When will the Xbox 720 (or whatever) come put? Post your predictions here.

[starcraft]

Rock_on_2008 said:

starcraft said:

 

But thats just the thing Rock on, the 5 billion dollar loss your referring to is a "Sunk Cost."

In economic terms, this means it shouldn't be (and won't be) taken into account when Microsoft decides whether or not to continue in the console business. What will be taken into account includes:

-current assets (manufacturing facilities, developer relationships)

-cash-flow (they are currently making a tonne of profit)

-future growth potential (the games market is EXPANDING)

 

Ok thanks for pointing that out to me. But I guess lots of people would have differing views on Microsoft and its performance.

I know it sounds bad when you think about how much money they have lost in the past, but in reality that sunk cost has created a large number of assets that will make it easier to make money in the future.  For example, they have lost less on this generation than last and it's likely this generation will eventually be profitable on the whole for Microsoft.

It just doesn't make any economic sense for them to quit now they have carved out marketshare and profitability to work with.