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Xbox Division Down $4 Billion
Forbes, in a long article about Microsoft's monetary situation, drops the news that the Xbox division is $4 Billion in the hole over the last four years. From commentary on C|Net: "That's a lot of money, even for Microsoft, which Forbes also says has a war chest of $40 billion in cash. Just before Thanksgiving, Microsoft will launch its next-generation console, the Xbox 360. The early word is that the 360 will also start its life as a loss leader, though Redmond insists the new box will soon be a moneymaker. Either way, it's got a long way to go to get back to even, and though Microsoft is a rich company, it surely doesn't want the Xbox 360 known as an albatross around its dividend-paying neck."
Agreed. With less consoles, developers can spend more time developing games and less time porting games to multiple different consoles. On the otherhand, if M$ retreats from the market and the major players get down to Sony and Nintendo, unless a balance is maintained between the two, we may see a monopoly, which is not a good thing for anyone except greedy CEOs and stockholders. But I hate "console exclusive" games because I don't want to buy a console just to play one or two games I can't play anywhere else. And this next generation seems to be generating those types of games, because the architectures are so radically different between the three platforms, its going to be harder than ever to make porting of games cost-effective. :(
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I'm pretty similar to you, except that my console of choice for gaming is the PS2. My Xbox just sits on the side mostly playing audio CDs and the occasional DVD.
Both of us have in effect contributed to the $4 billion loss by not buying many (or any) Xbox games, beyond what was in the original bundle.
I'm happy with that. I suffered at the hands of MS for years (no choice of O/S at work), so in my small way, this is payback.
Let us all not forget that the losses for the Home and Entertainment Division as a whole were $4 Billion USD. Not just Xbox. If anything, Xbox only accounted for about $1.5 Billion of those losses and was also responsible for the profit in Q404. Remember, The Home and Entertainment Division also encompesses the loss leading eHome team, DirectX group, Movie Maker, Windows Media Player, Windows Media Connect, Media Center Extender, IPTV, on and on. Out of all of those, Xbox is pretty much the only one generating any significant revenue and has a chance for any significant profit within the next 2 years.
Well not everyone realizes that the XBox bombed in Japan. All they see is it's relative success in the US and then wonder why Microsoft is taking a loss. I dunno if they would have been in the black by now if the XBox was a success over seas, but I am sure they hoped and expected it to do better than it did.
I don't really have any doubt that they would have been closer to their forecasts (and to predictions of a $2 billion loss rather than a $4 billion loss) if they'd done better in Japan. They seem to be pretty close to their sales forecasts for the US and Europe, but it is really hard to understate how badly they've done in Japan. They are not even considered a major player there - people talk about them there in the same way we talk about the Tiger Telematics Gizmondo here. I mean, what are you gonna buy, a PSP, a DS, or a Gizmondo? That's how the Japanese feel about the Xbox, and the sales pretty much show that. The system's basically a joke there. It's got less than 1% market share.
I think MS learned some things from this as they're at least paying lip service to the country now and promising to refocus. They put on a big, somewhat pushy show at TGS that I personally think was a bit too "in your face" for the Japanese (even forcing Xbox bags on people right as they got off the train in Makuhari), but that sort of illustrates their continuing problems there. I think they understand that Japan is tough and they understand that they need to do better there, but I don't think they really have any clue whatsoever how to go about doing that. It's amazing to me that such a large multi-national corporation could be so out of touch with such a major market. I mean, just head-hunt some of Apple's guys, or something - there are plenty of American corporations that do well over there. It just requires an understanding of Japanese tastes, which it still seems like MS doesn't have.