Experts Give the New Xbox Raves for Control, Creativity
(Dec. 6 2001)
Photo: Mario Tama/Getty Images

Microsoft sold more than 960,000 consoles last week, with a majority flying off the shelves within a single 24-hour period.

Nintendo also said the Wii had the biggest Black Friday ever, selling more than 500,000 units on the day after Thanksgiving.

At one point during the shopping madness, a shopper pepper sprayed a crowd at a Wal-Mart to get her mitts on an Xbox (although reports now say police are investigating the incident to determine the cause of the attack).

Sony declined to release sales figures for the PlayStation 3 last week, but it is likely benefiting from a recent $50 price cut.

Such strong sales are mind-blowing.

People are lining up for — and in some cases fighting over — hardware that is five to six years old. It’s difficult to imagine any other consumer hardware that could attract that kind of demand after such a long period of time.

All three are nearing the end of their life cycles. The Nintendo Wii and PlayStation 3 are both five years old, and the Xbox 360 is a year older.

Nintendo announced that it will release a new console, the Wii U, later next year. Microsoft and Sony have not said anything official, but they are both expected to follow with competing launches in the same time frame.

It has long been a pattern for all three rivals to release new hardware at the same time. A European PlayStation executive recently hinted that Sony’s plan was to continue that trend because it was “undesirable” to be significantly later than the competition, according to IndustryGamers.com.

Despite the odds, there are at least three reasons why sales continue to do well.

The lineup of games is as strong as it has ever been for the consoles; all three have tried sprucing up the hardware with accessories and adding downloadable content; and, finally, consumers don’t have a choice — the only alternative is to wait another year.

First, the games: This year, publishers waited until now to release some of the hottest titles of 2011; hardcore gamers in particular will have their choice of any number of blockbuster hits.

Activision’s Call of Duty game is already a runaway success, grossing $775 million in the first five days it was available, to shatter all entertainment records.

Also in the hardcore genre is Electronic Art’s Battlefield 3, Ubisoft’s Assassin’s Creed, PlayStation’s Uncharted 3 and Rocksteady’s Batman: Arkham City, which are all going head to head this holiday season.

But the consoles don’t just serve the hardcore genre anymore.

Last year, both Sony and Microsoft released motion-controlled gaming systems to rival the Wii’s technology, which has always been considered more family friendly and easy to use.

This holiday season, Sony and Microsoft are offering the most games ever for the Move and Kinect, respectively. Microsoft will have 75 new Kinect games available for the Xbox this holiday, four times last year’s number. Sony said the PlayStation Move is expected to launch 26 titles.

In addition to being used to play games, the consoles are turning into entertainment systems for the living room.

It started with the ability to use the Internet-connected boxes to stream Netflix to TV screens. Now the consoles are turning into media hubs, playing video, music and other content that is readily available over the Internet.

Microsoft and Sony have made entertainment a particular focus between their respective online networks, Xbox Live and PlayStation Network.

Microsoft will make a huge push on Dec. 6, when it rolls out a free update to Xbox Live. Users will be able to conduct a Bing search to find games, music and video across several providers. To make it even more family friendly, the Xbox Live user interface will be controlled with voice commands, rather than by the game controller.

By the end of the year, Microsoft expects that nearly 40 TV and entertainment providers — including Comcast, Netflix, Hulu, ESPN and HBO GO — will be available on its system.

All of these reasons added up could keep the pedal on the gas for what in any other segment would be considered ancient technology.

In an interview, John Koller, director of marketing for Sony’s PlayStation, argued that there’s a lot left in the current generation of consoles.

As an example, he said its predecessor, the PlayStation 2, is 12 years old, but continues to be used in homes around the U.S. as a game player and DVD player. Similarly, the PlayStation 3 substitutes as a Blu-ray player.

Overall, the PlayStation 2 ended up reaching nearly half of all U.S. households.

If that can be used as a guide, then the PlayStation 3 still has a very long way to go. In fact, the goal may be unattainable if new hardware is coming around the corner.

To date, Sony has sold 18.7 million PlayStation 3’s in the U.S. That makes up just a fraction — less than 17 percent — of the 112.6 million households, according to the most recent U.S. Census Bureau figures.

“We are nowhere near where we could be,” Koller admits.

Next year, the true testament will be how the hardware sells as we get closer to the release of Nintendo Wii U and consoles.

Groupon, a group-based social e-commerce buying service, has nabbed $30 million in its second round of funding, led by Accel Partners.

The innovative Chicago-based service, which launched only a year ago, had previously received $4.8 million in funding from New Enterprise Associates, as well as $1 million from an angel investor. NEA participated in this round too.

Groupon features a daily deal with a huge discount on a wide range of things–from spas to skydiving–in 26 U.S. cities, including Chicago, Boston, New York and San Francisco, for large groups of potential buyers on the Web, through email or via social networking sites like Facebook or Twitter.

Using social tools, Groupon–which is a mashup terms for “group” and “coupon”–tries to use collective buying power to get low prices and to push customers to local businesses.

If it reaches the number of buyers it needs, which can be in the thousands, Groupon sells coupons to the consumers and collects a hefty fee for the sale from the businesses it sends customers to.

At the cost of discounting and paying off Groupon, small businesses get a crack at a lot of new customers–think of it as social networking lead-generation or, perhaps, the “Social Shopping Network.”

Yesterday’s deal in San Francisco, for example, was a “restorative massage” at Teashi, cut from $100 to $45. It sold out by 10:47 pm with 1,000 buyers.

Groupon is profitable and has about 125 employees.

The start-up plans to use the money it has raised for increased customer acquisition, as well as expansion to more cities and improvement of its technology.

As part of its funding, Palo Alto, Calif.-based Accel’s Kevin Efrusy has joined Groupon’s board of directors.

Groupon grew out of a project of The Point, an online community launched in 2007 for organizing group action.

This kind of thing has been tried before, of course, centering on consumers who group together to get discounts on items by purchasing them in bulk.

In Web 1.0, there were many group-buying sites, most of which failed badly. One of the more high-profile ones–Mercata–got $90 million in funding from investors, including Paul Allen’s Vulcan Ventures.

Here is the official press release:

Groupon Raises $30 Million Round Led by Accel Partners with NEA
to Support Rapid Growth of Social Commerce

CHICAGO–Groupon, the social commerce service that has saved consumers in cities across America more than $36 million since its launch 12 months ago, has raised a $30 million round of capital led by Accel Partners with participation from Groupon’s initial investor, New Enterprise Associates. The financing will be used to accelerate Groupon’s customer acquisition, expand into new geographies and further develop its technology.

Groupon leverages group buying and social media to provide its millions of customers big discounts on the best local businesses in major cities such as Chicago, Boston, New York City, San Francisco, Atlanta and Washington, D.C. To date, customers have purchased over 800,000 Groupons on deals ranging from spa treatments and golf outings to fine dining and skydiving.

“We’re proud of the positive impact Groupon is having on consumers and business owners,” said Groupon founder and CEO Andrew Mason. “Groupon is pioneering a new category, and we believe adding Accel’s experience partnering with digital and social media companies together with NEA’s depth in the area will help us reach our full potential.”

“The social graph is laying the foundation for a new generation of industry-defining Internet companies, and Groupon has effectively invented social commerce,” said Kevin Efrusy, Partner at Accel Partners. “Andrew and the Groupon team are executing with incredible focus at a breakneck pace and are delighting both their merchants and customers.”

About Groupon

Groupon, launched in November 2008 in Chicago, features a daily deal on the best stuff to do, eat, see, and buy in 26 major cities across the United States, including Chicago, Boston, New York City, San Francisco, Atlanta and Washington, D.C. Groupon uses collective buying power to offer unbeatable prices and provide a win-win for businesses and consumers. The social commerce service is a project of The Point (http://www.thepoint.com), an online community launched in 2007 for organizing group action. Groupon plans to be in 30 cities by the end of 2009.

For more information, visit http://www.groupon.com.

To get Groupon’s daily free email for the best in your city, subscribe at http://www.groupon.com.

To learn more on how to become a featured business on Groupon, visit http://www.grouponworks.com.

To see some of Groupon’s top-performing deals, visit http://www.groupon.com/chicago/deals

I’ll spare you the details, but suffice it to say that Twitter has replaced a cumbersome and completely nonintuitive process with one that makes more sense. That’s good, right?

The flip side is that spam really isn’t one of Twitter’s most pressing problems.

In fact, Twitter’s antispam qualities were one of its best features from the very start: “Spam” on Twitter isn’t like other services’ spam since no one can actually send you spam and clog up your inbox. You only see it if you’re gazing at messages that include your name. So it’s aesthetically offensive, but not the kind of thing that actually makes Twitter less useful.

In the more proactive category: Twitter’s “lists” feature, which curates interesting groups of Twitter users to follow, should debut next week, I’m told. This one does tackle a more significant problem for Twitter: New users come to the site and have no idea what to do or whom to pay attention to. (Twitter’s quasicontroversial “Suggested Users List” doesn’t really cut it, though it does drive Robert Scoble nuts, which is amusing.)

And in the time-to-get-serious category: Actual revenue generation. Twitter’s giant cash pile means the company doesn’t have to start making money anytime soon. But it’s going to start trying, I’m told, with a series of…well, I heard them described by someone familiar with the company’s plans as “experiments.” Alternate name for them: “Don’t freak out if this stuff doesn’t work.”

We already know what one of them is: A plan to sell both Google (GOOG) and Microsoft (MSFT) access to Twitter’s data stream. But I’m told we should see other kinda-sorta trials in coming months.

Sources with knowledge of the announcement tell BetaNews that Redmond is readying both hard disk and flash-based players for the launch. The flash device is said to be similar in size to the second-generation iPod Nano and will reportedly offer video and WiFi support. The existing hard disk drive device is said to be slightly leaner than its predecessor, but otherwise largely unchanged (no word yet on new color schemes, but it will be hard to match UPS brown). Which seems to suggest that Microsoft, against all odds, has managed to make the second-generation Zune just as underwhelming as the first generation.
(Photo courtesy Engadget)