Xbox Sees Earnings Lag, Stronger Sales
Thanks to GameSpot for its article discussing the Xbox-related financial results from Microsoft's Q4/annual 2004 earnings, released yesterday. The article notes: "The Home and Entertainment Group, which includes the Xbox division, had a $339 million operating loss for the quarter on revenue of $499 million and anemic revenue growth of 3 percent - the lowest growth rate of any of Microsoft's seven business segments. Though Microsoft doesn't break out separate results for the Xbox, it's pretty clear that the console business is still a strategic investment, not a profit center." However, it's not all bad news, since "Xbox shipments increased 27 percent over the same period a year ago. Microsoft reports 15.5 million units sold worldwide through the end of June: 1.5 million in Asia Pacific, 3.9 million in Europe, and 10.1 million in North America. The company also quoted industry research group NPD's claim that Xbox has a 33 percent market share in the US, with 50 percent growth in software sales over Q4 last year." Does this bode well for the apparent 2005 launch of Xbox 2?
Isn't Office for the Mac in that division as well?
It'd be interesting to know how the Xbox numbers compare to the Office:Mac numbers if so--I suspect one is carrying the other.
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manage to spend almost 2x what the total revenues were?
If I did this I would be MBNA's bitch for the rest of my life. Ah to have the life of a corporation....
Losses almost as big as revenues = sound business strategy. I'm sure their shareholders are loving that. I mean, they obviously need to do something with all their cash, but flushing it down the toilet usually isn't the best strategy. Of course, if they leverage these losses to eventually become profitable in the console market, that's another story. But that's a big "if" right now.
I think it really all depends on what specs the Xbox2 has. If the Xbox2 won't play first gen games then I think this buying trend (which appears to be people have waited a while to buy) will not be good for the Xbox2 release because all the games bought in December of 2004 and January 2005 (like Jade Empire and Halo 2) will then be useless. And even though Penny-Arcade and the like will own every console known to man normal people like myself (who just purchased an Xbox a few months ago) will wait a few years to purchase a new system. I think this will lead to poor sales for the Xbox2 unless the Xbox1 games will work with the Xbox2 and then maybe I could pay ~$150 (after selling the Xbox for $50) for a new console and I wouldn't have to buy any games right away.
it's what Sony does, or doesn't, do to counter.
Nintendo has already said they're trying to sidestep the next generation of consoles; the focus is going to be on "Revolution" (whatever the heck it is). So they're out, and will probably be content with 20% market share. Look at Nintendo as trying to transition to the Apple business model, with the Gameboy Advance their bread and butter.
Xbox being 33% in the USA market is a good thing; they've got strong sales and they're getting better as the PS2's hardware just can't keep up with new games. Compare PS2 Spider-Man 2 to the Xbox version, the PS2 version looks like ass.
The trick for Microsoft now is to leverage themselves so that they're the next-buy instead of the PS3. They're 33% in the console market right now because the majority of Xbox owners also own a PS2. When crossover titles come out, this hurts them - people pick one console or the other as their primary, and only get the "must have" titles on the second.
It will help immensely for early adoption sales, however, for Microsoft to have the Xbox2 compatible with Xbox games; The Playstation did the same, and people saw it as an "upgrade" rather than a whole new platform. This enabled them to keep a lot of customers, as opposed to Nintendo's N64 being abandoned by many players for the Playstation - you can bet they'd have had better luck if the N64 had been backwards compatible with the SNES.
Of course, Microsoft could REALLY kick ass if someone (them or a third party; preferably them, and in the box) came out with an emulation layer that let the Xbox2 play Playstation/Playstation2 titles as well... they're moving to a RISC processor, so it shouldn't be all THAT hard, especially since they're emulating something that ran at an order of magnitude less clock speed.
Back during one of MS's $1B loss (on Xbox) statements, someone posted the relevant portion of the law against abusing a monopoly... could someone who knows where to find this info either post a link to a site with the laws available, or post a reply with the relevant info, please?
The basic jist of it (from memory, it was a year or 2 ago), was "using one's position and finances within one market to attempt to dominate another, unrelated market" or something like that. I'm almost positive it specifically mentioned losses for an extended period of time (proving the company won't be able to profit in the new market until its competition is dominated).
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#2 - Nintendo's PR and designers have made statements that the console currently named "Revolution" will be a "different" sort of Console.
To wit: THIS.
The Xbox has not failed; if it had it would be dead by now (3 years after launch?) and a second generation would not be planned. Microsoft successfully turned a 2-player market into a 3-player market. This whole article is stating that "people don't like the x-box and are not buying it" and "of course, nobody has an x-box" are simply not true.
Post MS console makers: Nintendo, Sony, MS
2 to 3, huh?
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I wouldn't count them out yet. When has Microsoft ever did anything right the first time, or even the second? Windows 1.0 and 2.0 were terrible and barely usable, Word for Windows 1.0 and 1.1 were not very good, IE was up to version 3.0 before it really started overtaking Netscape, and it even took MS DOS until version 5.0 to really be any good.
I don't own an Xbox, I have a PS2 and Game Cube, but I have seen how Microsoft operates in the past. They take the best ideas of their competitors and incorporate them into their own designs. I would guess that the Xbox 3 will be the real contender.
Umm...Halo 3?
What the hell are you talking about? The PS2 was a total crash thanks to god awful launch games (PS1 games don't count) and the shortage of units at launch day. The only reason why it survived was because it played DVDs (now a moot advantage) and because it played PS1 games (once again, moot).
The only real killer game for the x-box is halo,
Go back to playing KOTOR, Splinter Cell : Pandora Tomorrow, and Halo on your PC and try getting a smooth framerate. I've been playing them smoothly with no hassels on my X-Box long before they were ported the PC. Wanna play some Mechassault with me? Oh wait, you can't.
PlayStation was the first generation for Sony, and a completely new disc format. There was nothing to be compatible with.
The Atari 7800 was backwards compatible, but didn't beat the NES to launch, and wasn't advertised properly. See any history of Atari if you want more details on the matter.
The PS2 was backwards compatible... and hey, it WORKED! All things being equal, a backwards compatible console from the same company will do better than a non-compatible console, because you'll speed early adoption as players go for the "upgrade".
Connectix WON their court fight. They were completely legal to sell their emulator.
The only reason that VGS died was that Sony paid them boatloads of cash to stop selling it.
Bleem would have won, too, but they ran out of the financial resources needed to challenge Sony. Microsoft wouldn't have that liability, it'd be big company vs big company.
I think Microsoft's not going to go with Sony compatibility, but that's nothing to do with their lawyers - they know they could win the court fight, or at least drag it out long enough that the console was entrenched as-is.
The real reason I think they won't is that if they sell well, they're essentially handing Sony sold-market share; if people buy Sony games to play on an Xbox2, Microsoft doesn't see the licensing profit from that.
In the end, it could be an entirely winning tactic - kill your opponent because nobody's buying his console, even if people are still buying the games. But Microsoft would have to eat the fact that they're feeding Sony's bottom line a bit by keeping their software sales propped up.
most people don't know or care that Xbox is from Microsoft. and it's doing quite well. btw i'm a Nintendo fan so i'm biased the other way. the sad truth is MS probably can "win" by having the Xbox2 out early enough with enough pretty but not too special games at launch. I hope i'm wrong, i'd like a Nintendo comeback and for people to recognise Nintendo and Sega for the great games hardware/software design companies they are. As for Sony.. it's such a vast company you can't sum it up easily, but i'll be surprised if their PSP is a threat to Xbox2.
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I don't think that the Xbox has failed just yet. AFAIK, popular games (Halo 2, sports games, etc.) are still being released for the system three or so years after its release, although that might just be MS being able to expend huge amounts of money on ensuring development and multiple-platform launches. I do agree that the Xbox doesn't have a compelling list of games, but I've always chalked that up to the PS2 being released first.
Personally, I try to buy games for the Xbox. I'm not a PS2/GC/Xbox-only fanatic, so I own a PS2, a GC and an Xbox. I think that the graphics look "better" on the Xbox. If I thought the graphics were better on the PS2 or GC, I would buy games for the PS2 or GC. On the other hand, there are some games that I can't get on the Xbox that I can get on the PS2 or the GC, so I purchase them for the required platform.
As for my statement that people don't like the x-box. Your right it is a 3 player market and MS finished last. Since GBA games sell at full price (at least over here) you could even argue that the gap between nintendo and sony is narrower, after all the money is made in game sales not in console sales so exactly why should nintendo care if it sells gamecube or gba games? But MS is last while they had cleared aimed to be number one. If this is not failure I don't know what is.
Judging from non-geek co-workers I meet I also get the idea that people have a PS2 or a PS2 and a x-box. Very few people seem to have just an x-box. Ofcourse just my experience is not worth much but I wonder how true this could be around the world.
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PS2 a total crash? Riiiiiight. Where exactly do you get your sales figures from? Bill Gates wetdreams? Not being able to ship units fast enough is a good thing, it shows demand. You will note that MS had no problems with empty stores or people hitting each other over the head to get the last unit. Nope, the x-box stood there in the store totally undisturbed by crazed shoppers.
That you don't even have the intelligence of a deranged MS fanslave comes with the backward compatabilty of the PS2, a recent /. poll showed that many players found that a plus.
But you totally loose it with the dvd. Hello the x-box did the same.
Oh well. MS fanboys on /. God you must have an awfull time here.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
x-box was supposed to take over the console market. Instead it has the lowest sales of the current generation and is a total failure in japan wich is the current home of gaming. MS has so far only lost money on the project. Exactly how this all add up to anything else but failure?
I really don't get x-box fans. Dreamcast fans have no trouble admitting the financial failure of their console. Neither do all the fans of the non-gb handhelds. They freely admit nintendo beat them in sales. What makes X-box fans so unwilling to admit the truth?
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.