Conservative strategy? Please.

Microsoft's business model isn't anywhere near as flawless as you're trying to make it out to be. Microsoft has done plently of reckless spending. Forgotten all the money they've thrown at developers which cuts into the royalties that they receive, especially in the Japanese market(Blue Dragon, TOV, Eternal Sonata, etc) only to get a negative return? MS went with a loss leader business model for this generation and it hasn't paid off. With that kind of business model, MS would need mass exclusive third-party support, and in order to achieve that, they'd need the market share of the PS2, which is something they aren't to acquire any time soon. Since their console doesn't have enough appeal to warrant that kind of exclusive support, they've had to resort to paying for it en masse, which is why they can't post a consistent profit despite rather volumnous software sales.

Had this happened a year ago, then MS would be facing similar misfortunes as Sony considering that their console would have been more expensive and the Wii would have looked even more appealing at $250.

If you look at the big picture, this is the holiday season, and 360 sales after the holidays will fall back to 50-70K/wk in NA and EU and 6K/wk in Japan. Despite MS's recent gains, it's still a distant, unprofitable second, which is exactly where it was last generation. That being said, the real beneficiary of Sony's blunders and misfortunes has been Nintendo as it's entirely switched places with Sony from last generation.

MS should be focusing more on turning a consistent profit, because by concentrating all of their efforts on securing useless market share from the PS3 and pretending that the Wii doesn't exist, they're really just celebrating mediocrity.

Yep, it seems like the 7th generation of console gaming has been all about the cheapest products. Numbers shipped compared to original pricetag.

1. DS -86 million/ $149.99

2. PSP -40 million/ $249.99

3. Wii -37million/ $249.99

4. Xbox360 -23 million/ $299.99 - $399.99

5. PS3 -17 million/ $499.99 - $599.99

It has just been the market trend. Even when you take in to account the Wii launch taking place a year later it still overtook the 360 in part because of the cheaper price tag.  Now that the tables have turned I expect the Xbox360 will gain ground on the Wii and distance itself from the PS3.

And your Dad is now a multi-millionaire by using this knowledge to invest to take advantage of the crash he saw coming?

As MS, and Sony, and every other large multi-national company is raking in millions because their accountants saw this crash coming and prepared the company accordingly?

And Bill Gates happened to be looking the other way which is why his foundation (along with almost every company) has seen massive delvaluation of its assets?

Get out of here!

Sure the signs were there but are you actually reading the news, etc?  Every major company, bank, etc. has been caught completely short here and is suffering.  Do you actually know how much money globally is being put in by countries to bail out all this mess?

MS were as ready and prepared for this as anyone else - which is to say not at all.

I'm not knocking what they've done, but the lift the 360 is going to see due to the economy is pure, blind luck.  Nothing more.  Doesn't invalidate it.  But that's what it is.

I suggest more people review the excellent review by The Source on 100 week trends to see that, until the economic crisis, 360 was tracking just ahead of Xbox and overall MS had barely improved over previous generation, whereas Nintendo have almost exactly swapped position with Sony for sales, and the gain in marketshare of Nintendo almost exactly matches the loss by Sony.

I'm astonished people are actually posting that of course companies like MS knew all about the impending implosing of the global economy, the destructive of current investment and banking institutions and the impact it would have on consumer spending because they have such amazing accountants, etc. etc..  Do you realise how foolish that assertion looks?  Particularly as its glaringly obvious that as a company (I mean in total, not just Entertainment Divsion) MS made absoloutely no move to provision against the crisis or take advantage of it?

Love your 360 if you must, I certainly don't object nor have anything against the console or the company itself, but please don't let it cloud your understanding to this degree.  Seriously.  It's just plain silly.

Microsoft's profit margin: Usually around 30%

Sony's profit margin: Usually a bit above 1%

See why Microsoft can afford to easily drop billions into a product without blinking? Microsoft has:

- very robust profit margins
- a huge cash reserve (I recall in the tens of billions)
- no debt (means less risk and no interest rates dragging profits down).

Sony has:

- very fragile profit margins (which are biting Sony in the ass right now and will bite more and more as the recession and weak dollar/euro continue)
- a moderate cash reserve ($12 billion last I checked)
- tons of debt (around $10 billion last I checked)

To me, that says Microsoft is the conservative one, no matter how many billions their entertainment division lost in the past. They can afford that luxury because they have sound financials.

PS: You can find these numbers at MS's and Sony's investor relations page if you wish to.

I think it's pretty clear here that I'm talking about MS's performance and profits(or lack thereof) in the video game market. Not their performance and profits in every other market that they are involved in.

MS cash reserves and market dominance with OS and office tools doesn't change the fact that they're still being pummeled at every turn by the Wii, doesn't change the fact their best case scenario for this generation is to end up a distant, unprofitable second, doesn't change the fact that the 360 has yet to see strong sales in all regions outside of the holiday season, and doesn't change the fact that the 360 has yet to turn a consistent profit.

Bringing up MS's financials that it's incurred due to its other divisions is grasping at straws, and it really means nothing considering the above. For all of that money, MS is still in the same position that it was in last generation. It's just that Nintendo is beating the hell out of them instead of Sony.

And your Dad is now a multi-millionaire by using this knowledge to invest to take advantage of the crash he saw coming?

As MS, and Sony, and every other large multi-national company is raking in millions because their accountants saw this crash coming and prepared the company accordingly?

And Bill Gates happened to be looking the other way which is why his foundation (along with almost every company) has seen massive delvaluation of its assets?

Get out of here!

Sure the signs were there but are you actually reading the news, etc?  Every major company, bank, etc. has been caught completely short here and is suffering.  Do you actually know how much money globally is being put in by countries to bail out all this mess?

MS were as ready and prepared for this as anyone else - which is to say not at all.

I'm not knocking what they've done, but the lift the 360 is going to see due to the economy is pure, blind luck.  Nothing more.  Doesn't invalidate it.  But that's what it is.

I suggest more people review the excellent review by The Source on 100 week trends to see that, until the economic crisis, 360 was tracking just ahead of Xbox and overall MS had barely improved over previous generation, whereas Nintendo have almost exactly swapped position with Sony for sales, and the gain in marketshare of Nintendo almost exactly matches the loss by Sony.

I'm astonished people are actually posting that of course companies like MS knew all about the impending implosing of the global economy, the destructive of current investment and banking institutions and the impact it would have on consumer spending because they have such amazing accountants, etc. etc..  Do you realise how foolish that assertion looks?  Particularly as its glaringly obvious that as a company (I mean in total, not just Entertainment Divsion) MS made absoloutely no move to provision against the crisis or take advantage of it?

Love your 360 if you must, I certainly don't object nor have anything against the console or the company itself, but please don't let it cloud your understanding to this degree.  Seriously.  It's just plain silly.

Why do you have to be a cock holster?  The guy was obviously stating that if an ordinary man such as his dad could see it that it's obvious that companies like Microsoft and Sony had this situation planed as a possible senerio.  As for the economy it was a long time comming and anyone who was part of a major market could see it from a mile away... hell I knew this shit was bound to happen back in 2006 when my company dropped 200 people because of the housing market (I worked for Lennox Hearth Products)  The housing market was just the tip of the iceburg of the stupidity of the banks and lenders.  It's absolutely absurd to think that they didn't have a clue about what was going on.

Not again!  Review the situation in detail.  No major company foresaw or estimated the direction, degree and impact of the current crisis.  None.  At most some people saw issues with the sub-prime market and some complex investment packages, but you only have to look back to before the crash to see no company foreseeing how deep the issue would go nor provisioning themselves to take advantage of it.

MS made a price cut for the right reasons, but without any understanding that it was about to be given a huge boost due to external influences outside their control.

And I'm sorry but I don't buy this 'my dad' stuff.  I work for one of the world's largest IT companies as a Business Develoment Director, operating across US, Russia, Europe, Middle East, etc. and I can tell you that while our very expensive economists foresaw some trouble the current crisis took the company by surprise, just as it did all others.  Now, so far we've been lucky that our basic model as very high margins in line with MS, we have huge cash reserves, etc. so we can ride it out and in fact use the situation to our advantage to attack economically weaker competitors - so again its simply business that MS with their overall situation can really hurt Sony whose overall model is low margin, high cost consumer goods, and they will turn up the heat.  But please, please, don't believe MS figured an economic downturn would handily conincide with their price cut.

Consider the following:

Even Microsoft Corp. (MSFT) could not buck the impact. The software giant last month reported first quarter profit that rose a modest 2% from last year, as revenue growth slowed amid the challenging economic environment. The company forecast second quarter revenue and earnings below analysts' current consensus estimates and lowered its revenue and earnings forecast for the fiscal year 2009.

Like everyone else MS is in reaction mode to something so large, and outside its control, it can do nothing but review the situation and calculate how badly it will impact the busines.

Like all large companies MS and Sony would have had some basic measures already in place for a general economic downturn, but no company has provisioned specifically against the current situation as is glaringly obvious.