Blast from the past (2001): Microsoft vs. Nintendo

[Mr Khan]

MontanaHatchet said:

man-bear-pig said:

Red4ADevil said:
But in the end, Nintendo managed to make profit; unlike Microsoft, they lost 4 billion with the xbox. Xbox production was ceased after just four years on the market.

holy shitballs!!!!!!!!!!!!! how could they lose 4 billion :O

Development of the Xbox costs tons of money. The system itself was sold at a pretty big loss (consider the level of technology it had at the time combined with its media features). This might have been fine if Microsoft had been able to sell large amounts of software to offset their losses on the hardware. However, they only had one big series at the time (Halo), and that didn't even manage to sell as well (at the time) as Sony's Gran Turismo series. Meanwhile, Microsoft paid $375 million dollars for Rare, who would go on to make some of the worst and most embarrassing games of the generation.

Essentially, their overall investments have been FAR superior with the Xbox 360.

The key to the losses wasn't because it was high-tech, but because Microsoft bought all components for the Xbox off-the-shelf, which meant that the costs of production did not decrease at all over the generation (except maybe for actual manufacturing costs with increased production and such). XCPU, XGPU, and especially that 5 GB HDD absolutely killed them per unit, such that any price-drops the Xbox might have had pretty much came out of Microsoft's pocket