Gabe Newell says Apple biggest threat to Living Room

kbrickley

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http://www.electronista.com/article...apple.curated.living.room.gaming.environment/ ... well, if he would just release his Steambox already there might not be such a threat ... if they wait until Next Gen consoles launch then MS and Sony might be a little more of a threat than he thinks (waiting for the next gen Apple TV or Roku doesn't help them either ;) ) ... now is definitely the optimal time to launch the Steambox while consoles are stuck in aging hardware and with their Spring steam sale just a few months away :cool:
 
I'm not surprised he's downplaying the threat from the consoles but that's a bit of personal bias on his part. Apple doesn't have a single motivating factor to get into full scale gaming that I can see whereas his current competitors already are. But, he wants to dismiss them so he appears to be in a stronger position with respect to Microsoft (mostly).
 
Apple has kind of always eschewed gaming...but the sheer amount of money those $2 and $5 iOS games have made them might have changed their minds.
 
Gabe wanna play console wars with the big boys?

Welcome to the party, where cost/competition is high and margins are low.
 
Gabe has cried wolf too many times now for me to take his opinion on this matter seriously.

First, it was consoles that were destroying gaming in general. Then, they decide to make a console, so that hasn't been brought up again. (IMO, standardized PC hardware like Steam Box is an even bigger threat to PC gaming than consoles are, if it takes off.)

Next, it was Microsoft killing PC gaming because Windows 8 was supposedly "locked down." This, of course, never happened and never will.

Finally, it's Apple who is killing "living room" gaming, despite the fact that they presently have no device capable of competing with any of the consoles, gaming PCs, or Steambox, and the "dumbed down" living room Apple platform Gabe fears will not challenge those products.

And his "Apple rolls the console guys easy" but not Steambox schtick is going to get old fast.

Gabe: Y u no make HL3 instead of giving these PR talks?
 
Apple doesn't have a single motivating factor to get into full scale gaming that I can see whereas his current competitors already are.

$$$ is plenty of reason. They'd be expanding their brand while giving iTunes/Appstore a lot more revenue IMHO. With their dominance with the Appstore in particular and frameworks setup like gamecenter, they're in the perfect position to launch a successful console.

If they do it or not is another story... but it seems like it could be a home run for them.
 
Somebody gave my wife an Ipad this week. I turned it on looked at it turned it off. Haven't looked at it since. Turns out apple products don't really seem to do anything I give a shit a about.
 
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I think he's right. Apple can take all the casual gamers away from consoles. Already, kids are playing on iPads and iPhones. Most console gamers buy 1-2 games a year as is. PC gaming is where the hardcore are and will be, but it's easy to see every game developer moving to iOS if it eats through all of the casual players (i.e. the larget market segment by far - even for consoles). Consoles cannot survive if their casual players are taken away and are only left with the semi-hardcore players (as hardcore players stay on PC).

I think the Steambox could be a very clever ploy to entice the semi-hardcore console players to Steam while accepting that true casual players probably aren't going to be buying another gaming-only device when they already have a phone/tablet. What you're left with is Steam/PC/Steambox ecosystem for the hardcore and iOS/Android for the casuals. Consoles would end because there would be no market that they serve better than Steambox/PC and/or iOS/Android.

EDIT: better wording
 
IMO, Apple popularize the tablet just with their brand name alone. I've had many family members asking me about iPad and the had no idea what a tablet it or that such devices has been around long before iPad.

I don't know what Apple's plan is in the gaming console market, but their brand name is still a powerful marketing tool, and they might give Microsoft and Sony a run for their money if they are serious about it.
 
As I said recently

Apple is desperate to expand and to maintain stock price and growth targets.

Their rumored avenue is the Apple iTV. But they have failed on previous iterations. And rumors also state that studios aren't cooperating because they have a stranglehold on packaged content delivery as their bread and butter.

Apple desperately needs an "in" to the living room. The way "in" could likely be by swallowing up Nintendo with their highly valuable franchise. Don't be surprised to see Apple try to take over of Nintendo. It makes even more sense now that Nintendo's stock is down
 
The only reason I can think of as to why Apple would be a competitor is if Steambox is going to be either a $99 machine that can only play casual games and otherwise serves as a media streaming device or that Valve is going to have multiple models, one that can handle actual gaming and media streaming and one much less powerful model at a $99 price point that competes with things like Apple TV and Roku.
 
IMO, Apple popularize the tablet just with their brand name alone. I've had many family members asking me about iPad and the had no idea what a tablet it or that such devices has been around long before iPad.

I don't know what Apple's plan is in the gaming console market, but their brand name is still a powerful marketing tool, and they might give Microsoft and Sony a run for their money if they are serious about it.
The Pippin was Apple's console, remember? Not many people do.

As far as iPads go. My in-laws say they bought iPads, turns out they bought a bunch of off-brand Android tablets. They're actually pretty good tablets but what I'm getting at is that they call any tablet an "iPad". iPad, the next Rollerblade. I think it's kinda funny.
 
I am not sure that Apple will move into full scale gaming but who knows ... with their investors hammering their stock over doubts of their ability to penetrate new markets they definitely have an incentive to try ...

I have a Roku 2 that has the gaming support (the one that comes with Angry Birds) ... it is more of a novelty than a serious gaming system but if Roku could do it, then Apple or someone more serious definitely could

The set-top box market and smart TV market is probably the next battle ground for electronics ;)
 
Even if this thing came out in the next year or even 2 chances of me buying it over a new xbox, ps4, or nvidia grid system are very slim.

IMO somebody should put a tvtuner in a console. Even if it was a higher priced version with a seperate HDD just for recording I believe it would do well. But maybe that's just me...
 
Apple desperately needs an "in" to the living room. The way "in" could likely be by swallowing up Nintendo with their highly valuable franchise. Don't be surprised to see Apple try to take over of Nintendo. It makes even more sense now that Nintendo's stock is down
But what is Nintendo going to offer Apple? Nintendo has a lot of good IP, but Apple certainly has no problem filling their marketplace with good games, and expanding out into the living room is only going to improve that situation.
 
Apple desperately needs an "in" to the living room. The way "in" could likely be by swallowing up Nintendo with their highly valuable franchise. Don't be surprised to see Apple try to take over of Nintendo. It makes even more sense now that Nintendo's stock is down

will not happen.
 
$$$ is plenty of reason. They'd be expanding their brand while giving iTunes/Appstore a lot more revenue IMHO. With their dominance with the Appstore in particular and frameworks setup like gamecenter, they're in the perfect position to launch a successful console.

If they do it or not is another story... but it seems like it could be a home run for them.

Except it is a mature market with fairly big competition already. It would also require a whole other operating system to be developed when they already have two operating systems right now. Just smashing OSX on a "console" wouldn't fly as the price would be too high. Also, as noted, the margins are terribly low on console hardware. That's not exactly a type of market Apple likes to be in. They want high margin hardware. To add, Apple wouldn't want to split their fans attention between iOS gaming and console gaming. They want to keep their revenue streamlined through the iTunes store and I don't see that such is going to work too well for console gaming. First they'd have to demand digital-only downloads to ensure their 30% cut of games, something Gabe fears of MS that hasn't materialized. Second, they'd have to attract a whole lot of developers who're already stretched thin trying to make games for PC/Xbox/PS3/Wii, with many already having abandoned one or two of those. To be a fifth person in that market would take a ton of money (which they have), to make small margins, which they hate, to just be in the living room ... which Apple already is (with the current AppleTV). I just don't see the economic benefit of Apple trying to compete with current options for non-casual gaming.
 
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The biggest threat to the console market is the stagnation and slumping sales they just experienced through the holiday sales cycle. New hardware is at least a year overdue.
 
The biggest threat to the console market is the stagnation and slumping sales they just experienced through the holiday sales cycle. New hardware is at least a year overdue.

I think this might be their biggest threat ... one of the weird market changes with mobile is that people are starting to expect these rapid hardware refreshes ... although that is much tougher for consoles I don't think their old 5-6 year cycle will fly with consumers anymore
 
Personally, I think that Gabe only really stands a chance with the Steam Box if he's willing to take a loss on the hardware to get people hooked on Steam instead of consoles. He won't be able to sell an under-powered "computer" to people to play PC games and de-throne the consoles. Without the hardware being optimized to games he'll need to spend more money on hardware than MS/Sony/Nintendo are currently spending and then take a loss to even get in the same price range. That would be to just get the games to the same level of quality as consoles, not above them. If he wants to push the benefits, he's got to get the quality higher, hence more expensive hardware and a steeper entry price. Microsoft could have gone this route with the Xbox instead of competing with Sony but, I suspect, they did the math and didn't see a way a traditional PC setup could compete directly with a lower cost console in a similar market.
 
Personally, I think that Gabe only really stands a chance with the Steam Box if he's willing to take a loss on the hardware to get people hooked on Steam instead of consoles. He won't be able to sell an under-powered "computer" to people to play PC games and de-throne the consoles. Without the hardware being optimized to games he'll need to spend more money on hardware than MS/Sony/Nintendo are currently spending and then take a loss to even get in the same price range. That would be to just get the games to the same level of quality as consoles, not above them. If he wants to push the benefits, he's got to get the quality higher, hence more expensive hardware and a steeper entry price. Microsoft could have gone this route with the Xbox instead of competing with Sony but, I suspect, they did the math and didn't see a way a traditional PC setup could compete directly with a lower cost console in a similar market.

They just need to decide which model they want to follow:

- Apple Model ... sell the software with minimal revenue and profit to facilitate high revenue and profit hardware sales

- Amazon Model ... sell the hardware with minimal revenue and profit to facilitate higher revenue and profit software sales

- Console Model (this is probably not possible for Valve since they wouldn't have a proprietary system) ... sell initial hardware at a loss until economies of scale and technology enable profit ... make profit licensing access to your system

You can only play in one of those models since they are not compatible with each other ;)
 
They just need to decide which model they want to follow:

- Apple Model ... sell the software with minimal revenue and profit to facilitate high revenue and profit hardware sales

- Amazon Model ... sell the hardware with minimal revenue and profit to facilitate higher revenue and profit software sales

- Console Model (this is probably not possible for Valve since they wouldn't have a proprietary system) ... sell initial hardware at a loss until economies of scale and technology enable profit ... make profit licensing access to your system

You can only play in one of those models since they are not compatible with each other ;)

The first isn't possible because he won't be convincing any kid's parents to buy a $1000 or $1500 "Steam Box" when it is sitting on a shelf next to a $350 or $400 console. You'd have to buy a whole lot of games at zero profit to allow the parents to justify the higher up front cost. Apple can make big profits because it has spent a LONG time growing a brand "mystique". Valve doesn't have a brand mystique and doesn't have the time to build one.

The Amazon model and Console model are very similar. The console makers truly make their money on the software side of things, not the hardware side. Valve is currently making its money selling software. Again, I seriously don't see the benefit in them selling a $1000 or $1500 "steam box" at $500 just to maybe sell a little more software. That's a big loss.
 
The first isn't possible because he won't be convincing any kid's parents to buy a $1000 or $1500 "Steam Box" when it is sitting on a shelf next to a $350 or $400 console. You'd have to buy a whole lot of games at zero profit to allow the parents to justify the higher up front cost. Apple can make big profits because it has spent a LONG time growing a brand "mystique". Valve doesn't have a brand mystique and doesn't have the time to build one.

The Amazon model and Console model are very similar. The console makers truly make their money on the software side of things, not the hardware side. Valve is currently making its money selling software. Again, I seriously don't see the benefit in them selling a $1000 or $1500 "steam box" at $500 just to maybe sell a little more software. That's a big loss.

I think $500 is the sweet spot ... remember we are talking about domination of the living room and not just gaming ... your average living room these days probably has one or more of the following appliances:

Home Theater - receiver and speakers anywhere from Home Theater in a Box setups to High End setups

DVR - whether it is from your cable/satellite provider or a stand alone unit like the Tivo this item is fairly ubiquitous

DVD/Blu-ray - most households have some sort of movie device

Video Game - between all three companies (Nintendo, Sony, and Microsoft) you probably have decent market penetration (at least in developed countries)

Internet Steaming device - this is only an emerging market right now and it could be an Apple TV, Roku, or features integrated into the DVR, Blu-ray, or Video Game

I think the battle that GN is referring to is that there is an opportunity for the company that integrate all or most of those features into one box can win the hearts and minds of the living room consumer ;)
 
You can build an excellent gaming system for $500 that will run great on 1920x1080 displays with AA on by default.

Even with a low Celery 2 core processor based on Sandy Bridge I can achieve really really good frame rates.

I built this system for $500. And it runs super silent and cool

$230 AMD Radeon 6950 with 2 gigs DDR5 memory
$50 case (Cooler Master HAF series)
$60 HDD 750 Gig WD
$70 Celeron Processor 2 core
$40 Memory (8 gigs 1600)
$50 Z51 Motherboard
$55 BluRay

And this system kicks butt as a value build. I imagine you can do even better today as I built this system a year ago.

Add mass manufacturing and cost comes down per unit. You don't need more PCI(e) ports, or more SATA ports, or more USB ports. You can use a much smaller case. All in all, you could shave about $100+ off this system I would say.

Now license a game at $5/game or $10/game (like microsoft and sony do) and you have some potential to make some serious profit.
 
I think $500 is the sweet spot ... remember we are talking about domination of the living room and not just gaming ... your average living room these days probably has one or more of the following appliances:

Home Theater - receiver and speakers anywhere from Home Theater in a Box setups to High End setups

DVR - whether it is from your cable/satellite provider or a stand alone unit like the Tivo this item is fairly ubiquitous

DVD/Blu-ray - most households have some sort of movie device

Video Game - between all three companies (Nintendo, Sony, and Microsoft) you probably have decent market penetration (at least in developed countries)

Internet Steaming device - this is only an emerging market right now and it could be an Apple TV, Roku, or features integrated into the DVR, Blu-ray, or Video Game

I think the battle that GN is referring to is that there is an opportunity for the company that integrate all or most of those features into one box can win the hearts and minds of the living room consumer ;)

True, but both Sony and Microsoft are already on top of all those things. They already have streaming, PS3 has bluray and no doubt the next Xbox will. If rumors are to be believed, Microsoft has been in talks to make your cable provider capable of using an Xbox. If they pull that off ... will be amazing. I don't have hopes, though. One thing is true, Valve won't have the industry or monetary power to make this happen if Apple and/or Microsoft can't, not without bending over and taking it from the cable companies which would, no doubt, ruin the experience.

Yes, $500 or less is the sweet spot. The current $500 computer listed below your post might be fine (today) but is unlikely to be capable of keeping up for the next 5-7 years which is your usual console life. The "steambox" has to be capable of lasting just as long without the owner having to do upgrades if it expects to compete in the same market.

I honestly just don't see the math working out for Valve in this. My bet is that they'll have "partners" that will sell various "computers" that Valve will allow them to be labelled with "Steam Approved" or some such. They won't compete in the console market but, instead, will likely compete for the dollars of people wanting to buy gaming computers today but don't want to build them. I suspect these "Steam Approved" computers will mostly be competing with Alienware, Falcon NW, Origin, etc and not so much with Microsoft and Sony for the console market. I think Steam's affiliates could take a lot of sales away from those folks but I don't see them impacting the console market all that much.
 
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