Outgoing president of Microsoft's Entertainment & Devices Division, Robbie Bach has been talking about his times at Microsoft and has shot one of the huge elephants in the meeting room: Microsoft was comfortable losing money on Xbox and Xbox 360.
He then justifies it, "It just turns out Microsoft is one of those unique places that will... forget whether we can afford it or not... that will... is willing to take those kind of bets. And I think sometimes people give us... because we're a bigger company and we... all those kinds of things, people say, well, you know, they don't bet big, they don't... they're not old, they're not innovative. I just kind of look around and I go, oh come on, I mean, Xbox to me, you know, in some mathematical way was a gigantic investment. And yet look, asset value paid off, earnings potential paid off, upside for the future pays off. Id' do that again in a heartbeat."