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Xbox Division Slips Back into Loss

Posted by Zonk on from the you-can't-win-em-all dept.

Despite general news that Microsoft's revenues were up last quarter, the Xbox division slipped back into the red with a $164 million operating loss. From the article: "The operating loss in the division also dropped year on year, falling to $164 million from $204 million, which could be seen as very positive - but can equally be interpreted in light of the fact that the previous quarter, ended on December 31st, saw the division post its first quarterly profit since the launch of Xbox."

69 comments

  1. Here's what I think by Will2k_is_here · · Score: 4, Interesting

    Recent sales are low because everyone is anticipating XBOX2. Why not?

    1. Re:Here's what I think by NanoGator · · Score: 1

      "Recent sales are low because everyone is anticipating XBOX2. Why not?"

      Because people play games and not machines?

      --
      "Derp de derp."
    2. Re:Here's what I think by Rayonic · · Score: 4, Informative
      "Recent sales are low because everyone is anticipating XBOX2. Why not?"

      Because people play games and not machines?


      Tell that to the Sega Dreamcast.
      --
      [PowerPoint] is a tool for capitalist presentation
    3. Re:Here's what I think by shadowzero313 · · Score: 5, Insightful

      I'd say it's because the only killer app for xbox in the last year or so has come and gone. If people wanted to get halo 2, they would have within a month of it launching. Those who didn't buy at launch were either convinced for it or against it relatively soon after, so now halo 2 is the same as most games for sales. Now that the big event has passed, the market for xbox games is settling back down into it's old behavior.

    4. Re:Here's what I think by NanoGator · · Score: 1

      "Tell that to the Sega Dreamcast."

      Huh? The DC died because Sega couldn't keep producing machines to sell. It's a widely regarded tragedy, not a mass exodus to a machine that Sega was hyping up.

      --
      "Derp de derp."
    5. Re:Here's what I think by ZephyrXero · · Score: 4, Interesting

      There are two reasons why Dreamcast "failed". They didn't have a DVD player and PS2 did (the first year of PS2 sales in japan were almost exclusively for the dvd functionality and not the games). The other, main reason it's no longer with us is the Saturn. The Saturn was such a horrible failure that it put Sega billions of yen in the hole. The Dreamcast would have had to be extremely popular to pull them out, but it didn't take off quite as fast as they hoped/needed. Since you usually don't take a loss on software, it was only natural for them to switch to a software only company. If it weren't for the Saturn, we'd probably still be playing new DC games and hearing rumors about its successor coming out this fall :(

      --
      "A truly wise man realizes he knows nothing."
    6. Re:Here's what I think by NanoGator · · Score: 3, Interesting

      The Dreamcast had a respectable user base when the PS2 came along, it was cheaper, and the graphics on it were better than what was typically shown on the PS2 for it's first and second generation games. Granted, it is doubtful the DC would have beaten the PS2, but if Sega had more money I bet you it'd most definitely be around today.

      As for the DVD player, I agree that had a strong effect on getting the PS2 off the ground, but realistically speaking that is NOT what's carrying the weight of the system. I would be REALLY curious to see if the XBOX remote control that enables DVD playing was sold with a lot with the 1st year of its sales.

      Frankly, I'm saddened by the death of the Dreamcast. It was the first real hardware I truely appreciated from Sega. The others really felt like they cut too many corners. (Well.. maybe not the Genesis. I didn't like that machine a whole lot, but by the time I came on board the SNES was out.)

      --
      "Derp de derp."
    7. Re:Here's what I think by Anonymous Coward · · Score: 0
      Wow, of all the problems Sega did have with the Dreamcast lack of consoles in the US was not one of them. Many stores tended to sell out during Xmas 99 but that was a good thing. There was no universal shortage and people who wanted one could still easily get them, the sellouts were merely an indicator of how successful it was.

      Read and learn.

    8. Re:Here's what I think by ZephyrXero · · Score: 1

      The DVD player thing is mainly just about Japan. In Japan companies were having a hard time convincing the public to make the switch, and the PS2 kind of ushered it into popularity. In American and Europe that was not so much the case, and by the time the Xbox and Gamecube (Japan got a dvd edition) came out it didn't matter anymore..

      --
      "A truly wise man realizes he knows nothing."
    9. Re:Here's what I think by g-san · · Score: 1

      GTA San Andreas is coming out for XBox in June last I heard, so there may be one more killer app. I will probably rent it first, I was not nearly as impressed with San Andreas as Vice City. If they do it in 480p and have decent sound and textures plus have the custom radio stations, it's a buy.

    10. Re:Here's what I think by Anonymous Coward · · Score: 0

      Thats perhaps the other problem. While there are rumors back and forth on the subject, are you sure you're going to buy a game for what is essentially a dead duck consolee instead of saving for a better game on a better platform?

      With playstation games, it was a no-brainer... anything you bought at the end of the PS1's life cycle was known to be playable on the next generation, and Sony trumpeted this to the heavens. Again (with less fanfare, since it's come to be expected) with the ps2->ps3 jump.

      The best we've gotten from MS on this is apparently a survey that mentioned that you might be able to play against xbox1 users using an xbox2 if you're playing the same game.

    11. Re:Here's what I think by Anonymous Coward · · Score: 0

      The Sega Saturn was a magnificent piece of crap, I really do have to agree with you.

    12. Re:Here's what I think by Bigthecat · · Score: 2, Informative

      There is a third major reason: Piracy. It is well-known that the Dreamcast employed their GDROM system with a gigabyte of storage that at the time couldn't be burned by the home user market. Unfortunately, most games developers didn't actually fill their GDROMS, so one could be duplicated easily and burned to a CDROM. Add that to the fact that to pirate games all you needed was a bootdisk, no other modification, and the Dreamcast had a thriving market for pirated games. Having looked for a second hand Dreamcast not too long ago, I found that the majority of consoles selling either openly came with so-called 'backed-up' games, or a 'free gift' of hundreds of games. On top of the other reasons, the Dreamcast really didn't need this to kick it in the guts.

    13. Re:Here's what I think by birder · · Score: 1

      I think it was a much simpiler reason. Piracy. The DC was the first console I know of that was extremely easy to copy the games. I don't like it's hyperbole to say everyone was doing it.

      They lost money on every console sold and no one bought any games. The games were great it's just that sales must of been awful.

      I can almost hear Sega scream "Stop buying our hardware you're killing us!."

    14. Re:Here's what I think by elrous0 · · Score: 1
      It gets a little old playing the same old shooters and sports/racing/fighting games over and over again. Maybe they can invest in some more original content for the xbox2 (how about some MMORPG's or online strategy titles, people?).

      -Eric

      --
      SJW: Someone who has run out of real oppression, and has to fake it.
  2. The console wars continue by SpartanVII · · Score: 4, Insightful

    I guess they have priced themselves out of any profits. I bought my XBOX for $300 back in November '01 when it was first launched. At that time, those $300 got you the console and one controller. These days (last time I checked), for $150, you can get an XBOX, two controllers, and one or two games. The console wars have driven down the price from what used to be an arm and a leg to something much more affordable in an attempt to sell more and more units.

    1. Re:The console wars continue by StocDred · · Score: 4, Informative
      If you're impressed by paying only $150 for all of that, imagine what $50 can get you in Sega Genesis equipment!

      Xbox has been a financial struggle for Microsoft since Day One. The $150 bundles are SOP for all the consoles once we get a few years into every generation.

    2. Re:The console wars continue by Rousterfarian · · Score: 2, Interesting

      Sony makes profit off of their system at a nice healthy $149. They also outsell the Xbox each and every month.

    3. Re:The console wars continue by zero_offset · · Score: 1

      Sony makes profit off of their system at a nice healthy $149.

      Because the hardware is, by comparison, crap. (Speaking as an owner of both.)

      --

      Slashdot quality declines as the number of hot grits posts decreases. - Provolt's Law, Apr-09-2005

  3. Expenses developing the new console? by bersl2 · · Score: 1

    Regardless, Microsoft will keep fielding consoles for as long as Billy says they can, while Nintendo seems flimsy, with barely any support, and Sega sits in the corner, having no fucking clue what they're doing.

    Thus, I am now reminded of how violated I feel.

    1. Re:Expenses developing the new console? by xenocide2 · · Score: 2, Interesting

      Well, they're not exactly one time expenses, since those are usually investments in hardware and machinery. This was more of an investment in Sameus Blackley, and as it turned out, he didn't think too hard about computers. Yes, PC hardware rapidly evolves, but that doesn't mean your parts drop in price because manufacturers will push performance up to make up for it. Somehow, MS and Sameus were convinced that PC hardware was on some other plane of commoditization compared to the console systems you're used to. They seem to have learned their lesson somewhat, with a general system design that basically sounds like what Nintendo called the GameCube.

      The one thing that the X-Box did was inform the PC developers how shitty a gig it was. Developers took one look at the potential sales on X-Box, compared them to the PC and recognized the PC for what it was: a mismash of technologies preferred by early adopters and a market incapable of competing on price, even compared to the X-Box.

      --
      I Browse at +4 Flamebait

      Open Source Sysadmin

    2. Re:Expenses developing the new console? by bVork · · Score: 2, Insightful

      The Xbox did more than just convince some PC developers to start supporting consoles. The Xbox was the final thing necessary to push me over to gaming entirely on consoles. I was absolutely sick of the six month upgrade cycle you need to follow to run the latest PC games, and suddenly there were (nearly) all of the PC games I wanted to play, on a $300 console!

      The one thing that worries me about the design of the Xbox 360 is the removal of what you mentioned as being a flaw with the original... the PC hardware. I wonder if we'll see less PC ports on Xbox 360 due to its hardware design. Personally, I quite enjoyed being able to play Morrowind, KOTOR and other ports on a $300 console rather than a $1500 PC. Sure, no port has been perfect, but I'll take a large amount of tradeoffs at that price difference.

      But I guess the major thing, more important than the hardware, is the profit versus effort. Even if it takes more effort to port a PC game to completely unrelated console hardware, it will be done if they think there will be a profit. In other words, the sales will drive the amount of PC ports. I can only hope that PC-to-Xbox ports have sold well enough this generation to convince developers (or rather, the suits that direct the developers) to port their in-development titles to the upcoming console.

    3. Re:Expenses developing the new console? by FidelCatsro · · Score: 2, Interesting

      This is exactly why the Xbox is a problem for MS , They didnt sway many hardcore console gamers , They bit straight in to their own PC-Gaming market.
      The Xbox to me is a console i could never understand , Its loud , ugly , large and is basicaly an x86 pc (which makes hacking easier so that is a plus ). It really featured non of the things i love about console gaming,Most of the A1 title games are PC ports or PC games in console form, oh and i didn't like halo.

      This machine did not appeal to me , I am unashamedly a console gamer. I do my Pc gaming on Wine or native linux or mac and thats rare ,only for a few games really (morowind , NWN and UT(99,2k4))

      Thus the Xbox held no appeal to me , I may be tempted to get an xbox360 as i could do with another ppc box to hack away at , The games i doubt will intrest me as they continue to focus on PC style games mainly i suspect .

      The only money that has ever been in the Home console market has come from games , Hardware is near unilateraly a loss for companys (The other question i have strongly in my mind , is the xbox seems like MS abusing a monopoly to push into the new market).

      --
      The only things certain in war are Propaganda and Death. You can never be sure which is which though
    4. Re:Expenses developing the new console? by Anonymous Coward · · Score: 0

      Wait Microsoft is abusing its monopoly position in one markey inorder to buy market share in another? I would have never guessed!

      Also hardware is NOT usually sold at a loss. In fact SEGA is the only recent company besides Microsoft to sell at a loss and look where that got them. The PS2 was sold at a marginal loss at the beginning of its life cycle but is profitable now. Nintendo has never fielded a consol at a loss. The PSP is probably selling at a loss which may say something about its viablility.

  4. Halo 2 by skyman8081 · · Score: 4, Insightful

    Sales are low because everybody already bought Halo 2.

    But not everybody's buying Turf and the other new map for said game.

    --
    Two Roommates and a Boyfriend, updates Monday, Wednesday, and Friday
    1. Re:Halo 2 by Anonymous Coward · · Score: 0
      But not everybody's buying Turf and the other new map for said game.

      Actually, you couldn't be more wrong. Most of the people I have tried the maps out with have the $5.99 Killtacular Map Pack and play with the rest of us. Of course theres always one or two people who don't have the pack, but that's their loss. I can't wait until the playlist update that integrates these new maps. Besides, its only $6 and that $6 can get yo MANY hours of fun.

    2. Re:Halo 2 by CrazyJim1 · · Score: 1

      I bought an xbox so I could play Halo2. I admit there are no other games for the system I am interested in, nor will I be buying maps for it.

      --
      God spoke to me.
    3. Re:Halo 2 by MBraynard · · Score: 1
      Recommendation.

      Go on Ebay and buy this awesome RTS for Xbox - MAgic the Gathering: Battlegrounds. Best Xbox game ever.

    4. Re:Halo 2 by GaryPatterson · · Score: 1

      I bought the X-Box with Halo and a tennis game (both included).

      Since then I've bought Halo-2 and Beyond Good and Evil (great game).

      I can't see anything else worth playing...

    5. Re:Halo 2 by kisrael · · Score: 1

      Or Crimson Skies.
      Or Fuzion Frenzy, if you have 3 friends around.

      --
      SO YOU'RE GOING TO DIE: The Comic for Dealing with Death
  5. Somebody doesn't understand seasonality... by ComputerSlicer23 · · Score: 4, Insightful
    but can equally be interpreted in light of the fact that the previous quarter, ended on December 31st

    Okay, let me explain this to you. Christmas is the biggest, baddest ass time of year when it comes to retail business. I want to say like 35% of all retail business takes place in the month of December.

    Game publishers try to get their best games out around Christmas seaons, because they know it's a great way to have a block buster game.

    If X-Box has equalled the quarter that had Christmas during any quarter that doesn't have Christmas in it. Either they did something incredibly wrong during Christmas, or they did something incredibly right during the non-Christmas quarter.

    There's a reason they seasonally adjust all retail numbers when doing economic analysis. It's because not all quarters are equal.

    Kirby

    1. Re:Somebody doesn't understand seasonality... by Anonymous Coward · · Score: 0

      Ah yes except both of those are yearly loss numbers. They are compairing 2003 with 2004. RTFA.

      Wait let me sum it up:

      XBox fails to make any money... Again.

      Or

      Xbox losses millions less then before.

    2. Re:Somebody doesn't understand seasonality... by Keeper · · Score: 1

      Those are quarterly figures, not a summation of revenue from 3Q 2004 to 3Q 2005. They're comparing last years 3rd quarter results with this year's 3rd quarter results.

      If you examine the figures, you'll note 12.3% revenue growth and a 20% reduction in operating losses. If you assume that their growth continues at that pace, the xbox division will be consistently profitable in roughly 4 years.

      It will be interesting to see how those figures change after xbox2 launches; they've got to be dumping a fair amount of money into R&D for that unit...

    3. Re:Somebody doesn't understand seasonality... by Anonymous Coward · · Score: 0

      "Okay, let me explain this to you."

      Nothing like some guy who works part-time after high-school at EB lecturing the Net on the console biz.

      The Xbox/Flopbox/Portbox or whatever your favorite name is has turned out to be the largest console disaster in the history of the business. Nothing even remotely comes close in any metric.

      And what is amazing is just what a piece of shit the next Xbox has turned out to be. It is doubtful MS will be able to even get half the installed base they got during this console cycle. Even the most diehard MS/Xbox fans seem to be completely discouraged by the whole Xbox fiasco.

      MS has more important things to worry about these days. Some grownup at MS really needs to take control and dump the mess no matter how much temporary face they lose.

    4. Re:Somebody doesn't understand seasonality... by Anonymous Coward · · Score: 0

      "If you assume that their growth continues at that pace, the xbox division will be consistently profitable in roughly 4 years."

      Um, why the hell would you make that silly assumption?

    5. Re:Somebody doesn't understand seasonality... by dtfarmer · · Score: 2, Interesting

      If you assume that their growth continues at that pace, the xbox division will be consistently profitable in roughly 4 years.

      So, nine years to become profitable sounds good to you? And how many more beyond that will it take just make back what they've already lost over the last ~5 years? (R&D began well before launch remember...) What makes you think that growth rate from one quarter's results will hold over 4 years? Is growth always positive, and if so, where's my Microsoft Bob?

      It will be interesting to see how those figures change after xbox2 launches; they've got to be dumping a fair amount of money into R&D for that unit...

      Interesting that you assume a) they will have no R&D after they launch (what, no xbox 3?) and b) the xbox2 launch will be immediately good for the bottom line (xbox1 launched losing an estimated $120-150 per unit sold, we have no idea about pricing for xbox2 yet, but you would hope they learned their lesson the first time around - luckily since they print their own money, they were easily able to shake off the losses unlike Sega)

      Basically, this article comes as absolutely no surprise to me. In fact I basically summarized it over two months ago. $84 million profit in one quarter versus the billions lost in the others is not a win. Until E3 shows me different, I'll still be betting on MS to place or show in the next generation.

    6. Re:Somebody doesn't understand seasonality... by mister_slim · · Score: 1

      Yeah, they launched Halo 2, making one of the largest initial shipments to retail ever, which retails still haven't worked through. Last quarter shouldn't be just seasonally adjusted, it should be adjusted for the fact that a highly anticipated game, with development costs in previous quarters, unbalanced the results.

    7. Re:Somebody doesn't understand seasonality... by ComputerSlicer23 · · Score: 0
      Nothing like some guy who works part-time after high-school at EB lecturing the Net on the console biz.

      Hmmm, that's funny. For whatever it's worth, I'm a College Grad, majored in Math and CS got a BS. I took several economics classes in College and have read up on economics, and statistical measures in economics in particular. Both as an interest in investing, purely for fun, and because I've considered becoming an actuary. I've got the necessary skills and background to become an economist if I really wanted to.

      It doesn't take any insight into the console business in order to realize that's a really stupid mistake to make that comparison.

      Here is some good reference material were a world famous economist goes into detail about economic measures and statistics. One of the points he drives home in detail, is that all statistics have to be considered in context. One of the major considerations is seasonal adjustments. It's important in any retail business. It's important in any personal real estate stats. It's important when considering the price of Oil.

      He talks about how a couple of bad snow storms in April can make the housing market look horrific. When if you take into consideration the weather, the numbers aren't so bad. He discusses how the Department of Labor does such things, and how they make refinements over time to their methodology. That comparing numbers between two different methodologies can at points be misleading.

      Finally, my favorite math book of all time, is "How to Lie with Statistics". Wonderful book. It should be required reading by anyone who reads news articles. People misuse, or misinterpret statistics all the time.

      The author of the article clearly didn't take seasonal issues into consideration when he compared the retail Q4 to retail Q1 (if he did, he should have mentioned it). You can call me a High School drop out if you like (no matter how wrong that is). Sure I'm an arm chair economist, but I sure didn't make such a stupid comparison while writting for "GamesIndustry.biz". I didn't post such a silly quote on the front page of an /. either. However, I can see a bogus comparsion when it's blatantly obvious.

      Kirby

    8. Re:Somebody doesn't understand seasonality... by Keeper · · Score: 1

      So, nine years to become profitable sounds good to you? And how many more beyond that will it take just make back what they've already lost over the last ~5 years? (R&D began well before launch remember...) What makes you think that growth rate from one quarter's results will hold over 4 years? Is growth always positive, and if so, where's my Microsoft Bob?

      Where did I say it sounded good? Stop jerking your knee all of the place. It's annoying.

      I can't guarantee you that their growth will remain constant, no more than you can tell me that it will get worse. Based on the performance trend of that division, it will probably perform better -- not worse. Based on what they've disclosed of their plans in that market, I personally see them improving their performance. It is a judgement call; you are free to disagree if you like, but your judgement call is no better than mine.

      Interesting that you assume a) they will have no R&D after they launch (what, no xbox 3?) and b) the xbox2 launch will be immediately good for the bottom line (xbox1 launched losing an estimated $120-150 per unit sold, we have no idea about pricing for xbox2 yet, but you would hope they learned their lesson the first time around - luckily since they print their own money, they were easily able to shake off the losses unlike Sega)

      R&D costs are variable, and tend to increase the closer you get to a product launch. After the product launches there is a transition period where R&D costs fall off and the R&D team transitions support to (or replace) the ops team. R&D costs will start rising again after a stratedgy for the next generation is formed.

      One of the factors they are supposedly focusing on with the 2nd generation unit is the per-unit cost of the hardware, which should aide in the Home & Entertainment unit's profitability over time. Only time will tell if they produce on that goal. Given what information has been made available so far, it would seem likely.

      To you, billions lost over a few years seems like big money. To any company in this market, it is a years income. You almost always start off losing money entering a market dominated by other companies. If Sony had burnt (for example) 4B on developing their games division, they've made over two times that amount back by now (see below).

      Sony Games division operating income

      FY04 - 68BY -> $649m
      FY03 - 113BY -> $1079m
      FY02 - 83BY -> $793m
      FY01 - (51.1BY) -> ($488m)
      FY00 - 76.9BY -> $734m
      FY99 - 136BY -> $1300m
      FY98 - 116BY -> $1108m
      FY97 - 57BY -> $544m
      FY96 - (8.9BY) -> ($85m)
      FY95 - unkonwn
      FY94 - unknown

      These figures do not compensate for inflation.

      The PS1 was launched in Sony's FY94. Sony reported revenue for the playstation in the 20-F SEC filings under their electronics division until 1998 (and their '98 filing only lists operating income for the games division until '96), so it is not possible to determine what their operating income during the first few years of the unit; in other words, I can't tell you what the initial "entrance fee" for Sony was. I'm forced to assume that the numbers were largely negative, otherwise I would imagine Sony would have made an effort to call them out somewhere.

      If that assumption is valid, you'll note that there was a tipping point -- once the PS1 caught on it took off. 2 years later Sony was dominating the market.

      Also, note the operating income for FY01. This was when Sony launched the PS2; even with their dominant position on the market they still lost half a billion dollars. You may also noticed reduced operating income for FY00 due to increased R&D costs.

      Compare/constrast that information with Microsoft's figures.

      Microsoft Home & Entertainment division operating income:

      FY02 - ($1135m)
      FY03 - ($1191m)
      FY04 - ($1215m)

      Q1 FY05 - ($142m)
      Q2 FY05 - $126m
      Q3 FY05 - ($164m)
      Q4 FY05 - ? at their

    9. Re:Somebody doesn't understand seasonality... by Anonymous Coward · · Score: 0

      "The great thing about Microsoft's current performance (from an investor's perspective) in the game market is that they're at a point where a blockbuster title pushes them into the realm of profitability for a quarter, without a huge amount of market share (what are they at now, 20%? On sales of new consoles they are around 40% now I believe). Four great titles a year is all they need to maintain profitability."

      Fantasy land. Give it up.

  6. Is MS running out of money anytime soon? by AvantLegion · · Score: 0, Troll
    No?

    Then get the fuck over it already.

    Seriously, I'm plenty critical of MS, but this continues to be stupid.

  7. Pressure by warmgun · · Score: 5, Insightful
    From what I understand, Microsoft's plan was to take a hit with Xbox so they could get a user base and then recoup their losses with a profitable Xbox 2 (360?). So this puts a lot of pressure on their next console. If it tanks, remains #2 or #3, or just has a lukewarm response (which is likely), I don't see why Microsoft would stay in for another generation.

    PS I thought the Xbox was supposed to be the key to Bill's wet dream, convergence. What ever happened with that?

    1. Re:Pressure by Anonymous Coward · · Score: 1, Funny

      I thought the Xbox was supposed to be the key to Bill's wet dream, convergence.

      He's only half way through it.

      hold one second

      BAM!

      There's the mental image forming in your head.

      Suckers!

    2. Re:Pressure by bradkittenbrink · · Score: 1

      PS I thought the Xbox was supposed to be the key to Bill's wet dream, convergence. What ever happened with that?

      Yeah, I bet they're still building up to that. In fact I'd bet it's the whole reaon they made WindowsXP Media Center Edition, so they can put a half-assed version of it into the Xbox2pi(or whatever) like they did with Windows 2000 and the xbox.

  8. Re:Nintendo marches on.... by shadowzero313 · · Score: 1, Insightful

    nintendo also has better games and a better system overall, IMO. If they didn't miss the boat completely on internet gaming, they would be well ahead of the xbox for US sales. From what I've seen and played, the only way xbox has such a high amount of market share is xbox live. even if xbox is just decentralized internet play like the ps2 online, it wouldn't have nearly as many consoles in use as it does with live. Even though I'm not a fan of the box, xbox live does have it's strong points.

  9. Microsoft had said this would happen by Nice2Cats · · Score: 1, Insightful
    If you take the time to read their quarterly earnings blurbs, you will notice they told you this would happen -- the last quarter was a fluke, they don't expect to make a steady profit with the Xbox until 2007.

    Nothing here to see, ladies and gentlemen, please move on...

    1. Re:Microsoft had said this would happen by justforaday · · Score: 3, Interesting

      ...they don't expect to make a steady profit with the Xbox until 2007.

      And since they've stated that they're EOLing it in 2007, I guess their ultimate plan is to NEVER make the xbox profitable. How did these guys make so much money again?

      --
      I'll turn into a supernova and burn up everything. Well I'll turn into a black little hole and you'll turn into string.
    2. Re:Microsoft had said this would happen by Anonymous Coward · · Score: 0

      They made a profit by using unfair market practices (like loosing billions of dollars on a gaming machine) in order to put their competition out of buisness so that they could charge what ever they wanted for their products. If microsoft ever gains market dominance expect to pay $500 for a basic XBox and $1,000 for one that plays games.

    3. Re:Microsoft had said this would happen by Anonymous Coward · · Score: 0

      That certainly explains why XP costs so much more than a new OS from Apple. Or why OS/2 cost half as much.

      Oh wait, it doesn't, and it didn't?
      Huh.

    4. Re:Microsoft had said this would happen by snuf23 · · Score: 1

      If microsoft ever gains market dominance expect to pay $500 for a basic XBox and $1,000 for one that plays games.

      That's just silly. The money is in the software with consoles. If they had a monopoly situation the first place hit would be the developers. They would likely need to fork over even more out of every game sold for the right to publish an Xbox game. This would likely push game cost up.
      How much the console costs is based around an acceptable loss versus the profit from the average number of games sold per console purchased.
      This is why the initial console release shows a high price. The cost per unit is higher because when new the parts are newer technology. As the tech ages the machines get cheaper to produce.

      --
      Sometimes my arms bend back.
  10. Xbox = rathole by the+eric+conspiracy · · Score: 1

    This late in the product cycle the Xbox should be a cash cow throwing off the money needed to fund future consoles, repay the investment in the first console, etc.

    Instead it is just a big old rathole into which money continues to flow.

  11. And people worry about Nintendo... by Staats · · Score: 2, Insightful

    ... but at least they make a profit! Sure Microsoft has huge pockets and could lose money like this forever if they wanted to, but a company can only do this so long before stockholders want to see some improvement. Remember that hardware sales equal a loss, software sales equal a profit.

    Look to see Microsoft try to make more games and sell cheaper hardware with 360.

    1. Re:And people worry about Nintendo... by mister_slim · · Score: 1

      The strange thing to me is that the Xbox claims the highest attach rate (games sold per console) but it still can't make money.

    2. Re:And people worry about Nintendo... by Anonymous Coward · · Score: 0

      MS claims a lot of things.

      Too bad they are all just ways of trying to make "DESTROYED BY SONY IN THE MARKETPLACE" sound positive for MS.

    3. Re:And people worry about Nintendo... by Anonymous Coward · · Score: 0

      Well, considering that Microsoft has been giving away one or two free games with each Xbox since about a year after launch, that makes sense.

  12. duhhh.... by Anonymous Coward · · Score: 0

    Maybe it's because they dont send out much stock these days to smaller stores, and instead focus on big shopping centre outlets. I work at a small HMV in UK and we aint seen an Xbox since before xmas.

    1. Re:duhhh.... by ZephyrXero · · Score: 1

      I think MS has already given up on the current Xbox, it was merely their practice system before they really knew how to dominate the industry. Does anyone else smell a new anti-trust suit headed their way in about 5-10 years???

      --
      "A truly wise man realizes he knows nothing."
    2. Re:duhhh.... by Anonymous Coward · · Score: 0

      " it was merely their practice system before they really knew how to dominate the industry"

      Oh, yes the humiliating ass-reaming Sony gave Microsoft is clearly a portent of doom for the console industry.

      Only those evil geniuses at Microsoft could have come up with something as crafty as the 'strategic marketplace failure' of the xbox as a stepping stone to their future domination of the console market.

      Get a fucking clue clown, MS is desperate for consumers to even notice them, ilovebees and so on, that they can only dream with their little peabrains about some day being the target of an console market anti-trust suit.

    3. Re:duhhh.... by ZephyrXero · · Score: 1

      we'll just have to wait and see...

      --
      "A truly wise man realizes he knows nothing."
    4. Re:duhhh.... by cowscows · · Score: 1

      Probably not. But if it does happen, it'll be because of Xbox Live. There's a few big reasons that MS has stayed so strong in the PC world that don't exist when it comes to consoles. The most significant is Businesses/Governments. The majority of businesses and governments get their day to day work done on MS software, and that represents a huge investment in software, related hardware, support, and training. You're talking about lots of organizations with thousands and thousands of workstations, none of which are in any rush to switch away from something that, while certainly not perfect and foolproof, has worked well enough for years.

      Consoles don't have that sort of market. They just go in people's houses. If I decide to switch from Xbox to Gamecube, I just have to convince myself, and go spend a couple hundred bucks for a system and some games. Learning the controls for a gamecube game isn't going to be any harder than learning the controls for a new Xbox game. Beyond that irrational fanaticism of some fanboys, a console is not that big of an investment. And when I get a new game system, I generally don't throw out the previous one, in case I feel like replaying some of the older stuff.

      Another issue is file formats and compatibility and whatnot. This has helped MS keep such a good hold on the home consumer market, as well as tightened their grasp on the businesses/governments. Keeping compatibility with other people forces some conformity. Backwards compatibility is not as huge a deal in consoles as some people pretend, because most people don't throw out their old consoles when they get a new one, and I doubt the average casual gamer goes back to their older games all that much.

      Xbox live is a chance for MS to lock people in, by storing data remotely. People can get pretty obsessive over their statistics and whatnot, as the comments in any /. article about a MMORPG will reflect. As Xbox live starts to track those sorts of things more throughly, there will be plenty of people who invest enough time building up their numbers online that they'll be loathe to just walk away, regardless of what hardware MS asks them to buy in the future, just to keep their accounts.

      Nintendo had the big monopoly in the past, and they did some pretty anti-competitive things to solidify it. It didn't work for them when they hardly had any competitors. MS is strong, but they've got two well established opponents in their market, which would make all out domination quite unlikely.

      --

      One time I threw a brick at a duck.

  13. Effects of PC games on the console market by Valarauk · · Score: 0

    Unless I'm mistaken microsofts userbase is based primarily in north america for various reasons. Games like World of Warcraft, Everquest 2, Counter-strike 2 and a variety of other bigname time consuming releases are beating the hell out of their console competition in the US. It isn't surprising that MC's xbox division sales are hurting.

    --
    **insert favorite profound quotation here**
    1. Re:Effects of PC games on the console market by ZephyrXero · · Score: 1

      Don't be too surprised when they release a WoW for the Xbox 360, and Sony puts EQ2 on the PS3... Counterstrike 1 already came out for the orignal Xbox, so part 2 will probably be a launch title, or soon after, for the 360 too.

      --
      "A truly wise man realizes he knows nothing."
  14. no suprise by Sv-Manowar · · Score: 1

    As the people hear more and more news about the Xbox360, PS3 and revolution, the amount earned by ALL companies will go down, it's just that microsoft are making a loss because of the expense of producing the xbox

    I'm sure sony and nintendo are also experiencing lower profits in the run up to the next generation

    --
    Business Voyeur
  15. If they want to head back into the black... by wickedj · · Score: 1

    They should just release Halo 3: the Rest of Halo 2. That was pretty much the only reason XBox really did well. Heck, that's why I bought the XBox. I still haven't found another game that I would want to buy for it.

  16. Meet the decline by rAiNsT0rm · · Score: 2, Interesting

    This is the beginning of the big gaming decline ver. 2. Having lived through the first gaming implosion in the 80's all of the stars are aligned for a second one. And isn't it amazing how cycles always go in 25 year increments... almost to the day this will again.

    Nintendo is the only one staying out of the hardware arms race and will smartly stay alive and strong through this one. The sheer costs of R&D of Sony and MS's continual losses as well as their R&D costs are going to be the downfalls along with rehashed games and themes ad nauseum. Hopefully nintendo will really bring gaming back to accessibility and fun as they are claiming and get this industry back on track.

    --
    http://teasphere.wordpress.com - A little spot of tea
  17. Re:Nintendo marches on.... by tjhorne · · Score: 1

    Nintendo has better games? Are you on crack?