Sounds like a lot of crap to me, it wasn't long ago we were told XBOX made Microsoft billions and the billions they burned up during XBOX and the RROD disaster had been "paid back". Either they must have spend alot of money on Kinect2/XB1 or someone has been lying all the time if this is supposed to be true.
Analyst claims Xbox losing $2 Billion per Year; Suggests it should be dropped
- Thread starter BoardBonobo
- Start date
Sounds like a lot of crap to me, it wasn't long ago we were told XBOX made Microsoft billions and the billions they burned up during XBOX and the RROD disaster had been "paid back". Either they must have spend alot of money on Kinect2/XB1 or someone has been lying all the time if this is supposed to be true.
here is a link to article on what Elop wants to do:
http://www.theverge.com/2013/11/8/5080192/microsoft-ceo-candidate-stephen-elop-bing-xbox-rumors
Personally I don't care for him too much, I think he is willing to make tough decisions and even gutsy ones which has merit but I think any good leader will plan for what could go wrong and his leadership at Nokia suggest to me anyway that while he may be good at getting all the business units beating to the same drum the consequence of this is a lack of diversification for when you time things wrong or simply misjudge the market. He'd make a good advisor but he shouldn't be running anything IMO.
If MS want to make a broader entertainment play (and they do) they need to grow their base fast.
The high price of admission for Xbone is going to work against them more than the esram teething issues and lower GPU FLOP count. The high monthly fees for Gold (which fall greatly over longer sub periods) also make Gold look like terrible value as an entertainment package that you need to pay for *on top* of your other subs.
And the product being gimped but (even more) expensive in Euroland is ... perplexing.
MS are doing a shaky job of bridging Game <-> Entertainment IMO.
The high price of admission for Xbone is going to work against them more than the esram teething issues and lower GPU FLOP count. The high monthly fees for Gold (which fall greatly over longer sub periods) also make Gold look like terrible value as an entertainment package that you need to pay for *on top* of your other subs.
And the product being gimped but (even more) expensive in Euroland is ... perplexing.
MS are doing a shaky job of bridging Game <-> Entertainment IMO.
That analyst is either an idiot or a stalking horse for the folks that want to divest xbox. Probably both.
Live probably generates 500 million margin per year or more.
MS gets 8-10 margin per software disc pressed
MS makes bank off of publishing
MS makes 30% margin off all xbla sales
At this point, hardware probably makes a weighted average margin of $50 per console.
At this point the XBOX division probably makes 1.5 Billion or more per year. I could easily see the 360 business having made 6-8 billion in profit over the last 5 years. Take away a billion or so in xbox1 R&D and you still have a ton of profit.
Couple tens of million in profits or losses last two years, on billions in revenue ... it does fuck all for them, certainly doesn't put them in the black from their initial investments and cluster fucks.
It's a distraction purely because it doesn't do anything for them, it does take management time, it does affect how they design consumer windows (DirectX12 wherefore arth thou?).
Assuming rational markets for a moment, if the stock value rises after the sale then the market thinks either someone else can run it better than them and is thus offering a higher price for it than it's value to Microsoft, or it has negative effect on Microsoft's business to begin with. Otherwise it would be simply a zero sum game.
I think MS primary motivation for the xbox was they were worried about sony getting a foothold in the living room (which become more like PC's) and so it was some counter
funnily they were late and missed the 20 trillion ton gorrilla that is smartphones etc which was the real competition to PC's and not game consoles
funnily they were late and missed the 20 trillion ton gorrilla that is smartphones etc which was the real competition to PC's and not game consoles
hmmmm
**** Turns on windows phone.... big xbox video tile , big xbox live tile , big xbox music tile*******
**** Turns on pc.... big xbox video tile , big xbox live tile , big xbox music tile*****
The xbox brand even with its dings from the drm fiasco is still their best brand and has the best mind share . To say it does nothing for htem is a bit silly
Small fry compared to the 800 pound gorillas ... they can't use that as leverage to sell windows and windows phone. They were already forced to port xbox music to competitor platforms ...
They are independent brands which don't feed each other ... whether you have xbox services on your windows desktop from Microsoft xbox or whatever xbox in the end doesn't matter. If Microsoft can get a fair price for the xbox, and in the current IPO market they almost certainly can, both brands might be better off (unless the xbox somehow finds itself needing a massive subsidy AGAIN).
When EDD cost Microsoft $1.15 billion in write-offs for warranty repairs, that was a big deal. When Surface cost $900 million in price adjustment of unsold inventory, that was a big deal too. I don't see how on earth MS can hide $2 billion in losses without someone *actually* finding out, not speculating it's disappearance. Not to mention, this would be the most profitable time period in a consoles life, especially since the Xbox 360 has only had one official price drop in EIGHT years. This thing is making money left and right. And at worst, the R&D for the Xbox One is maybe $1 billion. And Microsoft is doing the radical thing and actually attempting to make a profit on each box!
As for the Elop thing, I don't see in what universe it makes sense to sell the only consumer product your customers love which is also a portal to other services you sell, not when the company has just bought another device company, not when your company slogan is now being for "devices and services". Oh, and there is no way Bill or Steve would let the axe it. Period.
Investors want short term gains. The stock popping this year should quell them for a while.
As for the Elop thing, I don't see in what universe it makes sense to sell the only consumer product your customers love which is also a portal to other services you sell, not when the company has just bought another device company, not when your company slogan is now being for "devices and services". Oh, and there is no way Bill or Steve would let the axe it. Period.
Investors want short term gains. The stock popping this year should quell them for a while.
The Xbox One OS and dev tools are too integrated with the Operating Systems group that runs Windows (and now Windows Phone) to make ripping them apart feasible. No investor knows that but any buyer who does their due diligence would immediately see that as greatly devaluing their purchase or as a showstopper. If the don't, they are idiots.
None of Sherlund's numbers add up. He either has an agenda or is an incompetent idiot.
Cheers
Don't rule out the combination of the two.
I wonder if MS's marketing and exclusive-content budget has something to do with it?
I mean they have sold quite a few Xboxes and other entertainment devices, but does it make up for the amount of money spent to create some semblance of brand-awareness?
I mean they have sold quite a few Xboxes and other entertainment devices, but does it make up for the amount of money spent to create some semblance of brand-awareness?
Last edited by a moderator:
Where do you think the xbox marketing budget comes from?
Revenue and Gross Margin for FY14Q1 (quarter ending september 30th 2013) is here
Revenue from Android ends up in D&C Licensing, which has nothing to do with XBox, - at all. Also, I can find zero confirmation of $2B/year in Android patent license fees.
XBox hardware revenue , revenue from 2nd. and 3rd party games and Live subscription is in the D&C Hardware segment. Here you also find the Surface boat anchor which is the likely culprit for the lower gross margin in this segment.
Xbox Live transactions is found in the D&C Other segment as is 1st party game revenue (are there any left besides 343 Industries ?).
AFAICT, Sherlund gets his numbers from his backside.
Cheers
