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[doicare]

Wow well done ms 8.2m, i'm sure with those results they will have ended up being the top 'shipped' console for the year.

However as i'm sure has been said before, it's blatantly obvious they've over shipped for the quarter & are going to be paying for that over the first two quarters of next year.

 

[bigtroyjon]

I wasn't able to listen to it but this is from the conference call.

Chief Financial Officer Peter Klein noted, though, that the console market is "softer than we expected", and said he expected revenue for the division to grow in the high single digits in the third quarter and in the midteens for the fiscal year.

Whether they move up price reduction plans or accelerate next gen development, it's important to them that the business continues to grow so I expect some kind of reaction to lower than expected sales.

 

[Rat Salad]

Wow well done ms 8.2m, i'm sure with those results they will have ended up being the top 'shipped' console for the year.

However as i'm sure has been said before, it's blatantly obvious they've over shipped for the quarter & are going to be paying for that over the first two quarters of next year.

Makes you wonder, Sony probably had their hand in stuffing also. Don't forget that they had a great Dec. too.

 

[jvm]

All of the numbers listed are correct. They announced those four quarterly numbers, and at the end of the year they announced the full year nimber that didn't add up.

...for Microsoft versions of "correct". Got it! Thanks guys.

 

[bigtroyjon]

I posted this in the NPD thread but this also seems like a good spot to mention the info since it comes from their quarterly earnings report. USA NPD attach rate for the 360.

Kind of crazy that the 360 tie ratio went up again, it had stayed flat for a while and hardware is better than ever. Here's what it's been at the end of each quarter, going as far back as they have data for on MS investor relations site.
7.0(Dec 07)
7.5
7.8
8.1
8.1(Dec 08)
8.3
8.6
8.7
8.8(Dec 09)
8.8
8.9
8.9
8.9(Dec 10)
8.9
8.9
9.0
9.1(Dec 11)

 

[Captain Tuttle]

Wow. That attach rate is really impressive. It always makes me laugh when people say that lots of new 360 sales are replacements for RROD units.

 

[shinnn]

I'm wondering how much of those X360 are from Brazil. The media here is reporting an 200% increase in hardware sales since october when they started the local manufacturing. Looks like PS3 is losing its dominance here.

MS should forget about japan and invest in south america and east europe much more.

 

[NavNucST3]

I'm wondering how much of those X360 are from Brazil. The media here is reporting an 200% increase in hardware sales since october when they started the local manufacturing. Looks like PS3 is losing its dominance here.

MS should forget about japan and invest in south america and east europe much more.

The Wall Street Journal had a quote from MSFT saying that by producing the 360 in Brazil they would be able to reduce the cost of the console by 40%, did that happen or maybe I should ask if that made its way to the consumer at all and if that could account for the increase?

EDIT: (found blurb)

SAO PAULO (Dow Jones)--Microsoft Corp. (MSFT) announced late Tuesday that it will start to produce its video game Xbox 360 console in Brazil, the company said in a press release.

The company said it expects to sell the first console produced in Brazil in October and it will be produced by Microsoft in partnership with Flextronics International Ltd. (FLEX).

Brazil will become the second nation to produce Xbox 360 consoles. Currently, Microsoft produces Xbox 360 in China, also in partnership with Flextronics.

With the local production, Microsoft said that the price of video game consoles will be reduced by 40% here.

The company will produce Xbox 360 consoles in Manaus, capital of Amazonas state, in an industrial unit with a capacity to produce 17,000 Xbox 360 consoles per week.

-By Rogerio Jelmayer, Dow Jones Newswires; +55 11 3544 7071; rogerio.jelmayer@dowjones.com

 

[east of eastside]

So has 360 broke even yet? Where is relative to early generation losses? What bearing does this have on the timing of next-generation console release?

 

[jcm]

So has 360 broke even yet? Where is relative to early generation losses? What bearing does this have on the timing of next-generation console release?

Most likely yes, still deep in the hole, and none whatsoever.

That's not how businesses work. MS doesn't owe money to some loanshark to cover the costs of the original xbox. The money is spent, and it's water under the bridge. Future hardware timing is strictly baed on maximizing future profit. How long can they milk the profitable current gen hardware before they have to spend a bunch on the next gen?

 

[charlequin]

Most likely yes, still deep in the hole, and none whatsoever.

I think he's talking about early losses this generation, not the massive, unfillable void that is OG Xbox losses. (But your point about next-gen timing is right, of course.)

 

[Sydle]

It's really hard for me to judge if Xbox is now considered a success or a failure.

It lost more money than it earned. It took a lot of time and resources that Microsoft could have invested in possibly more lucrative markets (smartphones?). The first Xbox hardly made a splash and the 360 was a distant 2nd to the Wii in marketshare.

But through it all, it's still considered a successful venture for Microsoft by the members of this forum and the media. I never really understood that, I would expect that by now shareholders would have slammed on the table demanding to stop with the gaming nonsense.

Of course gamers like 360 and many consider it (rightly) to be this generation's leading platform. But it's hard to reconcile the business reality with the overall perception of the product.

MS had a 3-generation strategy before the Xbox launched. They expected to invest a lot to get started, made possible with tons of cash, and they wanted to keep at it because it's 1/3 of their 3 screens & a cloud strategy.

Since 2006 it has shown revenue growth every year. Investors would be baffled if you pull the plug on something like that. If anything, MS just needed to get cost under control, which they've done to the point where they are now making profit.

 

[[Nintex]]

I'm not sure if this is true but I had Xbox explained to me as 'well Microsoft could either do Xbox or pay more taxes so they decided to do Xbox'.

 

[TheFightingFish]

The Xbox division was probably rather mediocre in terms of investments Microsoft could've made at the turn of the century, but it's doing pretty well in terms of investments Microsoft has made, relative to all the businesses where they've thrown away billions of dollars and never seen any sort of return. If they can turn the success of the 360 into a sustainable business going forward (by launching a 720 that loses less upfront and moves into significant profitability faster) it'll definitely cement itself as a successful choice overall.

I'd fully agree that trying to look at any industry as volatile as tech and pick out winners and losers in retrospect is a bit of a silly game. But the one thing that will always chaff me a bit about the 360 was the inability to get that working together with what was at the time a pretty commanding lead in PC gaming as well. Saying that "well they should have done phone, or search" is a little silly as they are unrelated fields. But if I think of overall Microsoft gaming strategy the gains from making the 360 profitable have to at least a little bit be weighed against pretty much sitting around while Valve created and then dominated a pretty lucrative DD PC gaming market. I'm sure that it would have been harder then I'm thinking to combine the two, but it always sticks as a bit of a bit lost opportunity to me.

 

[barkers crest]

I'm not sure if this is true but I had Xbox explained to me as 'well Microsoft could either do Xbox or pay more taxes so they decided to do Xbox'.

This is pretty much true for big money in all kinds of sectors. One thing people don't take into consideration when understanding the cost of investing in the xbox is that a percentage of that money was out the door either way.

 

[Massa]

The Wall Street Journal had a quote from MSFT saying that by producing the 360 in Brazil they would be able to reduce the cost of the console by 40%, did that happen or maybe I should ask if that made its way to the consumer at all and if that could account for the increase?

EDIT: (found blurb)

Yep, about 38% price cut for the 4Gb model and 32% for the 250Gb.

 

[McHuj]

I'm not sure if this is true but I had Xbox explained to me as 'well Microsoft could either do Xbox or pay more taxes so they decided to do Xbox'.

Supposedly, same reasoning could have been applied to their acquisition of Skype.

 

[[Nintex]]

Supposedly, same reasoning could have been applied to their acquisition of Skype.

The Nokia buy out rumors were fueled by MS's cash stashed away in overseas markets and banks. Microsoft's fortune is insane.

 

[jcm]

Microsoft doesn't pay much in taxes. They are very good at avoiding US (and foreign, too) corporate taxes. They have a shitload of cash overseas ($30B as of the end of the last FY) that they can't bring home because they would be taxed on it. In 2010 they paid $445 million in taxes in the U.S. and other foreign countries, which was 7% of their $6.32 billion pre-tax profit.

Edit: Here's a good explanation of the strategy Google and MS have been using to avoid taxes. The Double Irish and the Dutch Sandwich.

 

[JoshuaJSlone]

I posted this in the NPD thread but this also seems like a good spot to mention the info since it comes from their quarterly earnings report. USA NPD attach rate for the 360.

Is that about as explicit as they get with software information? I'm guessing if they gave simple shipment numbers Parmenides would be including it in the OP.

 

[Kazerei]

The Xbox 360 has probably reached its peak, but sales will be strong through 2012. Even after the Xbox 720 is released, I think the 360 could continue to sell sort of like the PS2 did.

 

[FrankT]

Is that about as explicit as they get with software information? I'm guessing if they gave simple shipment numbers Parmenides would be including it in the OP.

That is all they have ever given that is why you cannot come up with a WW SW number for MS. Also I had no idea they hit 9.1 in Dec. The US LTD hit what around 32M? If so closing in on 300M SW sales.

Someone mentioned earlier they passed into the black this quarter actually that was last iirc using the first quarter 360 launched. I know they lacked about 300M last quarter or before as I had been keeping with it to that point which they had passed it by 20M or so at that time. This 500M and from here in out is just gravy.

 

[Road]

Yea, MS never routinely disclosed worldwide software sales.

There was a time people mistakenly assumed that tie ratio was worldwide, but it was always US NPD.

 

[rpmurphy]

The 360's second wind with the Kinect is very impressive, and that's on top of the growth of its console division as a whole this generation. MS will have a strong angle for positioning their next console as a family console and not merely a hardcore gamer's console, which will be very interesting to watch.

 

[SapientWolf]

The Xbox 360 has probably reached its peak, but sales will be strong through 2012. Even after the Xbox 720 is released, I think the 360 could continue to sell sort of like the PS2 did.

The 360 is going to do gangbusters when it goes under $100.

 

[Miles X]

The 360 is going to do gangbusters when it goes under $100.

They need to make sure they hit that price whilst it's still a somewhat relevent console. If they don't cut until fall this year, then they've spent 4 years at the baseline price (insane) and I can't see them cutting to $99 until at least fall 2014.

Then again this next cut might be more than $50, we might see a $129 360.

 

[Kazerei]

The 360 is going to do gangbusters when it goes under $100.

I don't see that happening until 2014 at the earliest. IMO Microsoft should follow the gradual PS2 price cut history: $199, $179, $149, $129, $99. Spaced out by at least six months to maximize sales at each tier.

The 360 has a great software library, so even after the 720 launches there's still good reason for lots of people to buy a 360.