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Microsoft (still) Hates XBox Users

So there are two different XBox 360’s you can buy — the expensive one with a hard drive, or the cheap ($199) one with no hard drive. Unfortunately, it doesn’t work very well without a hard drive, so people go and buy memory units to let them save games. Even users with hard drives often buy memory units to let them backup games, or transfer data to friends’ consoles. Basically, the memory units expand the functionality of the XBox 360, making it a more desirable product and improving sales, right? So Microsoft would want people to buy memory units, right?

The latest firmware update, which enables Twitter, Facebook and Last.fm support on the XBox 360, also cripples XBox 360 functionality for no reason other than to attempt to gouge customers. Microsoft XBox 360 hard drives are priced well above reasonable; a standard terabyte hard drive sells for the same price as a Microsoft 60GB XBox 360 drive. The same problem exists for memory units; Amazon carries a 512mb XBox 360 memory unit for $24.99. No explanation for why you can’t use a standard thumb drive that sells for the same price has 16GB capacity. This is especially disturbing when you realize they both use a USB interface, and it was only a business decision to disable standard thumb drives from working.

So Datel figured they could make a memory unit that works better than the Microsoft units – they sell a 4GB memory unit for $39.99. Moreover, the Datel units are expandable with MicroSD cards, so you could basically have a 16GB SSD in your XBox 360 if you wanted it. Many people bought these, and many people use them to have a large amount of portable storage. Microsoft should embrace the concept of other companies improving their product. If they make a great console, they’ll make plenty of money through game licensing fees. On the other hand, if you “improve” your product to disable functionality that customers have paid for, you’re just going to alienate your own customers.

I love to criticize Microsoft, but there are many companies that get this wrong. Make your product as good as it can be. If people find ways to improve it, embrace it. Ensure your profit model relies on delivering the best possible service to your customers. If you structure your business in such a way that you need to purposely cripple your customers in order to make money, you are hurting your long-term profitability to temporarily raise revenue.