Digital Home Thoughts: Rob Enderle Says Microsoft Should Never Have Built the Xbox

"There is no argument that the Xbox 360 is a sound game system, and it isn't uncommon for a company struggling with its primary product to broaden their product portfolio and look to other areas for growth. The problem is that the opportunity cost is generally greater than the benefit, and that is the case here. As PRJ points out, PC gaming isn't what it should be, but that was a cost of doing the Xbox 360, so Microsoft effectively sacrificed a product that generates billions to assure the success of a product that makes millions."

I have to think that this is one of those articles that Rob Enderle writes to be controversial and get page hits - because it boggles the mind that he believes someone buying an Xbox 360 would have instead happily bought a computer running Windows instead. Enderle's basic point is that the Xbox 360 captured profits that should have gone to Windows, which he pegs at $200 million to $600 million per month. The stunning lack of logic in this line of thinking is almost hard to describe.

When the first Xbox came out (2001), a capable gaming PC was probably in the $1500 range (at the low end), easily 3x more than what the Xbox would have cost back then. So if you had $500 to spend and you wanted to play games on your TV, what were you going to buy? An Xbox or a gaming PC? Enderle talks about things Microsoft could have done to improve gaming on a Windows PC - virtual machines, etc. - but ignores the single most important factor in playing games: graphics processing. There's absolutely, positively nothing that Microsoft could do with software to magically enable fast hardware 3D acceleration. What do you think of Enderle's arguments?