Microsoft STILL Losing Money on Xbox

[Lord Nepenthean]

Four years after the fact, Microsoft is still losing mucho dinero on Xbox.  At least this year they cut it down to hundreds of millions of dollars, rather than billions like the previous three years.  (Sarcasm.)

Full Article: http://gamesindustry.biz/news.php?aid=10288

Operating losses continue for MS' Home and Entertainment division
Illustration
GamesIndustry.biz staff 10:51 22/07/2005

However, operating income still resulted in a net loss of USD 179 million, bringing yearly operating loss to USD 391 million. But this is still an improvement over last year's figures, when the Home and Entertainment group lost USD 340 million for the same quarter and USD 1.2 billion over the course of the year.

Much of the money lost by the division over the past few years is believed to be down to Microsoft's losses on Xbox hardware sales, which some commentators believe are still being subsidised even four years after launch.

Unlike Sony, which has been able to reduce manufacturing costs on its PS2 hardware to the point where it is sold at a profit, Microsoft relies on off the shelf components from suppliers including Intel and NVIDIA - a strategy which prevents it from making major cost savings on the system.

However, the company hopes to avoid this trap with Xbox 360, and has signed a very different deal with ATI to its Xbox deal with NVIDIA, which will see ATI licensing a design to Microsoft rather than simply selling components directly.

Report by Ellie Gibson and Rob Fahey

[Arrrhalomynn]

It's crazy they're still going to make an xbox 360. Even if that thing makes a profit, it'll be nearly impossible to recover the losses from the xbox.

[Hydrobond]

Its an acceptable loss if they are trying to kill their competition.  After that, they will have plenty of oppertunity to make up the lost money.

[CatchFiveBats]

Its an acceptable loss if they are trying to kill their competition.

I'm praying for that not to happen.  They've already (partially) done it in the computer world, and if they do it in the video game world, I will be very, very pissed.  I refuse to own a system made by Microsoft.  Although, if worst comes to worst, Nintendo will become to the gaming world what Macs are to the computer world, and the true fans will stick to their roots.  But that's just my opinion.

[Hydrobond]

i was under the impression that Nintendo was already that way.  The game cube seems to really be geared towards children in a way the other two are not, much in the same way that Macs are geared towards video and photo guru's and everyone else uses PC. (Except for the DoD, which uses Mac servers because no one cares to find out how to hack a Mac.)  

In the end, the Microsoft consoles will meet or surpas the quality of the other offerings, or at least they should with the money Microsoft is throwing at them.  But they are still very new to the concept of the console.  

On a side note, it would be really nice to get a few forum members from Japan, given that they are respondible for the majority of consoles/games on the market.

[CatchFiveBats]

i was under the impression that Nintendo was already that way.  

Well...then I guess I could be considered a "true fan." |D

[Arrrhalomynn]

But they are still very new to the concept of the console.  

I'm not really sure what to think of this remark. You make it seem as if it matters wether a company is new to the concept of the console. Wasn't atari new to it when they started? Wasn't Nintendo new to it when they released the nes? Wasn't sony new to it when they released the Playstation?

And in the end it's still the game developers making the games. It doesn't really matter wether the new metal gear solid gets a release on a nintendo, sony or microsoft console. So it also doesn't really matter wether or not any company is new to making consoles.

[thx1138]

Microsoft make so many bazillions of dollars, that it might suit their purposes, tax wise, to take a loss on something.....

[Hydrobond]

And in the end it's still the game developers making the games. It doesn't really matter wether the new metal gear solid gets a release on a nintendo, sony or microsoft console. So it also doesn't really matter wether or not any company is new to making consoles.

The console does matter though, I wouldn't even consider getting an Xbox because of the controllers and the overall size of the beast.  Look, feel and company reputation all come into play when someone looks to buy a console, so who makes it, and if it is their first attempt, matter greatly.

And my point was, they will only get better.  Yes, their first system wasn't very good, but the next ones will improve.

[Arrrhalomynn]

I don't think so. Sure, all new consoles were technically better than their predecessors, but if you judge a console on its own merits, few will say the snes was better than the nes, or the saturn better than the genesis. If there's one branch where companies don't learn from their own mistakes it's the game industrie. Just look at nintendo, whose consoles have gone down hill since the nes.

Look, feel and company reputation may matter to you, but many people don't care as much about these details like you. Great marketing can provide these last two and the first one has nothing to do with the manufacturer. The mass of the people doesn't hate microsoft or care that much about the size of a console, because they will only buy one. And as long as it churns out madden better than other consoles they're happy.

[Tynstar]

I understand how teh N64 was worse then the SNES and there are problems with the GameCube but how was teh SNES worse then the NES?

[Arrrhalomynn]

Well, maybe not worse, but the nes certainly was the more popular one.

[CatchFiveBats]

Personally, I think that Nintendo's systems just kept getting better up until the N64, which should have been a disk system.  After the N64, the GCN was released, and that was a big improvement over the N64.  But really, the systems don't matter nearly as much as the games that are on them, and Nintendo has, in my mind, always won in that department.  Of course, I'm a big fat fanboy. |D

[Lord Nepenthean]

After the N64, the GCN was released, and that was a big improvement over the N64.

And Dreamcast was an enormous improvement over Saturn, but look where that got Sega.

[CatchFiveBats]

And Dreamcast was an enormous improvement over Saturn, but look where that got Sega.

Yeah...