@fumanchu
Marketplace on Live is a vending space provided by Microsoft to suppliers of content. Think of it like this Microsoft owns the shelf, and developers are allowed to use the shelf on contingency. Microsoft isn't usually the retail provider. They get a percentage of the sale in lieu of a rental fee. Microsoft doesn't take a risk, and the provider only pays what sales make possible. Usually Microsoft is just taking a small cut of the sale. So for the sake of an example if a developer sells a game for six dollars Microsoft may get fifty cents from the sale. Frankly I think it is simpler then even that.
Anyone who uses Microsoft points knows there isn't a direct correlation between points, and the money that is used to purchase them. One hundred points doesn't equal out to one hundred cents. Instead a hundred points equals out to one hundred and twenty five cents. I suspect that for every hundred points you spend on a product the developer recieves one hundred cents, and Microsoft just pockets the twenty five cent difference. Basically you could say that Microsoft gets a cut of twenty percent from each sale, and adding in their own products you may say in total that they generate a revenue of twenty five percent from the service. Thus a revenue of 160 million dollars annually. Then you must subtract costs since the Marketplace isn't subsidized by subscription services the space must by paid for by revenue, and I know that must seem small.
However they have to pay for employees, real estate, technology, and access. Along with the research and development to upgrade the service over time. Once all those costs are covered only then does Microsoft get into the area of profit which isn't all about reinvestment. First that money needs to get split between dividends, and to fund other product development. Just as other projects funded the development of the Marketplace. Which brings up the really important part. I think it is apparent that it isn't existing products that drive down profit from the EDD. I know everyone wants to blame the Zune, but lets be real a existing product unless it is being sold at a significant loss isn't going to consume massive amounts of profit. There is little doubt for me at least that this money is getting funneled into new product development at a staggering pace.
That said it doesn't even need to be technology that will be readily available this year, next year, or the year after that. I have mentioned this before, but nobody ever notices. Hell nobody ever responds, because I don't think anyone really grasps what I am saying. Microsoft is angling to be the premiere software supplier for the robotics market. They are even developing the development kits for autonomous robotics, and and working on universal operating systems. They are trying to corner a market that won't even be profitable for twenty years. Up until now robotic software has almost always been in house. Microsoft is planting a seed of dependency for future robotics, and mark my words you will hear the same cries of foul in twenty years when Microsoft has a near monopoly on that market.
The point being is that the figures are misleading, and the EDD looks like Microsofts version of the Skunk Works. Where all the market penetration both short and long term is probably likely to be found. Frankly the fact that it is actually generating real profit is frankly goddamned scary.
