Microsoft and Intel are on the ropes... what's next?

I'm not known for being a positive person when it comes to certain things. I'm generally critical, analytical, sceptical, and distrusting of processes, industries, and companies. However, I do love tech. I am critically positive about it, and for people in general and it's in the spirit of these two parts of me that I feel like I need to get these thoughts off of my chest.

Two of the biggest players in gaming are dying - their literal death throes are all around us and fill the tech news headlines, background blog rants, literal subreddits, and trending on social media.

I don't even think we need to introduce who I'm talking about but let's get it out of the way:

• Microsoft
• Intel

Their flailing is having a huge impact on gaming and tech in general and I'm a little worried as to what fills the hole they make if and when they do fail or contract away from the segments that I've traditionally engaged with.

Let's get this out of the way, neither Microsoft or Intel are going to go out of business. That's not the kind of death throes I'm talking about, here. What I'm thinking about is them "rationalising" their businesses and "focussing on their core strengths" - that's the danger from my point of view as an enthusiast and user.

Microsoft...

Back at the start of the Xbox One generation, Microsoft experienced what we then termed a PR disaster. It was horrid - they were directionless, unsure of their decisions, vague and cagey. Then, when they saw the response from consumers they pretty much walked everything back... wasting time, energy, and consumer goodwill in the process.

The Xbox One was the console where they introduced the concept of cloud gaming and cloud-enabled gaming, which, is still being beaten like the dead horse that it is despite the concept roundly being decried as a flop... something which we all saw coming from a mile away. Then there was a leadership change and we all thought there was something better on the horizon...

Now, however, things feel a lot worse. 

Xbox has recently stumbled from one poorly thought-out or excecuted situation to another. They've moved into the realm of hardware as a service with their cloud gaming push, trying to imitate what a business to business relationship would look like in the consumer space, despite knowing the drawbacks to a subscription model which requires datacentre resources to manage...

Not only that but many of us highlighted the dangers of pushing out sequential hardware updates and tiered hardware generations, and, though I can't find any of my various diatribes* I have been vociferously against subscriptions and other forms of locking games behind 'cable TV-like' services.

*I guess they were made on social media!

Finally, though, the chickens are coming home to roost:

Prices are going up, there's no stopping them... running instances in the datacentre will not get cheaper!

Microsoft repeatedly denied the fact that the purchase of Activision Blizzard King would result in any sort of negative effect on consumers but, now we can see the logical conclusion of that decision combined with several others: prices are going up, and will continue to go up. This is mainly because growth through acquisition requires ever-expanding gross revenue to sustain it and compare against returns of that same monetary value invested in the stock market*...

*Even if I believe anyone thinking like this is an idiot, it's clear some suits do...

The reason is very simple - games are expensive to make and Microsoft and Sony's current strategies are focussed mainly on producing double A or triple A games which take multiple years to do so - and these numbers have only been going up!

Ironically, the UK's CMA (Competition and Markets Authority) have been proven right on the situation... because Microsoft now have a tonne of IP wrapped up tightly in their stable that needs funding to be maintained. 

Additionally, despite Europe never being a priority for Xbox, there are now rumours that Xbox will reduce their focus on Europe and deprioritise the continent going forward... but that's not really a surprise, nor is is it actually a change of strategy in my opinion!

What is a change in strategy is choosing to treat different customers differently. Previously, Microsoft had chosen to denigrate the PC consumer in the mid-2000s, stopping PC ports and killing studios. 

This was reversed in the 2010s, with an increased balance between the two hardware pools but now Microsoft apear to be punishing their loyal console enjoyers, instead.

Gamepass is a mess: the console players not only have to pay for online features but now have to pay more for the same day-1 releases and game selection than PC players. That's just crazy and very anti-consumer for the people who are most connected to the Xbox brand. 

What this will likely mean is that Xbox will piss off those customers, further negatively impacting this generation of console sales and, even worse, any future generation!!

It's a short-sighted, sorry state of affairs for which Xbox only has itself to blame. I feel there is a real risk that Xbox quits console hardware and, as a result, shutters a large percentage of the studios it has just recently acquired as they no longer fit into their long term plans...

It's really pathetic - and, unfortunately, they've got a proven history of doing this as well. 

[Update: 08/09/2024] EposVox has listed even more problems that I hadn't even considered to mention here - Microsoft is basically falling apart and becoming completely dysfunctional...

Microsoft went through a period of growth and acquisition in the early 2000s, then closed a lot of studios with storied histories...

Intel...

Moving on to Intel, we had almost ten years of them fleecing us with very little performance and technology improvements along with slowly increasing costs.

During that time, they lost process and technology leadership, resulting in hot, power-hungry silicon, whilst AMD focused on their comeback with efficient and performant chips which doubled as server hardware.

Intel even hired some ex-AMD senior staff but their company culture essentially killed their products/ and pushed them out.

The other problem of Intel is that they wasted their massive earnings and market position to give dividends back to their investors instead of investing that money into their company and products. This happened to such an extent that when things started going badly, each and every one of the dominoes from process, to product, to staff fell one by one and now their stock price is garbage and they don't have enough money to pull themselves back up unless they do something like AMD and divest themselves of their manufacturing plants...

Intel rode the wave of lack of competition from AMD throughout the 2010s, failed to capitalise on it to invest in their future, and are now paying the price...

Now, Intel has a third problem - aside from all their technology being expensive and late*, and having to utilise their competitor's manufacturing capabilities (aka TSMC), they've intentionally** ignored architectural issues with their last generation of products in order to maintain competitiveness with AMD's Ryzen line of consumer products. Along with intentionally** ignoring defects such as the oxidation issue which has come to light and which was not disclosed to clients...

This has resulted in products which generate less profit for them both on the manufacturing and returns sides of things but also in products which have damaged Intel's brand image.

*Intel has delayed products, technical developments in process, manufacturing sites, you name it! This is a sign of a deeply disfunctional company that cannot deliver on anything. (I have first-hand experience of companies heading towards this endpoint)

**I say intentionally but that's a supposition on my part. Working in a tightly regulated industry, when we have RMAs/failures, we begin root cause investigations right away. Given the stated failure rate of processors from Intel's commercial partners, they would have had these investigations starting at least in early 2023. Which means they were either incompetently investigating the issue for more than a year, not investigating it at all (ignoring RMAs as normal failures), or that they knew about the problem, what it was, and just ignored it... None of the possibilities look good.

Intel was previously the expensive, boring, reliable company that didn't give a lot of performance uplift, were stingy in platform upgradability and ran hot and power-hungry, with products which launched later than specified in their roadmap. Now, Intel is still all of those things but also unreliable, sneaky, deceptive, etc. etc.

Clients were already moving away from Intel in practically every segment but this debacle will only accelerate that, with consequences still to be realised over the coming years. This will mean more losses and less revenue leading to even further efficiencies being implemented.

This bodes ill on Intel's already pathetic ability to execute, leaving the door open...

Filling the hole...

AMD have been closing-in on Intel for multiple years now and Sony has been beating Microsoft's ass since the latter's missteps around the Xbox One launch. Now, we're potentially looking at a future where Microsoft really isn't in competition with Sony, instead focussing on publishing games on multiple platforms. This isn't a great situation, though, because the typically capricious corporate overlords within Microsoft are as likely to back the Xbox management, as they are to undermine them. We could be seeing a LOT of studio closures over the coming years - resulting in game IP being locked in a dying Microsoft division.

Stepping into such a void, Sony would be able to charge an arm and a leg, not only for the hardware but for access to the software and features since Nintendo is not really a competitor with the other two console giants. Additionally, it's likely that developers would get a worse deal in such an environment, as well. However, there's always the PC sphere for players to jump ship to:

On the other side of things, AMD have been shown to have been pushing up the prices of their products every chance they get - they're no charity - and as Intel continues to flounder and provide a worse competition, we can expect them to push the boundaries on what is acceptable to charge for components...

All of this would mean higher prices to access and play games as a hobby and that's not a good situation to be heading into.

I really hope I'm seeing things too negatively and that the reality will be less severe but I'm not hopeful, given the current trends and signs, and I cannot see any third party stepping into the gap to bring meaningful competition to either AMD or Sony...