Can Microsoft afford another price cut??? erm NO

[De85]

cleveland124 said:

Cueil said:

ManusJustus said:

First rule of economics: Only consider cost and benefit in the future, not the past. It doesnt matter if XBox made a billion dollars or lost a billion dollars in the past, the only thing Microsoft should (and since they are ran by people who understand economics, do) consider is potential costs and benefits in the future.

 

while true you can get a picture about how a price drop or a large game could effect sales... we look at the past to get an idea of the future because the trends don't generally buck unless something huge happens

 

I would go one step farther and say the best indicator of the future is the past. That's why such an emphasis is placed on financial statements. Or do we need that graph that shows the Wii actually decreasing in userbase near the end of it's life while the PS3 doubles each year?

 

I don't think either of the two of you understood what ManusJustus was trying to say.  Yes, past sales trends can be used to get a feel for the future, but that's not what he's talking about.  What he's saying is that it wouldn't matter to MS's investors if the Xbox division was 1 trillion dollars in the hole already.  If, based on their profit margins and expected sales, they think the division will make money then they will continue to operate regardless of past losses.