And now the retail are sitting on 800k extra 360s... incredible!!!

Do people actually believe that MS will CONTINUE to lose money on a product after proving, over 15 years, that they are unable to turn a profit?  What's amazing is that people seem to think MS is actually a CHARITY instead of a BUSINESS!

Interesting article with some really valid points. MS has a challenge in the hardware market and Nadella seems firm in his belief that software is the way to go. However, they forget to mention that the division still maintained a net plus this quarter and that these devices are important for MS's vision for cross device software. Also, X1, Surface and Lumia are so good damn well built devices! MS has really grown in that department.

Personally, I still think they should make Sega in charge of the Xbox division, it would be a great way to strengthen Xbox in Japan and the companies to have some history.

Who believes that?

I have no idea what makes people so confident that MS will just keep dumping money into the Xbox brand regardless of how bad it's doing. Everything MS has done since this generation started has shown me just how bad MS is pushing to make the Xbox brand profitable. From the required kinect, DRM policies, TV watching etc. It is very clear they wanted to use the X1 to collect data something that is very valuable and profitable these days.

I honestly would not be surprised to see MS drop out of the console game after this generation. The amount of money it would take to win everybody back over to their side next gen is not something I'm confident MS is willing to invest in.

What if I told you that the EDD / Computing and gaming hardware division (or whatever it was / is called) posted a healthy profit for 7 years in a row?

They just reported a 900 million USD profit for FY14.
850 million USD profit for FY13
380 million USD profit for FY12
1.26 billion USD profit for FY11
680 million USD profit for FY10
108 million USD profit for FY09
445 million USD profit for FY08

I am not making this up.

Sure this is not much compared to Windows, Servers or Office, but for the last 7 years, the Xbox business was a profitable one for Microsoft.

Yes but rumors are saying that they are hiding the losses from the xbox with the profits from Android patents. It only makes sense otherwise why would investors want to get rid of a division that is making money regardless of how small?

You need to subtract the extortion money they are getting from Android.  Take that money out and they post a loss.

Those rumors were debunked months ago.

Investors (they only own a tiny fraction of MS btw. I think about 3% or something like that, but don't quote me on that one) think about opportunity cost. They know they are making money with the Xbox, but they think they would make even more money if they invested this money in the next Windows or Office. That is their logic.

I think it is flawed, because of a couple of reasons. Here are 2:

1st) MS depends on the global PC market performance. They have a huge market share in the OS market, they basically own that market anyway. The ups and downs of the PC market is a direct indicator how good MS is doing. Even if they invested another 2 billion USD in Windows instead Xbox, they still can't influence a global economy. If a financial crisis is hurting PC sales in emerging countries, an investment made by MS won't change that.

2nd) MS sits on 85 billion (!!!) USD. That is their "total cash, cash equivalents and short-term investments". So it is not like the Xbox business is blocking other businesses, because it takes the resources / investments these other businesses need. If MS saw a great market opportunity, they would invest no matter what.

As I said, these rumors were debunked months ago.
Just one arguement for you: The Xbox business reported a profit before Android was even released.