-
Hey Guest. Check out your NeoGAF Wrapped 2025 results here!
Xbox division down $4,000,000,000
- Thread starter Matlock
- Start date
Mike Works
Member
you don't say?Matlock said:
â Narayan
Member
NEWSFLASH!YellowAce said:
You're a retarded scum-fuck! :lol
gamergirly
Member
DCharlie said:
You roll dice with the bank the moment you invest into a short term money losing, long term money gaining plan. Having more money only allows you to plan for a longer business future, not a permanent one. It's all a matter of how much MS is willing to lose to become #1. Also, making truckloads of money guarantees that it's viable for you to continue generation after generation. So, Nintendo is utilizing the opposite of what MS(and to a lesser extent Sony) is doing. They dont have an unlimited supply of money to tap into but arent going anywhere. They're extending their future, not shortening it by running through a great amount of cash.
SyNapSe said:Good to know. I'll start selling my stock now
Dont be frightened. MS wont be around forever, but doesnt mean it's going to happen anytime soon
JackFrost2012
Banned
Well, as the saying goes, you can't make an omelette without breaking a few eggs.
...And at $1.98/dozen, MS just made a 25 billion egg omelette, 5 million times the size of this 5K French wonder:
Looked at another way, MS could have bought 6 dozen eggs for every man, woman, and child in America.
And if MS is serious about reaching 1 billion consumers next generation, why not buy them 2 dozen eggs each?
Dem's good eatin'!
...And at $1.98/dozen, MS just made a 25 billion egg omelette, 5 million times the size of this 5K French wonder:
Looked at another way, MS could have bought 6 dozen eggs for every man, woman, and child in America.
And if MS is serious about reaching 1 billion consumers next generation, why not buy them 2 dozen eggs each?
Dem's good eatin'!
JoshuaJSlone
Member
Why would you be surprised that something that's never happened before, again didn't happen?DenogginizerOS said:
"You're either with us, or with the terrori... woebedraggled!"Speevy said:
Damn, I already forgot that funny MS equation everyone use to post when they reported their annual losses. Something like.
Step 1 = Spend Billions on Xbox
Step 2 = ?
Step 3 = Make money
Ahh hell I'm butchering it.
But yeah anyone here who thinks MS cares about "the gamer" needs to understand that there is a much bigger picture in stake here for MS and it isn't games. They're just protecting the hive with a preemptive strike on the living room and 4 Billion is just another drop in the bucket to keep their main buisness secure.
Step 1 = Spend Billions on Xbox
Step 2 = ?
Step 3 = Make money
Ahh hell I'm butchering it.
But yeah anyone here who thinks MS cares about "the gamer" needs to understand that there is a much bigger picture in stake here for MS and it isn't games. They're just protecting the hive with a preemptive strike on the living room and 4 Billion is just another drop in the bucket to keep their main buisness secure.
Fight for Freeform said:
Yes it does and yet they claimed they had a 10yr plan in place back in 2001. This is why 360 is not the most powerful, has a barebones option, accessories are highly priced and why Xbox is getting killed off one Christmas too early. Everythings going according to plan to bring gamers the best most powerful gaming console possible at a bare minimal price to the consumer. I guess I'm the only one who remembers that.
TheDuce22 said:They may not care about the gamer but they are good for the gamer, thats a fact.
They were indeed good for the gamer and it took me 3 years to realize their snafu was our holy grail of gaming. Wether or not they will continue to be good for gamers now that they know where they fucked up remains to be seen though.
What?
I think the plan was to make a loss to secure entry into the market (hard to really break in, if you want to be stingy and try to make a profit). Of course, whther the loss was planned to be 4 Bill is another thing. I, for on, applaud Microsoft for succeedin making a very proud brand for themselves. Like Playstation before tehm, tehy have entered the market and made themselves known, and in a big way.
Kobun Heat
Member
Hell.
Somebody give me an unlimited, never-ending supply of money and I'll make a console right now. I could sell 700 units a week of the HeatStation in Japan too.
(Also, just for the hell of it, the article says they lost $4 billion in four years, or since the day the console launched. So that doesn't count what they spent prior to launch, which, let's face it, is probably phenomenal.)
Somebody give me an unlimited, never-ending supply of money and I'll make a console right now. I could sell 700 units a week of the HeatStation in Japan too.
(Also, just for the hell of it, the article says they lost $4 billion in four years, or since the day the console launched. So that doesn't count what they spent prior to launch, which, let's face it, is probably phenomenal.)
Mermandala
Member
JackFrost2012 said:
are you proposing that microsoft pursue the development of an eggsbox68?
edit - wtf math! EGGSbox72. now sleep.
It's basically an unsustainable subsidy. Subsidized hardware is somewhat expected at the beginning of a console cycle. If you consider the cost of the hardware, the R&D and marketing, the first million units sold to consumers probably cost the company more money than they are getting back as revenues. Even if there is a paper profit (as in price sold to retailers less cost of production). However manufacturer expects that by the 10th million unit, they'd be in the black as a business.
The Xbox was unique in the sense that it was never profitable, no matter how many units it sold. It's a warped product and is an abberation . Microsoft will not be able to keep putting out Xboxes every generation and pursue the same kind of strategy no matter how cash rich it is. A money losing venture is a money losing venture and eventually the company will have to readjust. They were hoping the Xbox would crack open the market for them, and in the US, that's been true. But Sony is so dominant even in the US that if the 360 doesn't blow everything away right out of the gate and establish a commanding lead before the PS3 makes it out, Microsoft will be pursuing a different console strategy after the 360 because they will likely lose another 4 billion in the next generation.
Even if the 360 doesn't have a commanding lead or better technology, Microsoft is hoping for a MegaDrive/Genesis style micrale with the 360 and they certianly have the money and expertise to pull it off. The roughly one year headstart might give them the time to gather developers to fight off the PS3 onslaught. That's their plan but it could just as easily turn out the way Dreamcast did. Launched early and dead early. Frankly however, I don't see MS taking Japan which will remain a weakness for it in the next cycle. It will be PS3 > Revolution in Japan.
P.S. Nintendo's cash reserves as of March 2005 is not $10 billion as someone suggested on page 1, its 7.4 billion USD. Working capital is slightly lower at 7.39 billion. The company has almost no debt.
The Xbox was unique in the sense that it was never profitable, no matter how many units it sold. It's a warped product and is an abberation . Microsoft will not be able to keep putting out Xboxes every generation and pursue the same kind of strategy no matter how cash rich it is. A money losing venture is a money losing venture and eventually the company will have to readjust. They were hoping the Xbox would crack open the market for them, and in the US, that's been true. But Sony is so dominant even in the US that if the 360 doesn't blow everything away right out of the gate and establish a commanding lead before the PS3 makes it out, Microsoft will be pursuing a different console strategy after the 360 because they will likely lose another 4 billion in the next generation.
Even if the 360 doesn't have a commanding lead or better technology, Microsoft is hoping for a MegaDrive/Genesis style micrale with the 360 and they certianly have the money and expertise to pull it off. The roughly one year headstart might give them the time to gather developers to fight off the PS3 onslaught. That's their plan but it could just as easily turn out the way Dreamcast did. Launched early and dead early. Frankly however, I don't see MS taking Japan which will remain a weakness for it in the next cycle. It will be PS3 > Revolution in Japan.
P.S. Nintendo's cash reserves as of March 2005 is not $10 billion as someone suggested on page 1, its 7.4 billion USD. Working capital is slightly lower at 7.39 billion. The company has almost no debt.
I think by entering the videogame business Microsoft is ruining its profitabilty. Videogames were profitable for Sony (as undisputed market leader) and Nintendo (no loss on hardware). But 3 contenders sharing the profits and fighting price wars for gaining leadership will not be profitable (see Sony, they lost money for the first time).
This business will become profitable for Microsoft as soon as they pushed Sony out of the business. I dont think that will happen and even if it will happen Microsft will have already lost lots of billions of dollars.
And if they will really have successfully invaded your living room in 10 or 15 years, who knows where videogames are heading then? The hardware in your living room might get less and less important.
The games will sure get more and more profitable, but I really dont understand why Microsoft insists on reducing their profits from software by doing the harware too.
This business will become profitable for Microsoft as soon as they pushed Sony out of the business. I dont think that will happen and even if it will happen Microsft will have already lost lots of billions of dollars.
And if they will really have successfully invaded your living room in 10 or 15 years, who knows where videogames are heading then? The hardware in your living room might get less and less important.
The games will sure get more and more profitable, but I really dont understand why Microsoft insists on reducing their profits from software by doing the harware too.
Whatever, they would have made much more profit if they had just sold their games on PC and PS2DCharlie said:
Microsoft leaving Sony the harware market would help everyone. Microsoft would make (more) profits, same for Sony. And instead of being forced to buy two $400 consoles to play all games we probably only had to to pay $600 for one. Competition is good, but the competition should be between the game developers, not the hardware companies.
DCharlie
And even i am moderately surprised
... so once MS has helped Sony to become the one Console future - guaranteeing them 100+ million units in your living room, once Sony then convert to say "oh we are now going to provide content and PC functions, move away from Windows!" that would help MS's profits how exactly??
There is a bigger picture going on here - MS were worried, and they moved early to plug a gap.
Also - if MS weren't sinking cash into Xbox, it would have been into something else in an attempt to grow OR PROTECT their business.
DCharlie
And even i am moderately surprised
Of course - but MS are out to try and stop that or at least stem the flow. Now the actual tactic (which i think it might be) might be to try and bleed Sony to death - a move to a 5 year cycle would not suit Sony at all (or the consumer) so it'll be interesting to see how things go....
PSX didn't work out because it wasn't very good at what it was supposed to do.
So we have had a total of one effort... the PSX - yet Sony have already released PSX1.1 and have already talked about PSX2.
X360 PC - is this dead or is it still alive? is the PS3 pc funcstions still alive - i believe the Sony drive is coming with Linux preinstalled (+ other functions?) so i'm not sure those ideas are as dead as we think.
But , hey, Sony trying to go head to head with Wintel (now they have Cell and plans to create thier own OS) is a risk. And part of business is protecting against risks - and this is exactly what MS is doing.
Helping them would be idiotic.
MidgarBlowedUp
Member
I've known about the 4 billion loss for about 2 years now.
It's actually higher than that by a few hundred million.
I use it whenever I start loosing flame wars against Xbots.
It's a low blow, but it works sometimes.
I just can't figure out how MS is going to make up the 4 billion, plus turn a profit, with the 360?
They will need to sell 10,000,000 non-retard packs and manufacture and advertise them for free just to break even. I doubt they will even sell that many 360's in the next 5 years. I know MS has money, and I can see using the Xbox brand as a write off/tax break, but throwing away 4 billion dollars is generally considered bad business.
MS could have taken that money and created games for PS2. :lol
Seriously Microsoft, I'm going to give you the winning strategy right now.
Here it is:
Make Xbox369 an AO only console.
All games on the console must be adult oriented with either violence, polygon porn, or both. It will sell millions, just image GTA Grand Theft A-Ho! All the stuff you love about GTA with more hot coffe than you can shake a condom at.
Am I right?
It's actually higher than that by a few hundred million.
I use it whenever I start loosing flame wars against Xbots.
It's a low blow, but it works sometimes.
I just can't figure out how MS is going to make up the 4 billion, plus turn a profit, with the 360?
They will need to sell 10,000,000 non-retard packs and manufacture and advertise them for free just to break even. I doubt they will even sell that many 360's in the next 5 years. I know MS has money, and I can see using the Xbox brand as a write off/tax break, but throwing away 4 billion dollars is generally considered bad business.
MS could have taken that money and created games for PS2. :lol
Seriously Microsoft, I'm going to give you the winning strategy right now.
Here it is:
Make Xbox369 an AO only console.
All games on the console must be adult oriented with either violence, polygon porn, or both. It will sell millions, just image GTA Grand Theft A-Ho! All the stuff you love about GTA with more hot coffe than you can shake a condom at.
Am I right?
Tim the Wiz
Banned
Flynn said:
Eh, I had it lying around...
*runs*
MidgarBlowedUp
Member
Amir0x said:
There was a link posted on a newsgroup somewhere that they were approaching 4 billion.
At that time, they weren't quite there yet but were so close the 4 billion mark was being called. If I had the link or article I'd post it.
*edit*
Ah, maybe this is what is was, investement cost.
http://www.frictionlessinsight.com/Archive/Weekof2002_11_10.htm
Year 2002:
"Microsoft described the "Cost of Revenue" as $1.20 billion, and attributes the increase from $884 million the prior year as being largely due to cost of sales for the Xbox. Research and Development was $1.09 billion (some of which was for Xbox code), and Sales and Marketing expenses were $1.22 billion compared to $1.15 billion the prior year. "Sales and marketing costs associated with the Xbox and headcount related expenses were the primary driver" of these increases.
If these losses sound large to you, keep in mind that Microsoft's cash and short term investments comes out to $40.5 billion, and that they are under pressure to do something productive with this cash. The Xbox counts as something productive. "
Interesting, it sounds like the $4 billion loss doesn't even matter as they were being pressured to blow it?
MidgarBlowedUp said:
But 2 years ago Microsoft was at 2 billion in losses, not 4 billion. It's just silly details, but I find it hard to believe you knew 2 years ago that they would double that. Maybe the information you got was wrong and it said that which led you to believe they were nearly there at that point in time.
MidgarBlowedUp
Member
Amir0x said:
Well, you know how us Sony-Whores are.
Give us an inch and we'll take a mile.
I seriously remember reading something a long time ago about MS losing 4 billion on the Xbox. Maybe it was a prediction someone made a long time ago, or maybe that was the figure for the R&D budget for the Xbox?
Either way, that is a big chunk of money that I would have gladly helped MS spend.
Losses for the H&E devision don't tell the entire story! As I said it includes PC games and Mac software - both of which are profitable. That means Xbox losses are larger than the total for the entire division. Certain expenses may also go elsewhere.
Actually I also accurately predicted what would be MS's total losses after I saw the first 2 annual losses the writing was pretty much on the wall. The hardware was costing tons to manufacture and the losses were probably consistent year over year especially when looking at things like the Nvidia lawsuit. Even though MS stopped the over-blown spending of buyouts and money-hats the damage was pretty much already done. MS's first party portfolio though good, are not massive sellers except for Halo. The only thing I didn't account for was the massive success of Halo 2 which they probably banked on to dramatically reduce losses which it did. But when everythings said and done it was the Xbox hardware itself along with the lack of hardware accessory sales which lead to monumental losses.
If MS would have known ahead of time about the towering losses and level of piracy the Xbox would begot they would have never of let that design leave the drawing board. I would imagine that if MS knew they were gonna end up spending 4 Billion instead of 1 billion this generation (their original lifetime projection) I believe they would of made sure that every million they spent went towards chopping away at least 20k gamers from Sony's empire. Hell it probably would of been cheaper for them to just manufacture a more cost efficient console like Gamecube and damn near give the thing away while retaining an install base equal to their current one if not bigger. The N64 which is generally considered a failure in the market place especially among detractors was still much more successful than Xbox and Gamecube overall and it wasn't because of a lack of competition.
If MS would have known ahead of time about the towering losses and level of piracy the Xbox would begot they would have never of let that design leave the drawing board. I would imagine that if MS knew they were gonna end up spending 4 Billion instead of 1 billion this generation (their original lifetime projection) I believe they would of made sure that every million they spent went towards chopping away at least 20k gamers from Sony's empire. Hell it probably would of been cheaper for them to just manufacture a more cost efficient console like Gamecube and damn near give the thing away while retaining an install base equal to their current one if not bigger. The N64 which is generally considered a failure in the market place especially among detractors was still much more successful than Xbox and Gamecube overall and it wasn't because of a lack of competition.
ninge said:
Because it doesn't quite work that way? At least not if you want a realistic figure. If your speaking figuratively then simply divide 22Million into 4Billion which gives you aproximately $182. Even figuratively this isn't accurate because as others have already pointed out Xbox's true losses are somewhat masked by the other profitable ventures contained within the Entertainment division's revenue.