Xbox cops another loss

[Dippo]

Xbox cops another loss

However, the operating loss at the division was a very substantial $209m - illustrating just how difficult Microsoft is finding it to make money out of the Xbox. Compare this with closest rival Nintendo, which made just shy of half a billion dollars profit in the year to 31 March - and expects a billion dollar profit in the current financial year

With losses on the Xbox running into multiple billions of dollars, and the company still owning a global market share of the home console market that's slightly behind Nintendo's (albeit certainly leading the GameCube in North America), the console may have been an important stepping stone for Microsoft's console ambitions, but the cost of building that stepping stone must surely have been enough to make even the cash-wallowing beancounters of Redmond blanch.

I feel for both Sony and Nintendo...how can they compete with a monopoly that throws billions against them?

 

[g30ffr3y]

Xbox cops another loss





I feel for both Sony and Nintendo...how can they compete with a monopoly that throws billions against them?

don't feel bad for them... sony and nintendo will compete because they acutally make good game consoles with games that are fun to play...

xbox's make good boat anchors... if that...

 

[stoid]

So what's Microsoft's long term plans here?

Continue to through billions of dollars out for the next three years or until it finally crushes Nintendo and Sony's systems then jack their own price up so that with their new monopoly gamers are forced to take it up the ass to play their favorite games?

At this point, I don't think that Microsoft can feasibly even turn a profitable venture out of the gaming system anymore. I never knew that the xBox was doing THAT poorly. I think that it is some stubborn boss-man somewhere in MS that is the only thing keeping the xBox alive.

 

[Savage Henry]

xbox's make good boat anchors... if that...

As reluctant as I am to stoop to 'forumspeak' acronyms, but that did make me lol

Nevertheless, with the Redmond cashpile behind it the x-box will certainly last until at least v.3, whether it's a plop-slab or not.

 

[srobert]

Well, I own a Gamecube and a PS2 and I got to admit, I've been tempted more than once to purchase a XBox. There are some real good games that I'd like to play that are ontly available on XBox: KOTOR, Crimsom Skies and Mechwarrior to name a few.

 

[LethalWolfe]

I if the next Xbox doesn't do well I think MS will bow out of the console market. Or maybe make some all-in-one home entertainment set-top piece (console+DVD player+DVR kinda thing).

I would be surprised if MS planned on the Xbox being a success on paper. I think the Xbox is a success in terms of "mind share" though. It went from zero to hero basically. I remember when it was first announced it was getting slammed by everyone. When it first came out people had a field day because some of the units were duds and gave their owns the Green Screen of Death. Or because of the big controler. Or because Halo was the only good game. But now it's a few years later and most of the haters have gone away. MS has delivered a solid product in the Xbox. And when people talk about the upcoming "Xbox 2" (or whatever it's going to be called) it is a far cry from how people talked about the upcoming Xbox a few years ago.


Lethal

 

[Stike]

Well, I own a Gamecube and a PS2 and I got to admit, I've been tempted more than once to purchase a XBox. There are some real good games that I'd like to play that are ontly available on XBox: KOTOR, Crimsom Skies and Mechwarrior to name a few.

Yeah, but I tell you why it is that way - because MS paid the developers to make exclusive games. Of course this is nothing new to Sony and Nintendo, but I bet some of those developers would love to port their games to PS2, since it is promising far more sold units due to its high market share.
All the money spent to keep some exclusives for the XBox lower the revenue, too. Or better said: MS increase the loss, hoping that it will find an end.
In my eyes the XBox is already dead, it´s just a question of time when Microsoft will admit it. It may also take 10 years, like they admit now that Windows 95 was shipped completely without security measures.

 

[Mr. Anderson]

You have to wonder how much of the loss is due to hardware vs. software costs....

Well, like what was said above - competition just makes things better for all of us....

D

 

[Dippo]

Well, like what was said above - competition just makes things better for all of us....

You got that right, we can all look forward to better consoles with more features and better games.

Microsoft doesn't have a monopoly on game consoles, so they can't just make crap and expect everyone to buy it. (like they do with the PC)

 

[MorganX]

So what's Microsoft's long term plans here?

Continue to through billions of dollars out for the next three years or until it finally crushes Nintendo and Sony's systems then jack their own price up so that with their new monopoly gamers are forced to take it up the ass to play their favorite games?

At this point, I don't think that Microsoft can feasibly even turn a profitable venture out of the gaming system anymore. I never knew that the xBox was doing THAT poorly. I think that it is some stubborn boss-man somewhere in MS that is the only thing keeping the xBox alive.

FWIW, Xbox sales are hot. They're the only console to increase year over year in both software and hardware sales. +30% I believe. The problem is the cost to manufacture the current Xbox. Microsoft has stated publicly that they will not be able to be profitable on the current Xbox. This would be why a Hard Disk will probably be optional in Xbox 2 (rumors that it will be a dockable MP3 player are interesting).

It is also why I believe MS will not wait for PS3 to launch Xbox 2. And remember, with +30% in hardware in software sales, Starcraft Ghost, Fable, Halo 2, Chronicles of Riddick, and Doom 3 will be arriving in the second half of the year, and maybe, Rebel X (about time). All consoles began this way, sold at a loss to establish market. Microsoft is probably ahead of where it thought it would be in software sales, but they're going to have to get Xbox 2 out ASAP to head towards the black.

 

[1macker1]

I own a XBOX and play a PS2, and hands down, the XBOX wins in almost every aspect. The PS2 has a huge collection of games to choose from, but the XBOX is catching up. I prefer the XBOX, cause it's simply the better of the 2 systems. MS idea is to sell games, and a report came out today that on average, every XBOX owner owns 6.8 games. Their earning was up more than 30% on the XBOX.

http://www.microsoft.com/msft/earnings/FY04/earn_rel_q3_04.mspx

 

[DreaminDirector]

I, too, have to admit that I like my xbox over my PS2. Xbox just feels more fluid. Maybe I've become so comfortable with my controller s that the PS2 controller feels like crap to me. The problem as I see it is that the xbox is much like the mac (please don't kill me....). There are some really quality games on the xbox that have amazing graphics, are fun to play and (unfortunately for me..) very addicting. PS2 has some great games as well, but I see more crap games for PS2 than the xbox. Hence, this correlation between Macs and xboxs. There a small loyal following of addicted gamers.

All of us hardcore mac users (again, I may be speaking for myself) who love the mac know that it's because of the experience and quality. I think xbox is a solid gaming machine and delivers an amazing experience 99% of the time.

I can see more developers jumping on the xbox platform when xbox 2 comes out. It'll prove to alot of people that the xbox can be the gamer's choice. However, I quite possibly fall back in love with playstation when the PS3 is released. Who knows....

 

[flyfish29]

So what's Microsoft's long term plans here?

Continue to through billions of dollars out for the next three years or until it finally crushes Nintendo and Sony's systems then jack their own price up so that with their new monopoly gamers are forced to take it up the ass to play their favorite games?

At this point, I don't think that Microsoft can feasibly even turn a profitable venture out of the gaming system anymore. I never knew that the xBox was doing THAT poorly. I think that it is some stubborn boss-man somewhere in MS that is the only thing keeping the xBox alive.

M$ will continue to try to buy game companies as they have in the past to own the best games. There was talk that they were going to buy Sega when Sega was struggling and even mild rumors of trying to buy EASPorts, but obvously neither happened.

Remember that the X-box is basically a PC as far as processing power goes and of course it is going to be a better machine as far as speed/graphics than the PS2...they are using $500 worth of materials (cost when Xbox was released) and selling it for less than $150(now...$300 when new) they have always intended on selling the Xbox at a big loss in hopes to make inroads to the gaming market.

But what do you think will happen if they do take over the console market from Sony...do you think they will give you hardware worth more than you are paying for like they are now? Not Do you think they will be the creative leader if they own the market? Not.

 

[imac_japan]

I own a XBOX and play a PS2, and hands down, the XBOX wins in almost every aspect.

The PS2 is what 2 -3 years older than the X-box...Its like comparing The dreamcast to a PS2 - (only two years apart). Consoles usually have about a 5 year life so the X-box is in the middle and the PS2 is an old man.

Basically, the X-box isn't even beating Nintendo ! and outside of the U.S - its doing poorly. Especially in Japan, The PS1 sells more units here...

Japanese people just won't buy it because they only really trust Japanese companies to give them Japanese style games ( I mean alot of American companies just make shooting, death match or sim games) - I admit that it has some good games and Ive thought about buying it because of KOTOR and Halo (and they've come out on the PC anyway). BUT the PS2 has alot more games and with the Gamecube - its really easy to play different region games on it.

Mircosoft should just focus on software ! they would make more money...

 

[amyhre]

Actually PS2 is only 20 month older than XBox but that still makes a difference when it comes to Moore's Law. Also, the XBox is designed to be much like a computer.

 

[LethalWolfe]

But what do you think will happen if they do take over the console market from Sony...do you think they will give you hardware worth more than you are paying for like they are now? Not Do you think they will be the creative leader if they own the market? Not.

What do you think will happen if Sony takes over the console market? Or if Nintendo takes over the console market? As another poster mentioned, competition is good (both competition from MS and against MS).


imac_japan,
It's funny you mention DC (which I still own and probably will never sell). The DC was released 1 year before the PS2 (which is part of the reason it's sales never took off as everyone was holding out for the PS2). And it's graphics, in general, were better than the first few generations of PS2 games. The PS2, IMO, has been a let down when it comes to visuals ( especially considering all the hype Sony was pumping out about how awesome the graphix would be).

Anyway, this whole non-Sega hardware reality has been kinda rough for me 'cause I've been a Sega fanboy sense day one. Until I got my Xbox for Xmas I'd only owned Sega hardware. But at least I still get to enjoy their killer games.


Lethal

 

[zamyatin]

What do you think will happen if Sony takes over the console market? Or if Nintendo takes over the console market? As another poster mentioned, competition is good (both competition from MS and against MS).

Lethal

Neither of those companies has the track record that MS has for abusing its market position. In fact, very few companies in history can compare to MS in terms of abusing their customers to reap unearthly profits. You have to go back to the early 1900s to find the few comparable circumstances (US Steel, Rockefeller's Standard Oil, and the railroad monopolies). MS is truly an historical anamoly, let's hope it is a short-lived one.

 

[zamyatin]

So, to put this into perspective, if MS had used the dollars it's lost since the beginning of the XBox project on the Apollo program instead, how much of the entire moon landing could it have financed?

 

[LethalWolfe]

Neither of those companies has the track record that MS has for abusing its market position. In fact, very few companies in history can compare to MS in terms of abusing their customers to reap unearthly profits. You have to go back to the early 1900s to find the few comparable circumstances (US Steel, Rockefeller's Standard Oil, and the railroad monopolies). MS is truly an historical anamoly, let's hope it is a short-lived one.

Neither of those companies do because they have always had competition. If Sony or Nintendo became the only, or only viable, console maker the hardware innovation and one-up-manship were are seeing would go right out the window. I agree that companies w/the size and power of MS rarely come to life, but that doesn't mean Sony and Nintendo are nicer companies. It just means they've never been in such a dominating position before. Looking at niche markets it is a bit easier to see top companies becoming lax because their is typically less competition in niche markets than there is in more mainstream markets.

Take Avid for example. For years Avid was the sole big dog in the film & TV editing world. Yes there were other companies but their markestshare, and impact, were tiny (and most no longer exist). Then comes Apple with FCP (especially versions 3 and 4). People start going, "well crap. This stuff from Apple is nearly as good as this stuff from Avid and it costs way, way, way less..." Suddenly Avid is coming out with new features and hardware left and right and prices have absolutely plummeted in the last 2 years. Coincidence? No. Avid finally has real competition again.

If Sony or Nintendo became the sole provider of console hardware would they be as "bad" as MS? I don't know. But I do know that w/o competition we'd pay more for less no matter what company (Sony, MS, or Nintendo) was selling it.


Lethal

 

[Danrose1977]

This has turned into a very interesting discussion.

I own all three consoles and believe that there are good points to all of them... though I do tend to play xbox more than others.

Regarding sales I don't think you can really look at the situation on a worldwide level. The markets in Japan, Europe and America are all very different. I personally think that Nintendo are the brand that is loosing their way while xbox becomes the major PS opposition (at least in Europe and the US).

Upcoming product lines from the companies show their focus:

MS:
Xbox2 - Aimed at the home console market

Sony:
PSP - Aimed at taking market share from nintendo and nokia portables
PSX - Aimed at the Home entertainment market
PS3 - Aimed at the home console market

Nintendo:
GC2 - Aimed at the home console market
Nintendo DS - Aimed???? into the middle of nowhere as far as I can see, there is nothing else quite like it on the market.

 

[MorganX]

Neither of those companies has the track record that MS has for abusing its market position. In fact, very few companies in history can compare to MS in terms of abusing their customers to reap unearthly profits. You have to go back to the early 1900s to find the few comparable circumstances (US Steel, Rockefeller's Standard Oil, and the railroad monopolies). MS is truly an historical anamoly, let's hope it is a short-lived one.

I think you're confusing being a monopoly with abusing customers for unearthly profits. I think Apple is more guilty of that. That's basically their business model. MS tends to abuse their competitors.

 

[MorganX]

So, to put this into perspective, if MS had used the dollars it's lost since the beginning of the XBox project on the Apollo program instead, how much of the entire moon landing could it have financed?

Now put Steve's Learjet in perspective...

Apple's years of bloated profit margins because they won't allow clones...

This is a silly notion.

 

[flyfish29]

What do you think will happen if Sony takes over the console market? Or if Nintendo takes over the console market? As another poster mentioned, competition is good (both competition from MS and against MS).

Sony prettymuch owns the market, but they don't try to buy all the game companies like MS. they own 989 but their games suck. Sony has much different practices when it comes to business ethics. Sony innovates and always has no matter what market share they have. M$ is known to do the opposite. Competition is good, but if M$ gets a hold of a market they end up destroying innovation.

 

[flyfish29]

I think you're confusing being a monopoly with abusing customers for unearthly profits. I think Apple is more guilty of that. That's basically their business model. MS tends to abuse their competitors.

You both are right! M$ abuses both their competitors and their customers. M$ abuses their customers directly as well as indirectly(by destroying their competition). They abuse their customers directly by providing software that is inferior, overpriced, and limiting in the ability to use other software programs instead of M$ products.

Here is a link Stoid has in his sig. This pretty sums up how M$ abuses their CUSTOMERS! It is things like this that M$ does that pisses me off!

http://www.macdailynews.com/comments.php?id=P2555_0_1_0

 

[1macker1]

No offense, but I dont care about the Japan market. The XBOX is doing well here in America. Many game publishers are announcing that they are stopping game development for the GameCube. The XBOX has tons of good games, but i guess that all depends on the individual's taste. I'd never buy a GameCube because it's a console for the kiddies.

The PS2 is what 2 -3 years older than the X-box...Its like comparing The dreamcast to a PS2 - (only two years apart). Consoles usually have about a 5 year life so the X-box is in the middle and the PS2 is an old man.

Basically, the X-box isn't even beating Nintendo ! and outside of the U.S - its doing poorly. Especially in Japan, The PS1 sells more units here...

Japanese people just won't buy it because they only really trust Japanese companies to give them Japanese style games ( I mean alot of American companies just make shooting, death match or sim games) - I admit that it has some good games and Ive thought about buying it because of KOTOR and Halo (and they've come out on the PC anyway). BUT the PS2 has alot more games and with the Gamecube - its really easy to play different region games on it.

Mircosoft should just focus on software ! they would make more money...