Microsoft taking huge losses on 360

Discussion in 'Games' started by GFLPraxis, Nov 23, 2005.

  1. GFLPraxis macrumors 604

    GFLPraxis

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    #1
    http://www.businessweek.com/technology/content/nov2005/tc20051122_410710.htm

    That blows the analysists that thought it would be a $40 loss right out the window.


    And,
    http://www.gamespot.com/news/6140325.html

    Apparently, Microsoft's shortages are costing so much money that they're bringing the entire INDUSTRY into the red.

     
  2. xli_ne macrumors 6502a

    xli_ne

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    #2
    well since the gaming industry pulls in about 44 billion dollars a year, i'm pretty sure microsoft will make their money back.
     
  3. Lacero macrumors 604

    Lacero

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    #3
    I heard microsoft lost billions from the xbox console and they've yet to recover those losses. Microsoft is playing hard to be number 1 so I expect they'll lose even more on the 360. Triple 3.0ghz PowerPC processors for $300, that's taking a huge loss.
     
  4. Dagless macrumors Core

    Dagless

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    #4
    Microsoft losing money on a console? whoda thunk it?
     
  5. topgunn macrumors 65816

    topgunn

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  6. Moria macrumors regular

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    #6
    This was to be expected - they'll be making loads of money on the games.
     
  7. mad jew Moderator emeritus

    mad jew

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    #7
    So we all need to band together and buy as many 360s as possible so that soon MacOS can rule this Earth once more. Sorry, it's late and I have a cold. I need more whisky...
     
  8. takao macrumors 68040

    takao

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    #8
    like they did with the original Xbox ? ;)
     
  9. GFLPraxis thread starter macrumors 604

    GFLPraxis

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    #9
    The initial XBox loss was $70 per system as I recall. It's not a case of "giving away the razor to sell the blades", it's "giving away the razor to force the other razors out of business at the cost of billions of dollars so you can start selling the razors for money in a few years".

    That's a mouthful.

    Microsoft doesn't expect to actually start making money until at least 2007. But when you think about it, they'll have the losses from this terrible launch (all that money spent in marketting but they hardly had any systems to actually sell), the losses incurred from each system sold in the first two years (and I expect the system will continue selling for a smaller loss even in 2007, just a small enough loss they can make it back), the R&D cost of this system with a completely custom-designed GPU, AND the $5 billion they lost on the first XBox. I seriously doubt they'll recover their initial investment. I wonder how the stockholders will view the consistent 7-years-in-a-row, billion-dollars-per-year loss the XBox market has kept up when 2007 rolls around.
     
  10. katie ta achoo macrumors G3

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    #11
    Yeah, that's what I was thinking.

    Wasn't the original Xbox a money-loser, too?
     
  11. GFLPraxis thread starter macrumors 604

    GFLPraxis

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    #12
    Well, on the other hand, Microsoft WILL get a very big marketshare off of it. I think they'll probably dominate in the U.S., at least for a little while, or be very close to Sony.

    I don't predict them doing any better in Japan though. Japanese people just love Sony and Nintendo.
     
  12. Scruge macrumors member

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    #13
    rofl
     
  13. kwajo.com macrumors 6502a

    kwajo.com

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    #14

    for that to work he'd have to buy them all and make sure no one bought any games or accessories ever. i'm game, but i can't afford more than a handfull of them
     
  14. XNine macrumors 68040

    XNine

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    #15
    But what I have not seen is people that take into account the number of people paying for XBL, and games and accessories which MS profits from. SO, does MS truely lose more money than it makes? I'm not so sure of that.

    However, Playstation will probably reign again, simply because the Japanese aren't concerned with the xbox. The PS2 outsold the Xbox almost 4 to 1 worldwide. We'll see how it goes this time. I expect Nintendo to do better with their REV than they did with Gamecube (which on a personal level did lousy with me).

    The Next-gen era is here. It's gonna be an interesting battle, for sure.
     
  15. Lord Blackadder macrumors G5

    Lord Blackadder

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    #16
    Microsoft can absorb the loss, it has the money to burn. This is all about putting pressure on competitiors - that is the sole reason for the XBox's (and its successor the 360) existence. By selling consoles M$ is stealing potential customers away from Sony and Nintendo.

    So far the loss seems to have had little effect on Microsoft, so unless something changes I doubt anything will be different with the 360.
     
  16. takao macrumors 68040

    takao

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    #17
    that aside the profit for the retailers is left out as well.. which would add another 15-20 bucks ;)
     
  17. pknz macrumors 68020

    pknz

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    #18
    This is excellent news for anti-MS people like myself.
     
  18. GFLPraxis thread starter macrumors 604

    GFLPraxis

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    #19
    Have you seen the XBox numbers?

    On average,
    DS: 50,000 sold per week
    PSP: 30,000 sold per week
    PS2: 20,000 sold per week
    GBA SP: 6,000 sold per week
    GameCube: 5,000 sold per week
    GBA (normal): 200 sold per week
    XBox: about 100 sold per week, sometimes under.

    XBox sells really bad in Japan and really good in the U.S..


    Yes. The five billion loss I mentioned was overall. Taking into account the insane Halo 2 sales and all peripherals for the first XBox.

    The above article is talking about overall negative numbers as well.
     
  19. Eric5h5 macrumors 68020

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    #20
     
  20. calyxman macrumors 6502a

    calyxman

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    #21
    One of the managers got his 360 today and was playing through one of the projectors in the conference room at work along with a few other players. I watched the action for several minutes, and honestly, I know I may get flamed for this, but I don't see anything special. Graphics are similar, though a little bit better, than the first xbox, but that's all. Nothing really to write home about.

    If MS is banking on the fact that this is all about who's hardware is the best, then they'll probably win from now until next spring. Because, when the PS3 arrives with Blu-Ray support, the 360 will look outdated in comparison.

    I've already made up my mind on the 360: I'll pass.
     
  21. Dagless macrumors Core

    Dagless

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    #22
    I came into this generation with an open mind, expecting to pick up either a PS3 or 360 as a second console to my Rev. and that is exactly my opinion too. it doesn't look much different than current gen and when the other 2 hit the grahpics whores will go to the PS3 and the gameplay whores to the Rev.

    I dont think any system will be next gen. The Xbox doesn't look, feel or sound next gen. The PS3 is for its graphics, power and blu-ray and the Revolution for its controller and free online service (which will probably have 90% of players go online, opposed to the mini number of Live users, people like free). I'd love to see a blend of the PS3 and Rev. Power, blu-ray and a new way of playing games, and the Nintendo developers all for one console would be a beautiful thing.
     
  22. clayj macrumors 604

    clayj

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    #23
    Here are the important facts you need to consider:

    1. Microsoft can AFFORD to lose $150 on each console... they'll make up the diff through game and accessory sales, and they make plenty of money in other areas (OS, app, server software) to cover any shortfall.

    2. The current marketshare for next-gen gaming consoles:

    PS3: 0%
    Revolution: 0%
    Xbox 360: 100%

    Every 360 that Microsoft sells between now and the PS3 launch is one more console that Sony has to catch up to... it's hard to gain back marketshare when someone builds up a huge lead. This is the same problem Microsoft had with the original Xbox... Sony's PS2 had built up such a commanding lead that even though Xbox sales caught up to PS2 sales on a monthly basis, Microsoft could never close the gap.

    Now it's Microsoft's turn in the driver's seat.
     
  23. cycocelica macrumors 68000

    cycocelica

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    #24
    They better pray to god that their plan of making money off Live and other extras works. They will be in a world of pain if not.
     
  24. GFLPraxis thread starter macrumors 604

    GFLPraxis

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    #25
    It didn't work on the first 'box, and that was only a $70 loss per system.

    Precisely their strategy. The problem here is that Microsoft has a choice of:
    A) Try to grab the biggest marketshare possible even if you lose billions
    B) Try to make a profit this time around

    I thought they were doing A with the first XBox and then B with the 360, but they're still doing A it seems.
     

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