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Former Xbox head says original Xbox lost 'between $5 billion and $7 billion'

The original Xbox ushered in a new era of gaming for millions of people, and it introduced us to some of the most famed franchises and memorable characters, some of which we still enjoy to this very day. While it was a revelation for developers, gamers and global culture, the system ended up costing Microsoft quite a bit.

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RuleNumber51106d ago

They did initially with the original, but the Xbox 360 more than made up for it. The Xbox division has been a very successful investment for Microsoft.

1106d ago
yewles11106d ago

"but the Xbox 360 more than made up for it."

http://www.neowin.net/news/...

Death1105d ago

@Thrust,

Sony shareholders have said the same for PlayStation. The more concervative shareholders think the money invested should be allocated to higher profit divisions. As for Microsoft losing money "except a couple years", they have been consistently making money with Xbox since 2008. that is 7 straight years of profits within the division. You can check their financials online to verify this if you like.

A small portion of the money they are making was used to fund the $100 million used on the controller.

freshslicepizza1105d ago (Edited 1105d ago )

from this same article,

"Mathematically, certainly, if you look at the original Xbox, it’s just true. The original Xbox lost, depending on who is doing the accounting, somewhere between $5 billion and $7 billion. I think of that as an investment, and everybody ultimately can think of that as an investment, because we know the end of this story. The end of this story is that the successor product made billions of dollars, even with the write-off, and has built an asset for Microsoft that’s worth billions of dollars by itself," Bach told

the xbox 360 made billions of dollars, even with the write off for the rrod.

@Thrustmaestro
"Why do you think some of the major shareholders wanted to ditch it at one point?"

good luck thinking that will happen anytime soon.

http://www.gamespot.com/art...

nedalla is the main guy at microsoft. 'HE' makes the decisions not any shareholder and it was only 2 shareholders to begin with.

read what he said, nothing even hints at xbox being a secondary thought. so stop worrying about how much they make or lose on the xbox and look at the product itself and make your own opinions on it.

BeefCurtains1105d ago

This will be a 1000 degree topic soon. You heard it here first.

Whether or not it made money is irrelevant to today, the X1 has given me a ridiculous amount of great entertainment. That's all I need to know.

Bigpappy1105d ago

@Thrustmaestro: That like adds nothing to support your assertion. 360 made money most to the years it has been on the market. RRD did hurt early on, but 360 did very well financially. Stop trolling with nothing to support what you are saying.

scientificreasoning1105d ago

No it did not, 360 never came close to recuperating loses, stop spreading fud.

badboyz091105d ago

The Xbox Division has never made any real Profit. Point being Microsoft isn't in it for the money.

gapecanpie1105d ago (Edited 1105d ago )

Anyone who think MS hasnt made that money back should never go into business for themselves.

MS made that back with the 360 probably half with just xbox live alone and then license fees just for the game companies to put there games on the x360.... Halo 3 and 4 ...

The division as a whole still in red but they made up for the original xbox....

Like i said you shouldnt go into business for yourself.....

Charybdis1105d ago

"The end of this story is that the successor product made billions of dollars, even with the write-off, and has built an asset for Microsoft that’s worth billions of dollars by itself," Bach told GeekWire."

christocolus1105d ago (Edited 1105d ago )

@Moldybread

Well said.

you beat me to it.I was about to post Nadellas comments from that gamespot article. The guy has been very straightforward about his plans for xbox even calling it a key part of the companys future, he was at E3 this year and he met with xbox fans after the show. The quote from this article is quite clear but its funny how most here will intentionally skip it and act like it was never stated. Lmao. XD.

Griever1105d ago (Edited 1105d ago )

Microsoft has never made any money on the Xbox. Maybe a little bit during one or two quarters once in a while but overall it has been nothing but losses. The problem is they spend far too much on buying exclusives, buying timed-exclusives, buying DLC, serving warranty claims (Xbox 360), and marketing ($500 million on just promoting Kinect). Just search the internet and one can find several articles and reports. Here are just few of them.

http://www.destructoid.com/...

http://www.dualshockers.com...

http://www.neowin.net/news/...

http://www.gamespot.com/art...

http://www.destructoid.com/...

Microsoft never cared about making a profit with Xbox. Their actual goal was to reach the living rooms and then take over them as an entertainment hub for movies, music and television. Xbox and gaming were just a trojan horse. They tried to fulfill their plans with Xbox One but failed and are now stuck with a games console they never wanted. Some industry experts even say that MS is now distancing itself from console gaming by integrating Xbox One with Windows 10 and will eventually leave traditional console gaming. Just read on the internet.

KwietStorm1105d ago

@crock

Popularity does not equal profitability.

uptownsoul1105d ago

@badboyz09

"Point being Microsoft isn't in it for the money." -- What??? If you truly believe any of these companies aren't in it for the money you are severely misguided

freshslicepizza1105d ago (Edited 1105d ago )

@Griever,
"Some industry experts even say that MS is now distancing itself from console gaming by integrating Xbox One with Windows 10 and will eventually leave traditional console gaming. Just read on the internet."

just read the internet? so it must be true then, give it a rest will you.

2016 looks very bright for the xbox one with a bunch of games coming and all new ip's. is this a sign of microsoft leaving the console industry any time soon? who knows about next generation, we are still in the beginning of this one. sony may end up just having playstation now as a service, valve might team up with nintendo. anything is possible but the focus is on reality and reality is showing there are no signs at all microsoft letting up on xbox one suppport. in fact they are investing more into the xbox division than at any time in the xbox history and you guys are acting like you're upset about it.

they also have new leadership not only at microsoft but also the xbox division. it is a positive atmosphere at microsoft not seen for many years because of steve ballmer. yet you guys want to keep up the negative shenanigans.

deadpoolio3161105d ago

Your joking right they NEVER made a penny on the 360 and it cost them billions releasing a known defective product with a 54% failure rate(and YES they have admitted it was 54%)...Then spent more millions/billions on the Xbox One....

The Xbox division is in no way, shape or form profitable for Microsoft ALL of their money comes from Windows and Office products

jttwister091105d ago

whats funny is that in the same article sony fanboys are complaining about the xbox losing money 3 billion over its first 10 years playstation lost 5 billion over that same ten years lol
http://www.neowin.net/news/...

Griever1105d ago (Edited 1105d ago )

@moldybread

And if it becomes true in a few years? What will you say then? I have seen Xbox fans proven wrong more times than any other fanbase. We are still waiting for Milo and Kate, still waiting for Kinect to revolutionize gaming, still waiting for illumiroom, still waiting for cloud power to make the console 3 times powerful than PS4, still waiting for discovery of secret sauce, still waiting for DX12 games, still waiting for HoloLens and still waiting for all those stage tech demos to become reality.

I never said it is a fact or written in stone. Predictions and analysis are estimated and educated guesses backed by subtle evidences. That is how business world works; predicting and forecasting future turn of events and taking action preemptively. There is no concrete proof for them and things can go either way. However, the signs are there and experts see them. You did not object over the rest of my comment because you couldn't. So you just took that one part and wrote a raging rant over it.

MS is not a gaming company and gaming is not their bread and butter. They have never made any money on it and they have never won a generation. They were even unable to conquer the living room. What is the purpose of them remaining in this industry if they are not achieving anything? Just to keep their fans happy? Be realistic please.

I wonder what you loyal Xbox fans owned before the console even existed 15 years ago because you cant even imagine your life without it. On second thought, most of the Xbox fanbase is too young like their console of choice so they probably did not own a gaming system before it. Playstation and Nintendo are the real gaming brands that existed long before Xbox. Xbox is just a me-too product that entered the industry after Playstation and ruined it with shooters, online patches and DLCs.

Gwiz1105d ago

You obviously missed the RRoD debacle which costed them pretty much as well.What success?lol

freshslicepizza1105d ago

@Griever,
"And if it becomes true in a few years? What will you say then?"

i can't comment on that now and why would i when we both have no idea what exactly that means. all we know is the now and right now there are no signs the xbox one is going away anytime soon. so tell me why do you care about what ifs? it has nothing to do with you purchasing an xbox one today.

"I have seen Xbox fans proven wrong more times than any other fanbase. We are still waiting for Milo and Kate,"

who is we and why are you pushing your goal posts way beyond reach? what is this, some diary of all the things you were excited about that never materialized? they removed kinect, it's what people asked. so why are you harping about something that occurred on the xbox 360?

"still waiting for Kinect to revolutionize gaming,"

keep waiting because it looks like it won't happen on the xbox one. is this what's holding you back from getting an xbox one or just more garbage to complain about?

"still waiting for illumiroom,"

it's called hololens, that's what they have confirmed that is coming. not illumiroom. and we still don't know when that is coming. why not talk about what is now and what the system offers today instead of getting ahead of yourself?

"still waiting for cloud power to make the console 3 times powerful than PS4, still waiting for discovery of secret sauce, still waiting for DX12 games, still waiting for HoloLens and still waiting for all those stage tech demos to become reality."

and then what, you will move the goal post again as to why you don't think much of the xbox one? you're not even here to debate properly, just whine about things that really have no bearing on whether you will buy an xbox one.

"I never said it is a fact or written in stone. Predictions and analysis are estimated and educated guesses backed by subtle evidences."

here's an educated guess, milo is not real nor is it coming. crackdown 3 is. hololens is.

"That is how business world works; predicting and forecasting future turn of events and taking action preemptively. There is no concrete proof for them and things can go either way."

off-topic nonsense and just hyperbole on your part.

"However, the signs are there and experts see them. You did not object over the rest of my comment because you couldn't. So you just took that one part and wrote a raging rant over it."

you are no expert and by my calculations microsoft is worth a lot of money. they can get by without some armchair critic who has 10 years of baggage he brings to the forums.

"MS is not a gaming company and gaming is not their bread and butter."

that's funny. why don't we talk about the games then? forza 6 looks good does it not? halo 5 looks good too. are they not games? ori and the blind forest is not a game?

freshslicepizza1105d ago

con't,

"They have never made any money on it and they have never won a generation. They were even unable to conquer the living room. What is the purpose of them remaining in this industry if they are not achieving anything? Just to keep their fans happy? Be realistic please."

yet you're so far from reality it isn't even funny. you talk about the xbox one not being made by a game company yet neglect it has games to play. too funny. you seem more concerned about microsoft's well being than your own. that's awfully nice of ya. perhaps you should play games instead of playing games here on the forums with your agendas.

"I wonder what you loyal Xbox fans owned before the console even existed 15 years ago because you cant even imagine your life without it.

Ahh here we go, the old let's attack because we are from a weak stance talking about hypotheticals. i don't even own an xbox one. surprise surprise. i have owned the original xbox and the xbox 360. i have also owned all playstation consoles besides the ps4. does that fit your little label you want to cast on me? why are you even here?

"On second thought, most of the Xbox fanbase is too young like their console of choice so they probably did not own a gaming system before it. Playstation and Nintendo are the real gaming brands that existed long before Xbox. Xbox is just a me-too product that entered the industry after Playstation and ruined it with shooters, online patches and DLCs."

feel better now getting that off your chest?

dcbronco1104d ago

It's not a surprise Sony fans refuse to believe Xbox makes money, they have their own agenda. But to deny it and then see gamers get so upset when the rest of society looks at us as children or stupid is unbelievable. The kind of ignorance that goes into choosing a side and then blindly sticking to it no matter what is the same stupidity at its core as what leads to racism, sexism, terrorism and any other destructive ism you can think of.

Xbox is in a division with many other products. That division also has a huge R&D budget. For those that don't know what that is it means research and development. The Devices division, the one that includes Xbox, spend sometimes up to a billion dollars a year in R&D. If you look at their financial statements you will see some of the other things in that division. Zune, iptv, Surface. None of which had much to do with gaming, none of which made any money for Microsoft. Surface being the exception last year maybe. And given what Surface Pro is the R&D on that is huge. Kinect was also a huge R&D cost.

Microsoft has not sold a console at a loss, with the exception of the first few months of the Xbox One price drop, since 2007-08. You would have to understand how parts pricing works to understand why, which I have explained several times but there is that agenda feeding on the gullible. Because of their designs the PS4 and Xbox One launched breaking even or making slight profits. The time when consoles are launched at a loss is long gone. Unless someone launches an uber console.

The fact that any person can come to the conclusion that Xbox loses money based solely on the division losing money makes it clear from the start that they have no clue what they are talking about. That person also thinks because they got $500 on their check and bought one game for $50 it means they have $450 to spend on games even though they also spent $250 on rent and $60 on food. Or that person is still being taken care of and sees money as magic. Or at least mommy and daddy seem to be.

Don't get upset when people look down on gamers if you don't get upset when gamers believe in stupid things because they refuse to try to understand anything but games. Winston Churchill said the greatest argument against democracy was spending five minutes with the average voter. The argument against looking at gamers as mature people is spending five minutes reading the comments on gaming sites. There is no doubt there are extremely smart gamers. But don't worry about anyone spying on you when they can determine everything they need to know by reading your post online. Anonymous or not, it makes a general statement about the whole by the volume of poor comments.

+ Show (20) more repliesLast reply 1104d ago
Bigpappy1105d ago (Edited 1105d ago )

It was well worth it. Just goes to show how much it meant to Bill Gates. I like what they brought to the industry. They have made it about more than just hardware and exclusives. They have came in at a time when they were needed, and defined how we now identify and play with each other on the internet.

They are talking about Billions of dollars, and you come with a like about $100 controller R&D. They will easily make that back and as a gamer, you should be happy that a company is putting that much investment back into making the controller as great as it can be. Xbox's controllers are one of the major benefits of owning the system. It is the most universally praised controller on the market.

scientificreasoning1105d ago

Not for MS it hasn't at all. x1 is not going to change that lol.

3-4-51105d ago

Worth it though to build the brand. You have to spend money to make money.

A lot of that was they invested in a ton of new ip's that were fun to play.

They forgot to follow that up with the 360 though and are starting to get back to that.

The more new ip's that are exclusive to the XB1 or Xbox brand, the more money they can make in the long term.

* Just look at how much money Mario,LoZ&Pokemon games still make Nintendo, and those were created decades ago.

Microsoft will see more returns on their investment if they continue to give the gamers what they want.

But as expensive as it was, losing that much money was worth it in the long run.

These 3 companies are pushing each other forward and keeping each other honest by there being competition and the risk of falling behind the others.

Even Sony is better off for having Microsoft as competition.

Magicite1105d ago

If u consider all loses, xbox is still unprofitable.

+ Show (2) more repliesLast reply 1104d ago
Sonyslave31105d ago

Majority of that lost come from that stupid Nivida deal they had at that time .

ape0071105d ago

original xbox was awesome though

that generation ps2/GC/XboX was legendary

1105d ago
Aloy-Boyfriend1105d ago

Dreamcast was better than all three. Too bad it flopped

shloobmm31105d ago

Xbox was basically the successor to the Dreamcast. That's why got such amazing games from Sega like Panzer Dragoon Orta, Gunvalkerie and Shenmue 2. I would say it was easily on par with the DC because it had all of Sega's best first party games while still having the crazy Sega Flair.

343_Guilty_Spark1105d ago

Xbox was basically the Dreamcast 2.

NiteX1105d ago

If it was truly better than all 3 then it clearly wouldn't have flopped. The PS2 alone took down the DC without breaking a sweat.

snoopgg1105d ago

I liked the dreamcast, but ps2 destroyed it and had better controllers to boot. That dreamcast controller sucked in my opionion.

Major_Glitch1105d ago

I loved playing Jet Set Radio on my Dreamcast. Having said that, there's a darn good reason the PS 2 dominated that gen.
http://www.dorkly.com/post/...
Hint: It's was, and always is, the games.

+ Show (2) more repliesLast reply 1105d ago
marioJP871105d ago

No "Download DLC to complete the game" BS in that era.

Black0ut1105d ago

That's exactly what I was thinking. Everything was fine tuned and a FINISHED PRODUCT at release. They made sure there was no slacking because the finish date was IT.

I do miss those days even though I was pretty young, I do remember great times on my brothers Original Xbox and PS2. They were great times.

Artemidorus1105d ago

That's in today's money NOT the end towards 2005.

Fro_xoxo1105d ago

Xbox is still around so i'm not fussed..

SpaceRanger1105d ago

If a similar outcome were to happen late this gen and next gen though, then expect the Xbox brand to become majorly focused in software (like the windows Xbox app, major franchises under their publishing) after an exit out of hardware.

Software has always been the core of MS. So that'll never go away.

Black0ut1105d ago

Hmm and would you like it if this happened?

I know literally dozens of people on this site that would wish Xbox to fail and for MS to exit out, yet if this theoretically did happen, the aftermath would be ridiculous and all of those people would eat crow.

Without competition things would only get worse.

Oh and just an FYI, Satya Nadella has mentioned on countless occasions that Xbox is a core part of the Windows ecosystem and it is not going anywhere any time soon. He runs the show, not 1 or 2 noisy shareholders. I'll just leave it at that.

SpaceRanger1105d ago

Never said that? What I said is that if they are to lose just as much money again sometime either during this gen if next... It will more than likely happen.

Way to take my comment out of context. Money speaks more than anything in any industry.