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Xbox Sinks into a $1.26 Billion Hole

In the wake of Microsoft's release of the annual report for the fiscal year 2006, details have surfaced casting a shadow on the market performance of the Xbox 360 product. In the all out war with rival console builder Sony, Microsoft has proven that it is prepaired to cut into its own flesh in order to gain the terrain that separated it from its Japanese competitor. In this context, while hitting the 5 million sold units milestone just seven months after the launch of the Xbox 360, with no less than 1.8 million products shipping just in the last quarter, Microsoft's Home and Entertainment Division posted record losses related directly to the performance of its console.

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shotty3718d ago

Most of it is due to all the events they hold. And don't forget the development costs of all the first party titles like Halo 3, Forza 2, GOW, Viva Pinate, Too Human, Mass Effect, Etc.

sa739173718d ago (Edited 3718d ago )

Another 360 article slides by that will probably garner little notice or comments..

Why is it that EVERY PS3 related article gets swamped by 360 fanboy's comments (and outright abuse of other members) whilst for some reason the ps3 fans don't seem to feel the need to do the equivalent to 360 stories?? Even when it's an article like this one where they could...?

I'm willing to bet $$'s that the minute Sony announces their matching losses on the PS3 after its first year there'll be mountains of abuse coming through from the 360 boys...

Sony's image may be poor at the moment but after reading forums and comments on various web sites I'd have to say the 360 owner's image seems be taking a hell of a beating too. The majority of posts being more concerned with ridiculing the PS3, its games and its prospective owners whilst providing very little intelligent commentary and huge amounts of swearing and abuse..

Thankfully I know a number of 360 owners out there who don't feel the need to hurl abuse at people just because they happen to be interested in a Playstation.. Otherwise I'd think they're all like the people I see posting every day..

Oh well - now that I have that off my chest I guess I better go put the asbestos suit on and hide.. I'm sure even though this is carefully written I'll get the usual 'intelligent' replies..

TheXgamerLive3718d ago

No new console proves in the + category it's first or less than first full year. It's just the nature of the business. It will be the same for sony and nintendo as it is for Microsoft.

ACE3717d ago

the sony fans come on the 360 section too and hurl abuse at the 360 fans lol...

any way back to the article ,, AINT COMPANYS MENT TO LOSE ALOT OF MONNEY AT THE START OF A NEW CONSOLE? LOL SILLY POST THAT ONE ..

ANY WAY MR GATES AND CO HAS LIKE 40 BILLION IN LIQUID MONEY SO WHAT EVER LOL

dikturbo3717d ago

While we are try to balance our cheque books and count our pennies, companies like MS have strategies. Some of these are strategic gains ie. Office, network and OS products. While others are projected and strategic losses ie. Xbox and Zune with obvious intentions of long term positive results. An operating loss over the term of a 5-7 year games console of $1.26B seems insurmountable and bizzare in our world but in MS land; it's dollars and cents.

Don't think for a moment that SONY hasn't projected it's own losses on this generation. It's all relative to what the individual company can handle. Unfortunately for SONY, MS may be drawing them into a 'cash fight' (not a knife fight) and we know who will win that.

The best business strtegy will win this one. Ahem, Nintendo.

The Snake3716d ago

You're the second post in here. The Sony fanboys have yet to make it in here. Also, differentiate between fans and fanboys. Apparently Sony lovers are fans while 360 lovers are fanboys in your private world. There's a big difference. The 360 owners you say you know are fans. The ones you come in here to hurl abuse at us about are fanBOYS. By the time you get to read this, there will have been Sony fangirls in here posting their garbage. Also, every console manufacturer will post losses just like MS. Think out your replies better or just leave us alone to wallow in the misery of the news that our favorite console maker is currently losing money by offering us a video game console at a reasonable price.

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THELANDSOFSAND3718d ago (Edited 3718d ago )

"Our business model anticipates that while we currently sell Xbox 360 consoles at a negative margin, product cost reductions and the future margins on sales of games and other products will enable us to achieve a positive margin over the Xbox 360 console lifecycle."

ghostface3718d ago

Im sure the board of directors is'nt to happy right know

The Snake3716d ago

Not to mention all the other stockholders.

killasssj4083718d ago

Sony is also expected to report an $870.6 million loss on its PlayStation 3.

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