Microsoft Posts Huge Xbox Losses

What a load of bullshit. What is this torrent of new products?

(1) A windows service pack. Wow, how much revenue do they get from those?
(2) A server OS that no one really wants, people are getting along fine with Win2K if they use windows for serving
(3) a tablet and media PC that no one really wants

We are witnessing the decline of MS. The just need a few more doomed products like XBox and the tablet PC to completely destroy the company.

 

I was quoting the whole article, but the part that was pertinant to this discussion was the "microsoft are biggest co. in the world", which i was told earlier was untrue in any form. Whether I agree with this being a good thing is irrelevant. The fact remains that they are/were THE biggest company in the world and maybe someone would like to eat some humble pie with an apology before replying in such a rude and hostile manner(cybermac?).

 

This probably depends on how you define "biggest company". Let's see exactly how Microsoft is not the biggest company in the world:

(1) Doesn't have the most yearly revenue
(2) Doesn't have the most employees

And considering that MS is no longer a high growth company, I can safely say that it isn't or never will be the world's biggest company. Thank god. They do have a large amount of cash in the bank and a ridiculously over priced number of shares on the stock market but that has never qualified in any sane laymans terms as biggest company.

Maybe you have a different definition of the word "fact" that you would like to share.

Go away, you stupid.

 

marconelly!:

No, it didn't make the games cheaper. The Saturn came out before the PSX, and the MSRP for PSX software was US $49.99 like it was for Saturn software.

What you may be thinking of is the royalty fee scale for third-party software that Sony implemented many years later in the PSX's lifecycle, well after they had spent their way into the market and became the lead player. I definitely agree that the fee scale, which depended upon the MSRP level being targeted, was an important introduction into the industry by Sony.

In regards to first-party software retailing at US $39.99, that was introduced by SEGA years before, first in the Saturn era and later in the Dreamcast era.

Almasy:

One of Sony's very first moves in the industry was to buy out long-time and fan-favorite developer, Psygnosis.

archie4oz:

Sony shifted gears well at different points in their system's lifecycle to expand its scope and appeal, but their focus was nothing more than a continuation of what SEGA had already started with the Genesis (and admittedly failed to continue themselves with Saturn). Advertising to a broader and more mainstream audience was the cornerstone of SEGA's past console success.

The marketing of the Genesis, after SEGA built up the initial hardcore users on the appeal of an arcade console with titles like Altered Beast, was specifically targeted at a broader and older demographic than what Nintendo believed there to be. I'm not sure what ads played in your area, but the US Genesis ads painted SEGA as a popular choice and Nintendo as very unpopular. They appealed to a broader demographic with a heavier emphasis on licensed properties as well as more mainstream tastes with a focus on sports titles. They were more liberal with regards to content and mature themes, allowing third-parties to follow suit with things like the blood in Mortal Kombat or a title like Night Trap (SEGA even instituted their own software content rating labels and system predating the ESRB.) Heck, even Sonic, the property SEGA skewed to their youngest demographic, was targeted intentionally with a more stylish appeal and at a slightly older audience back in the Genesis days than his competitor, Mario.

Here's an excerpt from Wired magazine on the shift SEGA brought with the Genesis and their approach in the 16-bit era:

http://www.wired.com/wired/archive/9.05/history.html?pg=4&topic=&topic_set=

Interestingly enough, Sony's new PlayStation branding ad campaign has many shades of design commonality with a campaign SEGA briefly used for Saturn called "A Little Too Real". Both bring to light the way gaming and content meld seamlessly with real-life and people's lives/jobs. SEGA's usage of their campaign, which was around the launch of VF2, Virtua Cop, and SEGA Rally, was of course ill-timed considering they were never ready to even attempt to transition to the mainstream with Saturn like Sony later was with their PlayStations.

 

cybamerc, how is that you're always so critical of Microsoft for their past business practices in another market, and yet show such an affinity for Nintendo of all companies?

Here's some excerpts about Nintendo's business practices from that videogame industry feature that Wired magazine did:

http://www.wired.com/wired/archive/9.05/history.html?pg=3&topic=&topic_set=

 

Nice informative post Lazy8s.

Just goes to show how:

I think Nintendo still does a good job on using proprietary things to boosts it's profits. Strong arm tactics will not work now since there are 3 good consoles to compete with.

That sounded like a pain to work with Nintendo, probably one of the reasons why the original playstation got so many third party developers.

I think the Xbox for M$ is a way to get into the market and the real race begins with the next gen consoles.
I don't think any of the big 3s want to be late with their console. Also M$ might have an edge in releasing their console b/c it's probably going to be made up of primarily PC parts and they can concentrate on US and UK and launch in Japan later. While Sony and Nintendo usually launch in Japan, then US & UK later.

2005-2006 should be very interesting.

Speng.

 

Nintendo was protecting the industry(their interests) by not allowing for waves of crappy games to flood store shelves. Were they exploiting 3rd parties? You betcha, and I can guarantee that investors demanded as much. Perhaps they had studied the market during Atari's reign and concluded that allowing massive quantities of mediocre software to be released for their system wasn't the best policy. Looking at today's market I think it's obvious what is going to happen. Eventually Microsoft and Sony will either demand higher licensing fees from 3rd parties or they will begin to produce more of their own titles. I'm sure they will also become more stringent regarding content. The hardware will never be profitable. At some point they will expect bigger returns(software). And the cycle repeats.

 

Nintendo's GameCube was always profitable and it continues to be even more profitable. Unlike Sony and Microsoft which took a while to become profitable and as yet to be seen profitable respectively.

I think Nintendo is very good at making sure they gain profit from whatever they are doing. A smart company and somewhat conservative when it comes to hardware.

Speng.

 

According to this article:

http://news.com.com/2100-1001-983083.html?tag=fd_top

Microsoft's income was only 3.711 Billion last year, meaning that in just the first 6 months of 2003, the console cost them 15% of their yearly income. It is also reasonably safe to blame the XBox console losses as being the cause behind their entertainment division losing $348 Million last year.

Tell me again how this is pocket change?

 

I would say that market value is a VERY good measure of the size of a company!

Opinions like yours are every bit as devalueing as someone like CHAP. At least with him everyone knows that he spills out complete drivvel, whereas you appear to hide behind a semi intelectual facade with the mistaken belief that your aggressive attitude will pursuade others not to dissagree with your somewhat flimsy arguement. You are rude, arrogant and extremely obnoxious in the way you address people on here and it makes me wonder whether you're some sort of retard or just a kid thats "lost his lollypop".
I would also add that I believe m$ also stated prior to xbox launch that htey do not believe that they'll reach profit within the 1st 5 years of release. These latest figures remain consistant with that and unless you have something to show that proves that they are significantly deviated from there business plan then I believe that you are talkin' out of your arse and just have some sort of agenda to relish in the desired misfortune of any company that isn't nintendo/sony(delete as appropriate).

 

Where does it say that 3.711 B figure? Are you just adding it up? What a silly way to do it...

Microsoft's net income last year was not 3.711B, it was $7.8B: http://biz.yahoo.com/fin/l/m/msft_ai.html

And 2001 and 2002 were "off" years for MS and most of the industry, it was $9.5B in 2000, $7.3B in 2001, and $7.8B now in 2002...

So in the first six months, it "cost" them about 6.5% of their yearly income. That's not very large at all for entering a market with an extremely high barrier to entry and entrenched competitors...and I think that cost will certainly go down as the Xbox matures.

The end result would be a more diversifed MS, much higher revenues...

 

wouldn't these losses also include acquisitions?

 

Right, it might be a "very good measure", but there are other better measures for determing if company A can be considered larger than company B.

Anyone who knows anything about economics will not answer: "Microsoft" when asked what is the largest company on the planet. In three years when MS is still making around 10 billion per quarter and other larger real enterprises with products that differ from a strangle hold on PC operating systems will be earning more revenue.

Infantile MS loonies such as yourself are the only ones who are confused on this point. Come on, you can do better than calling me a "retard". Go back to 3rd grade you loser.

 

Clear as mud...

 

1.no offence, but you ARE a retard if you think that I've even addressed any of those comments at you!
2.I'm no m$ loony, more pronintendo if anything! I just don't see the logic in disliking a company for no apparent reason other than the fact that it is larger than another! Just because someone doesn't agree with your rather narrow arguement doesn't mean that they are necessarily pro the opposition. Lets face it we're talking about big business and each of the 3 is equally guilty of using what some might say are unethical practices!
3.Even if M$ isn't the largest company in the world under every conceivable measure, it still doesn't detract from the fact that it is immensely larger than both SONY and Nintendo......a fact that you appear to have great trouble in accepting, maybe because you don't want to or maybe because you 're being extremely and purposefully myopic in your outlook on the industry?
4.The fact that you are resorting to rather sad and insipid retorts such as "you loser" just helps put emphasis on the fact that you have very little if any basis for your arguement.

 

Get a brain loser.

Revenue for Sony last quarter: ~20 Billion
Revenue for MS: ~9 Billion

You are just plain stupid.

 

How is that silly? AFAICS they are reporting the income of every aspect of the Microsoft corporation, they're just posting the numbers for each division separately. To get the total, you take the sum of the parts. Sounds pretty logical to me. It seems like they're listing every division of Microsoft, as I can't think of any MS products that don't fit into those categories, but perhaps there are. If so, they don't mention it.

First of all, the annual data you link to is from July 1, 2001 to June 30, 2002. The data in the CNet article I linked to is from January 1, 2002 to December 31, 2002. So I don't see how you can claim your figure was their income for the year 2002, when it clearly wasn't. Second, if you click on that little "Cash Flow" tab, you'll see that the 7.8 billion dollar income is completely spent on investments. They are actually down 906 Million dollars for that fiscal year. They're down an additional $924 Million from the previous year, and $158 Million from the year before that. With those kinds of expenditures, they're obviously spending money faster than they can make it, which makes a $588 Million loss on XBox sales in a 6 month period all the more damaging to their bottom line.

That will only happen if people stop buying XBoxes. If it becomes more successful, Microsoft will lose even more money on it, especially considering the fact that they're taking an even greater loss on each system sold now than they were during the first half of 2002. Not to mention that following previous console trends when there is competition, prices will drop to $149 this year, possibly even $99 for a bare system with no game bundle by the Christmas season. Instead of losing $100 on each system, they'd be losign $200 on each system. Sell 5 million of those next Christmas, and there's a nice $1Billion loss in a couple of months.

At this point, I also think it would cost them more to re-design the XBox to be cheaper to produce than they would make in production savings. That's part of the problem with PC components, the older components don't drop drastically in price, you can just get newer, better ones for approx. the same cost as the older ones. They could probably replace the P3's with P4's without increasing the cost, but that won't save them any money, and I don't find it possible that they will get Intel to re-design the P3 to be made on a smaller, more cost efficient process.

Note: I never made any claims that the XBox was a horrible thing to have, or that it's going to ruin MS, or anything of that nature. Hell, I'm glad the XBox is around, as it benefits everyone interested in console gaming, whether you like the improved graphics it brings, or the fact that the competition helps make the other consoles cheaper, and increased the production of games for them. I'm just pointing out the fact that half of a billion dollars is NOT pocket change to anyone, including Microsoft. I shouldn't even have to point it out, it should be obvious.

 

well everything that nvidia is making now on .18 or .15 can drop in process thus making more chips per wafer which will make the chips cheaper. At this point its nvidia that is keeping the price of the xbox extremly high. The powervr chip in the dc droped in price many times . Also the price of the ram should be droping too since it is becoming slow speed and ms is buying it by the truck load