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You want to talk “Call of Duty” or “Halo”? You want to analyze the differences between the original Xbox and Xbox 360? You want a clear vision of the past and future of video games? Not many 51-year-olds could lead a room full of college students in that discussion and maintain credibility after admitting, “I don’t play video games.”
But this was Robert Bach, former president of the entertainment and devices division at Microsoft, the man who oversaw the launch of the Xbox console in 2001, when Sony’s PlayStation 2 dominated the market. Dressed casually and speaking without notes to about 40 students from the Carroll School of Management at a January lunch in the Newton Room, Bach said he wanted to discuss Xbox as a case study in business and marketing strategy—and that he also wanted to speak about “life lessons” learned in his more than 20 years at Microsoft. His talk was part of the “Lunch with a Leader” series, sponsored by the Winston Center for Leadership and Ethics at the Carroll School.
Bach noted that when development of the Xbox began in 1999, Microsoft had no experience in producing hardware. To enter the market against established competitors such as Sony, the company would have to be willing to match their prices. He said that meant losing from $50 to $75 on every console: “We lost—over the course of five years, on Xbox—about $6 billion.” When stakes are that high, a business leader needs to think clearly about three things, he said. First, what is the purpose of the product? “If you can’t answer in two sentences, you’ve got a problem,” Bach said. Second, what are your guiding principles? When it came time to develop Xbox 360, he said, he insisted on this one: “We will not lose money on the hardware.” And third, what are your priorities? “If you have more than five, you’re just kidding yourself.”
After less than 15 minutes, Bach paused briefly, and the questions flew. How do you feel about Xbox Live charging for online service? Can you walk us through the process of starting Xbox from scratch? How have video games changed to find a broader audience? How does video game downloading affect the business plan for Xbox going forward?
It was a question posed by sophomore marketing student Paul Hillen, beginning with “I assume you’re not a huge gamer yourself,” that elicited Bach’s confirmation of that fact. “I didn’t grow up playing video games,” he said. “But I love businesses. And I love the dynamics of this business—the Xbox business is a really complicated, interesting business.” Branding is a big part of it. If you look at the original Xbox, he said, “you won’t find the word Microsoft on the box.” Microsoft at the time was a strong brand in the business world, he said, but it wasn’t “a gaming brand. Frankly, it wasn’t that cool.”
Further questions got Bach talking about Kinect, Microsoft’s device that uses voice recognition technology and motion sensing cameras to allow interactive games—similar to Nintendo’s Wii product, but without the wand. That led to discussion of the future for interactive television. “If you think about how people are going to control their TV five years from now, it’s not going to be with a 28-button remote control,” he said.
Eventually, Bach did get back to the “life lessons” part of his talk. “If this starts to feel a little foofy, pretend you’re in a philosophy class or a religion class,” he said. He spoke about how important it is for a leader to have faith—”If you don’t have that, how do you get people to follow you?” He drew lessons about perseverance, as well, in the ups and downs he experienced at Microsoft. But the sometimes-overlooked quality in a good leader, he said, is openness to serendipity.
In the 1990s, Bach was helping to guide the development of Microsoft Office business products. When he was asked to lead the entertainment and devices division, “it meant giving up [a job] I actually liked.” Being “open to that kind of serendipity,” he said, “will lead you to places you could never imagine.”
Dave Denison is a writer in the Boston area.
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