(Business Perspective) Does MS really need Xbox Hardware?

[DonFerrari]

Azzanation said:

Machiavellian said:

I had wrote a long rebuttal but I believe we can sum down thing to a few major points.  Your arguments from what I gather is that MS is losing money on hardware.  We have established that XCloud runs on MS hardware.  It will continue to run on MS hardware now and in the future so how exactly does MS not still invest in creating hardware when the major part of your argument still exist and MS will need to continue to need to invest in future hardware to keep XCloud ahead of the pack especially with newer games and compatibility.

Are you referring to the hardware needed for their server farms?

If so, building hardware for XCloud and selling hardware at a loss to customers are completely different. MS wont have limitations on building powerful hardware for their Cloud streaming services, if they dont have to worry about selling that hardware to the average consumer at a loss. 

They can come out tomorrow and tell Devs, XCloud has 90TF GPUs, help yourself. That can entice major devs in cutting loose on console limitations and just go bang with whatever game they want to make.

Also if the hardware is losing $1 per console sold and they sell 50m consoles, thats money down the drain. Phil said the Series consoles are losing $200 per unit. Thats a $10b loss at 50m sold. The more they produce the higher the bill gets.

They can avoid that bill by simply moving away from it. They have the infrastructure to do it, its just timing. Like Digital and VR, it will take time to grow and it will grow as tech improves overtime.

Cost of scale actually makes the farm cheaper to produce when they also sell 50M units (even if at a loss) than if they would only buy for the farm.