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Slimebeast on 26 February 2014
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Goatseye said:
Slimebeast said:
 

Remember that Elop said that based on X360's sales, before Xbone even launched.

Xbone right now doesn't look profitable in the long run. Microsoft doesn't want a 50 million console with tiny profit margins, they want a 100 million console with good margins and strong brand image. With Xbone starting so badly (since E3 until today) I believe their analysis right now is that the Xbox brand has much less potential of being profitable than it had one year ago and they're strongly considering selling it off.

The writing is on the wall, let's face it. In Microsoft's hands the Xbone just won't take off, we all know this deep within ourself, while if they sell it while it's still early in the generation it might have purpose to some other company (Amazon, Apple, Samsung).

In the long run I see the XBox brand and console business being killed off entirely though (within three-four years).

X1 is selling at $28 profit margin, while sony at $18.

Plus I'll tell you that it's easier for PS brand to be killed off or sold than Xbox. Xbox is profitable and can self sustain it's division, PS was able to do that just last year and even with that it needs more capital from Sony to compete with MS. Where is that capital gonna come from?

I think the capital factor is overrated. What has it done so far? If anything, it probably made MS think too big and make the Xbone too complicated (a historical miscalculation and PR fiasco by trying to sell a complex digital echo-system to the ignorant masses and prohibiting used games, Kinect being too futuristic and tech that simply isn't mature yet, console-to-TV integration that has no natural market yet, while Sony fought for its survival and made stuff that they know works (powerful core gaming hardware).

Now with hindsight we can say it was very risky, very bold by MS. They tried to innovate, but they failed.

A $28 profit margin doesn't matter if the console doesn't sell and that margin will quickly be eaten up they're forced to make a $100 price cut soon. Plus with so few units sold, XBox gold subs and SW sales won't bring much revenue on the investment they made and expenses they have for the existing and costly Xbox echosystem and business unit.

The main factor though is that the business cultures between MS and Sony are vastly different. We all know that Microsoft can get tired and abandon its console business any time (like they did with so many products in the past, a modern business strategy) while we know that Sony is faithful and won't abandon gaming until it has bled money for years and years (a noble strategy but not always for its own good).