The Sales Cross Over: It's Real. What are the implications industry wide?

[DoesWhatNintenDont]

Lost tears of Kain said:

DoesWhatNintenDont said:

You know that microsoft mad somewhere of 14 billion last year or fiscal year (read it) microsoft is in this for the long hall they want to beat out sony and take its place. BTW sony is like microsoft they are loosing billions on the ps3 right now but they see that if they can win the blue ray war they it will come back as profit later years, its the same microsoft sees about the gaming industry

 

Lost tears of Kain -

MS as a company as a whole is at a crossroads. Just read the link provided by The Source within this debate. MS's growth is rather bloated right now, and they are making money yes. But mainly that is coming from their chokehold monopoly with Windows.

Thing is, that itself isn't doing very good. Computers are starting to see similar the trends we saw with early TV's. People, and business, are slowing down their needs for top of the line PC's. Most PC's work well for the things people are interested in doing overall. People aren't buying a new PC every year, or even every other year like we saw during the 90's. The early adopter rate for uber higher end PC's is slowly falling away. And by the nature of things, so too are the huge adpotion rates for Vista.

Not to mention the general public is really starting to like what Apple has to offer, and they have been steadily growing. Look at what Dell has started to do: They are now offering PC's outright with Linux on it, and they even re-started shipping new PC's with XP. Why? Because people demanded it, and by in large, are rejecting Vista right now. Not a good sign for MS when this is your money maker.

Many people are familar with loss leading strategies; MS is a practitioner of this, and has bled heavily as a result, especially within the videogame industry. They have yet to make a penny out of their gaming department in SIX years! They are nearly SEVEN BILLION (!!!) in debt as a result, and once they become profitable, it will be years untill they are able to get out of the hole they have dug. Nothing short of being #1 in games and dominating will help them pull out of that red sea. Consider the fact that, for all of its domination, Sony only made two billion last gen on PS2.

Speaking of Sony, yes Sony has burned away its minimal PS2 profits with PS3. Thing is, Sony made the most money in gaming around 98-99. This was during the prime of PS(one)'s life. So Sony hasn't waisted all their profits in gaming on the investment of the PS3. And as TheBigFatJ has mentioned, and quite well I must add, Sony has planned PS3 for a very long term investment. While there are aspects in the industry that might take away the length of that plan in due time ( Wii's momentum and the launch of next gen of systems ) Sony has set themselves up for a long term investment with PS3. Also I think everyone knows Sony's approach is two-pronged, as they can make more money by winning the HD battle, than they can by gaming alone. Hence PS3's being used as leverage.

MS's strategy might really please their rabid fans, but don't think Wallstreet is interested in how fun the Xbox can be due to MS burning its massive piles of money on it. Shareholders will be seeing red soon enough if 360 doesn't show any sings of paying off, that is, if they don't own a 360 and haven't had a RROD already.

@TheBigFatJ

I agree with you and you've summed up several of my arguments quite well.