As I said the money was set aside, the repairs are already paid for.  Newer systems are more reliable than older ones and it's pretty obvious that as the components become smaller the problem will completely disappear (if it's not already gone now with the newer systems).

As for people not wanting to upgrade their operating systems that will obviously change over time as newer PCs have more memory, more powerful cpus and gpus, etc.

By that logic, you could set aside the cost of production, or you could build a huge stockpile of hardware and then sell it for a profit in another quarter, and show a profit. Even though you're just hiding your costs.

Don't be fooled by misleading accounting practices. The repairs cost money every day.

Regardless of that individual point, this is the writing of a professional over at Motley Fool.  His biggest issue isn't with the ongoing repairs (a million Xbox 360s in a quarter was MS' expectation?!), but it was with the Vista uptake and with Microsoft's key competitors consistently outperforming Microsoft. 

 umm...  not completely true thanks to more CE companies supporting Linux... more specifically Ubuutu. Even Dell is supporting it. 

 http://marketshare.hitslink.com/report.aspx?qprid=8

And this is consumer PCs not servers. Windows is slowly losing ground to mac and Linux. =]

 About damn time :P

This is true, and part of what DKII didn't account for is that Vista was expected to:

(1) Dramatically increase PC sales. PC makers wanted this so they hyped Vista and Microsoft wanted this so they hyped Vista.  Consumers have been apathetic on Vista.

(2) Draw a significant amount of OS upgrades.  For example, when Apple releases a major update to OS 10, Apple fans buy it in droves.  Microsoft wasn't expecting a response to that extent, but they thought some fairly decent percentage of their users would shell out monies for an upgrade

(3) MS wanted to change the license so Vista was non-transferrable, or had limited transferrability.  For example, why should a person pay for another Vista license just because they wanted to replace their hardware?  If you buy a copy of a game, for example, and you replace your computer, would you buy a new copy for your new computer?   This should be the same for all software, but Microsoft wanted their software tied to exactly one computer so that inevitable computer upgrades would send $50+ in Microsoft's direction and that the consumer would have to throw away their previous license.

But critics certainly do praise Xbox 360 software.

90+ Metascore games:

360: 11

PS3: 3

Wii: 4

huh, wasn't expecting wii to have more 90+ than ps3, let me guess:

Mario
Metroid
Legend of zelda
and ?????? no more heros??????

Here is the link for Microsoft's latest financials released January 24, 2008:

http://www.microsoft.com/msft/earnings/FY08/earn_rel_q2_08.mspx

Here are some highlights:

• $6.48 Billion Net Income for Three Months Ended December 31, 2007 ($3 Billion more than same time period in 2006)
• Entertainment and Devices Division (Xbox 360, Live, and Zune) recorded $357 million Net Income for Three Months Ended December 31, 2007 ($600 Million more than same time period in 2006)
• Entertainment and Devices Division (Xbox 360, Live, and Zune) recorded $524 million Net Income for Six Months Ended December 31, 2007 ($900 Million more than same time period in 2006)
• Entertainment and Devices Division is on track to record a $1.2 Billion Net Income for this fiscal year (my analysis!)
  

As for MS slowing growth:

• Six Months Ended December 31, 2006 - $ 7,946 Billion Net Income
• Six Months Ended December 31, 2007 - $12,399 Billion Net Income
• The Net Income growth is $4 Billion or 50% Growth.

I use vista, and there are very few (if any) features of Vista that I use regularly that make it better to use than XP.

Infact everything I do on Vista I could already do on XP before.

They should have done a lot more to the op system before releasing it in this state.

DX10 isn't even that much of an advantage at the moment either.

This is really all people need to see. I actually very much like Motley Fool, and I certainly do have some complaints about Microsoft (as I do any company), but honestly, how can people see their financial data and say Microsoft is in trouble?

Their profits are up nearly 50 percent from last year. They are earning somewhere in the neighborhood of 5-6x as much profit as Sony. This thread strikes me more as a "I don't like Microsoft" tangent than it does real critical analysis of Microsoft's position.

Red Ring of Death. Flawed OS transition. Lack of penetration of the Zune. Yes, these are all legitimate complaints, but to take these complaints and suggest that Microsoft is in trouble? Please. They are still clearly the big dog in gaming and software in general, and just as clearly, that isn't changing.