Thursday, June 6, 2013

How Microsoft Actively Chose to Cut their Customer Base, or: a Parable of Cousins

I have these cousins.  Or, rather, my husband has these cousins, but, y'know, family through marriage.

So.  There are these cousins: three kids, teenagers.  Good kids, and I like spending time with their parents, too.  Their dad really likes video games.  The girls really like video games.  The family has a Wii and definitely gets heavy use out of it, playing the hell out of every game that they buy.  Whenever we all get together at the beach in the summer, the girls love playing whatever we've brought and last year we talked Mass Effect with their father.  This year, the oldest came to visit and stay with us for a few days and my husband and I sent her home with a burned disc full of our favorites from GOG, for her and for the rest of her family.

Because here's the thing about this family: they live in a rural area.  A really rural area.  Their internet service is satellite-only, and it's got a cap of 5 gb per month.  5 gb, for two adults and three teenagers, in 2013.  And even without the cap, the speed doesn't support streaming much of anything and since it's satellite, a good rainstorm can knock their service out.

These cousins are a middle-class American family of five, and Microsoft is emphatically rejecting their money or the idea that they could ever be an audience worth courting.

"Because every Xbox One owner has a broadband connection..."

This is how Microsoft desperately tries to clarify their stance on whether the Xbox One is always-on or not.  Those are their own words.  "Because every Xbox One owner has a broadband connection."

It's not that Microsoft doesn't understand that plenty of people in the US and worldwide don't actually have reliable broadband connections.  It's that they don't give a damn.  If your connection isn't reliable, then by default, you are not an Xbox One owner.

It's almost a relief how clear and cavalier Microsoft is being about this, in fact.  If you have concerns about this system, that's okay with them: they do not want your money, your business, or your patronage.  They do not value you as a potential consumer of their goods, and they do not care if you are aware of their contempt.

It's good to know, I suppose.

Of course, American broadband infrastructure is notoriously spotty and challenging.  For the first two years my husband and I lived together, our connection was unstable and prone to fits of going at dial-up speeds or simply dropping out altogether.  Comcast eventually fixed the wiring and solved the problem, but this was not long ago or far away.  This was 2008-2009, in metro Washington, DC.  The nation's capital.

Yes, our internet service was fixed and now works as well as we pay for it to.  And yet Comcast can throttle service to our whole building anytime they want, if my media-savvy neighbors and I appear to be sucking down too much of their precious bandwidth.  So it goes, in densely populated areas: a thinly-shared resource can mean rationing.

And all this, of course, does not even make mention of our global neighbors, and how tricky heavy reliance on high-bandwidth internet connections can be in such tiny countries as Australia and Canada.  Nobody in those places wants to play Xbox games, right?

The always-on, fully global web really is the wave of the future.  I won't fight it (though I might tie an onion to my belt and tell you all to get off my lawn) but the truth of the matter is, we're still not there yet.  Tiny pockets of us are, and Microsoft is doing the best they can to erect stockades around those pockets and hanging handwritten signs over the gates that say "go away."  It is certainly their right do do so.  But contemptuously driving away groups of people who could spend their money with you strikes me as an incredibly bad idea in an ever-tighter and more crowded entertainment market.


  1. Great perspective. Regrettably I'm missing your point with "how tricky heavy reliance on high-bandwidth internet connections can be in such tiny countries as Australia and Canada." I know there's sarcasm somewhere, but can't seem to parse it, and that's unusual for me!

    For the non-satirical record, Canada has some of the oldest fiber-optic networks in the world, and my home city of 150k souls was fiber-lined in the 1980s thanks to Bell-Northern/Nortel (I have the newspaper articles for proof ;)

    Right now the local phone company offers their highest speeds as 200+Mbps down and 30Mbps up, which is what I will rub in the face of our cable company which has been locked at 0.5Mbps upstream for about a decade now. Coax, man... :p Thankfully we are in a region thus far unencumbered by data caps, which can't be said for Toronto.

  2. My understanding, from all the Canadian and Australian friends I know on Twitter, Facebook, and so on, is that data caps, and fairly low ones, are incredibly common with ISPs in both those nations. (As you indicate with your last line about Toronto.) Here in the US, it's completely mixed -- depends on which regional monopoly serves your portion of your state, and even then what a Time Warner customer experiences in North Carolina may not be the same as what a Time Warner customer experiences in New York.

  3. Sounds like we're not all that different with our mix diversity then. Per-capita you'll naturally hear the most complaints coming from people in Toronto and Vancouver (where there is also the most number of competitors buying off the same pipes), but that kind of congestion is geographically comparable to residents of San Francisco running out of empty wi-fi channels in dense areas.

    Considering Canada is roughly the population of California, with a whole lot more infrastructure (, it's really not bad service wise at all, south of the 50th parallel. Having crown corporations and telecom co-operatives certainly helps to ensure rural accessibility. :)

  4. as matter of fact "tiny countries" are not struggle with internet connection as much as usa do. I'm from generic city in Ukraine with only 300k population and 16-32mb was standard for last 2-3years here. I'm as example siting on 54 in 8 out for last 4 years and this speed was always "nothing special" for that time.

  5. The wave of the future is going to crash on the rocks of the present repeatedly in the US, as long as we have to rely solely on ISPs for infrastructure - IIRC this has been the case with virtually every form of technology. Companies that own it will run it out only to places that maximize their investment, which kind of makes sense ... except that the government's approach seems to be "I don't know why we don't have better internet service, we've been giving the (major) ISPs money, wonder why they haven't been using it?" And [stuff] that big doesn't get done without heavy government involvement, not in a country this size.

    If Microsoft weren't run by totally incompetent people, they (and Sony) would be working hand-in-hand with Google and others to spread high-speed internet to other areas of the country, particularly underserved areas ... and _then_ they'd roll out a console that requires a better, faster connection. (The always-on aspect is remarkably stupid, but that's a whole other rant.)

    Instead, they're making the same mistake many others across entertainment industries are making. (Major US sports leagues, for example: still charging sky-high ticket prices and doing little or nothing to offer customized PPV packages, as though it were the '50s and people would still say "Guess the game's not on TV, let's head downtown and get tickets.") So many more choices for entertainment are available ... and until certain politicians and CEOs stop deliberately sabotaging the economy, money will be at a premium for a significant percentage of people. Assuming that people will continue to do what they've done in the past is a fool's errand.

    Even an average gamer might hesitate to drop $500-$1K on a new console with just a handful of games when they could spend the same money on 100 games on GOG or 10-20 games on their current console ... and given Microsoft's past with both hardware and DRM, who knows if you'd even get to play that handful of games? (If you live in an area where you can download them, that is.)

  6. Next month I attend a family reunion in the Badlands of South Dakota. I expect to experience these sorts of issues first-hand.

  7. I'm too lazy to look it up, but I think from a business/profit point of view, the game consoles are a sideline, to Microserf. The big money, for them, is business site licenses, which require very little upkeep or outlay. For instance, I work for a company with ~25,000 employees. Pretty much every one of us has a desktop (or laptop, or both) running WinXPpro (soon to be Win7) and the full Office Suite, including Outlook. The software is customized in house, but MS still gets those licensing fees, like clockwork. And we're just one company.