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[plagiarize]

I doubt MS will ever make a single net dollar on Xbox.

Last generation they were 5 billion in the hole already... and that is with accounting that lumps in other profitable divisions masking the larger loss they're actually taking.

Just look back at some of Sony and Nintendo's most dominating years profit wise... reaching even a billion is extremely rare. MS is likely to see some billions more in losses before they can even begin to think about digging themselves out of this hole. It's an astronomically uphill fight.

Not to mention with the business model PS3 and 360 tend to follow, they require sheer dominance to produce profit, unlike Nintendo. I don't think anyone is predicting all out dominance for 360 anytime soon (though due to some precautions it shouldn't be AS much of a money sink, keeping all other things equal... and it should most certainly perform better... but 5 billion better? No)

well, when and if the division starts turning a consistant profit, i don't think microsoft will really mind that the xbox division is technically billion in the red, because in the years that microsoft have been losing money, microsoft has comfortably made up for that loss in other areas of the business.

it's not like they took out a bank loan they have to pay back, and when and if the xbox division is profitable, i doubt they'll look back. then they'll be able to use some of the money that division is making to buy their way into new markets or to spend on R+D for new products.

same goes for sony and nintendo.

 

[PipBoy]

I really don't understand this mentality of reaching 10 million consoles first = winning next-gen.

It's a point where publishers cant afford to not support the console, a point where software sales revenues can be invested massivelly in marketting/first party games/buying exclusives. Microsoft think this point is 10 million in one year, I think it's 20 million in two years.

 

[Timedog]

If Sony has a failure rate anything close to the 360 they are going to be reeling hard. Somehow I doubt that'll happen unless they purposely put shit into the retail stream to up launch unit numbers.

 

[sonycowboy]

MS 1.26B in the red since launch



And off we go!

We knew this 3 months ago.

http://www.neogaf.com/forum/showpost.php?p=3915726&postcount=33

 

[snatches]

We also know that MS is the most profitable software company in the ****ing world:

For the fiscal year ended June 30, 2006, the company announced revenue of $44.28 billion, an 11% increase over the prior year. Operating income for the fiscal year was $16.47 billion, or 13% over the prior year period. Operating income for the fiscal year included $1.11 billion for certain legal charges, compared with $2.06 billion in the prior year period. Net income for the fiscal year was $12.60 billion and diluted earnings per share were $1.20, which included $0.08 of certain legal charges and $0.01 of tax benefits. For the previous fiscal year, net income and diluted earnings per share were $12.25 billion and $1.12, which included $0.13 of certain legal charges and $0.09 of tax benefits.

Revenue up 11%
Profits up 13%

Here is the net profit for the year, I hope I don't run out of space:

12,600,000,000

thats a lot of frosty's thar

 

[tanasten]

I think that in Nintendo it's gona be like a party everyday

Really, they're smart.

Microsoft and thier shield move is hurting, but nothing to care of...

Sony with PS3 can suffer hard times.

I think that the Wii is gona hurt badly to Sony, killing the PS2 sales next year and Sony being unable to sell the PS3.

I can't see Sony diying thougth. I expect that Microsoft will buy Sony

 

[GreekWolf]

Well considering they are doing this so that gaming on the PC stays alive

Uh... no. PC gaming will not be affected in any form or fashion, no matter how Microsoft or their peers fare in the console wars. It's a completely different demographic, with the hardcore of the bunch constantly upgrading their systems whenever new technology arrives (which is roughly every six months or so). Consoles will never venture into that area because it's simply not feasible nor realistic to expect mainstream consumers to follow that pattern. For those of you keeping score at home, the set-top box will never happen, and every company that's tried to pursue that mythological concept has failed miserably.

 

[AlanHemberger]

We also know that MS is the most profitable software company in the ****ing world:



Revenue up 11%
Profits up 13%

Here is the net profit for the year, I hope I don't run out of space:

12,600,000,000

thats a lot of frosty's thar

no wai! m$ is d00m3d!

These threads are retarded when we already know that M$ is obviously in it for the long run and has the resources to back it up.

 

[sugarhigh4242]

Good luck to them. Xbox360 is a nice system.

 

[sonycowboy]

In related news, Microsoft is announcing Q1 earnings Oct 26th (2 weeks).

Although, the fun of poking at the H&E's divisions losses will be gone as they have now gone to only 3 divisions (From 5), all of which are going to be massively profitable.

 

[KINGMOKU]

If Sony has a failure rate anything close to the 360 they are going to be reeling hard. Somehow I doubt that'll happen unless they purposely put shit into the retail stream to up launch unit numbers.

Thats the question. What if the PS3 has sales for its first year at the same rate as the 360?

 

[Runningflame570]

Just need a google OS now and..

Thats not happening when Monkeyboy wants to, "...****ING KILL GOOGLE!"

In related news, Microsoft is announcing Q1 earnings Oct 26th (2 weeks).

Although, the fun of poking at the H&E's divisions losses will be gone as they have now gone to only 3 divisions (From 5), all of which are going to be massively profitable.

Really, that could be just as much about making themselves look better to investors as allowing for more efficiency within their business.

I'm looking forward to the day other businesses finally do to Microsoft what Microsoft did to IBM..IBM is a good company now. Microsoft is sitting on a few software monopolies so it will be difficult, but they are definitely being bled..its only a matter of time I think.

 

[sugarhigh4242]

Thats the question. What if the PS3 has sales for its first year at the same rate as the 360?

PS2 can still keep them afloat for a while. maybe as long as it takes to drop the price of the PS3.

 

[Raistlin]

It's interesting that they finally admitted MS corporate gave the go ahead to the X-box team in large part due to fear of Sony eventually cutting into PC sales.

While everyone knew that, I never expected them to say it.



360 costing more than expected is certainly interesting as well. Not that I though there was any chance of a price-cut this year … I now wonder when there will be one?

 

[Raistlin]

no, but imagine how shitty the industry would have been without MS? Do you really think Sony would be doing anything to move forward if it was just them and the GC?

Yes.

If there's one thing Sony has continued to do, it has always been to push technology forward - in large part, due to Ken K.

 

[Raistlin]

thank you i like you. Sony is so much of a worse financial state than MS and stands to loose even more. MS is still trying to establish a brand they can take hardware hits as long as they move software.

Umm ... they lost over 5 Billion with the X-box.

That is AFTER factoring in SW revunes.

 

[Raistlin]

Then that means Sony will lose aaaaaaaaalot more money because of the fact they're taking an even bigger hammering per console than Microsoft is.

Sony won't be losing money per console forever.

 

[dogbowl]

We also know that MS is the most profitable software company in the ****ing world:



Revenue up 11%
Profits up 13%

Here is the net profit for the year, I hope I don't run out of space:

12,600,000,000

thats a lot of frosty's thar

Just think of how much *more* profitable they could have been *without* the Xbox's. 6, 7 Billion dollars gone with no positive income in sight?

Remember people, Microsoft isn't here as a company to make video games. Their board of directors won't put up with this forever...

 

[Blackace]

They're sitting on 34 billion in cash, they need to show investors that they intend to do something with the money. MS doesn't intend on increasing their dividend or buy back shares. In order to justify holding all this money to shareholders, they need to reinvest the money in "new opportunities."

And the hardest thing for them is that they have do it outside of the PC market but in something related...

 

[Shogmaster]

Hold on a sec. So you are saying that MS is losing money on their cutting edge hardware before any process shrink?

THAT'S UNPOSSIBLE!?! *place the biggest rolleyes in existance here*

 

[beelzebozo]

this guy likes numbers. someone let him know

 

[Christoff Yurievich]

It's interesting that they finally admitted MS corporate gave the go ahead to the X-box team in large part due to fear of Sony eventually cutting into PC sales.

While everyone knew that, I never expected them to say it.

no they didn't.

We posed that question to company-specific research firm Directions on Microsoft analyst Matt Rosoff. His answer in short:

“I don’t know.”

Still, he explained his uncertainty. “Remember that Microsoft partly entered the game console business for defensive reasons,” Rosoff said. “The company was concerned that a PlayStation successor would become the default gateway to networked entertainment in the home—Ken Kutaragi promised as much—and cut into consumer PC sales.”

 

[gutter_trash]

MS is profitable,
but their Xbox department ain't.
I don't see an Xbox III in 2010 or 2011 ever happening

 

[Log4Girlz]

I see an Xbox 3 coming out, but it'll be pitched as a PC. Just watch, it will be a cheap pc with killer graphics.

 

[AlanHemberger]

I see an Xbox 3 coming out, but it'll be pitched as a PC. Just watch, it will be a cheap pc with killer graphics.

You mean basically an original Xbox? We all know how well that turned out.

 

[DCharlie]

Just think of how much *more* profitable they could have been *without* the Xbox's. 6, 7 Billion dollars gone with no positive income in sight?

they would have poured the same money into other risky ventures - as they have done for years and years and years.

Remember people, Microsoft isn't here as a company to make video games. Their board of directors won't put up with this forever...

OH YEAH!

Next week : DCharlie on how to pilot an F16. "Just use the flaps, and fly and then land!"

I don't see an Xbox III in 2010 or 2011 ever happening

there will be an Xbox3 and an Xbox4 and an Xbox5 i'm afriad

 

[bill0527]

Sony won't be losing money per console forever.

Neither will Microsoft.

And I while I dont' expect you to admit through your Sony-goggles, most experts have agreed that Microsoft is in a much better position to make a profit off the 360 than what they were with the original Xbox. When that profit comes? Who knows. But it will come at some point in the 5 year cycle.

 

[goldenpp72]

The reason the 360 can make money is that microsoft owns the hardware rights, they can drop price when they want and not get effed in the ass, I dont think the xbox console itself was ever sold at anything but a large loss.

combined with marketplace, software and eventual hardware profit, im sure the 360 will profit 'on a yearly basis' eventually.

Also the guy who compared xbox losing 7 billion to the 12 billion microsoft made, its not like xbox lost 7 billion in one year, when spreading it out all the way back 5 years ago, the xbox losses vs what microsoft makes is staggering.

Which isn't to say they will continue to make xbox stuff if it never profits, but if it ever manages to safely profit they will be happy to keep it around.

 

[7Th]

I think that in Nintendo it's gona be like a party everyday

Really, they're smart.

Microsoft and thier shield move is hurting, but nothing to care of...

Sony with PS3 can suffer hard times.

I think that the Wii is gona hurt badly to Sony, killing the PS2 sales next year and Sony being unable to sell the PS3.

I can't see Sony diying thougth. I expect that Microsoft will buy Sony

tanasten
Analist

 

[goldenpp72]

Microsoft will never buy sony, ever.

 

[KINGMOKU]

Neither will Microsoft.

And I while I dont' expect you to admit through your Sony-goggles, most experts have agreed that Microsoft is in a much better position to make a profit off the 360 than what they were with the original Xbox. When that profit comes? Who knows. But it will come at some point in the 5 year cycle.

I wouldnt be to sure. If they do start toprofit, it will be at the very end of the 360's life-cycle.

 

[Mrbob]

MS is profitable,
but their Xbox department ain't.
I don't see an Xbox III in 2010 or 2011 ever happening

You would be wrong. MS is too worried about the Playstation platforms evolving into replacing the PC to give up on the Xbox project.

 

[Vigo the Carpathian]

Sony doesn't need their own Major Nelson, they already have Next-Gen.biz.

The same folks that broke the news EXCLUSIVELY that 800k X360s will be sold in the US at full price.
And that Dead Rising breaks X360s'
And EA has no working X360's.


Watch out Rolling Thunder.

 

[artist]

Sony doesn't need their own Major Nelson, they already have Next-Gen.biz.

The same folks that broke the news EXCLUSIVELY that 800k X360s will be sold in the US at full price.
And that Dead Rising breaks X360s'
And EA has no working X360's.


Watch out Rolling Thunder.

Are you a self appointed Sherlock for GAF?

 

[Rhindle]

Like the analyst in that article said, whether or not the 360 makes money is irrelevent to MS - it's all about protecting Windows (and to a lesser extent, the PC). They were afraid that a PS3 being a "computer" not just a game console would hurt their OS sales. Which is almost pure profit.

Probably not a realistic fear, but a possiblity MS had to guard against.

That was the theory for the original Xbox launch, but they are very serious about turning a profit on Xbox360.

So far, their hardware costs seem marginally higher than anticipated, but high software sales are partially making up for it. They are largely on track. The first year loss is within expectations (and in all likelihood substantially smaller than the hit Sony will be taking in the first year for PS3).

 

[Vigo the Carpathian]

Are you a self appointed Sherlock for GAF?

Nah I'm just a regular Joe.

 

[Moonwalker]

No wonder ms aren't in any rush to drop the price. It's an expensive game this good old console biz.

 

[arne]

You mean basically an original Xbox? We all know how well that turned out.

you mean 50% of the way how Sony is pitching their machine to us?

I'm serious.

 

[jedimike]

It's easy for everyone to see the earnings statements and start to draw conclusions about this or that, but you also have to account for the intangible things as well. To be frank, MS's image as a company was in the dumps. Hating MS was as popular as hating the latest Star Wars movies.

The Xbox has helped them transform from a company that was cool to hate to a company that is now just cool. I see far less angst against them. The revival of gaming for Vista will certainly help sell a ton of OS's and because of XNA, developers get essentially a game for 2platforms for the price of 1. Things like this don't show in earnings statements.

There's a lot more happening than just the numbers you see on the bottom line. The directors and executive officers at MS understand this and investors accept it as long as the stock remains a sound investment.

 

[bill0527]

I wouldnt be to sure. If they do start toprofit, it will be at the very end of the 360's life-cycle.

Its going to be hard to quantify when exactly they will make a profit because they are under the umbrella of the H&E division, which is also launching new businesses, namely Zune, and the 'Games for Windows' platform. Any one of these or a combination could have losses that offset the profit of the other. 2 out of 3 could turn profit, but the other one eats it all up and posts losses, or 1 out of 3 could profit, or hell all 3 out of 3 could be nothing but losers and post losses during the life cycle of the products.

 

[Ryudo]

We also know that MS is the most profitable software company in the ****ing world:



Revenue up 11%
Profits up 13%

Here is the net profit for the year, I hope I don't run out of space:

12,600,000,000

thats a lot of frosty's thar

Ha Ha.... Sony and Nintendo combined dont make that much do they ?

 

[nincompoop]

Hold on a sec. So you are saying that MS is losing money on their cutting edge hardware before any process shrink?

THAT'S UNPOSSIBLE!?! *place the biggest rolleyes in existance here*

So how long until they start making money on the original Xbox?

That's funny, Sony and Nintendo didn't seem to have much problem making money coming off the release of their cutting edge hardware.

 

[Ryudo]

Umm ... they lost over 5 Billion with the X-box.

That is AFTER factoring in SW revunes.

What do you think they can just get marketshare without spending any money ? Its like expecting to win a marathon without even participating.

 

[Striek]

Did anyone see SCB's post? We knew this ages ago.

Also, arguing since they have a profitable business that losing billions of dollars is unimportant, is not only moronic, its flat-out wrong.

However, as it says in the article and as we've known since day one of the 'DirectX-Box' plan, its existence is a pure spoiler tactic against PlayStation, hence its value is immeasurable.

 

[Ryudo]

Did anyone see SCB's post? We knew this ages ago.

Also, arguing since they have a profitable business that losing billions of dollars is unimportant, is not only moronic, its flat-out wrong.

However, as it says in the article and as we've known since day one of the 'DirectX-Box' plan, its existence is a pure spoiler tactic against PlayStation, hence its value is immeasurable.

Things arent as black and white as that i am afraid. It takes money to make money.

 

[Striek]

Wasn't really the argument most were making though, and wasn't related to my post, was it?

 

[Mook1e]

You mean basically an original Xbox? We all know how well that turned out.

The original Xbox was pitched as anything but a PC. This is why there was no VGA option or USB ports.

 

[Ryudo]

Wasn't really the argument most were making though, and wasn't related to my post, was it?

I always knew i was an individual !

 

[Drek]

there will be an Xbox3 and an Xbox4 and an Xbox5 i'm afriad

Depends if they ever actually take control of the industry.

I personally don't think a partnership between Sony and MS is impossible or even that far off if MS decides to exit the hardware industry. Wouldn't surprise me at all to see a Playstation 5 or 6 with a Direct X based dev environment and co-developed OS and applications.

Thats where the real money is for MS. They've established a strong software lineup, but are taking lumps on hardware that licensing fees aren't close to covering. Getting into some type of licensing deal with Sony would be ideal for their financials and would be the start of a online entertainment portal dominated by the two companies.

It makes great sense, not only from a console technology standpoint, where Sony develops cutting edge hardware and MS develops excellent development tools, but also from the standpoint of both companies getting what they want. MS wants to keep control of the mass market's online interaction, Sony just wants a premium spot as a content provider, which isn't MS' concern. Together they would be unstoppable and both would see profits soar. It would only make sense at that point to move to a licensable hardware configuration, letting 3rd party electronics manufacturers make their own units with various feature configurations, much like DVD players. Game sales would skyrocket, MS and Sony would be raking in profits on both hardware and software licensing fees without having to front much of the hardware manufacturing costs themselves, and would dominate the main online entertainment portal of most consumers.

One console future. BELIEVE! ;p

 

[DCharlie]

Also, arguing since they have a profitable business that losing billions of dollars is unimportant, is not only moronic, its flat-out wrong.

actually - at this point in time, it really is pretty much irrelevant.