drkohler said:
MoHasanie said:
thx1139 said:
With the profit created by the Xbox business this launch quarter I believe this sets up Microsoft to be very aggressive moving forward with the Xbox One. If they see the PS4 lead start growing considerably they can easily counter with a lower price or add value with free games in the box, etc. This is what I suspected all along with the $500 price. It will end up giving them flexibility and it did not matter at launch. It may matter year 2, but the extra revenue from a $500 launch is already in the bank. |
MS are a smart business. They don't make that money and then waste it. There's a reason why the hardware/xbox division was still profitable even when they launched a brand new console.
They will not sell X1 at a loss unless sales become bad, and that is the worst case scenario. They are much more likely to start selling a Kinect-less bundle first. and if that doesn't help sales, then they will sell it at a loss.
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I had a small nagging feeling glancing over the numbers. And here is the key question asked at the investor meeting:
Gregg Moskowitz - Cowen & Company
Amy, despite the healthy gross margins, your Xbox platform revenue grew $1.2 billion year over year, but your related cost of goods sold went up by $1.6 billion. And I realize there may be additional costs related to launch, but just wondering if you could talk to expected profitability levels for Xbox for the balance of fiscal ’14.
So the difference between revenue and cost of goods is MINUS $400mio. Where does that minus come from other than from XBox One ? Here's the q&a answer:
Amy Hood - Chief Financial Officer, Executive Vice President
We’ll continue to be in launch mode for Xbox One, especially many people are excited about the launch of Titanfall in March, and we’ll continue to add and expand markets over the course of the year. So I would continue to think about our investment in being the leading next-generation console as certainly extending.
"XBox One launch mode" translation. We are currently losing money on the XBox One...
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@ bolded:
No.
Xbox Revenue increased 1.2 billion USD YOY.
cost of goods sold increaesd 1.6 billion USD YOY.
This does not mean that the difference between revenue and cost of goods is minus 400 million.
The EDD posted a 600 million USD profit last year.
Xbox One launch mode means: We are profitable with the Xbox One, but as you can imagine such a launch is expensive and requires lots of marketing, logistics and distribution. Of course this will take a while.
Fahre jetzt Bundesliga gucken. Auf geht's Gladbach... naja... wohl eher nicht.
