One of Microsoft's major problems was they screwed up their contract with Nvidia. They forgot to put a clause saying that as the system price came down so would the price MS paid Nvidia. MS expected to be paying say $40 at the start and $20 at the end and instead got stuck paying $40 for every Xbox. Doesn't sound like much but times 25 million systems it comes to around $500 million. Now MS is with ATI and BC on the 360 suffers as a result. Even when winning console races it isn't easy to make money in the video game industry over the long run. Nintendo is the only company to do it for more than 12 years. Atari folded, Sega folded, Sony is not showing any signs of making money this generation, and MS would have been kaput before they even started if not for its mountain of cash. Nintendo has been able to do it since it has 2 peculiarities: they don't sell their systems for a loss, and their first party game attach rate is at least 3:1. We know this model makes Nintendo profitable even in last place since they made a decent profit on the GameCube despite only selling 21 million. Sony and MS both lose big money on the hardware and especially MS are below 1:1 attach rate. Of course they make money on every game sold but they far more on their own games. Sega couldn't make a profit in last place despite having the second best 1st party games so we can reasonably infer that neither MS nor Sony could do it.

Unfortunately, we're talking about consoles being profitable, not companies as a whole due to various products. The Cell isn't a Sony product. It's a product of multiple companies not just including Sony and IBM.

unfortunately separating the console business with other Sony ventures doesn't make any sense because the PS3 and the other ventures are all interconnected. BTW the 360 chip is also an IBM joint venture

As is the Wii CPU, I wonder how IBM cornered that market.

Depends on your definition of "profitable". Are you talking about the hardware turning a profit? The console manufacturer? As a company? Or as a product line? Do you include software sales and licensing? Overall, the answer is an obvious "yes" - as the GC sold least units last gen, but Nintendo was most profitable (games divisions anyway).

The Wii selling bad? Ridiculous I say! Ho ho ho.

Forgot about royalties. I beleive Microsoft still took heavy losses with the X-Box, weven with royalties. Nintendo just does things more profit orriented. Microsoft and Sony spend more money so they'll have the stronger system in the long run. The Wii seemed to mess this up. But, if the Wii starts to dominate to point it slows down sales off the other consols, then it will be devistating to their foes. Of course, Mircosoft would be fine as they're making a profuit, Sony on the other hand. I hink he means the total endevor.

I'm back from the weekend without internet, so I'm answering now.

Looks like IBM can lean back and wait: Whichever console will win, they will earn something from it. I include all revenues generated by the console. So I include hardware, add-ons, 1st-party-games, royalties for 3rd-party-games, online (xbox Live) and even at some point, how much more Bluray-movies Sony can sell because of the PS3.

GameCube, it could be produced with a much lower cost than any of the other system last gen. IBM proved themselves last gen and is now cashing in.

This is what I think each system needs to sale to be profitable............ Wii-10+million (covers R&D) 360-25+million (covers R&D) PS3-50+million (covers R&D due to Cell and Blueray)