Another troubled quarter for the 360

[kn]

Legend11 said:

I don't get it... There're people on this site saying that Microsoft should get out of the console business because they're losing money. Have they never heard of Microsoft Windows, Microsoft Word, Microsoft Excel, Microsoft Server, etc? When Microsoft said they were going to make a word processor people laughed and told them Wordperfect owned the field and was synonymous with word processors. The same with Excel, at the time Lotus 123 was the leader in spreadsheet software. The same with server software, people laughed when Microsoft said they were going to produce their own and said Novell and Sun own networking software and unlike Microsoft's past successes there was no way they could ever succeed in that field where Novell and Sun had infrasture and deals locked in with just about every large business. Look at database software, Oracle and a few others owned the field but that didn't stop Microsoft. It's the way they operate, they see a field or sector that they want for whatever reason and they enter it and don't stop until they own it. Do some of the people here think Microsoft Office or Server or Windows had profits and were the leaders from the start? Hell if Microsoft listened to some of the people here there wouldn't be any Windows software at all.

It usually takes Microsoft 2 or 3 times to get it right, sometimes more, many even refer to it as the Microsoft way. Their first product, second, etc might not take the lead but eventually they keep working at it until they get it right or at least successful enough that it starts to dominates the field and then simply takes the vast majority of it over. They saw the livingroom and all it's possibilities and they want it, not just for videogames that's just a small part of it, they're investing in the livingroom in case it ends up being the main hub for computers along with it's media and entertainment. Do some of the people here think their introduction of xbox live, movie and tv downloads, iptv, etc is all just coincidence? It's all part of a much larger plan and it doesn't matter how much it cost them they're not suddenly going to change from the strategy that practically built Microsoft because of naysayers.

Right now Sony is in their sights and they will fight Sony and force them to bleed and they'll never let up, if anything it's only going to get continually worse for Sony as Microsoft pours in more money, tries new ideas and products, and does everything until it gets it right and they take over the high end completely. Some of you wonder why their shareholders aren't revolting over the loss of some profit. Most of them have been with Microsoft for a long time and know exactly how Microsoft operates. The bleeding will be covered by Microsoft's other products (their server software just saw a 30% increase in profits in one quarter alone) until they take over what they're after and then the profits start coming in. And as for those saying Microsoft can't handle the bleeding, to put it into perspective in Microsoft's last quarter alone it made 2.6 billion in profit and that was down from it's usual 3-6 billion in profit per quarter. Nintendo just off a truly incredible year and made 1.89 billion in profit for the entire year. Microsoft has $35 Billion in cash that it's building up and nobody knows why (since 2001 it gave back $87 billion to shareholders in other cash is was hoarding). Does that sound like a company that can't afford to keep the Xbox brand afloat while it tries to win the livingroom?

 + rep if VGChartz had it.  It sounds like maybe Legend11 is economics educated.  Take a quick look at the product lifecyle matrix and you'll find microsoft executing exceptionally well:

 Cash Cow

These products have a high market share and are in the maturity stage of the product life cycle.
They are well-established products in a well-established marketplace. This means growth is
slow, but because the products are in the maturity stage they cost little to support (research
and development and initial promotion have been done) and their high market share means
they produce high amounts of revenue. The organisation can choose to reinvest this revenue in
new product development, or hand out bonuses or dividends to shareholders.

Rising Star

These products are growing quickly and have high or increasing market share. They are
products that show potential for becoming high earners for the organisation.

Problem Child

These products sell in a high growth market but have a low market share. So there is potential
for these products to do well, if the organisation can think of a strategy to turn the problem
child into a star. This may be a new promotional campaign or a redesign of the product;
whatever the strategy, there will inevitably be a cost involved. In the short-term, they may cost
the organisation money; however, if they are nurtured they may become good revenue earners
in the longer term.

Dog 

Products in well-established markets (low growth) which have a low or declining market share
(they are in the declining stages of the product life cycle. This often means that the products
don’t pay for themselves, and that the organisation has to support the products with cash from
other products, such as the cash cows. It may seem that the easiest thing to do in this
situation is to remove the product. However, this is not always the case. Often the removal of
these products can affect the sales of other products within the portfolio, so the decision on
what to do with these dogs needs to be taken very carefully.

 

The XBOX 360 is probably considered a problem child (or question mark as some call them).  Given the basic understanding of how corporations look to fund new ventures with existing cash cows, I'd say microsoft is fine.  All the doomsday analysts and others saying microsoft suxors and is DOOOOMED!!!111!!! need to go back to school and learn how efficient companies operate.