Microsoft hasn't proven that their measure of success is realistic. They keep saying that XBL, Gamepass, and software sales are more important than Console Unit sales. But they haven't produced the PnL sheets to prove it financially. 

Sorry, but for real, somebody needs to dig up their Profit and Loss sheets, and then go over it with a fine tooth comb. If their gaming division is making as much money per dollar spent or more, as Sony's gaming division then they are successful. If not, then their measure of success is just marketing B.S. 

Aren't consoles usually sold at a loss? If so, would that not mean Microsoft's words that "XBL, Gamepass, and software sales are more important than console unit sales" are correct?

Why is Sony the measure of success? Why can't the measure of success be profitability?

Console sales drive software sales, and publishing fees from 3rd parties. Consoles are sold at a loss initially, but they recoup that loss by charging a $10 publishing fee for every game sold on their platform. 

Because if you're not making as much money as the competition, then why not put the money elsewhere, where it can make more profit? And why should investors be happy if the gaming division is making money, but not as much money as if they put investors' money towards something else?  

Don't know, but console manufacturing has become much more low risk post 360 and PS3. Because MS and Sony are seemingly no longer interested in taking huge losses to push power and grow their userbase. PS3 in particular was sold at a massive loss. 8th gen console were sold at a small loss in comparison, they were kind of like mid range PCs and priced accordingly. MS said they lose money on X1X sales, but its likely small and to boast its value.

Essentially, Xbox isn't a separate thing that MS just happens to own. That's perspective many seem to have. Xbox is also a vehicle for pushing MS software, subscription services, movies, etc. Over the last few years, Xbox has essentially been used to bolster the Microsoft/Windows Store. In general, I don't get the impression they're injecting as much into gaming as they once did because its not necessary. 1st parties have been lowering their risks and relying heavily on 3rd parties to push hardware.

I'm confused by the part I bolded. I don't think how MS is doing compared to Sony is important. Certainly not the sole barometer of success.

People seem to have the impression MS's gaming division is draining MS of all its resources.

Even while throwing billions into gaming and purchasing of IPs like Minecraft and Gears. They still scrape up enough money to make major acquisitions like LinkedIn and GitHub.

Gaming is just one of the many things they have a presence in. Its not even their primary focus, its kinda just something they do.

So comparing profitability of the most similar competitor isn't important? And comparing console sales figures of the most similar competitor isn't important either. How about just comparing their Games Division's profitability to the profitability of other gaming companies? Is MS' Gaming Division as profitable as Activision? How about Take2? Or Sega? 

My guess is that no, they are not as profitable as these other companies. Profitable means how much money you make per dollar spent. So if you spend a dollar, and make a dollar and ten cents, then you have 10% profitability, which is golden. Any company that makes that much money per dollar spent will have investors flocking to them. That's because those investors will get a huge return on their investment every year. It's like putting a thousand dollars into a stock, and getting paid $100 at the end of the year, just for letting a company borrow your money. This may sound like small potatoes, but if you whip out a calculator it really adds up over the years. Over just five years your $1000 will have grown to well over $1600. After ten years your $1000 is now worth $2500. All for just letting a really good company borrow your money. 

Why allow the loser to redefine success, just because you support them? Also, hear of a thing called Steam? Even if every Xbox, Nintendo, PS gamers bought a gaming PC doesn't mean MS is going to see a ton of cash from that. Sure, they're happy to get that Windows revenue from the PC maker, but unless those gamers are actually buying MS published games or shopping on the Windows store, that's where it ends.

There's a real reason they got rid of Xbox exclusives. It's not because of some grand scheme that they originally had to tie everyone into Xbox/Windows Store. It happened because of low HW sales. They are preparing for if their next HW sells even less than the XBO. No point in having exclusives for a dying machine, when you can get a lot more money from the millions of PC gamers, as well as from PS4/PC and Nintendo/PC gamers.

I believe they are tied to more devices than just Xbox, so you can't really look at just the Xbox side of it.  An interesting note, Xbox Live MAU's actually went down by 2M since last quarter.  I wonder if this will continue or if it is is just a slight dip for now.

What? I said a lot of these things in this very thread (specifically the one about it being a way to compensate for low HW sales). I don't see how we disagree but then your first two sentences somehow try to create an argument against what i'm saying.

My point isn't that Windows 10 makes Xbox successful. I literally edited this into the OP so people would stop acting like that's what I said. I'm saying that the goal Microsoft is achieving isn't even linearly hardware sales anymore, so judging their success on slippery arguments like "Oh but I can get this on PC!" doesn't make a whole lot of sense. That's literally not the ball game Microsoft is playing. Why allow the loser to redefine success? Uh .. they aren't ... they're redefining what route they are taking to success because they realized it's more profitable to try and reach a greater audience and couldn't rebound their console completely.  

My point also isn't that every PC gamer buys Microsoft products consistently? Although Windows is by far the most popular operating system especially for PC Gaming machines and considering how overpriced Windows is for how little it costs to provide it to consumers ... yeah .. (conveniently there is a sale of Windows 10 for $40-60$ right now!)