Xbox 360 Division Loses $1.26B in 2006

According to Next-Gen, Microsoft's Xbox 360 division has lost $1.26-billion in fiscal 2006. What are your thoughts?

[HaHa]

hehe

[calderra]

During the 3 months prior to March 2006, Microsoft as a company made over $10Billion in profits. The game division is expensive, sure, but it barely makes a dent in the overall picture.

By the time of launch, Sony will have invested on the order of $2B on the PS3, counting all aspects. Sony's ENTIRE company (all divisions) only makes about $1.5B in profit per YEAR.

So with this loss (which is smaller than PS3's initial investment- not even looking another year down the road), Microsoft is making money at about 3x the rate Sony is. Geeze, how will they survive?

[bullet]

Waite until we see Sony's ps3 losses...

[Capt CHAOS]

The costs on the PS3 might well be alot higher.. However, I'm not sure that they plan on shipping as many units over 2007, which might help ofset the loses a bit more. I feel that they'll sell more so from 2007 Xmas, at still a loss, while the 360 will prob be on profit by then..

All interesting stuff though, I wish I had a slice of that pie though.. lol

[zonetrooper5]

MS will turn a profit sometime near the end of 2007 i reckon. But haha the PS3 will not make a profit until at least 2008 unlike Nintendo who will make a profit at the start of the Next generation Consoles, which is the Nitnedo Wii.

[FadeToBlack]

Because the Wii is over priced for what it is. i wont be paying $250 for a machine thats barely as powerful as and xbox that can only do 480p. Probably cost them less than $100 to produce.

[Captain Tuttle]

It's time to buy stock in Nintendo.

[hamburgerhill]

This isn't my department so I could careless! I mean of course it's a bad thing to lose money but in this generation it's going to take money to make it! The real question should be how much money MS made in software and service sales, but then again im a gamer and all I need to worry about are the games and that's it!

[TheMART]

MS and Bill have pockets deep enough and earning needs investments first.

I think I read somewhere Bill said he reserved 20 Billion for the XBOX brand to succeed. So they're not even on 10% of that budget.

The fiscal year of 2008 (starts on July 2007) will show positive earnings on 360 they already stated. Business model is healthy!

Unlike that of the PS3. Every 10 million units Sony lose 3 Billion freaking dollars. With the low number of real need to get exclusives (only Resistance is named by many game reviewing sites) I bet they can't make up any real earnings, the network is free (well I bet they'll charge you on variable basis, but well).

MS is doing just fine. And it's good to see they invest so much on the concept. That is a good thing (if a company has the money though)

[FirstknighT]

Sony is already in trouble with debt. PS3 will lose alot more money and might kill the Sony Brand. There will not be a PS4. 5-7 years from now....A New Xbox....A New Nintendo.....and maybe a Dreamcast 2??? wishful thinking!

[Daytona]

One can only wish. I just played code veronica on my dreamcast a few day's ago and the wacky races video game, god I love that game.

[beans]

Sad when you think about it but the more Sony fans that purchase the PS3 will put it more and more in the hole! There's got to be more to it though so im assuming Bluray will be the savior for Sony if it succeeds and the death if it doesnt!

[360pluswiiequalsps3]

microsoft will generate billions of dollars from Windows Vista. they can use that profit to spend on xbox brand

sony and nintendo envies microsoft's money, microsoft envies sony and nintendo's market shares... just neutral point of view lol

[whateva]

this is Microsoft so why is everybody talking about sony whats wrong with you people the lames on this website make me sick goodbye.

[TheMART]

Maybe because this gen, Sony and MS are direct competitors and Wii just has another niche market? So it's important how they invest and gain profit. Or not. So it's good to discuss about. If you can't take it, don't read it

[kmis87]

Hey, MART, you're stealing my argument about how Nintendo's business model can't fail this generation.

[FordGTGuy]

you never make money on the launch of a console unless your nintendo because thats their strategy to make money in the now and not later.

[FlamingTide]

Microsoft is a company with, basically, an infanate amount of money at there disposal so as far as Im conserned they'll keep on shoving money into the Xbox brand no matter what happens. Which is of course a good thing.

[BlackCountryBob]

Who cares how much money MS are losing and the same goes for Sony and Ninty! They are all massive companies with huge wealth and he ability to borrow money at any time if needed which it will probably not be! None of these companies are gonna be driven into stopping trading because of their consoles! Just enjoy the games, leave the accounting to the accountants!

[kmis87]

I don't really see the point of this gamingwise. So Microsoft has lost around 4.5 billion on the xbox. That won't make Halo 3 any less fun. Sony will lose money this time around because of the massive hardware expenses they're willing to incur, but the Playstation brand is strong enough to build up enough of a fanbase to make profits eventually this generation, and I think the same will go for the 360 eventually.

[Optimus Prime]

yea i agree. the company losing money it wont make the games any less fun.

[TheMART]

"and I think the same will go for the 360 eventually."

Is a strange statement, when they already see on base of sales and average attach rate on games and accesoires that it will be profitable in the fiscal year of 2008, starting at July 2007.

It's better to turn it the other way around: maybe the same will go for the PS3 eventually.

The biggest question marks are on that console, because of a few things:

1. Bigger loss per PS3 console (300 dollars compared to MS 150 to 175)

2. Later production cost reduction, 360 CPU die will be on new/smaller base soon, Cell needs first to be produced for a year/some years to get there. Less loss for MS, same big loss for Sony for some time on every unit

3. Sony doesn't have any money too loose, for years already writing red instead of black marks, just took multimillion bank loan. MS has billions to burn and still feel nothing at all

4. Attach rate last gen: Gamecube/PS2 1.9 game per console. XBOX 2.4 game per unit sold.

This gen: 360 4.5 game attach rate per unit, hardware (last I read) 3 per unit.

5. Number of available exclusive games out of own software studio (Microsoft Game Studios or Sony's equivalent). MS has more out and more that the gamers want. Resistance is the only game that one would really buy a PS3 for at this time. And that's not enough

6. Total businessmodel of MS is more viable. With the paid premium Live service. MS gives you what you pay for. Sony let you pay for potential, but is it used & their own push format that isn't nescessary (expensive Sony formats always fail, Betamax, UMD, Minidisc for example)

7. MS has and will have the larger fanbase for a long time. More profit for game developers, they'll choose 360 above others sooner. 10 million customers ahead of the other consoles is a lot, a lot especially when you know they spend, Sony's/Nintendo's customers spend less (younger probably, less -pocket- money). Especially the good programming environment for the 360 puts PS3 with 5 x the developping costs in a very, very bad position.

8. That all working through already, like COD3 better on 360, Face mapping in Rainbox Six on 360 not on PS3, online stuff in for example Tony Hawk and other titles on 360 not on PS3. That'll happen more often

[kmis87]

MART, wtf is your problem? I just tried to say that a loss leading strategy can turn a profit if a large enough fanbase is made, and that even if the company sells at a loss that it doesn't make the games any less fun. I don't understand what your point in disagreeing with me is.

1. See my points above on why I don't care.

2. The ps3 will see similar price reduction oppurtunities before too long. It's taken the 360 over a year to get smaller dies, and I just read an article about reducing the die on the Cell processor. BOTH consoles will find ways to reduce costs fairly soon. Also, the main thing driving up the price of the ps3 above the 360 is the blue laser diode. Fortunately, as production increases costs will go down. The dvd player in the original ps2 made it a loss leader at launch, but now dvd drives are cheap as hell to make. This also applies to MS's HDDVD drive. As more and more drives are made the price to manufacture drops significantly.

3. I have no idea where you get this impression that Sony is on the verge of imminent collapse from. Sony Corporation is very large as well. I haven't seen them fail to turn a profit in any past years, so where are all those red marks you talk about coming from? They've had a lot of trouble recently with that big battery recall, but stuff like that doesn't just destroy large companies. Sony has plenty of money to invest in its games division, and if it means seeing profits elsewhere due to increased bluray sales and adoption, and furthering hd tvs sales then they'll willingly do it. It must be nice to be Microsoft and have billions of dollars from monopolizing the operating system market, but there is no company that can just continuously throw away billions of dollars with no cares.

4. First off, I'd like to see the numbers for the 4.5 attach rate, I've heard that before and I'm a little wary of the idea that the average consumer buying almost 5 games at launch. I suspect some of those might be arcade titles, which would be fairly deceiving. Anyways, think about this. Sony makes some money on every ps3 game sold, and ever ps2 game sold. They also make some money on every bluray disc sold. Microsoft's original xbox sales have dried up and they don't make an extra profit on the sale of their games because they don't own that medium.

5. Sony will have plenty of software at launch and in the future. Most games are multiplatform anyways. Also, Resistance looks like it will be better than any 360 launch game. Next year will see many more of the ps3 exclusives that people will want to play like MGS4, FFXIII, and Devil May Cry 4. I know I'm looking forward to those games more than Gears or Too Human, or just about anything the 360 has to offer. That's just my personal preference however, so I can't speak for all gamers. However, your assertion that 360 has all of the games that people want to play is just an assertion that you've made. Trying to play your opinion off as a universal fact is a very poor argument.

6. I don't know why you're trying to say that having to pay for online multiplayer is a good thing. Maybe it's nice for Microsoft to be able to shake money out of players on a steady yearly basis, but I think that sucks total @ss. I greatly prefer an online service where I can still play without having to pay. You should have to pay for extra things like downloadable content and episodic content, not basic multiplayer. So personally, I prefer Sony's online business model from a gaming standpoint. Hopefully it can live up to its potential. Anyways, your argument that paying for potential is a bad thing is dumb. When people bought the original xbox back in 2001 what do you think they were paying for? Potential. Whenever you buy a new system you pay for potential. The ps3 has a lot of potential, and that's a pretty good thing.
We'll see next year if it has started to live up to its potential.

7. ?????? Microsoft has a larger fanbase? Sony's last two consoles have sold over 100 million each. That's an enormous fanbase. Ok, so maybe you're saying that Microsoft has sold more this generation. Well no sh1t sherlock, they had a one year head start! The ps3 will sell out this Christmas and well into next year. The ps3 will sell at a faster rate than the 360 did its first year and will most likely eventually overtake the 360 in a few years. I can't really say anything about your assertion that playstation and wii owners will be poorer than 360 owners except that it's crazy. By virtue of the fact that they paid at least half a grand for the ps3, I'll venture that they have some source of income. The ps3 is 5x more difficult to program for than the 360? I thought that random statement you're quoting said that dual core processors were two to three times more difficult to program for than single core processors, and that the cell was more difficult than that, not that the ps3 was 5x more difficult than the 360's tricore processor. Mischaracterizing someone else's information is not the best way to construct a convincing argument.

8. Ever think about this one? They've obviously been working on the 360 versions of these games for longer amounts of time and it's a console that developers have had an extra year to work with. Doesn't logic lead to that conclusion that early games will be able to utilize the 360 hardware better? Doesn't logic also lead to the conclusion that as the ps3 hardware becomes more familiar with developers that the games will increase to levels comparable or even superior to the 360? I guess the proof's in the pudding. Developers who put in the time and have the experience will make games on the ps3 that will match or outmatch the 360's games. Just look at Oblivion, nba 2k7, Fight Night, Virtua Tennis, and the others.

I'm really sorry for myself that I ended getting distracted from football to have to type up a response that I didn't think was necessary. We could bicker back and forth about business strategies and other crap like that or we could just agree on what I wanted to say in the first place. A loss leading strategy can be a viable one and furthermore, profits and losses don't distract from the quality of games. Godd@ammit, MART, can't you go one article without bashing sony for no reason.

[DJ]

And they lost that much already? This doesn't even take into account how much they lost in 2005 from the 360 launch. And if you think Microsoft Corporation or its investors are going to let the Xbox Division blow through $8~10 billion (they're over $5 Billion in debt right now), you might need some business courses.

Sony stands to lose a lot of money their first year in business, but the difference with them is that the Playstation Division has been extremely profitable for like 10 years; Sony can easily afford to lose a little short-term cash for additional long-term profits. It only took a little over a year before the PS2, a very expensive machine (nearly $500 to manufacture originally), became profitable so there's no reason to believe otherwise with the PS3.

[Optimus Prime]

good luck with that, sony will lose money till the end of 2007.

[TheMART]

Great DJ. But so untrue.

How profitable is the PS2 exactly? And was over it's 6 years lifespan? Sony is losing money already for years and just took a bank loan. No shares given out because they are almost a junk bond, a bank loan mostly only is the possibility and takes up a lot of rent.

It doesn't really matter what MS lost already. Point is that Bill says he will max spend 20 Billion. You know who's MS biggest share holders are? So yup, MS corp will invest, because they know this will bring cash.

They know it that certain, that it will from the fiscal year 2008 on, starting from July 2007. That's less then a year.

"there's no reason to believe otherwise with the PS3."

Oh yes DJ there are. Read my post above and answer those ones! And then more easy for you:

PS3 loosing 3 Billion dollars every 10 million units sold.

3 Billion freaking dollars. If they won't sell the games they have a problem. And they need to sell A LOT of games per unit to get that unit profitable. Like at least 10 to 15 or so. So start calculating! And then read and answer my post above

[shysun]

2 post in and this becomes a Negative Sony/PS3 thread...rolls eyes!!

[zypher]

this entire site is a negative Sony/PS3 site. there are relatively few true gaming fans who prefer the Playstation systems (and by that i mean gamers who, yes, prefer the Playstation, but will test the waters of all systems and appreciate what they have to offer as well) on this site: most of the other Playstation fans are fanboys, which makes it harder for true fans to argue valid points. but this board is about 80% XBox die-hards. and 80% of that 80% are just as bad as the Playstation fanboys. so, when it all boils down, this site is about 90-95% fanboys, 90-95% wannabee gamers who can't even postulate coherent opinions due to their lop-sided, dim-witted loyalty to corporations who couldn't probably give two dung-heaps about their well-being insofar as what money said dim-wits can contribute to their coffers.

[2tired2day2hate]

this just makes sony look worse. how do you dominate for 10 years and THEN start to lose money? ms is still new to games and they are about to make money. sony, not game wise but as a company is in financial trouble. and how does a company loosing money per console not charge for their internet service? ms is set to make money soon, not to mention what kinda money they'll get from 3rd party games and from the halo movie and merchandise. even with all that i think sony will be ok. they are potentially on thin ice but i think they will know how to get through it.

[zypher]

did you read the article? Microsoft hasn't made money from the XBox brand in five years: and won't make any money for another year (if their projections are correct, which can be doubted, since no matter how they try to explain it, they still lost money this year when at first they projected that they'd make a profit). during the initial years of PSOne and PS2 Sony (like Microsoft) lost money on both systems to ensure a higher installed base. soon after both systems launched, they began to turn profits: PS2 came out in late 2000, and in 2002 it began to turn huge profits for Sony. XBox came out in 2001, and has yet to make Microsoft any money. furthermore, Sony will still support the PS2 after the PS3 is launched, meaning that all sales from PS2 will be profit. Microsoft ditched the XBox months before the 360 was even launched.

[DJ]

That's life. Things happen. That's why they called in Howard Stringer, and within a very short time period he made Sony profitable again by cutting out unneccesary divisions and staff.

As for the consoles, the PS1 put the Playstation division in debt for about a year and then became profitable afterwards. Same with the PS2. It's a bit of a gamble to sell at a significant loss when you launch a new product, but Sony seems to have figured out how to turn their systems into huge sources of profit.

I think a lot of Microsoft's spending and debt can be attributed to marketing of the Xbox brand. They've been heavily advertising their Xbox consoles, hosting huge events like X06, and trying to get worldwide awareness on a daily basis.

Sony on the other hand has a different strategy. Instead of promoting the brand itself they help advertisement for specific games, games that are great but probably wouldn't stand a chance in a market full of sequels without strong marketing. The fact that people were talking about the PS3 over 18 months before its release without posting a single advertisement is simply remarkable. By keeping their mouth shut on the system's details they actually got more people to pay attention. Seems counterintuitive, and it is.

Microsoft's advertisement strategy has really improved with the 360. If you look at the numerous posters and advertisements they always emphasize people playing games and try to convey the message that their system links everyone up into a unique worldwide community.

Sony's advertising on the other hand is hella arrogant. They show the console, say it's extremely powerful, don't really bother to say why, and then leave. My friend who's a business major actually asked his professor if he could use this marketing strategy for his group project(they create and market a product). The professor gave him the look of "what are you, stupid?"

Crazy thing is that it works! It worked with the PS2, the PSP, and by the looks of it they've perfected that strategy with the PS3. 800,000 people in the U.S. want buy an Xbox 360 at its current price, while 9 million want to buy PS3s, despite its significantly higher price. If I was Microsoft I'd be shocked too.

While Microsoft tries to win the masses, Sony straight up says "We're giving you the highest quality product on the market. If you don't buy it there's plenty of other people who will." Everything about the PS3 bleeds hi-tech sci-fi awesomeness and it's pretty clear that they're going to switch their advertising strategy about a year in (just like they did with the PS2), stop advertising the console(since by then people will be telling their friends about it; free advertising in that section) and just concentrate on pushing the high-end games.

Probably the best PS2 advertisement I saw had Downhill Domination and War of Monsters on the same page. And the quote was "Your kids will say these games are "Off The Hook!"...whatever the hell that means." They've got a mature audience, they 'get it', and they're comfortable with their image. I think if Microsoft adopts a few of these ideas from Sony that they'll benefit a lot from it.

[Captain Tuttle]

That Sony's "marketing strategy" is working when I see the numbers in a couple of years. The "Any publicity is good publicity" approach usually only works for Paris Hilton and the like. Corporations have to make money for shareholders, not sell copies of "People" magazine.

[bilal]

i agree

Sony is genius at Marketing strategy..somehow they are able to make a lot of buzz.....
except for recent pr hickups (which the masses are oblivious of), ps3 has way more buzz from last 2 years then the other two consoles combined.

and the proof of that is the 360 fanboys who have stopped sleeping at nights, they are a part of Sony's advertisement machine.

[ASSASSYN 36o]

It was inevitable for microsoft to lose money initially. When they reach there cross-point revenue you start making money (profit). Takes money to make money.

[BIadestarX]

gee.. let me see... what do I think.
1) This is irrelevant to gamers. As matter of fact most people buying a console can care less about any company specific business strategy to get market shares.
2) Microsoft has the money even with this lost microsoft is more profitable than the other 2 consoles.
3) If microsoft don't mind taking this lost and think is worth it and are the one spending it; why should Sony fanboys or anybody make a big deal out of it.
4) Most of the games I want to play will still be out; gears of war, etc.
5) and ... whats your point?

[shotty]

Microsoft doesn't really care, since even if money is lost, they still are building up their install base. Think about it, people that buy xbox 360 are more inclined to upgrade to windows vista and maybe even get the Zune and other microsoft products since they all work with each other. So 1 billion lost on the xbox 360 is nothing if they can make 5 times that on other things as a result of the $1 billion.
Also alot of this money is from buying developers such as Lion Head Studios and funding first party games like Forza 2, Halo 3, PGR, the Rare games, Lost Oddesey, Blue Dragon, Too Human, Crack Down and the other first party titles. The money spent on the games will come back once those games are released.

[Retard]

Should all run the gaming industry, seriously I swear you people are all stock brokers.

By the WAY, I'm more then willing to bet NONE OF YOU KNOW WHAT YOU'RE TALKING ABOUT. Especially, and namely TheMART. Unless you're a Microsoft Executive :)?

Everything said here is common sense and I doubt it's how this business works.

[Shadow Flare]

Why does this sound like deja vu of the original xbox

[power of Green]

Because you're a hardcore Sony fanboy. I wouldn't worry about MS it's Sony you should be focusing on sense you're a Sony fanboy.

[Shadow Flare]

im just saying that the xbox never actually made microsoft any profit at all. Microsoft lost millions on the box. Sony made millions with the ps2 and psone. So i know who i got my bets on in this console war. Especially considering that the PS3 is pretty much the most wanted console EVERYWHERE chump

By the way, my preference is playstation. I may be somewhat of a hardcore playstation fan but at least i don't have a picture of a jedi as my avatar

[power of Green]

Thats a good one, sombody has talked shaa8t about my avatar before, i like Star Wars but im not the fanboy you try to make me out to be. I use this avatar because the dude knew all along when no one payed attention to what he was saying.

[Shadow Flare]

Get out more

[TheMART]

Once Nintendo also earned the big bucks and was nr. one. But then they fell and became third in line, PS1 was the new king.

Now PS1 did well. PS2 was because the head on competition went bankrupt (Dreamcast) and XBOX arrived a year later. Install base was done there for PS2.

This time around 360 has a year headstart. Many PS2 fans around. But this time things are different.

Nintendo went from 1 to 3. Now it's Sony's turn to fall that way. ANd they deserve it. Not to go bankrupt, I don't want them to. But to learn they may not lie and deliver on their promisses. To be back with a real good PS4 deal.

So a question back:

Why does Sony feel like Nintendo back then?

[Shadow Flare]

Uh, do they? What are you even talking about anyway? The only logic you're going on is that at one time Nintendo and Sony have at one time been the No.1 games console company (which by the way, microsoft will only dream about)

Nintendo WAS at the top of their game at one time. Then the psone came along. Do you know why psone won? Because it revolutionised gaming, brought games to the 15-35 year olds instead of the 5-15 year olds and above all made gaming COOL. Nintendo were providing top games like mario which appeal to 3 main groups of people, the Japanese, the kids and the limp wristed. The psone brought along games like Wipeout, Gran Turismo and Grand Theft Auto and revolutionised old classics into never forgotten 3D greats like Final Fantasy 7/8 and Metal Gear Solid. Because of GREAT GAMES the psone grew a fantasticly big fan base (the psone has sold around 100 million units) and it didn't need an online service to sell the console either. Just great games.

And thats something thats always stayed with every version of Playstation. Great Games. And we are still seeing that with the PS3. And EVERY playstation console has never been the first to launch, yet they have claimed the No.1 spot every time, beating all the biggest rival companies. So why should i doubt sony with the PS3? Even though it's the most expensive console out there, it's also the most WANTED console aswell.

"Japan Picks PS3"
http://www.news4gamers.com/...

"New research has shown massive consumer belief in the PlayStation 3, and waning interest in Xbox 360"
http://www.news4gamers.com/...

PS3 is the best of the 3 consoles:
http://www.gamepro.com/game...

Even though the Playstation 3 is the most expensive console, it is by a wide margin the most wanted console and shows the greatest potential. Theres nothing the Xbox 360 has on top of the PS3 except price. Sony is still carrying on its tradition of providing great games with the PS3. The Playstaion 3 is feature packed with the latest hardware so you get more bang for your buck. With Sony's doubtless history of making the Playstation 1/2 the successes they were in the past, there's no reason why the PS3 shouldn't win again

[power of Green]

Looks like Nintendo will be the only company making money with their over priced joke of an console. #21 I think the type of poster that worries about others as you do and some others on this site are worse that the super fans.

[bilal]

wii part. Wii is the most overpriced console and i am least impressed with it. it really is a joke which people would realize within hours of using that stupid stick of a control

[FKN Unbelievable]

Microsoft take loses for every system sold so i guess we always knew this. There a sacrifice that comes with global domination. When your money is long like Micro$oft it means nothing when Vista is about to drop.

[power of Green]

800,000 want to buy 360 and 8mil want PS3. thats almost neck and neck(If Sony was able to produce 8mil now, not by 2009) come after Xmas. And this is before all the great tittles that are coming out. Anyways that LA poll was just a sloppy one to say the least to generate hype and get people stirred up. Read all their poll and stats carfully. Companies do the same thing with politics to get people to read their poo.

[shysun]

Is this a stoy about M$ or Sony, by the Fanboy post here...I can't tell?:(

[alilhappything]

No kidding.

[power of Green]

Is this story about MS or is it about Sonyfanboys using this well known news to bash the 360. I can tell you're a sony fanboy. When articals about the PS3's cost to Sony comes out you won't find me in those threads because it will be well known that Sony will loose billions on the PS3 and would be pointless to comment on them when im not a Sony fan unless i was trying to start fanboy flame wars. (22.6 I can provide links that say the same thing about the 360. lol you need to get out more. PS2 was the dvd of choice when DVD was new and it had different games that Nentendo offered. Quote Sony is still carrying on its tradition of providing great games with the PS3)you mean non child tittles of Nintendo. Mario isn't the only competition now.

[zonetrooper5]

I do admit that the Nintendo Wii is overpriced, £179 but i will still get one, maybe next year. I will be getting the PS3 but not until end of 2007 or 2008 as its an expensive console.

[Daewoodrow]

What did you expect? They're selling the consoles at a loss. It wil take some time before everyone pays back the loss in accessory and game sales, and the analysts (the real analysts) believe this could be before June 2006. I'm confident of this fact. Have you seen the accessory and game attach rate???

[Dante1]

Remember the fanboys always get there's first, so expect these statistics to drop dramatically, especiall when PS3 arrives!

[NextGen24Gamer]

http://news.teamxbox.com/xb...

http://www.eurogamer.net/ar...

http://biz.gamedaily.com/in...

[Silver360]

You damn well better sell 100 million units. Developers only develop for your system because they are in this to make money and they make thier money off of the installed base. Xbox got few exclusives because by the time it debued PS2 was already into 30 million by then. This time around it is a different story. Developers may make some exclusive games for PS3, but it is stupid business to make exclusive games for the PS3 because no matter what you fan boys think 500,000 units is not making any developer thier money back. So Sony's advantage of last generation is gone. And more developer will lean to the 360 because of the installed base size. We may argue what system is best. We will never know that untill they are gone. But what make a system a winner is who developers think will deliever them the biggest return on their game. So tell me 10 million 360's or ok say 3 to 4 million PS3's where would you try to make your money?

[ORIELKILLER]

as far as i know ... MS havent see any profit for the original Xbox so .. there you go

[Ravenator529]

Original XBox development has stopped all together. It was totally unprofitable, but that was expected.

Nintendo stays profitable due to the fact that they essentially "overprice" their technology. It is no secret that the Wii is essentially a refurbished Gamecube. Not to mention their domination of the handheld market and the Pokemon franchise. $3 - $4 for a pack of paper trading cards is a money maker in itself.

As are the other divisions of M$. The sale of PC's and Window's based software is enough to cover the XBox losses essentially forever. And the company as a whole still ends up on the profitable side.

Sony on the other hand is putting a ton of money into cell and Blu-Ray. Forget the PS3 for a minute. If PC's and other electronic devices adopt Cell as their main processor of choice, the money will start to pour into Sony like you wouldn't believe. And lets not forget that Blu-Ray "may" have a chance at becoming the base for next gen DVD media.

The most ironic part of it all is that Toshiba is one of the main developers along with IBM and Sony in creating the Cell processor.

So even though Sony is Toshiba's main competitor with HD-DVD and Blu-Ray, they are essentially working together to push the Cell processor.

But as for the gaming industry, 10 million 360's sold by the end of the year would be quite painful for Sony and the PS3.

That would essentially mean that M$ achieved this goal without the support of the Japanese gaming community.

Everyone talks about sold out pre-orders for the PS3 but I distinctly remember seeing tons of video of long lines of eager gamers waiting to get their hands on a 360 as well.

The 360 was essentially sold out for almost 2 months in my area after the launch. And yet they still may hit their goal of 10 million units sold.

IMO, that would be pretty impressive.

[DJ]

So you stated: "Original XBox development has stopped all together. It was totally unprofitable, but that was expected.

Nintendo stays profitable due to the fact that they essentially "overprice" their technology."

Dude, NO ONE expected the Xbox to create that much debt for Microsoft; had Microsoft even expected that much of an initial loss they wouldn't have launched their console in the first place. They expected to take Sony's #1 position and they fell flat.

Nintendo doens't like to sell hardware at a significant loss and they don't care about technological superiority. That's just their way of doing things.

"10 million 360's sold by the end of the year would be quite painful for Sony and the PS3"

They would need to sell 4 million units between now and the end of december, which is only 10 weeks time. With the release of the Wii and PS3, they'll be lucky if they sell past 7.5 million by Christmas. The Wii is going to dominate sales figures this holiday, and there's nothing the other two companies can do about it for now. Microsoft only has one major title for the holidays and Sony doesn't have enough units to satisfy everyone.

If Sony can produce enough units though they'll most likely be in the top spot by Holiday '07.

[Boink]

The entertainment division as a whole lost that amount, granted the 360 likely made up the bulk of it, but is not all of it.

MS will do whatever it takes to win this fight, as the future for the winner looks quite profitable, MS has pretty much an unlimited cash supply(bill by himself is worth somewhere around 40 billion).

[The great 1]

If people don't buy your console then what's the point, people are waiting on PS3, this is the truth people, no joke, everyone i ask says when is PS3 out, the fact they don't know when it's out means they don't here all the pros and cons of a console, that's where Sonys E3 2005 came into play nicely, so in a way people who saw that but don't keep up to date with things will be totally amazed by Sony, basically what i'm saying here is sure Xbox is gona sell more this time, but PS3 isin't gonna sell any less than PS2 or PS1, seriously it's the same story once again! No luck MS BS!

[shortyNZ]

this site is called "news 4 gamers" so how does this story affect us? it doesnt...look at how much microsoft puts into charity! so i guess they aint broke and thats all that matters, obviously posted by a playstation fan, NEXT

[The great 1]

Sorry, i couldn't help notice you have only 1 speech bubble, you moron!

[FKN Unbelievable]

And yes the Xbox was a huge loss but as a gain it Sold 25 million consoles and Landed in second place amongst a Giant and well in front of a Hero to generations of gamers (Nintendo.) I don't care what no one say nintendo wii will be trash but i will own one. Graphically it will not hold up to the giants but For the Bulk of it the Returning favorites We'll love to play for sure so we will have one. Now anybody think the Wii will defeat the Ps3 and 360 you are seriously flawed, yes i know its a safe bet but be honest that control scheme will fall short after a while then they will scrap it after a while when they see the other multiplatform versions of games getting more love from 360 and PS3 owners. Wii will have (I Repeat have.) to live on the strength of its exclusives. As For the Virtual Console BS Every game you pay a dollar plus for i have emulated for my PC. (Genesis,Snes,nes,Turbographx, Neogeo etc.)
Oh yeah once Window Vista Drops and Windows Mac (Yes Even 50 cent the Rapper invested in this.I Read it in a Daily new a while ago i'm trying to find a link.)That Money Lost Will return by the 20-fold.
Unlearn.

[specialguest]

$1.26 Billion(yes BILLION)lost. and MS fanboys think their console #1. LOL!

[jdktech2010]

Every console since the beginning of time (except Wii cause Nintendo is smart and crafty) has lost money. Companies don't make their money on the console they make it off of the games bought for the console. Plus, the 360 doesn't cost anywhere near as much as the PS3 will. So honestly, Sony will lose more you just don't know it.

[Marriot VP]

how can he still have 5 bubbles

[no_more_heroes]

lost $300 dollars or something like that on each xbox they made. With the 360 they're not losing all that much (like $125 - $175 I heard).

[DJ]

But as the price of the system dropped there were a lot of things that conspired against them. They were using a Pentium 3 chip (licensed), an nVidia GPU (licensed), Controller ports made by Texas Instruments(licensed), the Hard drive (you get the drift).

They were paying royalties out the ass, and those royalty fees never decreased (at least to my knowledge). By the time the Xbox was priced at $150 the system was still costing almost $250 to manufacture. Thus, they cut production as quickly as possible, raised the price back to $180, and abandoned the system.

In comparison, Sony and Toshiba designed every chip and aspect of the PS2. Thus, Sony has been making a PROFIT off of the PS2 console ever since it was redesigned into its new Slim-line form. The PS2 in its current form costs $98 to build, and is sold at retail for $129.99

Sony took a few hints from Nintendo and it payed off nicely. Sony and Toshiba have a very close relationship, and I'm sure they're already working on a slim-line version of the PS3(along with IBM of course).

[Funky Town_TX]

Sony will have their losses, but this is about M$. I'm glad it's not my money.

[bullet]

The company is worth 209 billion in enterprise value.

If you look at Microsoft historically, they invest a lot of money in every field they've entered. And not all fields are profitable or profitable right away, but they have the potential to be profitable. It took years for Windows to make money. They knew entering the console market would cost billions. It's not totally unexpected. Over the long term, and we're just into their second console, they can turn a profit at the division. It's not about the hardware. It's about the software, licensing, accessories and ancillary sales. The hardware drives the sales of the other potential revenue streams.

I don't see Microsoft leaving the video console market anytime soon. They're a long term player. And they have the reserves to hold on for a while.

If you look at Sony in comparison, you'll notice they're worth 49 billion in enterprise value, they made 15 billion in profit, have 5 billion in cash on hand, and they're carrying 9 billion in debt. Surprising, Sony's profit margin is 1.65%, where Microsoft's profit margin is 28%.

Sony, while a major corporation, is much more impacted by the game console market than Microsoft would be, if their console were not to sell well.

Incidentially, turning a profit by 2008, is about right. I wouldn't expect Sony to see a profit with the PS3 until about the same time frame or shortly thereafter. Nintendo, I believe is best setup to recover profits quickly, but it's still too early to make any final determination just yet.

[FKN Unbelievable]

Nuff Said.

[ImTheNumber12]

how childish some people act. Making fun of someones avatar, that's rediculous. I'm sure you're in your mid-twentys too. The only thing that should matter at all is that this will not effect the games. No matter if you are a hardcore ps3/360 fan. The games are what count. Sony and MS are in it for the long run and we know that there are going to be great games so why do you constantly have to argue. It took 2 comments to start a war. Has it come to the point where in each comment you have to say 360 will beat ps3. It reminds me of second grade when kids fought over whose dad could beat up the other dad.

[Say's you]

Microsoft making 3x as Sony? like you would know calderra when talking about how much money M$ is making your not even a stock broker so who are you fooling with your mumbo jumbo paragraphes when clearly you don't have the proof to back it up.

[Say's you]

You retard its not like thier in debt with the electric company a debt to the batterie's about the laptops yes but a debt to the other company's no and further FirstknighT there not in trouble cause alot of those troubles are coming from Xbox 360 fans and dumb game journalist that only gives bad news to Sony except Microsofts Xbox 360 which in this case is suspicous when you come to think of it

and there not going to lose alot of money what kind of planet did you come from?,from planet retardation I bet you did knowing how stupid you are typing these bogus crap! that you do

and plus they don't have that much of a deep pocket knowing that there only a software company I'mean I would like to see how deep there pockets are if there that rich which in this case they aren't.