Xbox CEO Phil Spencer says Xbox Series X|S and PlayStation 5 are too similar — "I want us to innovate and make hardware the differentiator."

GraniteStateColin said:

I agree that having a lower-powered system to undercut the competition is good strategy. I also think requiring games run on it in a rare feat of MS standing behind its hardware is a solid choice, even if it does carry some negatives for games that struggle to run on it. The solution to that is to increase its market share so it's not an afterthought, at least until they move on to the next generation.

However, to Phil Spencer's broader point that rather than focusing on game advantages (exclusives), he wants to win market share based on hardware, that's inconsistent with MS' strengths and proven abilities. Unlike Nintendo, who took big innovative risks and won with both their Wii and then Switch, MS cannot innovate in gaming hardware. It's a demonstrated cultural weakness of the MS team. They tried with Kinect and failed. Since then, they've moved further from that (think Windows Phone, Band, etc.). Granted, those are not gaming systems, but the MS cultural problems appear to be consistent across the entire company, meaning they come from the top.

In defining strategy, success comes from finding ways to better leverage existing strengths and clever ways to avoid weak areas. MS' strengths are in its first-party game development, its possible tie-ins with Windows, its backward compatibility, GamePass, and possibly some others. It's weaknesses, especially now that it has lost much of its hardware innovation and engineering team, include its ability to create consumer-desired innovative hardware and now its perception of abandoning everything it starts -- this is a real liability. To bet on both of those over leveraging their ability to put out strong exclusives is just bad strategy.

Sometimes companies get lucky on bad bets, because sometimes chance rewards the lottery player, but that doesn't make it sound strategy.

agreed entirely that it's inconsistent with their strengths. Microsoft lacks consumer awareness and its corporate structure is antithetical to hardware innovation and product development.

Several points need highlighting:

1- Series S games are required by MS because those are the games Cloud streams. And building a catalog of streamable XBOX games is strategic.
2- Series S games, if properly written (as in using all the features of the hardware and not just those in the PS5 truncated RDNA) can do everything the Series X can do, just at a lower native resolution.
3- At the time the Series consoles were introduced, 75% of all TVs in use were 1080p. Even today, most monitors in use for gaming are either 1080p or 1440P.

4- Series X SOC is in fact better hardware than the PS5 overclocked, variable clock system. But because developers rarely fully optimize for the full ANACONDA feature set it gives the appearance that the two platforms are comparable..they are not, the ANACONDA GPU is 25% more capable which is why it ocassionally matches or exceeds the PS5 pro's 30% better GPU. When Spencer said XBOX doesn't need a mid-gen refresh, that is why.

5- Even on PC, most developers release un-optimized games to meet deadlines that are usually set a year too soon, counting on gamers to serve as gamma testers and subsidize the final release a year or more later. This needs to change.

fjtorres5591 said:

Several points need highlighting:

1- Series S games are required by MS because those are the games Cloud streams. And building a catalog of streamable XBOX games is strategic.
2- Series S games, if properly written (as in using all the features of the hardware and not just those in the PS5 truncated RDNA) can do everything the Series X can do, just at a lower native resolution.
3- At the time the Series consoles were introduced, 75% of all TVs in use were 1080p. Even today, most monitors in use for gaming are either 1080p or 1440P.

I really wish Microsoft/Xbox would counter argue with these facts against the "Series S holding games back" -crying developers/studios.
No need to antagonize, but clearly state these reasons.

Few Tech reviewers understood that, the Phawx or whatever his name is who does handheld reviews primarily, is one of the few for example.

fjtorres5591 said:

5- Even on PC, most developers release un-optimized games to meet deadlines that are usually set a year too soon, counting on gamers to serve as gamma testers and subsidize the final release a year or more later. This needs to change.

This x1000.

Obviously for gamers, pc/console/handheld makers these are big issues, but it applies to all tech.

For example, that's why awesome things like the efficient Intel Lunar Lake SoC get misunderstood, it's should and is not always about being on the top of the chart, but having good (enough) performance AND good efficiency.

*caugh* DeepSeek vs ChatGTP and Co... as another example

When Microsoft had the better hardware with RT cores on the XBOX Series consoles, instead of getting ahead of Sony, they did nothing, no innovation, never came up with their PSSR solution when they had the opportunity. Sony went and innovated and left Microsoft in the dust when discussing consoles. Now there is no reason with Microsoft putting games on every platform, why someone wouldn't just buy a PS5, so they can play all games Microsoft and Sony. They aren't innovating, they are throwing in their white towel with consoles. I don't see how the strategy of putting all your games on superior consoles is a good one.

GraniteStateColin said:

I agree that having a lower-powered system to undercut the competition is good strategy. I also think requiring games run on it in a rare feat of MS standing behind its hardware is a solid choice, even if it does carry some negatives for games that struggle to run on it. The solution to that is to increase its market share so it's not an afterthought, at least until they move on to the next generation.

fjtorres5591 said:

Several points need highlighting:

2- Series S games, if properly written (as in using all the features of the hardware and not just those in the PS5 truncated RDNA) can do everything the Series X can do, just at a lower native resolution.
3- At the time the Series consoles were introduced, 75% of all TVs in use were 1080p. Even today, most monitors in use for gaming are either 1080p or 1440P.
5- Even on PC, most developers release un-optimized games to meet deadlines that are usually set a year too soon, counting on gamers to serve as gamma testers and subsidize the final release a year or more later. This needs to change.

I'd argue that there are NO true negatives with developers needing to optimize their games for the Series S. As stated it is more than doable and more important than that it gives all gamers in the industry (on all platforms) a better experience. This has been proven time and time again. In a time where games are selling at a higher price than ever (not counting for inflation) and yet giving us less stable products filled to the brim with technical issues, optimization for a lower end system is desperately needed. The series S has kept gaming accessible (not just on the S but lower end PCs and now handheld machines). In the Destin interview Phil Spencer made a comment about being proud that games made to run on the series S are already optimized for a more smooth experience for the PC handhelds rising up now. Not a perfect experience (they still need to optimize for that specific hardware), but one that is generally much more playable on these lower powered devices.

What is essentially being complained with the Series S is that developers aren't allowed to brute force their games on the more powerful systems, which is what has been happening far too much this generation. That the media and certain gamers try to spin the Series S as a detriment to the industry and failure of Xbox really just tells me how much of a hate boner is had for Xbox (and Microsoft). It's to the point where gamers are engaging in self sabotage. We are the CONSUMERS not the producers. We shouldn't want producers to be charging more while taking as many shortcuts as possible and putting the consequences of those shortcuts on us. No shade to the game's success, but Black Myth Wukong was a worrying development to watch unfold for me. Despite it's many technical issues, high minimum requirements, and unstable and inconsistent performance even on hardware that exceeded it's recommended requirements (I'm speaking of the game on both PC and PS5/PS5 Pro), BMW sold in droves and recieved numerous accolades. The developers themselves have stated the issue with bringing the game to the S isn't the hardware, but their inexperience with development and optimization and that's very very apparent. What I find difficult to cope with is how much we as gamers have enabled that behavior and shifted the blame to being on Microsoft for making developers actually optimize. Had the BMW developers bucked down and optimized for the Series S and delayed the release on ALL platforms then every gamer who bought the game would've spent their money on a much more stable and better product. Of course people are allowed to make their own decisions and compromises with their wallet, but the situation tells me that we as consumers have lowered our standards for what an acceptable product (game) is. And I think that's because the industry has delivered us products that have all these technical issues and poor to no optimization more and more. The even more depressing bit is forced series S development pushing back against this and hatred for Xbox (or console war nonsense or just media looking for headlines) have turned the net positive of this into something "holding back the entire gaming industry" 🙃. If this attitude wins out next hardware generation we are so ******. Even more powerful hardware with upscalers and AI tools will be abused the heck out of to once again brute force games.

GraniteStateColin said:

However, to Phil Spencer's broader point that rather than focusing on game advantages (exclusives), he wants to win market share based on hardware, that's inconsistent with MS' strengths and proven abilities. Unlike Nintendo, who took big innovative risks and won with both their Wii and then Switch, MS cannot innovate in gaming hardware. It's a demonstrated cultural weakness of the MS team. They tried with Kinect and failed. Since then, they've moved further from that (think Windows Phone, Band, etc.). Granted, those are not gaming systems, but the MS cultural problems appear to be consistent across the entire company, meaning they come from the top.

In defining strategy, success comes from finding ways to better leverage existing strengths and clever ways to avoid weak areas. MS' strengths are in its first-party game development, its possible tie-ins with Windows, its backward compatibility, GamePass, and possibly some others. It's weaknesses, especially now that it has lost much of its hardware innovation and engineering team, include its ability to create consumer-desired innovative hardware and now its perception of abandoning everything it starts -- this is a real liability. To bet on both of those over leveraging their ability to put out strong exclusives is just bad strategy.

Jez Corden said:

agreed entirely that it's inconsistent with their strengths. Microsoft lacks consumer awareness and its corporate structure is antithetical to hardware innovation and product development.

I'll say I think Phil Spencer is wrong on specifying hardware as where Xbox should innovate, and in the interview with Destin Phil Spencer didn't really make any hardware claims for examples of innovation. He spoke about Xbox Play Anywhere and innovations in Cloud Gaming and benefits of being in the Xbox ecosystem as reasons to questions of "why Xbox" post multiplatform releases. The hardware differentiators spoken about are all from windows OEMs (and Valve). It's true. Microsoft isn't a consumer hardware first business and that is not where their strengths lie. Let's pretend for a second they know how to be a consumer business at all (they struggle with the consumer part in general), and focus on their strengths as a consumer software provider.

For the most part people don't mourn the hardware of the windows phone or zune or whatever (though Nokia is missed). People mourn the operating system and software and consumer value offered by each. Truly I was surprised when I learned the Zune was doing stuff way back when which has now come to dominate how we interact with music not on a hardware level but a software and business model one (streaming apps and subscription libraries). I think a big part of Microsoft's problem is that they tied their success in these markets based on the success of their hardware entirely. They nearly fell into a similar trap with Xbox, but it looks like they're starting to wake up.

From the very start Microsoft has subjected Xbox to following behind Nintendo and Sony willingly because they chased and measured success in the traditional ways the console market had set. But none of those ways took advantage of the strengths Microsoft has as a software based company. I don't think exclusives were EVER the strategy for Microsoft. If nothing else leveraging PC and building a first party gaming empire and experience on both Xbox and Windows PCs using the Xbox brand should've been a day one thing. Not something only started in the Xbox One generation and even now still years behind where ti should be. Now we're at least seeing a unique Xbox taking advantage of their strengths with features like Xbox Play Anywhere and cloud service that while not the strongest are more widely available and promise a seamless expansion of your Xbox library.

Nintendo certainly has proven to be the best at hardware innovation and providing consumer hardware in the traditional console market (well... every other generation historically; hopefully the Switch 2 breaks that pattern). But does Xbox really need to follow in their footsteps? Even before the Zenimax and ABK aquistions and when Nintendo hardware was selling far better than PS and Xbox's new systems, Xbox had higher gaming revenue than Nintendo. We're not privy to margins, so for it's size Nintendo might see more profit, but regarding revenue itself Xbox already had Nintendo beat. Now Xbox dwarfs Nintendo post Zenimax and ABK. Success in gaming as a platform for Xbox isn't limited to the console market, and I think they would do much better in the console market if they did a better job marketing their strength as a gaming platform and brand beyond a singular gaming market.

As a gamer, I don't see why I would ever buy a console other than Xbox in this day and age when Playstation and Nintendo don't even offer free cloud saves. Xbox is an extension of a wider gaming platform that I can access on various devices I already own and a whole heap of windows PC hardware. I think there's a lot of reasons why I consumer could list every benefit of each console platform and choose Xbox everytime because instead of offering a pristine walled garden with lots of exclusive candy to invite you in, it offers a wider ecosystem that let's you play without limit (ironically Sony's tagline which is FAR from true on Playstation consoles). In the Destin interview spoke about how Xbox's work with Xbox play anywhere gives consumers on their platform the most value and security in their purchases. Playstation and Nintendo don't even have free cloud saves for consoles themselves. In a world where more and more games continue to support as many platforms as possible, the importance of the value a platform provides only grows. Sony as well is seeing less and less exclusives as third parties move to supporting Xbox, PC, and Nintendo (if they can) day one and shy away from exclusivity deals. Sony is also seeing that the increased cost of development has massively impacted their ability to ship their blockbuster first party exclusives.

Looking outward to the console market as a whole, I question whether exclusives have ever been successful. Console hardware unit sales has never significantly grown. The peak is around 150m in a lifetime. That's really not amazing. Even worse that peak was reached in like 2006 (and has been dwindling since until the recent success of the Nintendo switch). I see a LOT of room for Xbox to win with Xbox hardware in the console space by just offering the best ecosystem and software innovations that appeal to the inherent value of Xbox and Microsoft. Sell Xbox consoles as a budget gaming only extension of their wider gaming ecosystem and platform (with the Series X SKU as the high end and S SKU (which can become a handheld) as the budget , but continue to expand this platform with first party efforts on cloud and PC (and mobile if they can manage). Let windows OEM hardware manufacturers innovate on the hardware side and just give them better tools and users better operating system experiences. During the Xbox One generation PS4 saw a lot of success with attack ads that highlighted their strengths and attacked the weakness of the Xbox and they really worked because people scratched their heads at the common sense features not available on Xbox. I think this would benefit Xbox a LOT because they could properly advertise Sony not having an answer to Xbox Play Anywhere or how the PS console doesn't have free cloud saves or how Game Pass just offers more value at the highest tier with PC and day one offerings. Even if not attack ads, Xbox needs to run more ads in general that actually shouts loud and clear what their unique value as a platform is. Stuff like the dev direct starting with an announcement that all games are Xbox Play Anywhere, but far far louder. I think Microsoft's biggest mistake was ever subjecting themselves to the traditional method of competition in the console market. It now makes them look weak as they rely on their strengths to provide a more valuable platform, and Xbox will HAVE to do a lot of heavy lifting in the marketing department if they want to reap any level of success from their current strategy.