We're talking about the government.

I say again, the government.

It's a wasteland of overcharges and fraud when it comes to private contracts. Especially military contractors. When is the last time anything came in on budget?

I didn't say anything about Sony. I'm just saying that if your business model is to sell your console for a loss, in the knowledge that you'll A) recoup costs in software sales and B) push a larger userbase and an increase in software support to keep console sales high when you can sell them at a profit, then selling a bunch of consoles at a loss that you know will never recieve more than one or two units of software might not be the best move.

Especially since the article mentions timing. They said it was early when the costs were high and they were worried about shortages. So this is probably during the first year or so, when Microsoft's strategy was to get the most out of their headstart on the Playstation. The army deal might have made them some money, but in the long term those would be consoles that gamers couldn't buy, couldn't buy games for, and couldn't choose to buy before there was a second console out with a much higher brand recognition.

It really does seem to make sense from a business perspective (though having made the army sale would have been an ok business decision too)

I dunno.  It makes sense back in 2006.

This was right when it was going to be at it's hottest... and it was selling for a loss.

Selling large quantites to the military... would just cost MS money.

When you sign a contract with the military, it usually doesn't mean you'll hand it over the next day. The delivery of product could be months or years into the future. You can sign extensive support contracts and sell development kits, even training. The government is not efficient.

neither is ms judging from the rrod issue

Just like every other government contractor.

This is a needles MS bashing story. Grimes I'm warning you, dont post this again, and stay out of the MS forum

LOL!  You got that right.  And I know from personal experience, as my wife used to work for one.  They manufactored mortar casings and parts for machine guns.  The one who made the bids for some of their contracts doesn't even consult the financial department before making said bids, and they lost millions as it cost more to make than the bid.  Another company they owned had a contract for a several Bradley assualt vehicles.  The Army put in a invoice to have the specific paint they used to be changed, since for some reason they couldn't use that type anymore.  Well, they got the invoice, but never put it through.  So they made 10 or so Bradleys, and the Army wouldn't accept them.

The sad thing is that most of their contracts are no-bid, as they are a minority owned company.  So even though therre may be someone out there who can do it cheaper or more efficient, they don't get that chance.  The government definitely needs to straighten itself out.  Though I doubt I'll see that in my lifetime.  MS should have sold them hammers.  Those are like $200 a piece, right?

Well, the first point makes sense, although they probably could have worked out a deal to cover the shortfall if it really was a money-loser for MS.

The second point doesn't make much sense. Did the army need those 360s tomorrow or forget it? Give MS a few months and I'm sure the order could be filled.

The last point, I dunno. It seems like any PR cost would be offset by the status of being the Official Console of the US Army, so to speak. Plenty of soldiers might come back from duty and pick up a 360 instead of a competing product, and it feeds into the machismo that so many Xbox games try to cultivate. I guess PR decisions like this are a dodgy weighing of risks and MS decided that the potential costs outweighed the potential benefits.

Hmmm? wasn't it because they used our tax dollars to shoot up a single 360?