones. We're blind to the fact that everyone will carry one of these devices. It h as have input, it has a screen. Anything that has input, has a screen, you can play games. What do you think of Nokia's new N-Gage push? I don't think they're blind to it.
I have to admire them for persistency. I have not walked the show floor. Do you think that persistence can get them developer support the same way that you've said persistence in Japan will earn you developer support?
Nokia's an unbelievable company. They remind us a little bit of Microsoft: they stick to things they believe in it. They have the capital resources and software engineers to get stuff done. Maybe later on today I'll go have a look. My priorities are to go talk with three or four partners, maybe go play with the Wii, and get on a flight home.
To hammer this one more time: do you really think that the cell phone itself can compete against the likes of the DS and the PSP?
The cell phone at its current structure... as they evolve now. [Pulls phone out.] This is a smart phone from HTC. You start getting this level of functionality -- you know the deal -- you've got the same thing. You've got 16 by 9 aspect ratios, you've got pretty decent screens, I look at this and I think, "geez, you could probably get things on the capability of Genesis or the old days on this pretty well. I will never be able to play things like this. I just can't do it. I also prefer to use the soft key pad because I can go faster with the stylus. But yeah -- the Chairman said so. The Chairman says so, believe me. I haven't been at Microsoft long, but I know when the Chairman says so, things happen.
Services as ambitious as Live Anywhere have to be rolled out over a number of years. You're not going to get that all at once.
So what are we going to see when Vista launches [in January]. Are we going to see any of it with Vista?
As Scott [Henson, director of the Xbox Advanced Technology Group] said, a lot of that -- certainly the interface that hooks into the service is already in Vista. I haven't seen ... we eat dog food (our stuff) at Microsoft. I think we've got the latest build of Vista coming up soon, and I'll see where we're at on that. It's all come together nicely.
Games is a major part of what Vista's about. It wasn't vaporware we put up there. The importance is when Bill does do something and puts his commitment to it, things happen. If I say do something maybe it'll get done.
Let's assume that it'll get done. The question is about timeframe.
You know what, I could make stuff up and say "here's the 18-month -- I'm sure there is -- rollout schedule." It'll happen. You're exactly right, it'll roll out. How it rolls out, don't know.
So you've said that the lack of rumble [in the redesigned controller] will hurt the PS3.
That's a personal thing about the way that I like to play. I like the tactile, the visceral response of the controller. Maybe that's because it's always been there for me. And I make that joke that maybe because I'm older I need the reminder that I'm hitting the wall. Don't you think that --
Well we went around the show floor and asked some people yesterday. Opinion's split. People who really care about the entire experience and who have played games where rumble is integral to the gameplay say that it's very important. For instance, the Rockstar Ping Pong title, you need rumble to know when you're about to hit the ball out of bounds.
Ok, I've played the title, but I haven't played to that level.
But a number of other people have said that's the least of Sony's worries. What do you think their key weaknesses are?
Price point is a weakness. As much as they will say that -- I think that Kutaragi overnight said it's too cheap or something like that -- I don't know. Price is going to be an issue. But the way that we as an industry need to cost reduce and bring better value to the consumer as quickly as we can... There are consumer segments that enter the market when the price hits a particular point. You've got to be able to cost-reduce your product accordingly.
They may be able to do an amazing job of incredibly bringing [the price] of that product down. I don't know.
Speaking of cost-reducing, Todd Holmdahl told Reuters in ... I believe it was September of last year that you have plans to cost-reduce the Xbox 360 every single year as part of the strategy.
Oh yeah. More than every year. It's not like, "January 1st let's take some cost out of the box." You have teams that are constantly looking at how you bring the box to a more -- you know, as componentry evolves... amortization, all of this stuff. It's complex stuff.
So people misquoted that as "price reduce."
Cost and price are two very different things.
It's feasible though.
Well of course.
So by launch window this holiday?
No, that's not what he said. He said you're going to cost-reduce the box every year.
I'm asking you though.
You're asking me to tell you I'm going to drop the price? We had a price drop on Monday when Sony announced their price. We obviously don't talk about price drops, and I can't think of any good reason right now that we would drop the price even further from the delta between what we're offering and what our competitor's are currently offering.
And when Nintendo announces a price that is lower than the Xbox 360 -- which is the expectation -- than, by that logic, you've suffered a price increase.
You could put it that way. It's a price increase if the consumer doesn't see the difference between the experiences. I would posit that the consumer right now would be hard pressed to find the price delta between an Xbox 360 and all it has to offer, as we currently stand here today, and the PlayStation 3, and what it promises to offer.
You're not often talking about Nintendo as a competitor ...
I talk about Nintendo every day. They are a competitor, but I think they're in a different space. They have spectacular first-party intellectual property that is timeless, that is built around fun, it's character-based in many instances, it's iterations of great franchises that have gone for decades, but it's primarily youth-based. They're also doing, with the Wii controller, which eventually I'll go and get my hands on, things that are innovative that, from the moment I saw them in Tokyo, I was quoted that day as saying that I loved the innovation and that has stayed with me forever, and I don't back down from that, but I think we're in different spaces as two different companies that can certainly coexist and complement each other.
My point would be that I can see exactly where the value proposition and the positioning of the Nintendo Wii; from who it's made for, what the price is, what would be attractive, to which demographic, on a global basis. I think we've made it clear about we are where we are, what you're getting for your $299 or $399, what the value proposition is, titles like Gears of War, Xbox Live Marketplace. Growing our reach on a global basis. In the middle, it's not clear to me, and maybe I need to take a breather and read this weekend what the value proposition is, potentially I read that Blu-ray is worth the $100 to $200 to $300 and I get very confused when Cell technology is a consumer value proposition. And I ask you guys, what does that do for me as a consumer?
From the game demos we've seen so far, and from the people we've asked, there seems to be a visual parity so they're not yet seeing what this processor is doing for the graphics of the games. But this isn't necessarily a fair comparison since you're now on the second wave of titles while they're just now getting used to developing for that processor. It might be years before we're able to see a difference. Maybe a year or year and a half from now, who's going to be the first to twenty million?
I'd like to think we'd be the first. Let's say we get to the 10 million [mark] ... they won't sell 20 million in the 12 months, it just doesn't happen. If we maintain our commitment to Xbox Live, which we will do, we've built up Live Anywhere, Vista that supports the platform, the content pipeline flow that I can see in 2007 / 2008 -- and in some instances now starting to see things that we're putting up past 2009 -- all of that comes into fruition of the quality levels I believe our third-party partners and my first party studios are doing, we have the price advantage. We globalize our strategy ... we bring China online eventually. Something's gone badly wrong if it's not at the Xbox 360.
So let's talk about Japan for a minute. Your continued investment in Japan is a sign that you really want to stay in the market in the long run. To an extent, you're saying, "the more we lost, the better the signal is to that market."
It's a commitment to the market that's very important, and when I looked at the Japanese markets, a lot of the metrics is how many pieces of hardware we sell to the Japanese consumer, but it's one of many metrics. Asia is a major part of our expansion profile cause online gaming is very important in Asia and we have an advantage. Japanese developers like Sakaguchi, Mizuguchi, Okamoto, all of these guys have an incredible impact outside the shores of the Japanese islands in to the Asian market. Companies like Konami, Capcom, Sega, Namco Bandai, Koie, are now, from an ecosystem point of view, looking globally. Our continued commitment to work with them in their domestic markets, whether it's Capcom with Dead Rising or Lost Planet, I don't talk enough about those two games either. I'm guilty of talking about Sakaguchi. Lost Planet demo has most of our data servers around the world on fire right now. For a game that's still a long way away ... what's happening with Lost Planet already, they're getting feedback from users already. You set up a URL to immediately get people like yourself saying, "Inafune-san, demo's great. Here are the three things I like, here are a couple things I don't like."
Why don't you build that right into the demo itself?
You could do that ... feedback? DeadRising.com. LostPlanet.com. Or Inafune@LostPlanet.com.
At GDC, you said that you run Japan as a hobby. Yesterday, you said that you run Japan directly.
Well, "hobby" is my typical irreverent way of saying that it's weird that I run Japan. But that comes from my legacy of being with Sega ... knowing the ecosystem there, knowing all the publishers, knowing the retailers, knowing the developers, and having as much of a gaijin as you can of understanding what makes the Japanese market tick.
But it's still accurate to characterize your involvement as increased now?
Yeah. The GM of Japan reports directly to me, which is the only country that doesn't report to Mitch Kock who's the head of worldwide sales and marketing. So, from that point of view ... But I'm very involved because all first party development reports to me, so we have MGSA , which is our first party people on the ground in Tokyo. And the third party reports to me. So, I'll go there twice a year and meet with our partners and third parties.
This one's a bit of a branding, marketing question: Would you ever name a product "Wii?" Why or why not? And, also at the same time talk about how Xbox 360, as a name, is a little hard-edged -- a little technical. How does that help or hinder the Xbox 360 in the marketplace?
Moore: Names that seem ridiculous at first, quickly get involved in our culture. "iPod." It's not even a pod. The idea of something that is unique and distinctive is what you brand. One of the challenges of global branding nowadays is finding a word you can protect on a global basis. And people said, "why not Revolution?" Well, I can only imagine how difficult it would have been to brand "Revolution." So now you see -- particularly in the world of technology -- you see these names that you can protect. And you see made up names. In the dot-com base it was "Avayo" ... "Lucent" ... there's a reason there's "Yahoo" and "Google." These are somewhat nonsensical names that try and give some can of a descriptor to the experience. And you can protect them on a legal basis.
So you don't see in problem with that name?
I mean, I'm saying "the Wii." You know, I'm from England, you know, we go for a wee. In England, it's more the Brits because Americans are completely petrified by bodily functions, so we can't even say, "toilet!" (Laughs). If you have to go to, it's the restroom. (More laughs). So in England, we ask where the toilets are ... here, toilet is horrific. So, there's a bit of toilet humor, bathroom humor ...
The portfolio strategy in Japan, it seems that PS3 will always have the advantage in terms of relationships there because Sony is just there and its a hits driven business. One title out of ten really sells consoles. Most people have characterized Sony's involvement there as magnitudes greater than yours. If you've got a portfolio of 100, you've got 10. If they've got 1000, you've got 500. So, just by virtue of luck, they're gonna have more hits and sell consoles in that territory. Would you agree?
No, what I would say is -- that my experience in Japan is it's three or four major franchises that thrive. And, whether that's Final Fantasy, Dragon Quest, Dragon Ball Z, Pokemon, Yu-gi-Oh, a Sega title ... these games would sell huge numbers. From that point of view, you're right, throw enough mud at the wall, some of it sticks. My strategy is to not to throw mud at all, but focus on bigger bets, obviously with bringing in Sakai-Sana. And you know, if you're going to do that sort of thing you will find the best in the worldm, and we were fortuitous that Sakai-san was available after leaving Square, and you place your bets accordingly. Trying to spread your bets and maybe going with a lot of mud but none of it sticks is not a smart strategy. I believe that if there's anybody I'm gonna put my bets on and ride a horse it's Sakaguchi. And I may be proven right, I may be proven wrong, it's a lot more than that as well. We haven't done a great job yet really driving the advantage of Xbox Live. We didn't do a good job with Arcade, you know, to my horror we only had one Arcade game at launch, that was Hexic. We're doing a lot now with Japanese publishers with Arcade.
Who's your tattoo artist, by the way? We wanna find out how much that thing costs.
None of you guys believe me!