Business Truth - Microsoft vs. Sony

Microsoft has announced that the online requirements and used game restrictions, originally planned to be featured on its upcoming Xbox One console, will be removed by a day one software update. The decision comes in the wake of public outcry over the policies, which many viewed as draconian and anti-consumer, and the praise rival Sony received for its customer-friendly decision to not implement similar policies. The problem is that the complaints Microsoft received and the praise Sony garnered both stemmed from some pretty basic fallacies people have about business. Let’s examine.

Companies don’t just exist to make money

No, they totally do. One of the most frequent complaints people had about Microsoft’s decision to restrict used game sales is that it looked like Microsoft was just trying to make more money off of customers: they were. This should really be a non issue, especially when you realize that Microsoft wasn’t even trying to put the squeeze on its customers. Used game sales typically result in the game developers and console manufacturers receiving exactly $0.00 of every purchase. Microsoft was attempting to make more money by eliminating a resale option that was cutting them out of the loop. Companies only exist to make money. The people who work for a company may be altruistic, goodhearted people, but the company itself is a cold calculating machine. The only exception is companies that are no longer in business because they couldn’t function outside of the fairy land of unicorns and pixies where dreams and happiness are both readily accepted currencies.

This company cares about its customers

No, they don’t. That company only cares about your money, as does that one, and that one, and… actually all of them do. You may think that Sony’s decision to not include the same restrictions was a sign that they actually care about you the consumer. Except, Sony didn’t reveal the PS4’s online connectivity and used games policies until after the Xbox One policies had been revealed. The announcement was even made in a “Microsoft says you can’t do something, but we say go ahead” sort of way. The entire announcement was calculated to inflict as much PR damage to Microsoft as possible. If you really believe that Sony’s tactic of doing the exact opposite of Microsoft was done for the customer’s benefit, and not for the benefit of getting customers, then you have a very poor understanding of how competitors work. On a more basic level, has Sony ever offered to help you move your couch? No, because they aren’t a moving company. Good customer service is not the same thing as caring about customers. Good customer service is about not making the customer want to kill himself, because dead people tend not to buy many new TVs.

This company doesn’t care about its customers

Yes, they don’t. They only care about their customers’ money. What? You didn’t think there would be a flip side to this? It seemed there were a large number of people who only bought used games, and who didn’t have a gold account on Xbox live (a subscription based online account used to access premium content) and they couldn’t understand why Microsoft seemed to have abandoned loyal customers like themselves. The only problem is that to Microsoft they weren’t really a customer, they were more like a leech on their profits. The original Xbox 360 retailed for $399 at launch, manufacturing costs were around $550, so Microsoft actually lost $150 on every unit sold. One year later manufacturing costs had dropped by 40% but so had the prices, so they were still being sold at a slight loss. Microsoft was willing to do this because they knew that they could make up the costs over the course of the systems life through online subscriptions and new game purchases. If this isn’t occurring though, then the company is just losing money from that initial transaction. Just like the other two fallacies, with this one people fail to realize that it isn’t the customer they don’t care about, it’s the customer who isn’t giving them money that they don’t care about. A customer that isn’t spending money, isn’t really a customer, to the company that person is merely an untapped wallet that they will force open if at all possible.