I thought Sony showed at least decent profits for Playstation.... nowhere near Nintendo, but at least profitable enough that they wouldnt consider cutting it (well maybe at the beginning of the PS3 lifecycle)
Washington post: Investors want MS to kill Xbox
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Randolph Freelander
Member
I'm beating my head against the wall here, but I think I just have to come back to your entire point being if they have money in the bank, the money they have spent and, more importantly, will spend on Xbox is not an opportunity cost. I just have to forever differ here. The money in the bank is not important. It doesn't exist, for the purposes of evaluating Xbox. The entire decision point is if whatever they're spending on Xbox could be spent better. The money they're not spending is not at all relevant. (On that note, if they had today's information in 1999, they might have said "you know, actually leaving that money in the bank at negative growth considering inflation actually would be more profitable than this venture." If they're thinking of the next 15 years, who's to say that evaluation changes.)
In reality, Microsoft has multiple multiples of decision points on what to do, and Xbox has continually made that cut, as has frankly just keeping some capital on the sidelines. However, it is not inconceivable that investors that want Microsoft's money out of consumer devices and into further enterprise development could win out.
Sorta, or at least they wanted to be that box. Keep in mind this was pre-mobile, now the living room is less interesting because everyone has their own screen and that's how media is increasingly consumed.
That said there is a resurgence of interest in the living room. It's not the end-all like people though in 2000, but it represents a huge area of growth for Google, Amazon and Apple. People still like to use TVs to do some things like movies and games and they would all love to push their TV/music/movie/game content into the space more aggressively. It would be bad for the current 3 if any of them wedged their way in as current transition models are unsustainable.
MrNyarlathotep
Banned
Some people think "taking over the living room" is a stupid and outdated concept when the actual 'always with you' screen turned out to be the smartphone, and MS have completely missed that boat.
What incentive is there for Apple and Google to support this now and long term when they have their own competing offers? Even if those offers are immature now they won't be forever.
As Nadella said, owning the hardware means they can enable innovative experiences that draw people to the brand. He said there will be more focus on delivering those innovative experiences he believes that Microsoft is resourced to create and deliver to market.
EmptySpace
Banned
no they won't. apple tv is a non gaming device yet it rules the.living room.
Look at any graph comparing Xbox profits with any other MS division....they arent suggesting to cut because they want to take your Xbox away
It was a bad read, as was throwing weight behind a dying medium in broadcast TV. The living room is long gone, which is why Sony is being more successful this generation... They realized it's a lost battle and focused on games adapting to a market that is much more strict and finite then "every living room"... A market that doesn't exist
SneakyStephan
Banned
Meh
monopolies are horrible but at the rate ms drags down standards in console land it might as well be on anyhow
how much worse can it get
I don't even want to imagine
Imperfected
Member
It was.
If only they had someone on staff who could have foreseen the importance of PC gaming as a platform, a man with the technical skills and doggedness to grow gaming on the PC and make it an entity that could stand on its own in the world of consoles, drawing millions of people with no need for professional home computing to constantly buy newer and better Windows PCs purely for the sake of playing games...
He'd have to have been a strong man, a virile man; oh, if only Microsoft's staff had included such a stalwart stallion...
ShinMaruku
Member
Industry will be fine. And while you may think this is stupid, sit on something that you lost bllions on and 10 years in you still have not seen a return. It's not stupidity it's pragmatism.
AbortedWalrusFetus
Member
I don't even know why MS sees Xbox as the key to the living room anymore. They should just work with TV companies or cable companies to make OS features directly for those items. Was the goal with Xbox every to become dominant in gaming? I thought the idea was always to let them get a foothold into the living room, not necessarily because of gaming. Gaming was just a way to sell their entertainment. They're better off creating something like chromecast, working with Comcast on a cable box OS, or working with Samsung/Sharp/Etc to develop a unified TV OS that seemlessly connects with PC OSes.
Wolfgunblood Garopa
Member
It's the price difference, performance difference and bad word of mouth from the DRM/Kinect big brother stuff. TV is still popular.
Dr. Kitty Muffins
Member
Lets assume this happens, they kill the One and they end up selling the parts of the business piece by piece (devs, Live, etc). I can't imagine who would buy the Live infrastructure. It must be massive and very costly to maintain, hence the subscription. The upfront cost to buy it would be huge and you would have to charge to maintain the upkeep. It would be more attractive to those looking to build their own console platform than a third party publisher.
KojiKnight
Member
The thing is... people aren't buying windows tablets, and windows PC sales are done YoY. Microsoft doesn't have the leverage to push Bing because people are moving out of Microsoft's environment.
They either have to regain that share (very hard to do, Apple and Google have the mobile segment on lockdown) OR if they want to push Bing, they need to drop surface and make Microsoft branded Android devices akin to Amazon doing so with Kindle. People aren't willing to have separate devices for all of their apps anymore.
I think you're not grasping the idea of opportunity cost. In terms of capital, which is what you brought up originally, the Entertainment division existing is not preventing unrelated investment elsewhere. That money in the bank *does* have bearing in a conversation about the merit of liquidating a division so that capital could be used elsewhere.
The sum total of Microsoft's Xbox venture is still negative. Even in the few years during which it actually generated a yearly profit, the return on investment was low. Getting rid of Xbox would increase Microsoft's profitability and thus the shareholder value.
Furthermore, as a gamer I think Microsoft is bad for the video game industry. Therefore I would consider MS killing Xbox a win-win situation.
Xbox is an entertainment play, Microsoft's only entertainment play, across Windows devices.
So long as Microsoft chases consumers they will chase devices and entertainment. There are tens of billions already invested across Surface, Windows Phone, and Xbox. None of them are going away anytime soon. Chances are more likely you'll lose interest in gaming before Microsoft does.
TechnicPuppet
Nothing! I said nothing!
Won't happen and would be a disaster for the games industry.
Nintendo will buy buy Xbox and Microsoft Nintendo. Everyone will be happy.
Why? Xbox wouldn't dissapear, probably Lenovo/Samsung/Amazon would buy it and keep the business going.
Exactly what I've been thinking. Their investors won't allow Microsoft to keep taking a ton of the company's money to pour it into the Xbox brand if it's not making them a huge return in profit. And it certainly hasn't, which is one of the reasons why they want to get rid of it.
Septimus Prime
Member
It would be the same incentive for them to support things like Netflix, Hulu, Kindle, and other services that compete with their own businesses. What MS would do is market the Xbox LIVE brand to be the only means to play "Xbox games," and if it catches on, the likes of Apple and Google would not want to be the only platform that does not have the service, since that would drive customers to their competitor. Half the work for this is actually already done, since Google will approve pretty much anything for Android, so there's a bargaining chip to use against Apple right there.
I half-agree with this, but it really isn't the Xbox that's driving innovation; it's Kinect. They can still have that around and just have it work with any future Xbox LIVE-enabled platforms.
KillerDark
Member
I highly doubt MS will kill Xbox.
sono
Gold Member
Online is the only area that makes a loss.
Which year(s) account for the xbox one R&D investment ?
Not if they sold the assets off to another company. Win-win for everyone, especially the games industry, since another company might figure out how to make the Xbox brand relevant to gaming again.
None of them would buy it to keep the current console model. Unless you like the elcheapo andoid style console with xbox branding. Especially Samsung they are used to god like margins on electronics they are not going to sell them at a large loss for years to make up later. None of them will buy the division and sink tons of money to keep it up that includes funding games.
Eh, I suppose we'll just have to agree to disagree. I just don't feel like the xbox's capital usage is a big part of the business strategy decision. I don't believe it constrains them at all.
I do think you make an interesting point about the decision they might have made in 1999. In hindsight, it looks like a big waste of money. But MS hasn't proven to be particularly prescient for many years. The Ballmer years is a long stretch of missed opportunities covered by enormous profits from their existing businesses.
money isn't the only thing being spent, you're also looking at the opportunity cost in terms of personnel and management, both of which can't be scaled infinitely
ChosenPredator
Banned
xbox one only just begun (Not perfectly) but this is still fresh lets see where it heads a few years from now.
maniac-kun
Member
The revenue for the entertainment division are rather small. So it dosnt realy matter for them.
graywolf323
Member
Online is the only area that makes a loss.
the Entertainment Division's profit comes from patents Microsoft has related to Android IIRC
Quadraphonic
Member
2008-2015
IBM is still number 6, and a head of Sony and MS.
http://en.wikipedia.org/wiki/List_of_the_largest_information_technology_companies
they are still so huge because they gave up the home market and focused on business hardware/software (just like Investors are suggesting MS should do)
maniac-kun
Member
So thats why its named Xbox.
The xbox name does matter for them. Its a brand name that people know and it sells. We aren't too far off from online services being really big. Selling off the division now would be dumb.
well, considering the TV function is next to useless outside of the US, combined with the fact that part of the performance difference stems from its TV function, they severely misread the market.
I'd also wager that the people who buy consoles in the first year and also the people who are more likely to not have broadcast TV anymore.
TV is popular by sheer numbers but is declining rapidly
I don't actually think it would happen, just addressing the "it would be a disaster for the gaming industry" argument. It wouldn't.
ShinMaruku
Member
Online is the only area that makes a loss.
Unless they are making tens of billions it's still an iffy investment 10 years in.
That was under old management. Now that a new head is in place stock holder will put extreme pressure on him to gut the money losing parts to focus on the money makers like enterprise.