Xbox Division Slips Back into Loss

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."

Comments

The console wars continue

[SpartanVII]

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.

Halo 2

[skyman8081]

Sales are low because everybody already bought Halo 2.

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

Somebody doesn't understand seasonality...

[ComputerSlicer23]

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

Re:Here's what I think

[shadowzero313]

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.

Pressure

[warmgun]

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?

Re:Nintendo marches on....

[shadowzero313]

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.

Microsoft had said this would happen

[Nice2Cats]

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...

Re:Expenses developing the new console?

[bVork]

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.

And people worry about Nintendo...

[Staats]

... 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.