The hundreds of million of dollars in profits from Mac Office are hidden in the EDD division.  There is no way MS will let anyone know how much money ther are making off of the current success of their OS rival.  It is just rolled up and hidden in EDD and called "XBox profit".

Edit: According to NPD 20% of all retail Office sales are the Mac version.  All of these profits go to the EDD division.

EDD Division is divided into:

1. Interactive Entertainment Business (XBox, Windows Games)

2. Communications Business (Mobile software)

3. Media Business (all Zune related stuff)

4. Connected TV Business (MS TV, eHome)

5. Specialised Devices and Application Business (PC Hardware. Mac Software, Windows embedded software)

As has been mentioned, 5. is certainly printing large amounts of money, 2.-4. who knows, and you are essentially interested in what 1. is doing on its own.. As a rough guess, the software part in 1. is printing large amount of money while the hardware part in 1. is burning money like hell.

I agree completely.  $199.99 is almost without question a loss, on a (console+controller+etc) basis.  With the inclusion of a 60GB HDD and a couple cables, even $299.99 is probably still a loss, or close to it.

Hardware profits are probably only really a positive factor for Nintendo this generation.  It doesn't matter to Microsoft that they lose some money on consoles, or even if they make it up on software.  What matters to them most is their presense in the livingroom, and if they don't make a dime on it, they've still cemented Windows, or a product of theirs, as the primary media system in your household.  

"Monopoly good.  Destroy all contenders." == effective MS motto.  Sony and Nintendo are both enemies of the MS household, even if the execs play up the "we're not competing with so-and-so" BS now and then.  MS will not bow out of the console race... ever.  You can trust in that.

mice, keyboards, headsets, joysticks

I find it somewhat obscene that nobody is even bothered to use a similar product in an effort to gauge what the 360s production to price parity should be. You could use the PS3 for this. Sony before the financial crisis was expecting to reach production price parity in the first quarter of next year at the latest.

Sony was going to do this with a loss leading model, after stripping the price back by thirty three percent within the first year. Even being overly generous and saying the removal of the emotion chip saved them a hundred dollars. They thought they could reach this goal in a stable financial situation in roughly two years.

Microsoft beats Sony on all of the curves. Their low end model has seen a hundred dollar retail price reduction. Note I was generous with the hundred dollar savings on the removal of the emotion engine from the PS3. So basically Microsoft has to be at the least matching Sony's own estimations, and doing so with a year longer extension into the life cycle after bringing to market seven million more consoles.

So I leave you with a conundrum either Sony were lying through their teeth about reaching price production parity in which case they are guilty of defrauding their investors, or Microsoft has managed to match the guidance that Sony provided in a more protracted period of time. Even if you argue a leveling off of savings, and here is the real nut buster. Microsoft uses the more standardized hardware in their console. They should actually reduce costs at a greater rate. They do have greater bargaining power, because more manufacturing facilities can accommodate the requirements. Basically more companies can assemble a 360 mother board then can build a PS3 board. Microsoft has actually migrated production from one supplier to another with little disruption.

Basically the argument that in some way the 360 is bleeding money due to production costs is a fabrication. Created by those that are intimidated, and they should be intimidated. Microsoft learned a lot of valuable lessons from their first console. This time they brought hardware to the market that could seriously leverage production costs downward, and was basically the premise of interchangeability. This time if they lost a manufacturer they could easily replace them with one that could meet their demands. Sony on the other hand really screwed up. They were behind on production for the first year of their production run. Dwell on that its, because Sony was too dependent on newer technologies with fewer suppliers.

Anyway its all bullshit plain and simple. I challenge any other poster to actually run a compelling analysis of the situation, and reach a vastly different conclusion. I am not interested in what you want, or what your gut tells you. If that is the height of your reasoning your not much better then lambs to the slaughter. Give me a rational assessment not any more of this paper thin propaganda. Microsoft's greatest losses come from investments that offer no return. Such as advertising, research and development, and strategic partnerships. Not from the console end of the division.

very well put dodece.... MS biggest fault in my mind was using the laptop form factor hd... those will always cost more then the desktop size, with worse performance

You should be a little more careful about freely issuing such highly libeluous statements. Now granted, nobody at Sony takes your fanboy statements for anything else than lunatic rants so you are reasonably safe from a cease-and-desist letter from a lawyer. However, that doesn't make them better in any way.

Now here is some food for thought for you:

1. Current manufacturing costs for an XBox Arcade: around $240

2. Current manufacturing costs for other XBox models: around $270

3. Current manufacturing costs for a PS3: around $350

(All estimates +/- 5-10%. Any no and no again, I'm not going to tell you or any kid why I know these estimates are reasomanly close to the truth).

Now currently, the arcade sells around $210 in Europe. This value is the final sales price in all shop and includes all state and local taxes as well as shop margins (which are very likely lower than Wall-Mart's margins in the States). All this amounts to around 20-35% MS has to forfeit on the $210 price, so MS gets around $150-170 for their arcades an around $200 for their other models. this gives you a rough idea how MS is losing money. Now the price for a PS3 in Europe has a MSRP of around $540. Again this includes all taxes and shop margins. If Sony gives shop margins as low as MS, thy get around $350-$380 for their console, essentially manufacturing parity or even a slight profit. Notice that Sony in other territories very likely is not on parity (and MS probably loses even more on the manufacturing level than in Europe).

Now for the general readers some food for thought:

In forums like these, there seems to be the general consensus that manufacturing costs go greatly down in time and particularly, people seem to be fond of the argument that a die shrink is the deus ex machina, the ultimate cost saviour that drives down costs in the hundreds of $. Now you should consider the following points before you pray these mantras:

Manufacturing costs always increase on many levels - wages go up, raw material costs go up, taxes go up, transportation costs go up (shipping a container from continent A to B once was around $4000, now it is around $7000 just as an example), environment protection costs go up. A die shrink eventually reduces your costs typically by 30% in the end, but only AFTER the manufacturer has recouped the costs for exchanging the necessary machines. Also keep in mind that all consoles were designed with mass manufacturing processes right from the drawing board, so there are no magical cost saving changes involved at any time in the life of the consoles. Also it might be good to remind people of the difference between manufacturing costs and production costs, which even professional companies occationally seem to forget (there is this infamous table floating around that gives manufacturing costs of $850 for a PS3 - let me assure you that manufacturing a PS3 never cost more than $550 - ithey probably knew the production costs of around $850 for a PS3 and made a faulty manufacturing price breakdown table to get to this value).

How much did MS spend on RRoD repairs in 2008?

I don't think it cost them anything in 2008.  They allocated $1+ billion for repairs in 2007.

@drkohler

You should know that on these forums there are certain standards. I will not even address your personal insults you tossed in my direction. I leave that for the moderators. You cannot present figures as facts, and then adamantly refuse to back up those facts. You can say its my opinion, my estimation, my speculation, or my theory, but you cannot say this is a fact. Without providing supporting evidence, or a legitimate credential. Proving that you are in a position to know.

Sorry that just doesn't fly. I can say I know things as facts too, and spout nonsense. I shouldn't be taken seriously for doing so, and neither should you.