The Great XBox U-Turn – Why Didn’t Microsoft Listen?

The Great Xbox U-Turn this week is a classic case study in how to bungle a major launch. A vendor makes fundamental changes to its market-leading product, only to be met with howls of consumer protest, and then backtracks

It’s a cliché I know, but this is Microsoft’s New Coke moment. And it’s a perfect example of a company losing sight of its external objectives – because internal concerns or politics came to the fore.

Reading the terms of the announcement, the actual intention behind Microsoft’s original idea of making sure the Xbox checks in online every 24 hours, and in limiting the transfer of games between Xbox users, was clearly to protect revenue – against games being bought, played a few times and then traded – and against second-hand consoles being resold outside their country of original sale. With the new Xbox pricing much higher in some regions (e.g., the Euro zone) than others (the US), this is possibly a problem Microsoft was trying to head off at the pass.

Yet the whole thing backfired – not only was the launch met with howls of protest instead of delight from dedicated gamers, Microsoft also allowed Sony to swoop in and benefit from its move. The battle for leadership in the console world has been waged between players such as Microsoft, Sony and Nintendo for decades, and just when Microsoft was getting ahead … so they stumble and allow Sony to catch up, or even overtake. In the melee, the virtues of the new Xbox were drowned out by the shouting.

This is a classic case of where talking – and listening – to the industry analysts would have saved the day. In its report on the U-turn, the BBC even quotes a Gartner analyst – and from my experience in working with analysts, I’d say the same comment would have been available to Microsoft executives via a Vendor Briefing, a long way in advance of the launch.

Monumental decisions like this, or to use a new recipe for one of the best-selling soft drinks worldwide, aren’t made overnight, or by individuals. They’re made by committee, with long meetings and lots of Powerpoint slides and Excel spreadsheets. Details such as the positioning of the buttons, the color, and even the energy consumption of the device while in sleep or standby mode are taken into consideration, and compared with the competition.

So in this case the only conclusion I can draw is that Microsoft knew the announcement would backfire, but the process felt like it was too far down the track to change it, so they went ahead anyway, and hoped the key features such as speed and usability would overcome any “minor” issues. Bad move. And once you consider that the company managed a U-turn in less than a week, it’s clear how quickly, and decisively, decisions can actually be made when companies are facing a wall of hostile public opinion: but why go this far in the first place?

Simon Jones, Managing Director – OnPR

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