czecherychestnut said:
His guy called microsoft said that microsoft was still losing money on their entertainment division. http://www.microsoft.com/msft/earnings/FY08/earn_rel_q4_08.mspx#Channel And yes whilst the division includes more than just the Xbox related businesses, looking at the other included products, most would be profitable in their own right, particularly with Windows Mobile products booming in recent months. So whilst its great that Xbox live sales have increased, can you really say its enough to counter the big price cuts? And note Microsoft only mention revenue increases, no mention of profit, although that just might be due to the difficulty in calculating profit over a small time window. And lastly how much profit would they make on live titles. $US2 per title, maybe $US3? So even if they sell 10 million titles a month, thats chump change profit in a division with a revenue of billions.
Please don't get the impression I'm flaming the Xbox, I'm happy that live sales are bubbling along nicely, and the extra profit (assumingly) is certainly handy for microsoft, but lets be realistic here. No increase in Xbox live game sales will suddenly generate any significant amount of revenue/profit for the company, so using this to say otherwise is a little silly. And any profit increase made by increased xbox live sales will be dwarfed by the reduced profit (or increased loss, we don't know) due to the price cut.
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There is no evidence to say that the price cut puts M$ in the red with their skus. All 3 Skus are privvy to the new hardware overhaul, which significantly cuts costs of production. I would say they are either even or in the black. This price cut was planned, not forced. The 360 is nearly 3 years old and is in line with price cuts of the PS2. You cant tell me that Sony needed to price cut the PS2 3 years in. It was a planned decision of which they would only do for profit.
