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Microsoft's Gamble With Xbox Business Has Turned Corner

Microsoft's bet on its Xbox 360 video game console is finally paying off.

The high-definition video game device is beating its closest rival -- Sony's (NYSE:SNE - News) PlayStation 3 -- in hardware and software sales. And better yet, Microsoft's (NasdaqGS:MSFT - News) Xbox business is turning a profit.

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Joey Gladstone3424d ago (Edited 3424d ago )

I believe its Truly Naive and ignorant to believe that just because one console or the other has a better week of sales, or downloads or whatever....that suddenly they've "Won" the console race and the other company will just say "OK you've beaten us for that week, it looks like we should halt all production and go home"........these consoles are set for a few more years of direct competition and whether fanboys like it or not, they are here to stay...so simply enjoy the games you like on your console of choice.....
...
....
......."The JOEY has Spoken"

Exhaust3424d ago

Both consoles are here to stay. In the end the PS3 will have more market share but less than they had last generation with the juggernaut PS2.

I think MS only goal this generation was to gain market share which they will and be profitable for the first time which they are now.

This article will turn into flamebait though. Can't wait to hear fanboys say Yahoo is biased to MS or MS paid them to write this... haha

meepmoopmeep3424d ago

i agree with both of you. this gen might not end up with 1 platform being predominate. i think it will be split rather evenly, which is awesome

BrianC62343424d ago

That guy who wrote the article works for Yahoo. Hmm. Do you think maybe he's kissing up to his possible new boss? Does he see the writing on the wall? Microsoft wants to buy Yahoo. He works for Yahoo. If he writes anything bad about Microsoft he might lose his job. If he writes about how well they're doing he might get promoted.

This is just like the knuckleheads at CNBC. They actually told their viewers to sell Sony stock and to buy Microsoft stock. They didn't really have good reasons but CNBC is part of NBC and Microsoft and NBC are TV partners. You just can't trust the media.

BrianC62343424d ago

"This article will turn into flamebait though. Can't wait to hear fanboys say Yahoo is biased to MS"

It doesn't take a fanboy to see that. We all know the story of Microsoft and Yahoo. You have to wonder about this story. Microsoft might be making a profit right now but I doubt they've gained all their losses from their gaming division. They just aren't losing money now. How many billions did they lose from gaming though?

Exhaust3424d ago (Edited 3424d ago )

You realize that Yahoo hates MS right? You know MS has tried to take them over several times in the past decade and Yahoo always says no right?

Come on man you're really stretching this everyone is biased for MS thing. If Yahoo has any biased towards MS is negative bias against them.

Of course they haven't made up the billions invested in the original Xbox and 360. The point is they just went black. Do you have to be Anti-MS everything just cause you love Sony so much?

Come on try to be a little opened minded.

MikeGdaGod3424d ago (Edited 3424d ago )

enjoy your console of choice.........or both

not the Wii though, it sucks balls.......jk ;).......not really

3424d ago
BrianC62343424d ago

Exhaust - I wasn't talking about Yahoo though, just the guy who wrote the article. He seems to be kissing up to Microsoft just in case they end up buying Yahoo.

wow4u3424d ago

"you do realize YHOO hates MSFT right"?

No. You're way off base. These are giant corporations, they dont "hate" one another. They are competitors, bu tthey are not emotional enemies.

There are some at the top of YHOO who either A) think they can make more money without MSFT or B) want a better price.

Most of the world's sober analysts think the case is B).

YHOO will be breaking apart and/or begin a downward spiral if it doesnt get into bed with MSFT.

gonzopia3424d ago

Here's the truth of the matter, excluding the Wii. The Xbox 360 is winning in North America right now, but the PS3 is winning in the rest of the world. That's because North America likes it's first person shooters, and the 360 has two of the best and most popular as exclusives (Gears and Halo) in that genre. In the end, the PS3 will have a more diverse range of games and more media capability, with a greater longevity thanks to it's Blu-ray and PlayTV forethought.

Each will have exclusive games that owners of the other system would like to play... and this kind of competition will healthily boost the quality of those games.

They both win, in their own ways... but people still love claiming victory for one or the other. It's a tough temptation to avoid - but it's silly and narrow minded, and serves no one.

fallfast3424d ago

I think we can all agree that the competition is good. Its even heating up this year, when (i pray) Sony comes through with some good games.

I really like Hack n' slash adventure type games, and I didnt really think HS or Folklore were that great. What I'm seeing of Fable 2 is making me hope that Sony brings something to the table for me... and soon.

robbo9183424d ago

I agree with pretty much all your thoughts on this one. I don't think MS will have won that much marketshare in the end BUT any gain over the lifetime sales of Xbox is gained share I agree. Only time will tell on that part.

As to it being profitable that's a bit of a fib. Yes they put the $1 billion extended warranty out over a couple years to make it have less impact but technically its cost belongs to the systems currently sold, smart business/bookkeeping idea by MS though.

+ Show (9) more repliesLast reply 3424d ago
v1c1ous3424d ago

it made this a 3 horse race.

it went from laughable rookie to industry juggernaut.

they might not win this gen (i personally doubt it), but xbox brand took enough of the pie from sony's court to shake them up and in a way helped nintendo sneak their way into the kitchen for the baker's dozen once again.

in a 3 way race, the one who benefits is the gamer.

chasegamez3424d ago (Edited 3424d ago )

but i will never buy an M$ console again
2 month after buying RROD showed up
that left a bad taste in my mouth

littletad3424d ago

Chase, I said the same thing my ps2 got the DRE three times. And yet, FF10 and Ratchet and Clank changed my opinion.

v1c1ous3424d ago

so don't talk to me about overlooking a console's hardware for a while to play good games :D

kevoncox3424d ago

Ms is making money hand over fist and it's all due to Sony's price point. MS doesn't ccare if it sells the most or not. They care more about turning a profit. Sony cannot afford to cut the price of the PS3 for a long time and MS doesn't care to have it's lead chipped into by a few hundred thousand units. It is going to retain it's price point and continue to sell 200K a month in the US at a 100.00 profit. It will continue to make about $100.00 per HDD sold(120 gig). It will continue to raking int the proceeeds from LIVE( 6 million users X 50 = 300 million a year)

When Sony is able to drop the price of the PS3 again, MS will match. In the mean time, they are swiming in their money bin like Scrooge McDuck

Dave20013424d ago

'Sony cannot afford to cut the price of the PS3 for a long time.'
Actually they can Sony have cut the production cost of the PS3 in half so they can drop the price when the time is right.

'When Sony is able to drop the price of the PS3 again, MS will match.'
Actually its the other way when Microsoft drop the price of the 360 Sony will be able to counter it.

Silellak3424d ago

Uh, whoops, you can ignore one of those "disagrees". I meant to click "agree" but apparently I'm *retarded*.

wow4u3424d ago (Edited 3424d ago )

This is no opportunity to deliver your FUD. Please take your lies ->

That said, regarding this 3-way race;

MSFT was always in this race. They are there with Windows. They have a long history of being a major player in the Video Game industry.

This isnt all "new" to them.

What we're seeing is MSFT's move in The Battle for the Living Room. Before the end of last gen, we heard much discussion of this. The future is a connected, all digital media world. Games, Movies, TV, music, communication, your personal data (home movies, digital photos etc) and on and on.

The "Front End" needs to be in a common space in the home. It is in the Living Room. The backend of the connected future is going to be a Windows Server (WMC with Tuner Cards makes my Xbox 360 a PVR *today*).

The Front End or the UI is going to be a Xbox 360 (for me and 18+ million others). MS isnt doing this just for games, but to bring the power of the Digital Lifestyle into the Living Room, and out of the computer-room.

@2.4
The Console has always sold at a lost, and made their money on Software sales.... you're missing all the Software revenue. That's their cash-cow.

fallfast3424d ago

I had 2 PS2s die on me...and Sony didnt send me a free fix.

It better not happen with my PS3 before I can sell the darn thing.

foodbox3424d ago

sony didnt send me a fixed PS2 when my drive failed.

ReBurn3423d ago

What does Sony not replacing your PS2 have to do with Microsoft turning a profit? I don't get it. By the way, they wouldn't fix mine, either.

wowsauce3423d ago (Edited 3423d ago )

They're already more than 3/4 of the way to the sales the xbox made in it's entire lifetime in the first 3 years. Unless you expect 360 sales to suddenly stagnate, which they won't as almost all consoles have sold best late in their lifetime when they open to the mass market. Then keep in mind M$ is actually making a profit off the 360 now, and will continue to.

And how do you call PS3 a success right now? PS2 was the far and away winner last time, and it's struggling to even make headway to get out of last right now. THAT IS NOT GOOD. They were consistently outsold in retail by the 360 through almost every week last year, with a 150 or so million user base on their last console.

With the exception of 360 stagnating, which is ludicrous, those are all facts. I don't understand how you can see them as positive for sony in any way.

+ Show (8) more repliesLast reply 3423d ago
meepmoopmeep3424d ago

when Nintendo or MS sell 120Million consoles and be #1 for two straight generations THEN it's fine to boast. At the moment it's way too premature.

bigmoney6173424d ago

because they didn't need to dominate with 120 million sold or lead after 2 years to be SUCCESSFUL and PROFITABLE.

see the problem is you measure success by only the numbers when looking at nintendo its a different story.

however you measure success i guess

v1c1ous3424d ago

nintendo did rule for 2 gens :D

Palodios3424d ago

Has anyone beaten them in the handheld market, ever?

Silellak3424d ago

I swear, are there people out there who think gaming actually started with the PS1, or something?

"What, Nintendo had a system before the N64? Surely you jest, my good sir! Sony INVENTED video games!"

wowsauce3424d ago

That Nintendo and M$ are even beating the sony console it's already a victory. Sony won by a rediculous amount for the past two generations, the fact that the install bases of either of the other consoles are larger than Sony's is a huge blow to Sony.

Even if Sony does pass M$, they're well on pace to sell more than enough to pass last gen, and have a strong presence next gen after not even being involved with console gaming 10 years ago. That's still an amazing feat in and of itself.

And sony won't drop to match M$, because when M$ drops it'll be into mass market prices. Sony will still be too pricey for mass market. When the Arcade drops to 220ish and premiums are below $300, it's gonna generate a whole lot of new appeal. If they pull a sony and redo the design of the console or put the power brick inside the system, they'll pull in a lot of new peepskis.

robbo9183423d ago

I disagree on MS in your theory. First MS hasn't beat the Xbox sales yet so hold off on them taking chunks from Sony. I do think they will take some but the amount isn't going to be insane IMO. As to your "the fact that the install bases of either of the other consoles are larger than Sony's is a huge blow to Sony." theory I have to disagree again. If MS hadn't sold more than Sony being out an entire year with no competition from PS3 or Wii it would be a disgrace. Its not "huge blow" if you have 12 months of no competition to increase your numbers. Nobody knows how much of that first year were Xbox fans migrating and how many were PS2 fans...won't know until X360 beats Xbox sales.

I do give you Nintendo though, I think they surprised MS and Sony both. I still can't believe that the Wii is doing what its doing.

+ Show (4) more repliesLast reply 3423d ago
mighty_douche3424d ago (Edited 3424d ago )

Sonys is actually beating them on both software (ratio to hardware) and hardware. so....?

Eitherway, both systems are selling well and both companies should be happy with their current performance.

littletad3424d ago

Whoa, I'd say hardware wise if you count all regions recently. But software? I don't know about that, got a source?

mighty_douche3424d ago

any recent software sales show that on a ratio of # of games sold vs # of consoles (in the market place) and its goes to sony.

Obviously if you simply take the numbers for what they are the 360 wins, but thats due to double the size install base, if you double sonys software sales (there for making the install base equal) sony sold more.

Sorry no source as i only read them on N4G, i dont go looking for sales figures as im not really that interested, i dont make money of sony or MS.

Exhaust3424d ago (Edited 3424d ago )

"Obviously if you simply take the numbers for what they are the 360 wins, but thats due to double the size install base, if you double sonys software sales (there for making the install base equal) sony sold more."

If you take the real numbers obviously it doesn't look good but if you tweak them and double Sony's software sales then Sony sold more...

Do you understand how attach rate works? Number of consoles sold doesn't effect attach rate. Its number of software units divided by number of install base. Having lower install base doesn't lower your attach rate. How can you spin that?

10 million software units/10 million consoles = attach rate of 1
10 million software units/18 million consoles = attach rate of 0.5555

Any way you look at it 360 owners buy more software. If Sony was doing the same I'd have no problem admitting cause I don't have an agenda. My only agenda is to point out blatant fanboy spin.

lokimendivil3424d ago

If you dont have facts, then dont go spreading fud.

SnakeDiesinMGS43424d ago

Leave Douche alone. He doesn't know any better. He's just one of those that believe in vgchartz.

+ Show (2) more repliesLast reply 3424d ago
avacadosnorkel3424d ago

is making money because they charge for everything

The Killer3424d ago (Edited 3424d ago )

they try so hard to twist the truth THAT IS 360 since jan,2008 is getting some @ss kicking from ps3 in its home land!! and the fact about 17.7 million 360 sold was to retailers not consumers!! the real sales if i remember correctly was around 16 plus some hundreds of thousands!
so the gap now between ps3 and 360 is 6~7 million which is not so much considering 360 had 1 year start and ps3 had a terrible year start!
and the attach rate now for ps3 is higher compare to the install base which means if ps3 reach the install base of 360 it will sell more games than 360!

about online and LIVE well i feel sorry for them its already starting to crash and psn is shining now and with HOME i think MS should be embarrassed to even mention their advantage to LIVE, HOME is around the corner now and u know WHAT?? IT FREEEEEEEEEEEEEEEEEEEEEEE!!! u cant complain about free services can u??

EDIT

sony did have profitable courter last year last courter!! so its not like ps3 is losing so much money, and they made it in the first year of ps3 launch not in the end of second year(360)

Dweg3424d ago

Actually the Attach ratio for the 360 is still higher then the Ps3.... something like 7 games per 360 and 3-4 games per Ps3.... o and while the 360 is making money the Ps3 has pretty much wiped out all the profits sony made from the Ps2..... 10 million Ps3s wiped out 120 million Ps2s worth of profit lmao.

Kleptic3423d ago (Edited 3423d ago )

^^^dude...no it didn't...the startup costs of the PS3 ate up the profit of the PS2 for one year...not all the profit the PS2 ever made them...

and SCE is barely losing money on the PS3 now hardware wise...its almost sold for the production cost at this point, with both MS and Sony ready to make price cuts around GTAIV's launch (Sony may wait until MGS4 though)...but with software sales included, SCE is already turning a profit on the PS3 line overall...and have been since late 2007...and that is just the PS3...factoring in the PS2 and PSP, the Playstation brand is stronger than ever...

face it...from a production and business standpoint...Sony knows more about what they are doing in this market than MS...took MS almost a decade to make a profit in their Xbox division...Sony took a hit for one year with the PS2, and 1 year with the PS3...And don't even bother with "MS was new to the market, thats why they lost so much money"...the original Playstation was making Sony money in just under 2 years...which by the way was their first console also...