MS needs to remember that they're in the gaming industry to sell consoles and games, not just services. Cloud gaming should be supplementary, not the main focus.
That's just thing right? Nobody is in the industry to sell consoles. The money is made on the games. Sony and Microsoft lose money on the consoles for most of their lifespans. Only Nintendo tries to avoid losing money on the consoles, though, the truth is, with how much their games sell, they are probably the only company that can really afford to do so.
But in the end, this policy of Xbox makes perfect sense. I've always said that the way these companies approach games is highly affected by the type of company they are.
Nintendo are a
toy company at heart, and got their start making toys and playing cards. Video games are basically an extension of that idea, and they approach games from the primary view that games exist to have fun with. Unfortunately, this has also effected their mentality regarding gaming in negative ways, such as the longstanding belief that Nintendo was "for kids", even though Nintendo themselves didn't actually encourage perception on purpose. This mentality also caused Nintendo to stand a part from their competitors (alongside being a Kyoto-based Japanese company), and caused them to become arrogant to almost see their competitors as not being true competitors, because they thought they understood what "true" gaming was.
Sony are a
consumer electronics company. They approach the industry the same way they approached every other consumer electronics business. They always focused on the hardware first, and got the software by making deals and partnerships with others. They used their game hardware to push their other hardware products. For example, Sony pushed CDs with the PSOne (Sony were part of the consortium that created the compact disk), they pushed DVDs with the PS2 (Sony were part of the consortium that created DVDs), and they used the PS3 to push Blu-ray (which Sony also created). However, this mentality was also the cause of their downfall. The UMDs that the PSP used completely failed to take off, the PS3 was technological monster that was a pain in the ass to develop for due to its cell processor, which helped hamper the console and raised its price to, at the time, ludicrous levels, and the Vita was saddled with, among other issues, $80 memory sticks that Sony pushed because it was their technology. The hardware division drove the company, not the other logical considerations of selling a video game console, so everything else suffered because of the hardware division's hubris.
And, finally, Microsoft is a
software company. At the end of the day, where Microsoft excels is in products like Windows, Office, and their cloud and server services. When they try to do hardware, like their Windows Mobile division, they fail utterly, or, as with Microsoft Surface, see only lukewarm gains that don't will accomplish much and only serve to make everybody else scratch their head because its so far out of their wheel house and it irritates the OEM manufacturers that they usually work with. Microsoft was never successful with Xbox. But Xbox Live was a roaring success. Game Pass is a roaring success. Their services are successful because that's what they are good at. Not hardware. They can build decent hardware, since they have experience due to working with the PC market for so long, but Sony is just as good, if not exactly better, due to being a hardware company, and Nintendo make very fun consoles that show you don't need the best hardware to succeed. Microsoft are just playing to their strengths.
