In September 1999, the Microsoft Xbox team was wondering what strategic decisions it would have the best chance against the upcoming Sony PlayStation 2 First “Project Midway” Microsoft was the console project to the perceived threat to the Windows franchise from Sony expands the original PlayStation in a wide entertainment platform with the PlayStation 2 arises. Seamus Blackley – the chief instigator of the Xbox within Microsoft – and some of his colleagues w … Read more »

In September 1999, the Microsoft Xbox team was wondering what strategic decisions it would have the best chance against the upcoming Sony PlayStation 2 First “Project Midway” Microsoft was the console project to the perceived threat to the Windows franchise from Sony expands the original PlayStation in a wide entertainment platform with the PlayStation 2 arises. Seamus Blackley – the chief instigator of the Xbox within Microsoft – and some of his colleagues were on a flight to Austin, Texas, where they make an appointment with Michael Dell, CEO of Dell Computer. The purpose of the visit was to convince Dell to manufacture Xbox video game consoles on the Microsoft software. In fact, the team is expected to produce tailored somewhere between a stand-alone game console and a PC to play a video game machine. It remained unclear, however, which should position the Xbox along the spectrum of dedicated console PC Microsoft. Would it be an open platform like the PC in the sense that independent developers could publish games on them without restrictions and without paying royalties? Who would produce consoles and under what terms? What should close the console, and how it would be priced for consumers? The home video game industry in the 1970s, Atari was born during the “golden age”, then suddenly broke in 1983. It was in the late 1980s under the leadership of Nintento, which was then challenged for a few years by Sega, conquered only by the original PlayStation from Sony to be born again. And some companies like 3DO on the way had tried unsuccessfully to change the prevailing business models. This turbulent 25-year history could provide Blackley and his colleagues with some useful tips on how best to enter the market.
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Andrei Hagiu
Source: Harvard Business School
19 pages.
Release date: 30 November 2006. Prod #: 707501-PDF-ENG
Microsoft Xbox: Changing the Game? HBR case solution