The Business Model Applied by Xbox - Case Study Example

Xbox.com Introduction Microsoft Company started manufacturing Xbox video games in two thousand and one in North America. The company extended the same video game services to Japan in two thousand and two while the same services reached Europe and Australia in March two thousand and two. Microsoft ventured into the video gaming industry by introducing Xbox and hit the market instantly. Xbox gaming is a sixth generation gaming that encompasses the Dream cast by Sega, the Playstation 2 by Sony, and GameCube by Nintendo. Dream cast by Sega existed before the advent of Xbox by Microsoft Company. The production of live incorporated services went on air for the first time in November two thousand and two. Among other features, the game allowed players to play through online means using internet broadband network. This was the most successful and selling factor of Xbox against other competitors entering and present in the same industry. Most analysts held that Xbox improved online gaming compared to Playstation 2 despite the fact that the latter has free services. To analyze the success of Xbox, the author of this discourse considered various issues but specifically the success and the business model of Xbox.com. Collection of information went as far as using other sites such as Alexa, Compete, and Quantcast. Recently, Xbox released a new video game, Console. Playstation remains the biggest competitor of Xbox. The new release is interesting and continues to attract more viewers and people across the globe. The new video still outclasses another newly released video by Playstation going by the same name. The timing by Playstation was crucial because they wanted to outsmart Xbox but they fail to achieve the target. The Business Model Any business organization needs an appropriate business model to extract optimum investment or innovation. A business model is an essential tool in transforming development in information and communication technology for the business to realize economic value. It is always necessary to design a new business model especially when either starting a business or introducing a new product in the market where competition already exists. The value of the business model is that incidences exist where innovation does not depend on the product and service but on the business model under application. Various scholars present different ways of describing a business model. This paper however, focuses on the business model used by Xbox to facilitate success and retention of the competitive advantage. Microsoft Company fully comprehends the tasks it has in entirety regarding Xbox considering the complexity of the products, environment within which it operates, and markets. This explains why releasing Xbox in the market was gradual and timely with North America coming first followed by Japan, Australia, and Europe respectively (Johnson, & Mackenzie, 2006, 91). Technical experts at Microsoft Company Ltd understand the domain of their work while business professionals know where important elements to take the product to the market live. The business model at Microsoft serves various purposes but first it provides a link between technical inputs and economic outputs. The business model sits between technical inputs and economic outputs. This is because a business organization cannot realize economic outputs directly from technical inputs. A link, which is a business model, serves as a link between the two important business concepts. The Business model applied by Xbox derives its functionalities by relating with a multitude of business disciplines. They include among others strategy, entrepreneurship, economics, marketing, finance, as well as operations among many more. The business model at Xbox is a significant factor in the levels of profitability of the company in the specific investment. Venturing in video gaming business was an innovation and a new venture for Microsoft Company. This considering factors such as the ability of players using the internet broadband to play video games online. This was an innovation because no any other company in the gaming industry was able to do that including Playstation. Scholars posit that if the company designs a great business model, it can sell even mediocre innovations to profitable levels more than a great innovation sold using a mediocre business model. The business model for Xbox.com has six components that help its successful marketing and operations. The website contains value proposition. This site describes the problem raised by client, describes the product, explains ways through which the product offers solutions to the client problem, and the value the customer will drive especially form the perspective of the consumer. On important element, that the management at Microsoft Company the manufacturers of Xbox understand is market segmentation. It is important to remember at this point that Xbox gaming constitutes video gaming services that customers pay for while the immediate competitor Playstation 2 offers its services free of charge. Xbox is keen to care of this fact in its website. The management categorizes the games according to the ability of the player to pay. The company offers nothing on flat-rate basis. However, there are enough options for clients to choose from while still undecided or making comparison on the best alternative. The site runs adequate highlights that encourage visitors to play the games. Microsoft understands players with varied financial capacities access the site and would have the interest of participating. This explains why the subdivisions are clear. There are incidences where the capacity of an innovation opens when the manufacturing company ventures into a specific market segment. It is through this that Microsoft started the business in North America in two thousand and one before spreading the tendrils to Japan, Australia, and Europe. Presently, the company offers the same services in Africa although it is a developing continent. The company considers this continent an emerging market. The web, Xbox.com entails the value chain framework option. The position taken by Microsoft Company on details of the same company targets to capture elements of the value creating the chain structure is clear and present in the site. Search engines that can a visitor understand the operations of the company and specifically Xbox including financial records are there (Montfort, & Bogost, 2009, 71). They include among others cost structure, profit margins, subscription, as well as the overall revenue generation. Scholars aver that the management at Microsoft Company understands the great differences between a business model and strategy. They also comprehend on when and where to apply the specific aspect. This is why they chose to have a business model for Xbox and strategy. The Xbox business model creates value for the product and service. This is as opposed to a strategy that would easily capture the value. Strategy on the other hand, makes additional steps to enhance sustainability of the value, in the process develop, and maintain competitive advantage. This is not to say that business models do not help the Microsoft Company to capture the value. While running a business two competing types of interests exist. The values are shareholder and business value. A business model transforms innovation in any business organization to economic value for the same company. However, it leaves the responsibility of delivering generated value to shareholders to strategy. A case in point is the financial techniques. However, a business model does not put into the perspective the same financial methods, they are however, very important to the shareholder value. Xbox understands the third aspect of its business model as assumed knowledge levels. Whereas the strategy takes a stab at the complex aspect of analyzing a situation that deserves comprehension of the environment, a business model requires limited understanding of the environment of operation. Analysis Xbox runs a website for news trending and associate with company, news.xbox.com. Xbox is popular on Twitter, Facebook, Delicious, as well as Google plus. Six thousand and thirty-eight people like it on Facebook, it has eleven twitter shares that result into two hundred and eighty-four thousand three hundred and nine followers on twitter. The company has fifty-three shares of Google plus (Ray, 2012, 36). The Facebook page has twenty- three million, four hundred and three thousand, nine hundred and ninety likes. This statistics are as latest as early March two thousand and fourteen. Xbox.com is the ultimate source for all issues including Xbox 360 and Xbox. A visitor gets news updates, screens, game trailers, strategy, previews, community buzz, hardware information, the latest Xbox live, forums, My Xbox coverage, and support. All this information puts the company at a vantage position because the site is a one-stop shop for all the visitors. The estimated value for www.xbox.com is around thirty United States dollars. It is important to note at this point that this figure is a rough estimate. Other niches could derive additional money out of reviews of the same page. Selling staff on the other hand, derives more money compared to the real income. The Xbox.com site has various technical qualities. The site puts into use the MS-QL as its software for the database. Xbox is a product of the Microsoft Company therefore, runs on the Microsoft internet Information Server software. This is besides the fact that when Microsoft Company created the site it put to use the Microsoft ASPX scripting environment. The NET framework applies in the programming section of the site. Management of the site layout is a responsibility of the CSS and user interaction is a duty of the JavaScript. Strengths Xbox.com has a number of strengths that help the company to rate as one of the leading companies in the gaming industry. The company was among the first to introduce the high definition in DVD players. Introducing the high definition caught the opponents off the guard making it sustain its competitive advantage against the competitors. Advancements by Microsoft are mere developments of what Xbox developed sometimes back. Developments in the same gadgets make execution and operations of the same very easy. Xbox scores highly in the side of charges. They have balanced prices on the same products and srvcies that rivals in the industry offer. This makes it difficult even for opponents to introduce new products or similar in the market. The company believes in great innovation in online video games. Players find the first experience in this site making the company more attractive. Clients experience new games for the first time in this website. Customers do not find inspiration from any other source apart from this site. The low price offered on existing games as well as hitherto graphics applied by the company makes it more attractive and the number one company in gaming console. The company continues to penetrate into new markets regarded by the management as emerging markets. This includes parts of Asia, parts of South America, and the entire continent of Africa. Xbox engages in partnerships with other senior companies in the entertainment industry majorly the Hollywood. The influence of these types of partnership will go a long way in marketing the image of the company (Yahoo finance, Xbox, 2012). The company is recording remarkable sales in areas originally untapped by companies in the video gaming industry. The initial fear was that these areas are not technologically advanced. The Infrastructure in Africa and parts of Asia is poor posing challenges that scare away other investors. Products and services sold by Xbox are strong. The company presents compatible products and services irrespective of whether they are new or existing making it easier for the players to learn. The company eliminates complexity to the finer details. The marketing strategy applied by Xbox makes any other new products popular immediately after the release. This makes the company retain its position as a number one gaming company. Relationships, associations, as well as collaborations with other companies continue to make the company more popular around the globe. The new aspect where the Xbox introduces new offers, products, and services to computer companies directly without using intermediaries helps clients to negotiate deals from their comfort zones whether in the office or at home. This is a good path through which the business with grow further. Apart from Playstation 2 that provides its services free of charge, all other competitors including PS3 charge their services and products exorbitantly. Weaknesses Most clients associate Microsoft Company with quality products and services therefore, continued production of cheap video games for Xbox might eventually influence the image of the company negatively. Another upcoming opponent of Nintendo presents the biggest competition for Xbox because of having a large consumer base and low cost of his or her products and services. The European market is under threat because of antitrust issues creating threats every day. The image of company products and services on the market would be in danger. The greatest responsibility that the management ought to focus on is marinating the image in the market, which almost the entire company success relies upon. This is because of increased competition and it would never be easy for Xbox to recover if it ever loses that position in the market. Obstacles in the production of hardware might result in uncontrolled suffering by the company that will lose it client base at the end of the fracas. Nintendo continues to develop as the main and direct opponent of Xbox. Considering the strength of Nintendo, which is low cost products and services as well as increased customer base, it is important for the management at Xbox to consider necessary measures to curb the growth of the competitor. Questions will develop regarding efforts by Microsoft Company to focus on manufacturing low priced-video games only. This is as opposed to other products manufactured by the same company christened quality with price. The quality of video streaming will come under scrutiny sooner than the management expects. It is challenging to the company to continue making pricey games and hardware. Such threats forced the company to adjust prices for its services and products upwards. The company continues to witness a drop in the market share since. User Demographics Gender representations in relation to the overall internet population show that males have low numbers in this website. On the other hand, women have high numbers in this site demonstrating high levels of confidence. Monitoring statistics show that with respect to the general internet population, visitors to this appear to be many with no college experience. The ratings are fair for viewers with college education meaning that that the rating would warrant a rate of some on the scale (Xbox, Official Company Webpage, 2012). Other niches could derive additional money out of reviews of the same page. Selling staff on the other hand, derives more money compared to the real income. The Xbox.com site has various technical qualities. The site puts into use the MS-QL as its software for the database. Xbox is a product of the Microsoft Company therefore, runs on the Microsoft internet Information Server software. This is besides the fact that when Microsoft Company created the site it put to use the Microsoft ASPX scripting environment. Representation on the site for graduate viewers is low. People seem to visit this site more when they are away from home but the preference is high for people in school. Relationships, associations, as well as collaborations with other companies continue to make the company more popular around the globe. The new aspect where the Xbox introduces new offers, products, and services to computer companies directly without using intermediaries helps clients to negotiate deals from their comfort zones whether in the office or at home. On the other hand, people at work rarely visit this site. However, this is expected considering the fact that it is a site for entertainment. Bibliography Johnson, B., & Mackenzie, D. (2006). Xbox 360 for dummies. Hoboken, N.J., Wiley. Montfort, N., & Bogost, I. (2009). Racing the beam the Atari video computer system. Cambridge, Mass, MIT Press. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=259267. Ray, M. (2012). Gaming: from Atari to Xbox. New York, NY, Britannica Educational Pub. Xbox, Official Company Webpage, 2012. http://www.xbox.com/en-US Yahoo finance, Xbox, 2012. www.finance.yahoo.com/news/microsoft-making-cheap-xbox-streaming. Read More