Rock_on_2008 said:
Lets break it down to you StarCraft. During the period between 2000 to 2008 Games division gross profits are as follows: Nintendo leads the way with a gross profit margin of nine billion dollars. Sony has a reasonable gross profit margin of just over 2 billion dollars. Microsoft has made a gross loss of 5 billion dollars - ouch!!! MS has only made a profit of one billion dollars in the past year, the loss was at a peak of 6 billion dollars. Still a long way to break-even.
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 shoudn'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)
starcraft - Playing Games = FUN, Talking about Games = SERIOUS
