PDA

View Full Version : Xbox back in the red in latest Microsoft figures


RobertoOrtiz
05-02-2005, 01:31 PM
Quote:
"Home and Entertainment Division records an operating loss for the March quarter
Software (http://gamesindustry.biz/content_page.php?aid=8369#) giant Microsoft (http://gamesindustry.biz/content_page.php?aid=8369#) has announced its financial (http://gamesindustry.biz/content_page.php?aid=8369#) results for the first quarter of 2005, revealing that while the company (http://gamesindustry.biz/content_page.php?aid=8369#) overall saw solid profit growth, the Xbox division slipped back into the red with a $164 million operating loss.

Revenues in the Home and Entertainment Division, which primarily houses the Xbox project, actually grew year on year - rising to $583 million from $519 million in the same quarter last year.

The operating loss in the division also dropped year on year, falling to $164 million from $204 million, which could be seen as very positive - but can equally be interpreted in light of the fact that the previous quarter, ended on December 31st, saw the division post its first quarterly profit since the launch of Xbox."

>>Link<< (http://gamesindustry.biz/content_page.php?aid=8369)

-R

Hazdaz
05-03-2005, 01:35 AM
With the added expense of engineering, designing, manufacturing and marketing the XB360, I really am not suprised by them being in the red right now at all. To be expected really.

heavyness
05-03-2005, 02:07 AM
MS knew that if they were going to introduce a new system, they wouldn't make much of a profit [if any at all] in the first round. look for the xbox 360 to bring in money.

dotTom
05-03-2005, 07:32 AM
Yeah, this is to be expected. They're going to have to recover R&D costs, not to mention the costs of fitting out the production process. Sony's not doing too well either.

opus13
05-03-2005, 03:50 PM
i suppose the big question is...

will the xbox ever make a profit? several months ago there was a thread with people claiming that the xbox was a success already. this confirms that it isnt. the xbox is so far in the hole it just doesnt make fiscal sense to continue it.

chadtheartist
05-03-2005, 04:44 PM
It's kind of scary that a corporation can operate this way. While it may not make a lot of sense now, if they can garner enough market, they will eventually make a profit.

What I've always found interesting, even though Nintendo isn't number one in sales, they sure know how to make money. I wonder if they can outlast a corporation like Microsoft though. Sony trounced them with the Playstation. But I don't think the Xbox has had that effect.

I'm betting that Microsoft isn't banking on making profits off of hardware. I'm guessing that their main cash flow is going to come through Xbox Live.

bentllama
05-03-2005, 05:30 PM
i suppose the big question is...

will the xbox ever make a profit? several months ago there was a thread with people claiming that the xbox was a success already. this confirms that it isnt. the xbox is so far in the hole it just doesnt make fiscal sense to continue it.

it made a profit the quarter after Halo 2 shipped.

in fact, if it was not a smart venture, I would be looking for another job.

dotTom
05-03-2005, 06:12 PM
I think if you're hoping XBox will fail because you don't like Microsoft you're going to be disappointed. Microsoft is in the console business for the long run. It's all about the control of the "living room". XBox, XBox 360, "XBox 3", "XBox 4"... I strongly suspect Microsoft's line is "Whatever it takes". They're not going to let Sony dominate this space.

chadtheartist
05-03-2005, 06:25 PM
I don't want any system to fail. But I also don't want any one company to dominate the market either. Wether it's Sony, Microsoft, or Nintendo. Diversity is good sometimes.

dotTom
05-03-2005, 06:27 PM
I don't want any system to fail. But I also don't want any one company to dominate the market either. Wether it's Sony, Microsoft, or Nintendo. Diversity is good sometimes.

I agree 100%. Diversity is always good. Diversity means change.

opus13
05-03-2005, 07:35 PM
it made a profit the quarter after Halo 2 shipped.

in fact, if it was not a smart venture, I would be looking for another job.

wow. 1 quarter. really? that one title must have made up for the other quarter of cash in the furnace. m sure that halo2 made MS well in excess of a billion to make up for everything else.

and, no... you would just be directed towards a different market if you are skilled, not simply fired. repurposing employees is cost efficient.

think if you're hoping XBox will fail because you don't like Microsoft you're going to be disappointed

actually, quite the contrary. im rather pleased with the MS software products that i have used, and i really dont have many complaints as compared to any other software producers product.

quite simply, the xbox is wildly underwhelming.

commanderdanger
05-04-2005, 10:01 AM
Actually its doing very well indeed considering its the first venture from Microsoft. They are using some very strong techniques to raise interest in the console, with Xbox live there is a huge user base that is now dedicated to using the system and as your live account is continued onto the Xbox 360 with no extra cost it makes sense to move up to the new console.


Most companys make a loss on their consoles, its not in the hardware that the profit is made. Its in the software that supports the system. They now have a very strong software portfolio for the machine with Halo holding the FPS market and Forza motor sport about to dominate the racing market.

Para
05-04-2005, 10:32 AM
The way I see the survival X-Box is that without MS and its huge funds X-Box wouldn't exist and we would have a lot smaller amount of quality games to play. So in short I don't care how well X-Box is doing financially :)

Recursive
05-04-2005, 10:35 AM
Actually its doing very well indeed considering its the first venture from Microsoft. They are using some very strong techniques to raise interest in the console, with Xbox live there is a huge user base that is now dedicated to using the system and as your live account is continued onto the Xbox 360 with no extra cost it makes sense to move up to the new console.


Most companys make a loss on their consoles, its not in the hardware that the profit is made. Its in the software that supports the system. They now have a very strong software portfolio for the machine with Halo holding the FPS market and Forza motor sport about to dominate the racing market.

Sony and nintendo might have a thing or two to say about sucessfull first ventures into the console buisness that actually make money.
If your definition of very well is "havent gone broke yet" then I guess they are doing very well.

It is indeed in the software that money is made, but if you loose so much on the hardware that you get that money back even though the consumer buys alot of software then it doesnt matter.

Last I saw about xbox live is that 6% of the xbox owners pay for that service, has that number changed? Couse I wouldnt call 6% huge, perhaps 60% would be huge....

Anyways, microsoft isnt intending to consistently post figures in the black untill 06/07 atleast, the problem is that by then they will have lost so much money that its going to take them many years to make up for it. So anyone waiting for microsoft to actually make a profit from the whole xbox thing is in for a long wait.

PhilOsirus
05-04-2005, 01:00 PM
I agree the Xbox has been a small player in the game market so far as most of its hit titles are PC ports, and if it wasn't for the XBox and the money they would have all been only found on the PC. But considering the amount of money MS has they will probably give it at least another shot to try and be number 1 the next time around, altho I don't beat on it happening.

As for Nintendo, just a week ago their DS sales in Japan outsold all other consoles combined, including the PSP. But I doubt this will continue for a long time, Nintendo has been basicly doing everything it can to have as little third-party support as possible by making consoles that are difficult to port games to or from, and this is expected to be even more the case with their next console.

Thalaxis
05-04-2005, 04:42 PM
Sony and nintendo might have a thing or two to say about sucessfull first ventures into the console buisness that actually make money.
If your definition of very well is "havent gone broke yet" then I guess they are doing very well.

If you consider the number of game developers they have on board, things look pretty promising for the
XBox.

dotTom
05-04-2005, 06:53 PM
Bill spake thus:

http://www.gamesindustry.biz/content_page.php?aid=8408

SimonPickard
05-05-2005, 12:31 AM
I don't see xbox as a problem for MS, as I see xbox as a path to a different goal. I'm talking about a home entertainment system.

It wont be long before we start seeing internet, games, music, films, tv, photo, all in one box. I think this is where MS are heading, and xbox is just a way to ground themselves in the gaming area first.

Regards,
Simon

Hazdaz
05-05-2005, 12:53 AM
I don't see xbox as a problem for MS, as I see xbox as a path to a different goal. I'm talking about a home entertainment system.

It wont be long before we start seeing internet, games, music, films, tv, photo, all in one box. I think this is where MS are heading, and xbox is just a way to ground themselves in the gaming area first.

Regards,
Simon

Exactly... MS's dominance of the personal computer is cemented, thus the only way to grow their businesss is to expand into areas where the PC doesn't really interfere... thus gaming (and with it, control of the living room in the form of a "media center") was a very logical next-step. Even if the XB360 loses money - which I doubt - MS will probably still be in it for another roound. After all, the XB1 and XB360 hardware is a "loss leader" (as are all hardware consoles) - ya lose money on them, but make it up on software. And The XB Live, Microsoft introduced another revenue stream that will eventually probably make it ALOT of money. The introduction of "micro-payments" is the next step in that - in which you can download new levels for "only" a couple of bucks.

Make no mistake about it... MS is NOT a dumb company - if they think they will eventually make money on a venture, they will see it through to the end, and they have plenty of money to burn until it happens cuz they know there is the potential is great.

SimonPickard
05-05-2005, 01:00 AM
Xbox live is something that will grow as well, again it's MS setting up something now that will become something very important in a few years.

Try to think in 5 years when you have an MShome system that has an xbox3 in it, VERY high speed internet. Live will become a way to stream games, music, movies, tv, etc. You'll be able to play anything, watch anything, listen to anything. All for a monthly fee.

I think MS are very smart in this regard. What was that line out of Independance Day? "It's like a game of chess.. First you set up all your peices, then you attack.... Checkmate."

Regards,
Simon

PhilOsirus
05-05-2005, 01:27 AM
Sony had first announced well over a year ago that the PS3 would be a media center connecting everything even your toaster to it. MS on the other hand can only compete with itself by making the Xbox a PC-like machine. What they have been doing and seem to be on their way to continue to do is transfer their PC users to the Xbox instead of attracting new players to their console.

commanderdanger
05-05-2005, 10:12 AM
Well it looks like its something we will all be agreeing and disagreeing on for a while anyway :)

CGTalk Moderation
05-05-2005, 10:12 AM
This thread has been automatically closed as it remained inactive for 12 months. If you wish to continue the discussion, please create a new thread in the appropriate forum.