Will Microsoft get out of the console race if Natal is not successful?

[CommonMan]

Jumpin said:

Recon1O1 said:
No. Even very slow adoption of their motion control gamble won't put EDD into the red. They can afford a reduction in profit. They threw $100m at Bing like we use spare change.

After paying $4B last gen to get into the business and $1B+ this gen to stay in, it seems unlikely they will quit while earning roughly $1B/yr in profit. Their near monopoly of OS is a thing of the past and the vg business has the potential to earn them $3B/yr next gen. That would be a tenth of net profit on last fy fiscal if I remember correctly. Hopefully they will learn from past mistakes. Xbl is a growing resource stream and an incentive to stay imo. Why chop that money tree?

Where are you getting these numbers? Based on Microsoft's own numbers, they're over 9 billion in the hole since the launch of the original Xbox and only have one year where they actually turned a profit on the Xbox brand, and it was 267M, not 1B.

 

http://www.microsoft.com/msft/SEC/default.mspx

 

Now I'm not actually directly attacking you Jumpin, but I'm sick of people talking about the losses that MS took as though they matter at all. They do not. Those costs are considered "sunk" costs, meaning they have already been spent. When a business decides whether they are going to discontinue a line, they look at several factors (current profitiability, the amount the product adds to the contribution margin, etc.) none of those are sunk costs. That money is gone, the ONLY things that matter about the Xbox now are that a) it IS profitable and b) it's keeping them in 40 million living rooms that would otherwise have Sony in them. They are most certainly not going to exit now that they are making money at it. Jesus people, take a basic accounting class before spouting off about profits.