Great. So we agree on the destination but disagree on the path. I still think you can separate the Xbox division because Microsoft had a gaming division before Xbox, which was profitable without xbox. XBox, alone, is not profitable. It doesn’t matter if it’s integral to their strategy (which I agree) but rather that at many other companies, such as Samsung, they would have killed it years ago because it doesn’t generate a profit.I think we are in violent agreement overall here.
I do not make that claim. If you go back to my OP:
Xbox is a different strategy, it's about content and subscription revenue streams.
it's pretty clear, IMHO, what I was referring to as part of MS' strategy for the xBox, which of course is gaming sales.
XBox is a loss leader because it drives gaming revenue. They need a platform to be in that market, and the xBox is that platform. They clearly think PC gaming is not enough to drive the growth they want in their gaming division; which makes sense because the cost of entry can be a lot higher than an xBox for a comparable gaming rig.
Mine as well; just with the caveat you can't separate the xBox from the gaming market since it is integral to MS' strategy in that market. They can lose money on each xBox, because the revenue it will bring in over its life more than makes up for the upfront hit.
There results bear me out:
Microsoft's overall gaming revenue is up $1.2 billion (50 percent), after reaching $5 billion for the first quarter ever last quarter, thanks mainly to Xbox content, services, and Xbox hardware.
xBox is more than just hardware for MS.
Which is what I also said. They just don't want to be there, even if they have in the past, most likely because the money and growth isn't there relative to the investment.
Which I suspect we can both agree is an example of foresight over in Redmond. They can see the value of Xbox’s impact on other parts of their business. The non-Xbox parts of their gaming division do not need Xbox to make a profit but they do better because Xbox exists. So while Xbox, doesn’t make them money directly it allows them presence in a market that would otherwise me lost.
I just think it’s misleading to claim Xbox is profitable when it’s not. It would be like claiming Apple’s Ping! Social Network service was profitable because it was part of the iTunes division.