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[sonycowboy]

I'll post webcast comments regarding the Xbox business when the conference call ends

Microsoft’s Home and Entertainment division, which houses the Xbox business, had revenue of $499.0 million in the quarter and $2.88 billion for the full year. Those numbers compare to $483.0 million in the last fiscal year’s fourth quarter and $2.75 billion in FY 2003.
An operating loss of $1.1 billion was realized in the sector in the fourth quarter, versus an operating loss of $1.6 billion one year earlier. For the full year, the Home and Entertainment division had an operating loss of $4.7 billion, up from the $3.7 billion loss in the company’s 2003 fiscal year.

 

[deadhorse32]

Gaining marketshare by bleeding money ... I'm wondering why MS hasn't patented it yet

 

[ManDudeChild]

Considering how much they said about Xbox in the press release (NOTHING) I dont see this topic being updated.

(Edit: But MS has patented it)

Word Mark XBOX
Goods and Services IC 025. US 022 039. G & S: Money hemorrhaging machines for use with televisions and computers, and operating system software programs and computer utility programs for use therewith; electronic devices, namely, computer hardware for accessing global computer and communication networks; and operating system software programs and computer and communication networks, and operating system software programs and computer utility programs for use therewith; computer hardware and peripherals; computer game controllers; computer game pads and controllers; computer software for loosing money and marketshare in Japan and for accessing and being owned; computer software for compressing and fiscal results, word PR text editing; computer game programs and computer programs downloadable from global computer networks and global communications networks; and user manuals for all the aforementioned software and devices sold as a unit therewith. FIRST USE: 20011121. FIRST USE IN COMMERCE: 20011121Mark Drawing Code (1) TYPED DRAWING
Serial Number 78975142
Filing Date September 19, 2000
Current Filing Basis 1A
Original Filing Basis 1B
Published for Opposition October 2, 2001
Owner (APPLICANT) Microsoft Corporation CORPORATION WASHINGTON One Microsoft Way Redmond WASHINGTON 980526399
Attorney of Record William O. Ferron, Jr.
Type of Mark TRADEMARK
Register PRINCIPAL
Live/Dead Indicator LIVE

Seeeee

(I know, lame)

 

[sonycowboy]

Considering how much they said about Xbox in the press release (NOTHING) I dont see this topic being updated.

Where's DCharlie?

 

[gofreak]

Crikey, they're some big numbers. It's funny to think they've almost losing the equivalent of Nintendo's entire cash reserves in the last year. What kind of (in)efficiencies are they implementing in there?

 

[jedimike]

Considering how much they said about Xbox in the press release (NOTHING) I dont see this topic being updated.

You have to read the report. They always show Xbox numbers and break them down by territory.

 

[jedimike]

Crikey, they're some big numbers. It's funny to think they've almost losing the equivalent of Nintendo's entire cash reserves in the last year. What kind of (in)efficiencies are they implementing in there?

Yep, MS could have made 9.27 Billion dollars this year, but now their only getting 8.17 Billion. Poor bastards. </sarcasm>

 

[SKluck]

HOW THE FUCK do you lose TWO TIMES what your actual revenue is? What the fuck are they doing over there?

 

[open_mouth_]

1) These numbers are misleading.

2) This is considered an "investment"

3) First-timers in a market always have to lose a little

4) The "Home and Entertainment" division is so broad

Any other excuses I forgot to mention?

 

[Lukas]

the more xboxs they sell the more money they will lose, simple isnt it?

 

[Deg]

They sure made one hell of an entry in the console market by dethroning Sony and earning Billions in the process.

 

[DSN2K]

Im confident they can reduce losses with xbox2 due to the completely different approach they are taking, almost Nintendo like.

 

[Prine]

It wont be that bad when Xenon is released. Kind of scary though, a company able to lose so much money.

 

[FightyF]

If only SEGA had such deep pockets...

...we'd have 4 consoles Come to think of it...we'd be playing Dreamcast 2 by now.

 

[Ghost]

What is actually in the Home & Entertainment division?

 

[aaaaa0]

An operating loss of $1.1 billion was realized in the sector in the fourth quarter, versus an operating loss of $1.6 billion one year earlier.

They're losing $500 million less than they did last year.

This means they've reduced the costs of the xbox, or they're selling a lot more games, or they're making more royalties on 3rd party games, or MSN is making way more money, or some combination thereof.

 

[WarPig]

What is actually in the Home & Entertainment division?

The Xbox, PC games, and WebTV, I think.

DFS.

 

[sonycowboy]

They're losing $500 million less than they did last year.

This means they've reduced the costs of the xbox, or they're selling a lot more games, or they're making more royalties on 3rd party games, or MSN is making way more money, or some combination thereof.

For the full year, the Home and Entertainment division had an operating loss of $4.7 billion, up from the $3.7 billion loss in the company’s 2003 fiscal year.

Nice try.

 

[AniHawk]

For the full year, the Home and Entertainment division had an operating loss of $4.7 billion, up from the $3.7 billion loss in the company’s 2003 fiscal year.

Nice try.

Damn.

Do they have shipped Xbox numbers there?

 

[aaaaa0]

For the full year, the Home and Entertainment division had an operating loss of $4.7 billion, up from the $3.7 billion loss in the company’s 2003 fiscal year.

Nice try.

Oops. I guess I should have read the whole release instead of just the thread.

 

[kitchenmotors]

I'd like a real logical answer on how a billion dollars worth of loss (and not one cent of revenue since Xbox launched) each quarter is a good thing. I find it odd how some fanboys feel that Microsoft can just bleed money, like it's never ending. These kinds of losses are damaging. This is a BILLION dollars. It's not a million, no company can keep it up, not even Microsoft.

Marketshare means nothing in this industry, it can change so easily with each generation. What if Microsoft loses the marketshare they built on Xbox because of poor decisions for the next generation? That's billions and billions of dollars lost, and not one single thing gained.

 

[sonycowboy]

 

[Ghost]

Can we get Sonys and nintendos revenues by way of contrast?

How can Xbox be costing them a Billion more this year than last? Are new R&D costs creeping in?

 

[Deg]

Can we get Sonys and nintendos revenues by way of contrast?

How can Xbox be costing them a Billion more this year than last? Are new R&D costs creeping in?

lots of flop games. Lots of bundling. Lots of spend but little results. Bad running of the division. Could be loads of reasons.

 

[Culex]

Jesus, in one year, they lost more than half of what Nintendo is worth.

Where's the oogly eyes emoticon when you need it?

 

[Ghost]

I think Ed Fries might have walked out of MS with a company cheque book.

He's probably still buying developers with it.

 

[Phoenix]

They're losing $500 million less than they did last year.

This means they've reduced the costs of the xbox, or they're selling a lot more games, or they're making more royalties on 3rd party games, or MSN is making way more money, or some combination thereof.

MSN is in the black for the first time since its inception - that's where your decreased loss is coming from. The internet ad sales business is picking up again.

 

[Baron Aloha]

Gamecube LTD shipments as of March '04 = 14,570,000
Xbox LTD shipments as of June '04 = 15,500,000

FIGHT!!!

 

[Prine]

They must be spending loads on Xenon R&D

I dont see anything MS did wrong last year to lose a billion dollers. (on Xbox)

 

[sonycowboy]

They must be spending loads on Xenon R&D

I dont see anything MS did wrong last year to lose a billion dollers. (on Xbox)

You mean last 3 months, right

 

[DopeyFish]

Gamecube LTD shipments as of March '04 = 14,570,000
Xbox LTD shipments as of June '04 = 15,500,000

FIGHT!!!

That would land GameCube shipments at about 15.5-16 million units in june'04. Though it might be less or it might be more because i don't really know the shipping schedules and i just used the basis of a= 14.57 million ((a / 28) * 2) + a = current shipments.

As well i'm not sure the original shipments either!

yay! shipments fight! *throws xbox shipments in JC10001's direction*

 

[Deg]

I think Ed Fries might have walked out of MS with a company cheque book.

He's probably still buying developers with it.

Could be you know

They must be spending loads on Xenon R&D

I dont see anything MS did wrong last year to lose a billion dollers. (on Xbox)

Yeah they accidently left their wallet with Ed fries and he didnt give it back to them after he left

 

[Jesiatha]

The Xbox, PC games, and WebTV, I think.

Close. H&E is:

-Xbox
-PC and online games
-Consumer software & hardware (Money, Encarta, mice, keyboards)
-TV Platform (Windows Media Center, MS TV)

 

[jedimike]

That would land GameCube shipments at about 15.5-16 million units in june'04. Though it might be less or it might be more because i don't really know the shipping schedules and i just used the basis of a= 14.57 million ((a / 28) * 2) + a = current shipments.

As well i'm not sure the original shipments either!

yay! shipments fight! *throws xbox shipments in JC10001's direction*

You also have to figure that were in the slowest part of the year... probably only 10% of the yearly sales/shipments happen in the 2nd quarter.

 

[FitzOfRage]

I'd like a real logical answer on how a billion dollars worth of loss (and not one cent of revenue since Xbox launched) each quarter is a good thing. I find it odd how some fanboys feel that Microsoft can just bleed money, like it's never ending. These kinds of losses are damaging. This is a BILLION dollars. It's not a million, no company can keep it up, not even Microsoft.

Well remember, it's one division, not the whole company losing money. They're losing 1 billion for every 3 billion they make elsewhere, and are sitting on $60 billion in cash already, so with numbers like that, they could definitely keep this up for an extremely long time if they wanted . Of course at some point, they're going to want results.

 

[kaching]

So, was there anything concrete said about Xenon at this conference?

 

[Flatbread]

You mean last 3 months, right

I get the feeling you enjoy news that you feel undercuts the xbox.


Do you like sports? If you do what sports teams do you follow?

I feel agitated everytime i read your posts that I'm beginning to wonder if your the antithesis of me.

 

[open_mouth_]

some parts of the division are profitable and some parts (e.g. Xbox) are not, but that doesn't mean Microsoft's efforts thus far have been futile or that they should abandon the money losing ventures at this point. Microsoft needs *at least* 2 generations of its Xbox to be in the market before they could/would divest. So far, the approach they are taking with Xenon (cost conscious, developer friendly, etc.) is the right one, imo, and if they play their cards right next-gen, they'll be turning a profit when all is said and done.

 

[Flatbread]

I'd like a real logical answer on how a billion dollars worth of loss (and not one cent of revenue since Xbox launched) each quarter is a good thing. I find it odd how some fanboys feel that Microsoft can just bleed money, like it's never ending. These kinds of losses are damaging. This is a BILLION dollars. It's not a million, no company can keep it up, not even Microsoft.

Marketshare means nothing in this industry, it can change so easily with each generation. What if Microsoft loses the marketshare they built on Xbox because of poor decisions for the next generation? That's billions and billions of dollars lost, and not one single thing gained.

Didnt they make 8 BILLION in profit last year. They just announed that there paying 3 dollars for every share to there shareholders? Its the largest corporate payout to a companies stockholders in history.


Yeah there in deep trouble, what are they going to do. Its going so bad that they are about to announce xbox 2, because xbox 1 was such a huge failure.


Uhhh, did you say marketshare means nothing in this industry ?

 

[DCharlie]

"Where's DCharlie?"

Here i am!

Yup, MS are losing money in the Home Ent department - a department that would be losing similar amounts of cash on less focused products anyways if the Xbox didn't exist.
Probably not -quite- to this extent though! ha ha.

That's MS's trump card - they can bleed this sort of money and , as a company, it's not going to hurt them in a serious way. As i said, if this money wasn't going on Xbox, it would be going on something like WebTV or something.

 

[Odysseus]

I think it is safe to say Xbox is the clear world #2 right now. In the past three months, Nintendo has sold well below 300,000 GameCubes in the US, far and away the largest single market. There is no way they sold 700,000 units in other territories to overcome the deficit. By the end of the calendar year, there should be absolutely no doubt.

 

[jedimike]

The increase in operating loss in fiscal 2004 was primarily due to $141 million of stock-based compensation expense from the employee stock option transfer program in the second quarter of fiscal 2004 and increased sales of negative margin consoles and costs associated with the next generation console development efforts, partially offset by increased Xbox and Mac Office software sales.

I guess Xenon needs to take some of the blame

 

[DCharlie]

'I'd like a real logical answer on how a billion dollars worth of loss (and not one cent of revenue since Xbox launched) each quarter is a good thing."

It's not a universally "good" thing. but i can lead to good things :

expansion into a new market?
creating a new potential profit stream?

I mean, why are sony investing in Cell? it's Billion of dollars worth of loss!!

At the end of the day, if MS are serious about getting in on some of the gaming industry action, it's going to cost cash.

 

[Prine]

I guess Xenon needs to take some of the blame

 

[dorio]

Oh no, and Microsoft just gave away 32 billion to there investors. They're headed for doom.

 

[Deg]

Looking at what the division does. XBox stuff must be a mess.

Well hopefully the effciency and costs improve. As well as MS learning to handle things better.

 

[cabel]

Yup, MS are losing money in the Home Ent department - a department that would be losing similar amounts of cash on less focused products anyways if the Xbox didn't exist.

That's not really true.

One of Microsoft's more interesting "dirty Microsoft accounting tricks" that I've heard of is that the "MacBU" (Macintosh Business Unit, the group responsible for Macintosh versions of Office, Virtual PC, etc.) is actually considered part of the "Home and Entertainment" department!

This move was done for one reason: to improve the outward profitability of Home & Ent dept. In other words, to offset Xbox losses, as I was told. The MacBU is EXTREMELY profitable. It may seem hard to comprehend, but the MacBU is one of the most profitable divisions in Microsoft -- Macintosh Office sells extraordinarily well.

So, to suggest H&E would be doing poorly without the Xbox is, I think, inaccurate. Rather, Microsoft is doing things to make the H&E department look better than it actually is -- and even then, it looks bad!

Assuming my source at Microsoft speaks the truth,
Cabel

 

[jarrod]

I think it is safe to say Xbox is the clear world #2 right now. In the past three months, Nintendo has sold well below 300,000 GameCubes in the US, far and away the largest single market. There is no way they sold 700,000 units in other territories to overcome the deficit. By the end of the calendar year, there should be absolutely no doubt.

Unfortunately, you're using NPD sell through figures as a base to try and represent shipments, which doesn't really clairify anything. The only thing that's safe to say currently is... we don't know who's ahead. :/

Realistically, I think it's a dead heat right now. MS shopuld pull ahead this fall/winter though, with Nintendo playing catch up in 2005/6 most likely.

 

[Gahiggidy]

I think the better question is whether the monopoly power that Microsoft excercises with their Windows/MS Office products is causing unjust harm on companies outside the O/S and Office-Suite markets. Sony did not break any anti-trust laws in thier efforts to build thier electronics empire. Therefore, when they entered the console biz against Nintendo & Sega in '95, the money they used to invest in that market was "clean". Microsoft is investing in Xbox with "dirty-money". Money they earned from breaking the law.

Is Xbox really a better product than GameCube? Its fair to say "yes", at the current price points...but what if the situations were revered, and Nintendo was able to subsidize the price-point of GCN by the margin of ~$130 as a loss-leader. What if the Cube launched on Nov. 18th, 2001 at $99 Dollars?!. Meanwhile, Microsoft would had to have make the tough choice of cutting out the modem and harddrive to keep the $300 price point at a reasonable amount below cost.

 

[Soul4ger]

Unfortunately, you're using NPD sell through figures as a base to try and represent shipments, which doesn't really clairify anything. The only thing that's safe to say currently is... we don't know who's ahead. :/

Realistically, I think it's a dead heat right now. MS shopuld pull ahead this fall/winter though, with Nintendo playing catch up in 2005/6 most likely.

With the way things are looking for MS's 2005, it shouldn't be terribly hard for Nintendo, if their software comes out in a timely fashion. Of course, I'm sure Microsoft will've put their focus on Xenon, so... At that point, it's not really worth arguing about anymore.