Chapter 1032 – Given an inch, want a mile
The proposal was pa.s.sed, but the details of the cooperation must still be discussed, and Feng Yu traveled to the US to discuss it with Bill Gates.
“Feng, do you know the directors have agreed with your cooperation proposal?”
“Of course.” Although Feng Yu did not attend the director’s meeting, Ralph had informed him about the meeting.
“How much money are you going to invest for 67% of the shares, and how much must Microsoft invest?”
“I will invest 200 million, and Microsoft also must invest 200 million USD.”
Bill Gates frowned. If both parties were to invest the same amount, the shares could not be 2:1. This Feng Yu is too much.
Bill Gates admits that the technologies Feng Yu owns are critical to this product, but the difference should not be so big.
“Oh, I need to tell you that it will not be Wind and Rain Electronics that will be working with Microsoft. It will be Aiwa Little Tyrant.”
Wind and Rain Electronics is now a world-renowned consumer electronic brand because of VCD, DVD players, and Wind and Rain Mobile. But Bill Gates had not heard of Aiwa Little Tyrant.
Feng Yu is going to use an unknown company to work with Microsoft, and not what was agreed upon previously. Bill Gates felt cheated.
No one can cheat Bill Gates! No one!
“Feng, this is not what we agreed. I think you had mentioned the wrong company.”
“No. It will be Aiwa Little Tyrant. Ballmer had visited this company, and this is the company that can develop the gaming console. DVD-related technologies are also included.”
“Oh, the development team must also be stationed in China. We will set up a product development center, and Microsoft staff will work there. Of course, if you want to let the staff work in the US, I am fine with it. But I will not provide the office.”
“Feng! I had given in to you by letting you own the absolute majority of this company. This is too much!” Bill Gates shouted.
“Bill, if Microsoft is holding the majority of the shares, where will you station the development team? Also, the hardware is critical for gaming console development, and my people are the best in the world when it comes to hardware development. As for software, all you need is a PC, right?”
Since Feng Yu has the absolute majority of the company, he has the final say over everything.
In Feng Yu’s previous life, Microsoft’s first Xbox had received many negative reviews, and their sales are about the same as Sega’s game console. Xbox’s retail price is also very low.
This means that no one is willing to buy Xbox even when they are selling at a discount rate. Xbox was selling at 299 USD, and the production cost is 430 USD at that time!
Microsoft’s production cost was the highest among all video console manufacturers, and their product is the lousiest. This does not include Sega, which left the video game console industry.
Xbox had sold over 20 million units worldwide, and Microsoft’s losses amounted to over 3 billion USD!
This is Bill Gates’ ambition. This is the product which he thinks he can teach Sony and Nintendo a lesson.
Many years later, Microsoft learned from this experience and knew the importance of their customers’ feedback. They improved their technologies and developed a better console. However, they are still no match for Sony and Nintendo, but at least they have better reviews and made some profits.
But how did this second-generation console turn their losses into profits? Microsoft had cooperated with IBM, a company they hated, to develop the processor.
Microsoft’s second-generation console sold over 80 million units. Still, the profits could not cover their losses from their first-generation console.
Microsoft’s development cost, servers, etc. had incurred a few billions of losses!
Of course, a few billion of losses is nothing to a company like Microsoft. But this is the first time Microsoft suffered losses from their investment.
Many years later, Microsoft claimed to have the best motion sensor gaming console in the market, but lesser people are buying gaming console.
Bill Gates wanted to retort, but Feng Yu continued. “Bill, labor cost in the US is much higher than in China. If we produce consoles in China, we can lower our cost and increase our compet.i.tiveness.”
Bill Gates becomes quiet. He knew setting up the production plant in China is the best choice, as there are existing factories, cheap labor, and an experienced development team.
But Bill Gates is not happy with Feng Yu’s att.i.tude. Why is Feng Yu setting all the conditions, and Feng Yu did not agree to any of his requests?
“What you said might be true, but we must get involve in the management, product development, production, sales, etc.”
“Bill, do you know anything about electronic product sales? I am more experienced than Microsoft in this field. I had set up my brands and products from scratch and faced many MNC compet.i.tors, to bring my companies to where they are now. My sales teams had played a major role, and you should let me handle the sales. If you want, Microsoft can handle North America’s sales.”
“Microsoft also does not have experience in manufacturing products and had never run a production plant except for producing CDs for operating systems. My teams are better than your men, and we should be the one managing it. If we set up a production plant in North America, I can let Microsoft manage the US plant.”
“We don’t need to discuss the development. The development teams are all my men, and software and hardware development can be separated. Microsoft can develop the software, and my teams can develop the hardware. As for the games’ development, we can discuss it later.”
“We can manage the finance and logistics department together and discuss if there are any important decisions to be made. Also, I have the right to appoint the CEO of this company, right?”
Bill Gates looks at Feng Yu speechlessly. Most of the management rights of this company were all taken away by Feng Yu, and the remaining departments will be run jointly with Feng Yu. What if there are disputes over some decisions? It will still be Feng Yu’s appointed CEO making the final decision. This means Feng Yu will have the final say in this company.
“Bill, trust me. We will create a better future together. This will be a revolution in the video game console industry, and we will change the way people look at video games. Sony and Nintendo will not be a match for us, and this honor will belong to us!”
Maybe Bill Gates was persuaded by what Feng Yu said about Sony and Nintendo, and he agreed in the end. “Fine. If the first product fails, I will get to appoint the next CEO, and both parties will get the priority to buy the other party’s shares. Also, Microsoft’s logo must be printed on the console.”
“No problem. I look forward to smooth cooperation.”