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

Here's what I think

[Will2k_is_here]

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

Re:Here's what I think

[Rayonic]

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

Because people play games and not machines?

Tell that to the Sega Dreamcast.

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.

Re:Here's what I think

[ZephyrXero]

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 :(

Re:Here's what I think

[NanoGator]

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.)

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.

Re:The console wars continue

[StocDred]

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.

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

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:Microsoft had said this would happen

[justforaday]

...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?