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misterd on 21 July 2007
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steven787 said:
I am missing your point I think. So MS is planning on losing another $13 billion?

Long term, they're not planning on losing a penny. How much they are willing to lose in the short term in order to make more money in the long term I can't say. However, as I understand it, they never expected to make much if any money during the first XBox's life cycle, and its not unusual to lose money in the first year of a new console (consoles being sold at a loss, low user base, and few available games).  Therefore, I think there is no reason to think that MS is terribly disappointed by what they've done so far, and there is every reason to suspect that MS will have to lose large sums of money for the next several years before they even think about tossing in the towel.

In 20 set top boxes may not even be the means of how people play games. With true ARD, (like Quake ARD) the direction Nintendo has been moving, and MS moving into Flat PCs, Tablets, Handhelds, etc. IN 20 years pc's, televisions, cellphones, media centers, pda's and video games will be nothing like what we are using now.

Look at the new PSP's video out. Consoles will probably start shrinking and becoming more like portables way before 2027. My Cable box has more built in functionality for HD movies on demand, DVR and HD music than my 360 or PS3. And it's included with my standard Digital Cable. 360 and PS3 will not be the home media center, and neither will their successors.

My DVD player has an SD slot for for music, movies, and picture. The 360 does not, how is that a media center when I can't send it an email or use a standardized form of memory. I have to use MS authorized memory, which is way too small. Even the Wii has an SD, and Nintendo is notorious for using proprietary formats.

iphone has catapulted the intergration of PC, PDA, Music and Movie player and Cellphone more than most people thought was possible by now.

Console gaming will merge with handheld gaming. Japanese publishers are already recognizing this, moving major franchises to PSP and DS. Sony knows it. MS even is moving in this direction and I would be surprised if a few Zunes from now (another blunder) don't have Xbox functionality.

IF you are asking me to justify the plan, I can't. As I've stated, I don't agree with either their strategy or Sony's (which is essentially the same). I can only say what it is, to the extent of what has been told to me via websites, magazines, intervies, and TV, and predict their behavior based on that. I think the gamer audience has always been too niche, and any  hardware primarily associated with games will have a stigma that turns off non gamers (hence my point that Nintendo has actually done more to foward Sony and MS's plans than they have) but I also lack the many millions of dollars of market research that both Sony and MS have invested in, telling them that this is a smart gamble.

But PS3 and 360 both need to get up sales as game machines. MS may very well discontinue Xbox, because it will never be the home media center.


But you won't know that, and they won't know that, for many years to come. They have placed their bets, and to pull out now would mean ceding this hypothetical future gold mine to a competitor, and accept that the money they have lost was wasted. Since, as you point out, the company does not live and die by its games division, it can afford to continue this venture with relatively little risk.