Suicidal Xbox Makers

First appeared in the Boston Globe

Dozens of workers assembling Xbox video game consoles climbed to a factory dormitory roof, and some threatened to jump to their deaths, in a dispute over job transfers that was defused but highlights growing labor unrest as China’s economy slows.

The dispute was set off after contract manufacturer Foxconn Technology Group announced it would close the assembly line for Microsoft Corp.’s Xbox 360 models at its plant in the central city of Wuhan and transfer the workers to other jobs, workers and Foxconn said Thursday.

Workers reached by telephone said Foxconn initially offered severance pay for those who wanted to leave rather than be transferred, but then reneged, angering the workers; Foxconn, in a statement, disputed that account, saying only transfers were offered, not severance.

The workers climbed to the top of the six-story dormitory on Jan. 3 and threatened to jump before Wuhan city officials persuaded them to desist and return to work, according to the workers and accounts online. The workers gave varying estimates of the numbers involved in the strike, from 80 to 200, and photos posted online showed dozens of people crowding the roof of the boxy concrete building.

“Actually none of them were going to jump. They were there for the compensation. But the government and the company officials were just as afraid, because if even one of them jumped, the consequences would be hard to imagine,’’ said Wang Jungang, an equipment engineer in the Xbox production line, who left the plant earlier this month.

The fracas is the latest labor trouble to hit Foxconn, a unit of Taiwan’s Hon Hai Precision Industry Co. that makes iPads and iPhones for Apple Inc. as well as Xboxes and other gadgets, helping consumer electronics brands hold down costs. Its massive China plants are run with military-like discipline, which labor rights activists say contributed to spate of suicides in 2010.

Foxconn said that all workers on the Xbox line were offered transfers at their current pay but that 150 demanded severance and not all of them participated in the rooftop protest. “It is our understanding that certain individuals threatened to jump from the building if their demands were not met,’’ the statement said.

Strikes and other job actions have risen in recent months across China as factories cope with rising costs, scarce credit and declining orders from Europe, the United States and domestic companies. Complicating matters is the approaching Lunar New Year, a time when many of the migrant workers who man factories quit jobs to return home temporarily before looking for better paying employment.

Foxconn’s Wuhan plant employs 32,000 people. The site previously had a couple of suicides or attempted ones a couple years back, prompting the government to take over the operations of the dormitories, said Wang, the equipment engineer.

After the rooftop protest, Microsoft said in a statement that it investigated, finding that the dispute centered on Foxconn’s staffing and transfer policies, not working conditions. “After the protest, the majority of workers chose to return to work. A smaller portion of those employees elected to resign, the statement said.

Ultimately, Foxconn said, 45 of the employees resigned from the company while the rest chose to stay. It did not say whether the resigning workers were given compensation. Wang, the engineer, said he received $4,700 (30,000 yuan) in compensation but that was because he planned his departure early, telling his supervisor six months ago he would leave.ionals, our award-winning solutions include custom displays, exhibit rentals, trade show graphics, shipping, installation and exhibit storage.

Microsoft's Kinect Already Hacked?

PC Mag

Has someone already won the $2,000 bounty for delivering open-source drivers that work with Microsoft's recently released Kinect motion-tracking system? Odds are looking good!

Here's the background. Adafruit Industries announced a $2,000 prize last week for anyone who managed to hack into the Kinect in an effort to unlock the device for use with hardware other than the Xbox 360. In short, here's the official challenge: "Upload your code, examples and documentation to GitHub. First person / group to get RGB out with distance values being used wins, you're smart – you know what would be useful for the community out there. All the code needs to be open source and/or public domain."

Well, user AlexP over at the NUI Group Community Forums has posted a video that appears to show a Kinect being controlled via a standard PC interface. That's the only background we have so far, so it remains to be seen whether the potential submission will actually fulfill all the criteria of Adafruit's contest.

Nevertheless, one thing is certain: Microsoft won't be very happy about the results.

"Microsoft does not condone the modification of its products," said a company spokesperson in an interview with CNet. "With Kinect, Microsoft built in numerous hardware and software safeguards designed to reduce the chances of product tampering. Microsoft will continue to make advances in these types of safeguards and work closely with law enforcement and product safety groups to keep Kinect tamper-resistant."

So why the challenge? Adafruit is hoping that the Kinect's "radar camera," as Make magazine senior editor Phillip Torrone puts it, can be unlocked for use with robotics. But as for specific purposes, the sky's the limit—Nintendo's gyroscopic Wii Remote, after all, has been transformed into everything from a VR head-tracking device to the controller of a 15-ton robotic arm.

Microsoft's Online Xbox Games to Pass $1 Billion Sales Mark for First Time

Bloomberg

 

Microsoft Corp.’s Xbox Live online video-game service probably broke the $1 billion revenue mark for the first time in the year that just ended, helped by sales of movies, avatar accessories and extra game levels.

Microsoft says about half the service’s 25 million users paid an annual fee to play games online like “Call of Duty: Modern Warfare 2” in the year ended June 30. That would be about $600 million. Sales of products like movie and TV show downloads topped subscription revenue for the first time, Dennis Durkin, Xbox’s chief operating officer, said in an e-mail.

The remarks suggest the business generated more than $1.2 billion in sales last year, exceeding analysts’ estimates. Success in online gaming is crucial for Microsoft because the other products in this unit include the barely profitable Xbox game console and mobile-phone software that’s losing ground to Apple Inc. and Google Inc.

“Xbox Live has helped sell a lot of consoles and created a lot of loyalty,” said Matt Rosoff, an analyst at Directions on Microsoft in Kirkland, Washington. “Everyone has been talking about Microsoft’s inability to innovate, but this is a pretty good example where they have innovated. They timed it just right with this one.”

Durkin declined to give more detailed results for the service, and Redmond, Washington-based Microsoft doesn’t break them out when it reports earnings. Sarah Friar, an analyst at Goldman Sachs Group Inc. in San Francisco, estimates Xbox Live had sales of $1.1 billion in the past fiscal year, up from $800 million a year earlier. Subscriptions for the premium service are $50 a year.

Rival PlayStation Network

Microsoft may have difficulty extending the popularity of Xbox Live to other consumer businesses like television software and portable music and video players, Rosoff said.

Sony Corp.’s rival PlayStation Network is starting a subscription offering, and Xbox Live also competes against Apple’s iTunes for music and TV show downloads. Microsoft said in May that Entertainment and Devices Division President Robbie Bach, who has overseen Xbox for a decade, will retire. J Allard, one of the earliest executives on the Xbox project, also left.

Friar estimates Xbox Live has gross margins, the percentage of sales remaining after deducting production costs, of about 65 percent. That’s buoyed results in the entertainment division, which has reported an annual profit only since 2008.

Microsoft will post operating income of $1.04 billion for the division in the year that ended June 30, projected Friar, who is based in San Francisco and recommends buying the shares. That’s more than six times the income in fiscal 2009. The company is due to report 2010 results July 22.

‘Launch, Sustain, Retain’

Xbox Live is helping Microsoft draw in additional revenue after gamers leave stores with games in hand, Durkin said.

“The old playbook of ‘launch and leave’ is a relic of the past,” Durkin said in an e-mail. “Today with Xbox live, it’s now about ‘launch, sustain, retain’ by continually adding new content that enhances the original experience.”

To boost future revenue, Xbox Live struck content deals with Walt Disney Co.’s ESPN and Activision Blizzard Inc. and introduced a family subscription that gives four memberships for the price of two. Its Kinect device, which lets users play games by movement rather than with a controller, will also fuel sales, Friar said. Microsoft probably can increase Xbox Live sales by a rate of “mid-teens to 20 percent” a year, she said.

Activision says Xbox Live is the only online gaming business -- except for Activision’s own personal-computer based “World of Warcraft” franchise -- that generates substantial money.

Revenue Sharing

“When it comes to online gaming, they’re the only significant alternative to us,” says Activision Chief Executive Officer Bobby Kotick, whose “Call of Duty” titles have 50 million registered online players.

Success may breed increased demands from content providers to share more revenue. Already Activision says it wants a cut of the take from subscriptions, not just the percentage it currently gets from its content sold through the service.

“We’re driving a lot of the subscription interest and certainly hours of game play,” Kotick said.

Microsoft rose 48 cents, or 2 percent, to $24.30 at 4 p.m. New York time in Nasdaq Stock Market trading. The stock has dropped 20 percent this year.

Microsoft’s decision to invest early on in a subscription service for online gaming is paying off, said Michael Pachter, an analyst at Wedbush Securities Inc. in Los Angeles, who covers the video-game industry. Xbox Live began in 2002.

Sony Plays Catch Up

Pachter estimates Microsoft sank about a billion dollars into the effort and didn’t break even until it released its second console in 2005. Still, the early start, combined with exclusive games, means Sony won’t catch up with its PlayStation Network, he said.

“I was skeptical in ‘02 -- I thought it was stupid,” Pachter said of Xbox Live. Now, the service is driving gamers to Microsoft. “If your friends are all playing on Xbox, you get an Xbox. If they’re all on Xbox Live, you get Xbox Live.”

Pachter estimates that Sony is losing money on PlayStation Network, which sells games and other content. Last month, Sony said it will add a premium service and charge $50 a year, matching the Xbox Live fee.

Some of Xbox’s success is due to the popularity of the alien-shooting “Halo” games, which are Xbox exclusives and top-sellers.

The “Halo” franchise “essentially invented” the market for multiplayer online games on consoles, Pachter said. There are 6 million people a month who play the game on Xbox Live, and Sony probably doesn’t have half as many people playing all of its exclusive online games combined, he said.

Microsoft is working to extend Xbox Live’s success to mobile phones. Its overhauled phone software, available later this year, will let customers play Xbox Live games and see users’ avatars, profiles and achievements.

The company needs to expand its success with Xbox Live to its other consumer businesses, Rosoff said.

“They need to take it more broadly,” he said. “It’s taken longer than I expected to do that.”