I don't tend to put too much stock in his predictions, but this is not a prediction.

http://www.reuters.com/article/idUSTRE64R63P20100528

Microsoft has sold 40 million of its Xbox 360 consoles and says it has 23 million paying subscribers for its Xbox Live network, letting users play each other in real time.

After considerable investment, Xbox Live is now the best example of a genuine money-making "cloud" computing business Microsoft has, Parakh said, and has gone some way to fulfilling its vision of Xbox as the hub for living room entertainment.

"The Xbox division has been on fire since Don Mattrick got there," said Wedbush Securities analyst Michael Pachter. "Xbox Live is really wildly profitable."

The Xbox still lags Nintendo Co's (7974.OS) Wii console in monthly sales, but Microsoft hopes to change that when its hands-free, motion-sensing Natal comes out this holiday.

Not all analysts support Microsoft's push. Entertainment and devices is only the fourth biggest of Microsoft's five operating units, behind its Windows, Office and server units.

Though on track to post more than $8 billion in revenue this fiscal year, that's still under a tenth of Microsoft's $62 billion or so annual revenue. Last quarter, it contributed only 3 percent of the company's operating profit.

Microsoft would be better off dumping the unit to focus on its core Windows and Office units, say some shareholders.

"The error is even if they do succeed, there's almost zero chance of it being a large enough business to impact a company the size of Microsoft," said Bill Smead, chief executive of Seattle-based Smead Capital Management, whose funds hold about $10 million worth of Microsoft shares.

Still, the view on Wall Street seems to be that Microsoft needs to keep working at the consumer business.

"There are not many adjacent areas of tech that can help Microsoft meaningfully add to its $62 billion annual revenue. Consumer electronics is one of the few that could move the needle for them," Katherine Egbert at Jefferies & Co said in a note to clients this week. "We don't expect Microsoft to abandon the consumer market and play only defense."

Okay......So now that we are making you even more rich ms...When are ya gonna use all that damn money and build up more first party games!!!!

To be honest i find that kind of hard to believe, atleast i don't think those 23 million subscribers are for a full year(they mean with paying subscribers Gold members right?). But then again i don't play online so maybe that's why it's a little bit hard to grasp.

But if true, it would mean about $1 billion income per year on subscribings alone....(WoW stil makes more i believe). No wonder Sony is so eager to bring out a Premium package.

Both sides have a point, but they're looking at it from a shareholders perspective. From a consumer perspective the Xbox must remain! Imagine a gen with only Ninty and Sony :S

I admit, I have often wondered why Microsoft is in the business of video games. Or more specifically, why they decided to invest in a console. I expected them to focus on expanding their PC and software business. Have all the branches working together to further revenue. Xbox on the other hand just seems to be doing its own thing on the side. This is probably contrary to what many think, but I actually expect Natal to benefit their PC business a lot more than the Xbox. Oh well, what ever the reason Microsoft is in this business, at least we the consumers get great games out of it.

At $50 a year on average, works out as $1,150,000,000

obviously the US has the cheapest deal going, exchange rates mean UK pays more ect.

Could easily reach 1.5 billion revenue a year by xmas.

I don't criticize Pachter as much as everybody else, but how would he know this for certain? I mean everybody thinks this is the case, but no one outside of MS knows for sure.

They have huge bills however and they don't get more than $35 most likely after costs/retailer cards from the ones you buy in the shops. They have a pretty tight operation and it wouldn't surprise me one bit if they have infact broken even on the Xbox 360 thus far this generation.

The idea was to counter the threat posed by Sony, which openly stated its intent to use the Playstation to dominate the living room (and therefore all the future revenue that is starting to trickle into the home "media center").  The PC was, and still mostly is, considered to be a personal device, rather than one the community utilizes, while the television remains the center of the household.  A console would help to control the television, and hence control the family's entertainment budget.

Presumably the same way he gets the other data he uses to make his   proclamations.

Dart board?  Ouigi board?   Used toilet paper?

Tim had better keep his used toilet paper safe. Noone craps insight like Tim does.