The Xbox 720 is a major competitor going up against Sony for this next-generation of gaming, and as a former Microsoft executive indicated, the latter entered gaming to beat Sony.
According to a report from VideoGamer on Wednesday, Joachim Kempin, former VP of Windows Sales at Microsoft, talked about why Microsoft originally got into gaming and how at one time, they wanted Sony as a business partner.
"You see, Sony and Microsoft… they never had a very friendly relationship, okay? And this wasn't because Microsoft didn't want that.
"Sony was always very arm's length with Microsoft. Yeah, they bought Windows for their PCs but when you really take a hard look at that, they were never Microsoft’s friend.
"And Microsoft in a way wanted them to be a friend because they knew they had a lot of things we could have co-operated on because they are, in a way, an entertainment company, you know?
"I mean, at least a portion of Sony is and they had some really good things going there, but as soon as they came out with a video console, Microsoft just looked at that and said 'well, we have to beat them, so let's do our own,'" Kempin said.
Kempin then talked about how Microsoft copied Sony's model of business in the console space, and then spoke about how financially productive the Xbox really is.
"I went out to several PC manufacturers and tried to beg them to do the Xbox thing and keep the device manufacturing out of Microsoft.
"The guys were smart enough not to bite, because they studied the Sony model and saw that Sony could not make money on that hardware model, ever. So they supplemented it with software royalties, and Microsoft copied that model
"There are actually two things. First, every developer who now has an Xbox game pays a small royalty to Microsoft for the honour of having it on that system.
"The other way they make money is that they finally got their act together on the services and actually that’s where the money is being made. So they’re just maybe a little bit above breakeven, that’s all there is. This is not a big money-making machine for Microsoft," Kempin said.