W29 said:
HappySqurriel said:
TheBigFatJ said:
The Xbox division is about 7 billion in debt -- the latest 1 billion was due to the additional costs incurred by the RROD issues. This does include some fairly costly acquisitions, most notably Rare.
Microsoft has not yet had a profitable quarter with the Xbox division, but because they front-loaded all of their repair costs into last year, they may be able to have an 'on-paper' profitable quarter this quarter with Halo 3 launching. Some analysts are indicating Microsoft could have a 'slightly profitable' quarter.
This, of course, does not indicate they'll have a real profitable year, but it is the first step. Nor does it indicate that they'll generate a profit from the Xbox 360 generation. However, Microsoft has some investors that want to see them get at least one year of profitability of any kind.
Microsoft is unique among the big console companies as they're the only one consistently operating at a loss. Nintendo hasn't had a year without big profits for a long time and Sony hasn't had two consecutive years of loss with its playstation brand. |
I thought they had 1 profitable quarter when Halo 2 was released? Regardless, with the business model that Microsoft uses it would take 2 or 3 generations where the XBox was as successful as the PS2 in order to put the division in a net-profit position; it would take at least 3 generations for it to have made more sense to 'invest' in the XBox than to put their money in the bank. Everytime someone brings up Microsoft's profitability with the XBox 360 I end up wondering what the underlying motivation is for Microsoft to continue with this line of products; it could be a way to defend their operating system monopoly, dominate the TVPC market, or possibly set up a monopoly where people are (dramatically) overcharged for products that are marginally better than what you can get for free. |
Well can you apply for the Microsoft job and fix it then? O_O |
From a business perspective the quickest and easiest fix would have been to not produce the XBox 360; I would have saved the company over $3 Billion in losses by now.
If that was unacceptable I think the other appropriate thing to do was ask the question "Why are we losing so much money on hardware when it has been demonstrated time and time again that hardware isn't what sells systems?" ...
It would have made far more sense for Microsoft to take $2 Billion, create 100 development teams across North America and Europe which would each be funded to produce a $20 Million games for release in the initial 18 months; those that turn a profit will then be able to continue developing games while those that lose money would have their (quality) resources shifted to another development team. By the end of the generation Microsoft would have (probably) gained 100 decent quality exclusive games, 25 reuseable IPs, and 20 highly talented development teams. (If they were lucky they would have recovered the initial $2 Billion from profits off of these games)
Consider that Microsoft has lost $300 for every XBox 360 they have sold, for that money they could have given each current XBox 360 owner a Wii with Wii Sports, Wii Play, 2 Wiimotes and 2 Nunchucks.
