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Microsoft: We're working unbelievably hard to match demand

Microsoft: We're working unbelievably hard to match demand

Thu 21 Nov 2013 7:00pm GMT / 2:00pm EST / 11:00am PST
Hardware

"I can only apologise in advance to anybody who is let down before Christmas," says Xbox boss Phil Harrison

Last time there was a console launch Phil Harrison was batting for the other team as president of SCE Worldwide Studios. Now he's corporate vice President at Microsoft, and leading the way with cloud computing and opening up opportunities for independent development on the platform.

From the launch event at Leicester Square he told GamesIndustry International why launching in 13 countries on the same day seemed like a good idea, why Twitter is the early adopter's friend and how cloud computing will change development forever.

Q: This is the first time there have been two products like this launching simultaneously, and it feels like there's an oddly symbiotic relationship between the two companies. Could the industry as it is survive without you or without Sony? Are two companies necessary to ensure a healthy games market?

Phil Harrison: Wow, there's a lot of speculation in that question. I think first of all it's a great moment to be a gamer and if we think about what we're doing tonight, celebrating Xbox One fans and thanking them for lining up and my mission to make Dan Livingstone famous… I don't know if you know who Dan Livingstone is but he was the first person lined up in New Zealand to buy an Xbox One so he is technically, officially, the first Xbox One customer in the world.

"That vision that we painted in May has now come true here in November. It's now the world's console, and it's up to the world to shape it and make it their own"

We're very lucky that we have an incredibly loyal and passionate fan base for the things we do and that is very motivational for me and our team, as people who make entertainment and make technology come alive through entertainment. So the fact that there is so much excitement and focus on our industry right now I think is great.

We have our plan, we have our vision and we have our point of view on where the future is and that's informed the design and development and product of Xbox One and I think that you can see for yourself that vision that we painted in May has now come true here in November. We're really excited about this moment where - what are we six or seven hours from the moment - we are about to release that to the world. And it's now the world's console, and it's up to the world to shape it and make it their own. And that's a very exciting moment.

Q: Microsoft has gone for a simultaneous global launch, unlike Sony, which must present a lot more logistical challenges. What was the driving idea behind doing that rather than doing a rolling release?

Phil Harrison: Well you know better than anybody that we live in a 24/7 socially connected news world and you can make a global impact by having a global launch. I don't know how many cities we have events in throughout the world but it's certainly more cities than we are in countries so it'll be 14, 15, 16 cities around the world with significant consumer focused events. You just have to look at the rolling thunder of Twitter images and stories coming from New Zealand first, then Australia and now running here into Europe. So that's why we decided to go globally and 13 countries is no small undertaking.

Q: Coming up so close to PS4 and Christmas this is a key time, so getting an edge is important, but how important? Will the console that gets ahead at Christmas still be ahead in six months time?

Phil Harrison: I honestly don't know, but I also could not tell you month by month the sales figures for Xbox 360 when it launched in 2005. I now know that there's more than 80 million of them and we've enjoyed market leadership in the US and the UK and many other markets around the world. But the week on week, month on month sales progression is not something that I would pay too much attention to.

"The week on week, month on month sales progression is not something that I would pay too much attention to"

But I just remain confident that the proposition we have is the right proposition for the market, we think this is the right device,the right software line up, and crucially the right service to back it and that that will power us into next year and beyond.

And it's not just the games we have at launch, although they are important, but it's knowing a customer who buys an Xbox One today knows that Titanfall is round the corner, knows that Kinect Sports Rivals is round the corner in the spring, knows that Watch Dogs is coming a little bit after that, knows that there are some mega franchises like Halo still to come. And that will reinforce their purchase decision every day.

Q: You mentioned the UK there, it was a very strong territory for you with the last generation. Do you think there's any particular reason it's become such an established brand here? And do you expect that to continue this generation?

Phil Harrison: Well, we certainly are putting all our energies in making sure that that is the case but let's start with a great product, a great service and great games. So long as we deliver on that promise and support it and work closely with our retail partners and our other channel partners then we can be successful. You only have to see the passion from everybody outside to know that that is making a good start.

Q: Are you able to say anything about your sales targets for this quarter? Do you expect it to sit fairly closely to the Xbox 360 curve? Or will it be a bigger market this time around?

Phil Harrison: It will be a significantly bigger than 360, we don't make forward looking statements because we're a publicly traded company and you'll understand that I'm not able to share that information today. But the pre-orders have been unprecedented, and the supply that we are bringing in to the market in addition to the pre-orders will mean that by far and away it's our biggest launch ever.

Q: And is that hardware launch across Microsoft? Or just the Xbox brand?

Phil Harrison: Good question, but I would say certainly in Xbox history and almost certainly in Microsoft hardware history as well. I couldn't speak for the introduction numbers of a particular mice or keyboard combination.

Q: The marketing messages went through some changes in the last 6 months or so, there was some rethinking on those messages...

Phil Harrison: I'm not sure I would describe it as marketing messages but go on…

Q: But you understand the concept I'm getting at, and that seems more confident now. Are you confident that consumers now are clear on what the Xbox One is, they know what it's going to do for them, they know why it's better than 360 and why they should be out there buying it?

"We're working unbelievably hard to match demand. I can only apologise in advance to anybody who is let down before Christmas"

Phil Harrison: Yes, and the only reason I can say that confidently is because of the pre-order volumes we are going to be sold out. But I would also back that up by saying that some very thoughtful critique of our hardware and system have just recently hit the internet and clearly people who have thought quite deeply about Xbox One, have spent some time with it, recognise that it's a great place to play games but it's also the all-in-one entertainment system and a great place to enjoy TV, music, movies, simple and instant. Those messages and themes come back very strongly in almost all of the criticism or reviews of the console and its system.

So what we set out to achieve, our vision, has turned into reality and I think that's now reflected back in what people think and experience with Xbox One.

Q: You mentioned pre-orders were sold out, are you confident supply is going to meet demand over the Christmas period?

Phil Harrison: We're working unbelievably hard to do that, to match demand. I can only apologise in advance to anybody who is let down before Christmas, we don't want to lose a sale, clearly, and we'll work hard in our operations and our manufacturing supply chain and obviously with our retail partners to make sure we catch up as quickly as we can.

We do have more stock coming in we believe before Christmas that retailers will be able to allocate in free supply and then it's just up to demand as to how quickly that disappears.

Q: How has the changing face of UK retail, the loss of the big flagship gaming stores, the switch to online, changed how you launch a high-end consumer device?

Phil Harrison: Well I'm old enough and long enough in the tooth to remember when Dixons was the number one retailer for games in the UK so there's always been change. The mix of retail in any market evolves over time but the number of doors selling Xbox One I would imagine is as big as it's ever been. But just perhaps the mix slightly shifts.

Clearly this time around, with the launch of Xbox One, we have much more significant online retail partnerships than perhaps we would have had in the launch of 360. Those have become powerhouses in their own right. And that evolution will continue.

Q: Are you able to share any rough numbers in terms of where you've seen pre-orders coming from? In terms of online retailers and high street?

Phil Harrison: Everybody that you would expect to be stocking Xbox One seems to have run a successful pre-order campaign. Interestingly I heard, I didn't see, but I heard that Tesco was running some ads last night for Xbox One, they've got some free supply which they kept back - which I think is great - so that means that they're going to try and corner a little position in the market.

"The launch line-up as a whole delivers exactly what we wanted it to be. A balance of powerhouse brands that everyone knows and new things that they haven't played before"

One of the great things about the world we live in now, this kind of 24/7 social media world, is that Twitter is probably your best friend for finding supply. You'll be able to lock down a particular retailer who has some inventory, so I think the tools are there for customers to connect with inventory much quicker than they perhaps would have been otherwise.

Q: The review scores for both sets of launch titles - there's nothing stellar in there, fairly solid, perhaps a couple a bit lower than you expected… what are your thoughts on the initial critical reception to them?

Phil Harrison: I think the launch line-up as a whole delivers exactly what we wanted it to be. A balance of powerhouse brands that everyone knows and new things that they haven't played before, with individual and in aggregate experiences that really show off the power and promise of the machine. And I think we have that, I think from a game like Forza 5 - beautiful, stunning game 1080p, 60fps - you can see the performance of the machine on the screen for you to enjoy and luxuriate in, and now do that mental extrapolation and start thinking about what games are going to look like one, three, five or seven years from now. That's really exciting.

Q: And obviously the cloud computing will increase that power, how much do you see that contributing over the Xbox One's life cycle?

Phil Harrison: Hugely. It's probably the biggest strategic investment we've made in Xbox One with 300,000 servers turned on today. My favourite quote, "equal to the computing power of the planet in 1999." Now that's an incredible amount of CPU horsepower which is dedicated to making Xbox One games great.

That will clearly grow over time as our platform numbers grow, our server infrastructure will grow as well. And that allows us to keep the console fresh, it allows us to add functionality to the device over time, but it also allows developers to tap that power for their own gaming experiences. And once developers get the tools and technology under their belt and they understand how to really take advantage of it I think that's going to be a huge shot in the arm for the industry.

Q: And a USP for Microsoft, there probably isn't another company that could bring that type of server power to the table.

Phil Harrison: It's a non-trivial task and it's something that Azure, which is our cloud computing division, has invested billions over a number of years to get to this point. We are very fortunate to be able to piggyback on all of that investment and skillset that we have inside of Microsoft.

9 Comments

Robin Clarke
Producer

275 600 2.2
They're still charging a higher price for a weaker machine.

The dizzier parts of the specialist press might get caught up in the hype, but people who have to pay for their own consoles will be harder to convince.

Posted:4 months ago

#1

Gareth Jones
Managing Director

40 51 1.3
Isn't Phil Harrison the same guy who in 2005 claimed the PS3 was sold out everywhere when in reality they were piled high in stores?

With a pre-order ratio of 2:1 in PS4's favour, claims like this look just as ridiculous.

Posted:4 months ago

#2

Adam Campbell
Associate Producer

1,118 888 0.8
Not sure Gareth. I think I believe him "this time", the demand for the consoles has been huge. It really is looking like another record launch for the industry.

The actual sales, as many sources have suggested are likely a lot closer than the pre-orders suggest, but these are early adopters we're talking about.

Posted:4 months ago

#3

Peter Dwyer
Games Designer/Developer

458 254 0.6
Hey Gareth, I just picked up an XBone and have a PS4 on pre-order but, I'm fairly certain it's not a 2:1 pre-order ratio. Last I hear it was just 10% difference. Also being a world wide launch it's obvious that Microsoft have far more stock available than Sony did. This may actually be the tipping factor as most gamers will ultimately be planning to get both consoles and so will simply pick up the one they can actually get their hands on come Christmas time.

It looks like Sony will need to do a Nintendo (with the Wii launch not Wii U) and shift stock to the US thus probably delaying or under stocking other regions. If you don't have a pre-order of the Sony baby I suspect you're looking at next year for any joy.

Me? I couldn't give a rats arse what fanboys think of the consoles. They are both amazing and I'm going to have both come years end....not intentional but, damned if some shops over here don't have stock simply because people don't know they exist!

edit: Have to throw this one in! For the last USP about servers. I'm fairly certain Google and Facebook could give Microsoft a run for the money on that one >_<

Edited 1 times. Last edit by Peter Dwyer on 22nd November 2013 7:26pm

Posted:4 months ago

#4
For me, I'll go for a PS4 day one launch (more affordable) and wait a year for the XBONE, so that on difference, this will help avoid any early adopter issues...

Posted:4 months ago

#5

Nicholas Pantazis
Senior Editor

968 1,161 1.2
@ Peter it is obviously larger than 10%. Sony sold more in the US alone than MS did worldwide. That's more than 10% without question, even in the US which is Microsoft's strongest (really their only strong) market. Sony's aligned launch should be ALMOST double Microsoft's, when they add in the rest of the figures on the 29th.

Posted:4 months ago

#6
I think the first few millions units for each console is assured, it's the soft demand that occurs after that which I think has some worried. The world economies and the world's middle class is not healthy right now at all.

Posted:4 months ago

#7

Justin Biddle
Software Developer

147 425 2.9
While I accept that I would still expect them to sell less than the previous generation did at launch if things were truly bleak. Launch is going to be strong that's a given but if people are truly moving away from consoles I would still expect things to dip in day one sales not increase.

Posted:4 months ago

#8
Once we have a good roll out of games for the new consoles, its a good time to accurately predict and gauge the gaming bellweather. At this moment, its too much navel grazing to accurately state anything concretely except, both consoles have sold at least a million something something...

and errr winter is coming

Posted:4 months ago

#9

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