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Xbox Losses Double, Xbox Shrinks
seldo writes "According to ITWorld, losses in the last quarter at Microsoft's Home and Entertainment segment have doubled. From the article: 'The segment, which also includes Microsoft's TV platform and PC games, posted a quarterly operating loss of US$348 million, compared with $180 million in the same period a year ago.'" An anonymous reader
points to similar coverage at news.com, pointing out that the company also reports "profits for Office, and one small note about an undisclosed presumably Japanese company that Microsoft if propping up. So, the big question on my mind is, who is Microsoft secretly holding above water, and why? The fact that they are presumably Japanese, seems to point towards an XBox partner. Could this explain the sudden flood of Sega exclusive games?" Another anonymous reader writes "Microsoft will be showing a smaller sized Xbox at E3 this May. In addition to the smaller size of the hardware, the Xbox Lite will also be integrated with Media2Go allowing Xbox users to download digital content such as music and movies. Wonder what this means for all the current Xbox Mod Chips?"
On the one hand, Microsoft are losing money, yay! But on the other hand, if they're losing money they must be selling more and more units, boo!
Not necessarily-- could be spending more on R&D.
LedgerSMB: Open source Accounting/ERP
It would have been much cheaper for Microsoft to bundle some of their own games, like Halo, with the Xbox. Instead they chose to bundle two games which Sega made exclusive to Xbox, and which didn't sell very well in their own right: Sega GT and Jet Set Radio Future.
My guess is that Microsoft did this to appease Sega and boost sales of their titles, in order to keep Sega making Xbox exclusives.
maybe i'm missing the point, maybe i'm old. but why are features like streaming video becoming more and more popular with consoles these days? am i the only person who use his game consoles for, well, games, and a pc for more 'useful' features?
The only logical answer is Sega. There is no other developer out there that is giving the Xbox any kind of serious support in JPN. Xbox is only getting games from them that are on all three systems or nothing much at all. MS needs to figure something out with the JPN market if they hope to really fight in the Consoling gaming market. I don't see them getting any major head way though (but that doesn't upset me at all) due to these already tight partnerships: Nintendo has Capcom, Namco, Square, Sega (amusment vision) Sony has Square/Enix I know I am not listing all the JPN developers..but those are the big buys (for the most part)
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MS bought Rare in late Sept. for $375 million. I wonder how much of the $348 million reported as losses can be attributed to that acquisition.
Like them or not, MS is in the console business for the long haul whether they turn a profit within the next 3 years or not.
It doesn't say XBox per se, but the division that makes XBox, along with other products is losing more money. For all we know, they're developing all kinds of crazy stuff, which is why losses are larger.
Microsoft's Home and Entertainment segment, which includes the Xbox, PC games and the company's TV products, posted an operating loss of $348 million in the quarter on revenue of $1.28 billion. A year earlier it had a loss of $180 million on revenue of $833 million.
MS has a history of going long-term with high-profile products, and it's paid off for them. This venture was no different, and losses were expected. Maybe if this story was posted say, 3-4 years down the road, it'd be newsworthy, since that's when MS is expected to BREAK-EVEN with the Xbox.
This sounds like editor & zealot bait - fanning the flames of hate. Woo-hoo, MS is losing money?
Woo-diddley-hoo, they knew it before we did. Get a grip.
i'm amazed that i survived - an airbag saved my life.
Coming from a big PS/2 background and advocate, I was converted to the Xbox from my brother. For the same price of a PS/2, I got Dolby 5.1 in all games, network adapter, built-in hard drive, etc. The Xbox is very cool, and from what I've read, the #2 console. So despite the current losses, I think there is a lot Sony has to live up to in its next gen console to even catch up to what the Xbox now offers. And #2 ain't bad for a 15 month console life span!
I hope not.
While I am not one to engage in schadenfreude for its own sake and I certainly support people's efforts in the area of embedded technology in certain parts of the home, I think these losses are good news on the whole. It's not that Mr. Gates's presence in the video game console market is itself really that important in real life - it's that Microsoft has repeatedly exhibited expansionist tendencies, and it's been pointed out that the very name "Xbox" is intended to mean "Anything Box" (ie. the "X" is a cheeky metasyntactic variable).
Not to be a conspiracist, but to me this implies that they have much more on their minds than video games. Imagine if their intention is to further expand beyond the digital media space they've so far occupied and on into real-world objects? Imagine if they make something that could be used to (mis)create toast? I find these prospects very alarming, and thus the news of the Xbox's impending failure can't help but be a little bit of a relief.
Could I interest anyone in some toast?
In Soviet Russia, XBoX uses YOU as room divider!
Carthago delenda est!
Are you kidding me? If MS legalizes the mod chips then the Linux folk would completely abandon interest. They're only into it because they think they're thwarting "The Man".
This isn't a troll either-it's the truth. I hope the system succeeds (I think it has, to a large degree) well into the next generation.
As much as people love to hate on MS, they've changed the console world forever. There won't be any more consoles released without a hard drive-it changes everything once you've used it. The same thing applies to the network jack-plug it in and you're off and running.
I know it's been said time and time again, but we play the games. Not the consoles.
If you could be anything you want, I'll bet you'd be disappointed.
OK - so the new X-Box will have more/better security, perhaps with the key in SEVERAL tamper resistant chips, so no one grad student could possibly afford to crack them.
Think the funding for this will not be found? No, because Bill Gates has pissed off a lot of very rich people.
Larry Ellison of Oracle, for one, HATES him and Larry Ellison is a billionaire. There's many more.
Think the new X-Box will go uncracked? No way. Unless chips are coated with Unbelieveium, the toughest material in comics, a quiet team of well funded electrical engineers with electron microscopes etc WILL open the new x-box and print it's guts all over the internet.
Bill's Karma will catch up with him.
It's Christmas everyday with BitTorrent.
Slashdot LOVES articles that cast the Xbox in a poor light.
Here's my take:
Let's just say they 'cut bait' and stop production on the Xbox. What happens?
My 8-10 games continue to function.
The 6-8 games I'd like but don't yet own get CHEAP. (we have an Atari 2600 and 80 odd carts that we bought for pennies on the dollar in garage sales)
My Xbox still makes a killer DVD player.
I dunno 'bout you, but I feel I got my money's worth. On a dollar per hour basis, it's been a pretty good purchase.
And yet, I doubt it's future is in jeopardy less than 4 months after announceing Xbox Live.
"Draco dormiens nunquam titillandus."
"Wonder what this means for all the current Xbox Mod Chips?"
Not much, they'll just come out with new chips that will work with the new systems, much like they do with sony continually coming out with new ps2 models.
"You had this look that of an angel, it was such a bad disguise" --Dishwalla
So did Carnegie...
Doing great things with money doesn't absolve you
of crimes you committed to get it.
Still, MS generates $1 Billion in pure profit every month. They could absorb a money-losing Xbox division for 50 years if they wanted to.
Sega is a public traded company and as such they can not have a secret deal with Microsoft. At least in theory,... Enron, Cough Cough
Help fight continental drift.
Oh, yeah (almost forgot)...Micro$haft SUCKS!
It's always sad to see a monopoly fail when it muscles it's way into a new market :)
I must say though SEGA has made some amazing games for the XBOX-- not enough to warrant a purchase from me.. I have a gamecube and a ps2(one that has a defective discdrive...disc read error blah)... The Gamecube has been insanely fun- more fun than most of my PS2 games... Metroid was tons of fun, and even though the games are pretty stylized and bright they are still great fun.
I don't think Microsoft will be able to stay afloat in the games industry personally- They are just getting started from their perspective- while companies like Sony and Nintendo are already working on releasing new consoles by 2005...
How long will it take for Microsoft to try and move into the handheld market?... Nintendo practically subsidizes their console business with handhelds until they can produce them cheap enough to stand on their own.
3 consoles-- and the market is already saturated...personally I hope microsoft fails- they produced an inferior product in many respects-- I'm am glad that the gaming public has enough taste to avoid the heap of plastic the XBOX is.
I'm sorry, but this is more than $500 million MS has lost so far on Xbox, and that is big news no matter how you slice it. Does anyone honestly think MS got into this business in order to lose money? What would be the point? There are two possible reasons for MS to have gotten into the video game business, and only two:
1. To make profits. This is self explanatory.
2. To use the system to leverage their Windows business somehow, selling the system at a loss in order to eventually put some modified version of Media Center in your living room.
They're failing at #1, and as far a I know, #2 would be illegal - it's basically exactly what they were found guilty of in court already.
No company can continue to lose money at something forever. I'm sorry, but this is a publicly traded company and if I were holding MS shares there's not really anything MS could do at this point to convince me that getting into this business has been a good idea. Sony's profitable, Nintendo's profitable, MS is losing *large* amounts of money. What's wrong with this picture?
Almost lost in this story is that MS is now saying they're barely going to hit the low end of their sales forecasts. You think they expected to lose $384 million? They probably wouldn't have if they'd sold as many consoles as they'd hoped - this means less software sold, and fewer royalty payments. The fact is the Xbox is not doing well, however MS wants to spin it.
And regarding this Japanese company they're "propping up" - I would honestly doubt it's Sega, though it's possible. However, all of Sega's recently-released Xbox games were announced over a year ago (at the E3 prior to the Xbox's launch), and the only recent Xbox game I can recall being announced by Sega is Virtua Cop 3. That's honestly not a lot of support. More likely, the investment is in Tecmo - which has been devoting almost exclusive support to Xbox ever since its release, and which has two of the highest-profile titles ever released for the console - Dead or Alive 3 and Dead or Alive Extreme Beach Volleyball, not to mention the recently announced Dead or Alive: Code Cronus and the hinted-at Dead or Alive 4. All Xbox-exclusive. Sega, by contrast, hasn't released any million-sellers for Xbox, not even close, and hasn't announced much for the system lately.
I recognized that some people think that since MS loses money on Xbox, and MS is losing much more money on XBOX now, that means MS XBOX sales are good (meaning more Xboxs are being sold at a loss). This is untrue.
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Xbox is selling poorly.
"the company lowered its total Xbox sales forecast to 9 million to 11 million units by the end of June 2003. The company originally expected to ship that many units by the same point in 2002.", for comparison playstation2 has sold 50 million units.
http://www.itnews.com.au/storycontent.cfm?ID=17
Another bad sign is component manufactures like Focus (and likely Nvidia) are being told that they don't need to make more components for the Xbox (mentioned in above link).
Huh? The Japanese *adore* foreign-made products. It's also that they're quite a bit pickier about the (perceived) quality. Look at the bunch of dokushin-kizoku driving BMW's, or all those girls with Louis-Vuitton bags. Both are indicative of perceived quality, and both are "foreign" goods to them. Let's see, culturally, it's still "cool" to be American. That's still foreign. I have been in this country for a few months, and I have *yet* to hear the gov't say "buy Japanese".
The reason Xbox isn't doing well isn't the foreign vs domestic bit, but the fact that the genre popular in Japan (RPGs, puzzles, etc) aren't there on the Xbox.
Yes, if you go to my journal, this is prettymuch what you'll find. I was kind of impressed with how it turned out, though, so here we go.
Okay, so Xbox losses doubled. The question is, does anyone care? Most people today get Xbox for one of two things: Halo or Xbox Live. It's not like people are saying "Why look, honey, another fine Microsoft product. We'll go pay a whole bunch for a brand new one!" And Halo is not receiving the near-divine praise it once was. Now it seems to be a precedent (and I have no objection to that, Microsoft does a good job of publishing trend-setters) that most other games compare themselves to (Ex: Tribes Aerial Assault). So they think releasing "Xbox Lite" will solve this problem. Yes, that makes sense, spend even more money to pump into a system that is attracting a smaller and smaller audience.
This seems like another famous Microsoft Act of Desperation (MAD). So maybe they need to step back and realize that maybe console gaming isn't their thing. It was released originally at a prime time, but the market for the PlayStation 2 was enormous, cutting down tremendously on possible sales. After all, someone spends $300 on a new PS2, it's not very likely that they'll spend the same amount on an Xbox while they're at it. So they need to pull out of console gaming for a while, and stick to what they're good at: successful publishing of PC Games. This is where they have my deepest respect. Sure, they make it seem like they're the ones making it, but you'll notice somewhere, maybe on the CD, maybe on the case, that some other company, usually one most people haven't heard of (Ex: Fasa Studios - MechWarrior Series, Gas Powered Games - Dungeon Siege, Ensemble Studios - Age of... Series) actually produced it.
EA and MS comprise about 90 percent of my PC games, which is impressive considering my gaming site requires me to have the 'latest and greatest' of the bunch. So stick with something you're good at, Microsoft. PC's are your specialty, and stay the hell out of console gaming. Remember, the Xbox is down, and nobody cares.
TLoM: Nerds + DDR + Rednecks for the win!
"If MS legalizes the mod chips then the Linux folk would completely abandon interest. "
No, there are always people who like to modify things. I'm happy to just buy Sega games, Tecmo games, and the odd non-Sega/Tecmo game (Splinter Cell, for example) for use on my Xbox. Legally, I have the right to do whatever I want with my Xbox, including using it as a toilet. I can put any chips I want into it, even PowerPC chips!
People don't want to modify their Xboxes because they legally restrained from that action, they want to modify them because it's a fairly compact (compared to a full tower PC) unit with all the important hardware for DTS/DD and HDTV in one unit.
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When they filed their year end statement, I distinctly got the impression that that XBox did well - at least they were bragging that the sales were better than expected. Now the say that it's loosing money. Is that misleading investors, or what? XBox is important to MS becuase the Office and OS buisnesses are mature and won't be able to sustain the company forever. This shows that the company is failing to grow into other segments.