Has MS recouped all their losses from the 360 ?

[Dodece]

@original poster

Microsoft only provides guidance on divisions. The consoles are part of a much larger division. So where we perceive losses is a subjective exercise. Basically the figures seem high, but only because Microsoft is eating losses across a great number of product lines. For all we know the majority of those losses might not be attributable to the consoles. You cannot lay all the losses in the division on the consoles they probably do not account for the majority of the losses. They might even be profitable.

The last two quarter statements however indicate that the divisions product lines are gaining acceptance, and sales are getting stronger across the board. More lines are generating profit then posting losses, and based on how many consoles are being sold, and how many games are sold for the hardware the console is probably one of the more profitable lines at this point in time.

Can they afford to cut the price on their hardware. Most likely yes given the age of the hardware. The manufacturing costs have most assuredly been reduced dramatically since the latest consoles launch, and given the licensing fees its a safe assumption they will make up the extra profit on unit sales in software licensing.

I actually think if you were able to remove the line from the division and do the math you would probably find that the 360 is actually very profitable. The consoles figures only look shallow thanks to a number of products in the division that are not performing.

Beyond that Microsoft most definitely has a strategy. This company gets to the races years before others even bother to show up. That is part of how they maintain dominance. This is a company that is actually developing operating systems, and development tools for autonomous robots. Even though the demand right now is almost nonexistent. Hell they even fund mathematical think tanks with no obvious profitability. Just to churn up new ideas.

The product is probably profitable at the moment, and will probably be profitable even after a major retail price cut. The fact that they are doing so indicates that they have great faith in its future potential. Otherwise they wouldn't be cutting prices, and be maxing out their profit potential in the short term.