I've been around the forums doing a bit of reading and I've been getting numbers betweem $2-$20 Billion for the cost of the 360 this included R&D,Promotion,Price Reduction,RROD Extended Warranty ETC. It's pretty appraent that releasing this machine after the original XBOX would have caused worry among the investors however there where too many reasons not to leave the games market.

MS's desire to dominate every market

MS's own trojan horse , digital Downloads

The Growth of the gaming industry surpases music and movies (I believe)

MS probably thought the XBOX was a learning opportunity or their introduction into the market.

But anyway that's beside the point , recent price cut's and alota people talking about how MS has infinite cash reserves has got me thinking . How much money has MS lost and then profited from the 360 , do they really have the financial power to continue cost cutting their hardware ( keeping in mind that the whole point of being in the market is to make a profit ) there's no use price cutting to force demand if it's gonna send the gaming division into the red.

Anyone have any insight to offer ?

uh, they lost something around 7 billion dollars already, and made back only around 200-300 million. I reason they made xbox was not because they wanted money, but to get their product in your living room. Granted they'd love to make money off of it, but i think they're very far from pulling out of the console race.

@OP:

Are you serious? They lost 7B and had 2 profitable quarters of >200M, so they still down 6.5B.

they are still far
(as Sony is far to get back his money on PS3)

They have lost $6-7 billion on their two consoles combined. Assuming half of this is on the 360 (call it $3 billion), they would have $2.5 billion in losses still to recoup, as they have made half a billion dollars in the last six months. Assuming their earnings should increase, you could expect them to be profitable on the 360 if they keep the console alive for three more years.

I bet MS will leave the console market when the XBox 360 finishes. Whats the point of just breaking even over 5 years?

Why would they do that when they are first starting to make money and properly build brand name? They are in this game (get it?) for far more than actually outselling competitors unit to unit like Nintendo.

 Hmm thanx for the input , but if MS are $2.5 behind in the 3rd year of the 360's existance isn't it slightly illogical to cut the cost of the 360's hardware in Europe (reports are indicated a follow up price drop in the US too http://www.pcworld.com/article/id,143339-c,gameconsoles/article.html) Yes it will cause a surge in demand and most probably enable it to beat PS3's WW sales but at what cost....

The first xbox was a monetary disaster. The 360 is a diffrent story. They are now making a profit and its still doom and gloom according to some.

They aren't even close to making a profit, and here's why:

According to my "Microsoft is dying" article I posted, the "Financials" that said they made 500,000,000 dollars last year include Zune revenue, and don't include the Billion dollars set aside to fix the RRoD.

Now with price drops looming, probably inclusion of an expensive Blu-Ray addon, and failure of HD-DVD with no bail out Halo 3 type first party games on the horizon, I think the 360 gaming devision, even with Zune support, will go back into the red pretty deep this year.

What do you guys think about that?