Microsoft’s pockets not so deep for the Xbox 360 division

[URNotE]

http://gamer.blorge.com/2008/10/05/microsofts-pockets-not-so-deep-for-the-xbox-360-division/

 

One of the silliest arguments fanboys like to make is that Microsoft has a vast reserve of unlimited resources, all of which can be thrown at the Xbox division.  Just like any other business, Microsoft is in the console market to make money and not to fuel useless fanboy fancies.

According to Silicon Alley Insider, Microsoft is in a hiring freeze and slowing down spending for the time being. Initially, it was reported that all of Microsoft would be doing this, but a clarification from a spokesperson indicated that this was false. According to an email sent out by Robbie Bach, head of Entertainment and Devices (Xbox and Zune), only his division will be enforcing a freeze on hiring.

Just a few days ago I talked about the closure of one of Microsoft’s internal game developer, Ensemble Studios. That brought the number of closed studios within the past year and a half, to four plus one that went independent (Bungie).

Microsoft stated its desire to seek scalable business ventures on the heel of a massive price drop across the board for the Xbox 360. There is definitely some belt-tightening going on at the Entertainment and Device division. This isn’t all that surprising, considering that Microsoft’s primary business has always been the operating system division since this is where most of the money is made.

Since the Xbox division is the furthest from being a highly profitable business unit, it makes sense for Microsoft execs to clamp down on its weakest link. The reality of the business is, there are consequences for throwing $50 million checks at studios for DLC (that have yet to materialize), spending $1.15 billion on faulty hardware (RRoD) issues and dropping nearly $80 on the Xbox 360, despite cut-throat manufacturing costs. At the end of the day, Microsoft executives have to answer to the stakeholders of the company regarding past business decisions.

It looks like Nintendo might ultimately get the last laugh this generation. Nintendo has proven that you do not need hardcore games or high definition graphics to succeed in the video game market. It seems like Sony and Microsoft is currently in the midst of playing catch-up to Nintendo this generation instead of the other way around. Oh the irony.

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