Microsoft doesnt consider their $6 billion in losses over Xbox to really be losses. They consider it an investment. A long term investment. Ironically just spent $6 billion in buying out an online advertising company Alquantive. Thats a loss in one day theoretically.
Anyways, Its hard to argue that the Xbox brand has forever secured itself in the game industry as one of the "big three". It has the mindshare amongst gamers to be a credible system to own. Imagine if Apple or Toshiba released a game system later this year. Would you buy it? Do you think that they would have the best and most games out of all the consoles? The Xbox brand now has that credibility to provide that to millions of gamers and and more importantly the mindshare amongst so many more people. You cant just buy that, that has to be won by the hearts and minds of so many gamers.
People question the lucrativeness of the games industry. This year, its expected to pass $40 billion dollars and $17 billion in the US. Although Microsoft is only getting a small percentage of that, you have to remember that they are still relatively new to the industry especially when compared to Nintendo.Nintendo has won over mindshare and fans for the last 25 years. They are a mature company that has created an empire in games. Mindshae for casuals the hardest won the win as they dont look at review scores, they dont care about graphics, they make purchasing decisions mostly on familarity much like how you will buy Coca Cola rather than brand X. Microsoft is not stupid, they know that they have to "start" with the hard core first as hard core gamers are more easily swayed by graphics, sound, review scores, etc. It will take alot more time to Microsoft to get to where Nintendo is, but its hard to deny their force in the gamming industry is not one to be ignored and it is surely growing. They have a permanant and credible positon already in the game industry and just being in it is like being an elite member of the most exclusive club in town that no one else is invited to. Microsoft will eventually earn ALL their money back and then some and probably wont throw away any lead they get like Sony just did as Im sure Microsoft is taking lots of notes in their quick pad of what NOT to do next generation and taking notes from Nintendo on what they NEED to do.
