| TheBigFatJ said: Gamer1211: Recently VGChartz member NJ5 posted a thread about this generation's war being over, and the result is essentially a tie. The more you consider this position, the stronger it feels. First, you have to realize that the main reason to care about how good your console is doing relative to other consoles is because you want more good games released on your console, and not because you love some company or because you want to validate your purchase. Here are the main points: ***** - The Xbox 360 has a ~ 6.5 million unit lead over the PS3. It has sold about 54% more units than the PS3 has world wide.- The PS3 is currently outselling the 360 world wide at a good pace, and the pace has been increasing - The PS3 won't likely pass the 360 until mid 2009 at best. Once this happens, they'll have a gap closer than the current gap for a very long time, probably at least two years. A 50% lead may never be attained again this generation. ***** Assume that the statements and rumors we've heard about multiplatform development are true: that porting a game costs 10-20% as much as the initial development. That means that right now, barring other financial incentives, it makes financial sense to port every single game. And since the companies making the games don't love either MS or Sony, they'll do what makes financial sense as well as they're equipped. And if you look around, that's exactly what's happening. This benefits MS and hurts Sony in general, as we see a lot of Sony big name PS2 exclusives (including the biggest, GTA) moving multiplatform. However, MS is far from being profitable with their Xbox division, and it's unclear whether or not they can make a single year of profit without writing off the extremely high cost of Xbox 360 repairs. They recently reported their first year of profitability with Xbox division, with 6.6 billion of losses to cover yet according to MS' own accounting, but they did not count the cost of 360 repairs in their most recent financial report. I agree with Rocketpig on this one. If you're Microsoft, you gotta be pretty happy with yourself. They took on Sony domination, and did pretty well for themselves. They've gone from also-rans to solid competitor. Look at it this way: Sony fumbled the ball very badly with the PS3 for two years. One year of delays, another year of broken promises, sky high prices, and much lower than expected sales. Microsoft failed to capitalize in part due to their own fumbling. Nintendo capitalized, and look at where they are. MS must be more than a little frustrated because generation 2 was supposed to bring the Xbox project to profitability and cover the losses of setup with the original Xbox. Right now, they're 6.6 billion dollars away from this goal and no clear way of getting there. One thing that is virtually assured is that they'll end this generation 5 billion or behind their original stated goal for this generation (breaking even / profitability). |
MS didn't count the cost of repairs because they set aside an enormous amount to cover it in fiscal 2006. That amount was expected to run the life of the 360. We'll see if that's true or not in due time.
MS did fumble and they fumbled badly. But despite their fumbling, they're on track to sell more Xboxes, increase market in every major region (though Japan is still beyond pathetic), and make some kind of profit to boot. As a new entrant into this industry, they shouldn't be pleased but they can't be too disappointed either. Headway is being made and they're set up to launch before everyone else again. I suspect that many of the mistakes they made this generation will not be repeated.
As for overall profitability, that money is sunk cost. All MS can do now is make sure they continue to gain marketshare and continue to show profits from the division. I don't understand peoples' fascination with that $6b number. MS isn't the type of company to walk away from something because it failed to turn massive profits in seven years. They're one of the few long-term corporate conglomerates left in America. They aim 10-20 years down the road and the Entertainment Division is starting to make headway. That's all that should matter to them right now and I have the feeling that's the case. These financial officers aren't the type to pull the rug out from a billion dollar business just because a few fanboys have their panties in a bundle now that Sony and Nintendo are outselling the Xbox.
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