File this under “Can’t Win For Losing.”

xboxMicrosoft says it was listening to its customers yesterday afternoon when it reversed some of its most controversial Xbox One policies, including the requirement for a daily Internet check-in and restrictions on game trading. And those customers were speaking very loudly.

Listening to customers is inherently good, right? So any criticism of Microsoft now is not entirely fair. I hereby acknowledge this reality to everyone about to take me to task for what I’m about to say.

But come on, people. This is not how great products are made. And this will make it tougher for Microsoft overall to do anything bold, controversial and game-changing in the future.

Microsoft’s biggest challenge coming out of the E3 video game convention — apart from Sony’s jabs — is that it wasn’t able to truly demonstrate the upside of the policies that it was implementing. The company did talk a lot about the benefits of cloud integration — including the ability to access games from any Xbox One when logged in, the lack of waiting for updates, and the ability for developers to create immersive, persistent worlds using Microsoft’s cloud system.

“There are times when what is really needed is incremental improvement of a product,” wrote Microsoft’s Frank Shaw last week. “There are companies who play that role in gaming right now. And there are times when a vision for the future demands a leap. That’s what we’re doing with Xbox One.”

The problem is that the console is months away from release. Microsoft wasn’t able to let people take that leap and see the things they’d be getting in return for some of the restrictions.

Xbox-One-Don-MattrickI’m not saying that the policies would have been worth it. I simply don’t know. That’s the type of assessment that comes after using a product for days, weeks or more. This is not the Apple Maps fiasco, where the backlash was based on real-world customer pain. It’s also not exactly Windows 8.1, where Microsoft is making changes after seeing how people use the product in their daily lives.

What’s clear is that, up until yesterday afternoon, Microsoft was saying that the tradeoffs were going to be worth it.

Now we get Xbox chief Don Mattrick telling us, “These changes will impact some of the scenarios we previously announced for Xbox One.”

Microsoft had to know these changes would be controversial, and that there would be a backlash. Did this new vision for cloud gaming come from a place of genuine conviction inside the company? If not, then why did the company do this in the first place?

And if so, why wasn’t the company able to stick to its guns, suffer through the short-term challenge, get the product out in the market and make the long-term bet for the good of gamers and its own business?

The answer is that it couldn’t afford to. Look at the rest of Microsoft’s consumer business. Windows 8, Windows Phone and Surface are not exactly setting the world on fire. Microsoft needs Xbox One to be a hit. Microsoft CEO Steve Ballmer and the rest of the company’s leadership — in the midst of a national surveillance controversy and their own internal restructuring drama — seem to have decided that the short-term backlash wasn’t worth it.

As Jeff Bezos at Amazon likes to say, sometimes success means you have to be “willing to be misunderstood for long periods of time.”

Flexibility is nice. But so is tenacity — if you truly believe in what you’re doing. And if you’re putting things like this out there without truly believing in them, then you’ve got a bigger problem as a company.

Poll: Now will you buy an Xbox One?

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  • Guest

    5 Startup Lessons I learned from Xbox One

    By now, we’ve all learned about Xbox One, the revolutionary new Microsoft game box with a shameful bout of Digital Rights Management (DRM). In June, Microsoft changed course and announced that Xbox One would be less restrictive and more permissive. What can you learn as a startup CEO from this turnabout?

    1. LISTEN TO YOUR CUSTOMERS. Customers spoke up and Microsoft was made to listen. Does your startup have one ear to the ground, always listening to Twitter, Facebook, phone calls, and Pinterest? If not, you’re not listening!

    2. IT’S NEVER TOO EARLY TO ACT. Microsoft could have made these changes after launch, but they owned the story by announcing these improvements more than five months before launch. In your startup, do you wait to act? Don’t! Act now!

    3. CONTRITION BREEDS CONFIDENCE. A lot of men thought “Dandy” Don Mattrick, Micro’s VP, was a little bit cocky when he introduced Xbox One and its DRM. The same man announced the changes. When your startup makes a mismove, make the same man mend the meat. Your customers will cotton to this contrition.

    That’s all for now. Happy startupping!

    • guest

      Not bad. Look forward to the other two.

    • lubba

      MS presented some bold fantastic ideas to move the game industry into a new and revolutionary era, unlike the stagnant ps4. Not all areas were bad and some could use tweaking. For MS to throw all their hardwork out the door is a shame.
      …and no customers are not always right.

    • hypocrite

      “with a shameful bout of Digital Rights Management (DRM)”

      Sort of like Steam?

    • Guest

      You forgot credibility and integrity. The fact that Microsoft went back on their policy is good for them, but shows that they are cowards in what they do. The only reason why they did this anyways was because Sony was going to win the console war, and they couldn’t let that happen. Sony forced them to act, not the people. At least not before launch anyways.

  • Test12345

    But what will stop them from turning this back on after launch?

    • Jason Farris

      Hopefully nothing.

  • guest

    This should really be an Oped piece, not a regular article. You’ve comingled personal opinion and facts and presented them as if they’re the same. It’s also pretty silly to accuse MS of not sticking it out on a product effort they’ve been pursuing for more than a decade and still have about a $4 billion net loss to show for it. If that doesn’t qualify as commitment to a vision I’m not sure what does. Also, I have a lot of respect for Bezos. He’s ten times the CEO that Ballmer is. OTOH, it’s a lot easier for him to talk about a willingness to be misunderstood for long periods when the stock market has rather uniquely rewarded Amazon’s shares despite their modest profitability. If Amazon sported a more normal PE, you can bet Bezos would have felt far more pressure for short term results than he has. Ballmer, having presided over a thirteen year 50% reduction in the stock price of MS, doesn’t have that same luxury. The Xbox team blew the messaging on this change pure and simple. And there’s no excuse since Mehdi himself admitted they expected pushback. That said, I think they believed in the long term vision both for consumers as well as being a necessary prerequisite to compete against the real competitive threat to gaming and the living room, which isn’t Sony but Apple and Android tablets and smartphones.

  • mp3Pete

    I believe that Jeff Bezos’ quote meant that he was willing to be misunderstood by Wall Street analysts not misunderstood by customers. When I worked at Amazon we pushed back hard on content partners to create great experiences for customers.

    • Todd Bishop

      Interesting point — thanks.

  • lubba

    Nope. The ones who lost credibility are the manipulative and Cunning media.

  • Arch Stanton

    I think what we are really seeing now is speculative design. All of the controversial features are software & policy aspects that are easy to change. The XBox teams confusing messages feel more like beta testing to me. Twitter and Reddit is just a massive focus group now.
    This pivot really solidifies it for me, as did Sony’s “check the box” announcement that simply collected people’s XBox gripes and went the other way. At this stage, both Sony and MS are simply more focused on PR and policy because they can’t change the other things.
    One could say Sony is winning this PR war, but it seems to me they aren’t flexing anywhere near as many facets.

  • SuperRob1

    The suggestion being made here is that a consumer should spend $500 on a device, and hope that days or weeks later, the product is worth it? No, a company has to be able to demonstrate value if they want sales. What Microsoft did was a problem because all they could demonstrate was that the customer would be losing value that they were used to, and it was a valid concern.

    Chalk it up to a platform that was supposed to be all-digital right from the get-go. If they hadn’t needed to backtrack on digital delivery (essentially becoming the console version of Steam), none of this would have been an issue. Discs complicated the problem, and by trying to change people’s understanding of how a rights management worked with physical discs, they were fighting a losing battle.

    I think Microsoft learned an important lesson though, and if survive into another console generation, I’m sure it will be 100% digital distribution.

    • Mekon256

      Well said, SuperRob!; Want to reiterate that digital downloads are alive and well in XBoxOne, just the sharing of them has gone away (for now).

  • rand

    As much as I was mad at MS for being so completely out of touch with the consumer, I’m not going to hold it against them now that they’ve fixed it. If consumers don’t forgive mistakes even after they’ve been fixed, what’s the incentive for businesses to fix mistakes?

  • guest

    Well, you have to admit that the Xbone fail nicely bookends the W8 fail which began the year, thus providing fitting closure to fiscal ’13 or what Steve “Ever Clueless” Ballmer promised would be the “most epic year in MS history”. Apparently he meant epic as in fail.

  • Michael Hazell

    The Xbox One is still a failure. While they might get back a few customers, they have lost their integrity and their credibility. And more importantly, what stops them from adding all of these policies back after the console has gained back consumers and made some money?

    • Trolls are dimwits

      Wow, a product that’s destined to compete over the next decade is a failure months before it has even launched? Gee Michael, it must be amazing to be you and see the future so clearly. You must kill it in the stock market.

    • Mekon256

      This is pretty silly; people buy game consoles based on feature and price, this is not (nor should it be) some sort of “moral” choice. Pretty sure the vast majority of people are not going into BestBuy saying, “hmm, which console manufacturer has the best integrity?”

  • Christopher Budd

    Interesting points Todd and I don’t necessarily disagree. But I think there’s another issue here and another way to look at it.

    In the case of XBox One and Windows 8 they’re making bold changes. Like you say that’s good because, let’s be fair, Microsoft has been roundly criticized for not being bold and innovative.

    I think the real problem is that these innovations are “burning the boats” in their approach: they give the customer the choice of adopting the innovation or rejecting the product, nothing else.

    When Windows XP came out, it was bold in its UI design. But Microsoft included the ability to switch back to the old UI. This gave people the power to choose the new thing on their terms, when and how they wanted it. Some people jumped in right away, others took their time. But eventually, everyone accepted the new UI.

    When Microsoft was competing with WordPerfect and Lotus 1-2-3, they included translators that enabled people familiar with th commands from those familiar packages in Word and Excel. Again, it was a ramp that helped ease the learning curve and accept the innovation on their own terms in their own time.

    Starting with the ribbon in Office 2007 that approach has gone and been replaced with a simple one of “use the innovation or don’t use the product”. To be fair, it’s not just Microsoft: Facebook is a master of forcing innovation on people on their terms rather than their users’.

    But I think XBox One is another example of this. If they had kept the ability to play offline with discs and added to that the new capabilities I think we’d have seen a different story entirely around acceptance.

    • Jason Farris

      Or, even just tried to message the advantages. They said things like “the incredible power of the cloud” instead of throwing up a quick infographic showing 10 people with 10 library sharing. “Microsoft’s cloud based sharing expands your library to ten friends”… show lines crossing between people, little animations of games being lent. A cloud in the middle. I could put an intern on it after lunch and have better messaging by EoD.

      And why call it Family Sharing when it was designed to be used with any ten people? It’s all just confusing and weird and just plain incompetent. I feel especially bad for all the folks that put their heart into this only to have the PR folks completely asleep at the wheel.

      Now the publishers got cold feet, everyone’s retracting and we all have to live with Sony’s own version of incompetence. Thanks Sony for covering your own failure by attacking every next-gen feature, thanks Microsoft for not being able to punch-dance your way out of a wet paper bag.

      I’m pretty annoyed with both frankly.

      • guest

        Yeah, usually Xbox is the one part of MS with messaging and marketing that doesn’t blow chunks. But huge fail this time. Probably explains why the stock is selling off even harder than the market. This is the one area of MS where investors thought the company understood its audience well and was well ahead of the competition. But this was such an epic fail that it has made investors question even that belief.

      • Christopher Budd

        Fair points. I have to say the points you make about sharing are new to me: I never heard that in anything I read (or at least not that clearly).

        Like I say: I think the right answer was to provide support for these new capabilities while maintaining options for the old way. For instance, the military scenario clearly needs the old way for the foreseeable future.

  • guest

    “Maybe Microsoft will learn an even bigger lesson from the Xbox fiasco when it
    makes updates to its Windows 8 platform later this year: Making bold changes to
    technology is one thing, but making bold changes that people actually want is
    quite another.

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