Microsoft Posts Huge Xbox Losses

[Glonk]

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.

"AFAICS" is the problem. C|Net isn't a financial site, they aren't showing you everything, just what they think is relevant to the article.

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.

I see economics isn't your thing...

The figures I linked to are for fiscal year 2002. I can't even being to describe how laughable it is for you to add up numbers given in a C|Net article for MS' finances, which clearly don't make sense as a sum ($3.7B? Give me a break...). $3.7B is clearly an inaccurate figure, and clearly incorrect for the company's earnings.

MS hasn't made $3.7B in earnings in a 12 month period in...hell, I don't know, the very early 90s?

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.

You're absolutely correct -- they are. You know why they are? They're expanding into growth markets...like video game consoles. They've got more than enough cash sitting around, which is why it isn't a big deal for them to lose a lot of money gaining entry into new markets like this. I don't see the point you're trying to make...

I also simply don't understand what cash flow has to do with any of this. Microsoft's investors have grown wary of the hoarde of cash the company has -- the idea behind this is a company with too much cash sitting around becomes less cost efficient because they don't need to be. That's why MS' cash balance has been in the negatives the past bunch of years, people are wary of their huge wad of cash. Investors also appreciate MS trying to continue growth (the OS and Office markets are saturated), which is why they are in areas like video game consoles. The cash flow figure reflects their expansions in recent years, spending their cash to enter new markets. It certainly doesn't say anything about how "damaging" the Xbox's losses are to the company's bottom line, that's not what cash flow says...

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.

That's...just...wow. Heh.

Hardware costs go down, they do not go up. I don't know what you're on, man, but I'd sure like some...

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.

Supposedly a new, smaller, and cheaper (to produce and buy) Xbox is to be unveiled at E3 this year. It wouldn't surprise me, MS has been talking about shrinking it down now for a long time.

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.

The costs of 0.13 P3s are lower than 0.18 P3s, regardless of their age. The price of a smaller PCB will be lower than a larger. The cost of a smaller overall design is cheaper. The cost of a smaller package is cheaper in terms of shipping and even production.

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.

The Pentium III already exists on a smaller, more cost efficient process. The Xbox's CPU is a 0.18 Pentium III, Intel's been making 0.13 Pentium IIIs since the beginning of 2002.

I'm also at a loss for why you think the price of the components in the Xbox would go up at all. Microsoft isn't buying the CPU and motherboard and all of that stuff from the market, where old prices may go up as the parts become more rare, MS buys them directly from Intel who makes the Xbox's Pentium IIIs on spare fab space. It doesn't make sense to think of it like an open market, MS is buying directly from the manufacturer. And 0.13 P3s are smaller and cheaper than 0.18 ones.

 

[Crusher]

So what sections of revenue for Microsoft were left out of CNet's article? And why does it matter if C|Net is a financial site or not, the story was written by Reuters, which IS a financial site. As I said, I'm sorry if they left things out, it seemed like all aspects were covered to me.

You agree with me that Microsoft was in the red last year by $900 Million, and they have been in the red for the past 3 years. Yet you haven't stated that you've changed your stance on thinking that $500 Million is pocket change to them, is this still your position?

I never said hardware costs would go up, I simply said they would lose more money on it. From the C|Net article:

The company loses money on each Xbox it sells, with some analysts pegging the shortfall at more than $100 per $199 console, meaning that strong sales for the platform actually increase its losses.

So they would have to cut the production cost of the system by over 1/3 for it to become profitable. And that's at the current price point of $199, as I said it can be expected for system prices to drop to at least $149 this year from competition with the PS2 and GameCube. I don't see them being able to reduce the costs of the system by that much. It's entirely possible that with the reduced price and the increased sales volume(at least, MS hopes sales increase this year) that the XBox has an even larger net loss than it did last year.

That does not mean the XBox program will take a net loss, as they could very well sell enough accessories and games to make an overall profit from the console. None of this, however changes the fact that losing a half a billion dollars is not viewed as "pocket change" by Microsoft, or anyone else on the world, except the two of you in this thread who said so. And that is the whole point, and the only point, I was trying to make. If Microsoft thought it was pocket change, why would they even bother trying to build a more cost-effective unit, as you mentioned?

 

[Glonk]

So what sections of revenue for Microsoft were left out of CNet's article? And why does it matter if C|Net is a financial site or not, the story was written by Reuters, which IS a financial site. As I said, I'm sorry if they left things out, it seemed like all aspects were covered to me.

Reuters isn't a financial site, it's a generic wire news service.

You agree with me that Microsoft was in the red last year by $900 Million, and they have been in the red for the past 3 years. Yet you haven't stated that you've changed your stance on thinking that $500 Million is pocket change to them, is this still your position?

I certainly do not agree with you that Microsoft was in the red last year by $900M. "in the red" means they did not turn a profit. Yes, their cash flow is negative, this does not classify them as "in the red" -- this is a direct result of them spending money trying to enter new markets. "Cash flow" isn't an important indictator at all of a company's status like if they're "in the red" or not, it's merely an indictator of what they're doing with assets.

I still think $500M is pocketchange to them. Their net current assets are $48B right now. Perhaps pocketchange is a hyperbole, but it's still not that much money to them, especially when you take into perspective what kind of market they're entering.

So they would have to cut the production cost of the system by over 1/3 for it to become profitable. And that's at the current price point of $199, as I said it can be expected for system prices to drop to at least $149 this year from competition with the PS2 and GameCube. I don't see them being able to reduce the costs of the system by that much. It's entirely possible that with the reduced price and the increased sales volume(at least, MS hopes sales increase this year) that the XBox has an even larger net loss than it did last year.

The problem here is definitely scope. Like the statement of needing to cut cost by 1/3 to become profitable (which I think is definitely doable, by the way): The more hardware MS puts on the street, the more games get sold. The more games that are sold, the more profit MS makes. The profits they'll start reaping now from much larger game sales are coinciding with reduced hardware costs.

None of this, however changes the fact that losing a half a billion dollars is not viewed as "pocket change" by Microsoft, or anyone else on the world, except the two of you in this thread who said so. And that is the whole point, and the only point, I was trying to make.

It's obviously a hyperbole.

The point is, it's certainly not a "huge" sum of money. $500M entering a market dominated by Sony and competing with a giant like Nintendo is pretty damn tiny. Their revenues are going way up, their product lineup is more diverse, and MS has already stated that the Xbox is on a "5 year product track" before they determine profitability. They anticipate losses around this side for the first couple of years until it begins generating profit that will hopefully offset the loss, if not it'll be pretty damn close anyway.

It's simply not a "huge" sum of money to MS, and while it's certainly isn't "pocket change" either (I didn't choose the word originally, I just agreed since I thought "huge" was a hyperbole as well), it's nothing important. It'd be nice if MS made $500M on it instead, but if it really wasn't anything but expendable to MS they wouldn't have entered the market in the first place.

If Microsoft thought it was pocket change, why would they even bother trying to build a more cost-effective unit, as you mentioned?

Because it'd be stupid not to? If I had a hole in my pocket I'd sew it up even though it wasn't making-or-breaking me financially.

As for what C|Net left out: There's a ton of factors. Unearned revenue, return of investments, etc.

 

[BenSkywalker]

For the current discussion-

In a quarterly report with the SEC filed Friday, Microsoft said it posted operating income of $1.97 billion in the December-ended quarter in its Windows-centered business unit on revenue of $2.44 billion.

That is from the CNet article(from Reuters). Everyone knows how long a quarter is, right? The profits you are talking about are very clearly stated as being for a three month period, there isn't really anything to discuss on that particular issue(MS's profits are over $1Billion a month according to that article).

To the broader point, MS has commited to taking a $2Billion loss up front to build the XBox brand. So we look at the relevant data-

Microsoft's Home and Entertainment segment, which includes the Xbox, PC games and the company's TV products, posted an operating loss of $348 million in the quarter on revenue of $1.28 billion. A year earlier it had a loss of $180 million on revenue of $833 million.

This quarter was the peak selling period to date so far in the XBox's life cycle(by far). If we assume every negative thing stated towards the XBox is true, in terms of the enormous amount per console loss MS is taking, they could sustain losses at that level for a year and a half give or take a few weeks, and that is if they don't up the number again(it started at $1Billion and has already been doubled once).

Let's say the analysts views on how much loss is taken for each XBox, $100, is accurate and say MS has moved 10Million of them. Factor in their current tie in run rate of ~5:1 and they are likely recouping over half of that loss per unit right off(ignoring all other factors including first party added revenue). So we have a working loss ratio of roughly $50 per unit, which would allow them to reach ~40Million in installed base before reaching their current loss threshold for the XBox platform. The NES, the console that utterly dominated the market and made Nintendo a household name had a global installed base of 40Million.

This ignores a few different factors, one of which is the new revision XBox and future price drops. A lot of talking has been going on about the CPU and GPU inside of the XBox, not a lot of discussion about the motherboard, RAM and HD not to mention production costs however. The RAM utilized in the XBox was quite high end when the XBox launched, only used in costly video cards in the PC space. Now it is mid tier to low end, its cost likely less then a quarter of what it was to start with. There is also the motherboard which was launched with specialized chipsets that were just entering production, chips which now are becoming far more mainstream. The mobo itself has gone from early production status to mature platform, all of these factors result in a less expensive unit.

Then you have the fabrication advances. Intel and nVidia may not want to front the cash to convert the specialized chips over to .013u, however MS would likely find it to their benefit to pay to have the move made. For Intel it likely isn't even anything MS has to have a say in, although nVidia it would be as they are just ramping production of their first 0.13u part. Given the current analysts estimation that MS increased inventory on parts through Q4 this year them making a move over to a new fabrication process for their major chips make sense at this particular point in time. Moving to the smaller build process will allow them to reduce the physical size of the XBox, reduce the PowerSupply needs and allow for a more Japanese friendly offering also. Not that that last part is key, the major issue is what should end up being a product that reduces costs considerably allowing them to have another price drop and maintain or improve their loss ratio. They also could switch their pack in bundle to include Halo, PGR and/or Blinx. New bundle, new round of press, and build potential demand for Halo2/PGR2.

This is all looking at this generation of course. MS has the underpinnings and is moving in the right direction to hit an installed base of ~40Million while staying within their loss threshold if things failed to improve(which they always do in late life cycle).

Next gen things change considerably on the financial end. Sony is obviously going to ship their next console with a hard drive and network adaptor, that is a given. It is also becoming increasingly clear that both Sony and MS are gunning for a close proximity launch. Sony is obviously looking for a radical new architecture while MS is nigh certain to use off the shelf PC parts. This lends itself to the possibility of Sony repeating early supply issues leaving MS a window of oppurtunity due to shear availability even in Japan. It also means that MS won't be trying to match an accelerated life cycle having to drop the price of their console within the first nine months. Based on current analysts estimates the XBox would be breaking even at $299, and that's with two pack in games. If MS can be dealing with those numbers after fifteen months on the market next gen they will be looking quite solid even on the spreadsheets.

At comparable life cycle points MS and Nintendo are both within spitting distance of where Sony was, this generation MS is losing most of their money due to their push for the most advanced off the part GPU they could land at the time and the addition of features the others lacked. Next gen this won't be a factor due to both diminishing returns and feature parity(MS has rather forced the hand of the other two concerning a HD).

Given MS's outline for acceptable losses that came out nearly a year ago, the XBox is on track right now to do everything MS wanted on the fiscal end. As of this point they could actually afford to get a bit more agressive to bring their sales in line with their expectations on the finance end of the equation. Not sure if that would include the acquisition of Blizzard, but if they marked it down as a PC games based right off they could manage it on the books without upsetting investors too much. Also, paying out a dividened is likely to make investors overlook something, and is likely done to make them overlook something. What exactly that is I'm not sure, could be relating to the TabletPC, could be XBox or it could be another dip in to the war chest for acquisition.

 

[cybamerc]

Lazy8s:

> cybamerc, how is that you're always so critical of Microsoft for their
> past business practices in another market

Because their questionable business practices aren't limited to the past.

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

Much of which is completely irrelevant.



DVFtaxman:

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

Good for you. I'd argue that revenue, profits, assets etc. are also relevant factors.

> You are rude, arrogant and extremely obnoxious in the way you
> address people on here

Get off your high horse. You enter this thread calling ppl nerds, arguing that they should side with M$ because of their nationality and urge ppl to play games instead of arguing about them eventhough that is essentially what you were doing yourself. You're a hypocrite. Your mindless drivel is unappreciated.

> 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.

Not in public.

> 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

Please... nothing I say contradicts internal forecasts as you allude to yourself. Your eagerness to insult me affects your argumentation.

> just have some sort of agenda to relish in the desired misfortune of any
> company that isn't nintendo/sony(delete as appropriate).

My agenda is to inform the uninformed.

> wouldn't these losses also include acquisitions?

No.

 

[Goldni]

Ben made some good points. Ppl dont realize but the PS2 was sitting around 10 million units sold right now in comparison to the same time frame of GCN and XB. If the latest figures are accurate. GCN is sitting around 8.5 to 9 million units globally. They've got till March 31st to hit thier 10m units sold globally projections. I think Zelda will help..also the new bundle deal. But they will do more to soften the after Christmas 'winter' lull than actually boost sales. Imo GCN will come damn close but not quite make it to the 10m mark by March 31st.

XB should be sitting on or around 7.5 to 8+ million units globally right now. With the bundles ending and no real big recognizable software coming anytime soon I dont think they'll come too close to MS projections by end of fiscal year either. I do however see the XB really picking it up fall and winter as thier big game franchise, Halo2, nears. One would think PS2 would slow down some but who knows the mind of the casual consumer?

GBA will continue to grow and pass PS2 this year with help from the GBA SP and Pokemon relaunching around the rest of the world. Overall it's gonna be a great year for everyone on any side of the 'war'.

If Nintendo would come out with a slogan like XB and PS2 and drop the price and do a bundle with GBA SP they'd post some really good numbers this summer and going into fall. But we know how Ninty feels about market share. I am excited about this year more than any past. As it gets better and better for mulitsystem owners.

 

[RaolinDarksbane]

Nintendo does have a slogan.

Nintendo: "Born to Play"
PS2: "Live in your World. Play in Ours."
XBOX: "For ___________. There is no Power Greater than X."

 

[marconelly!]

MS has rather forced the hand of the other two concerning a HD

HD for PS2 was available in Japan before the Xbox came out, not to mention that the inclusion of a HD port was the obvious sign of Sony's idea to include it, which they couldn't for the pricing reasons. I'd hardly say Microsoft forced it on anyone considering it was already planned much before, and was obviously going to be included in the PS3 - Xbox or no Xbox.

 

[Lazy8s]

marconelly!:

HD for PS2 was available in Japan before the Xbox came out,

And the 64DD was available even before that.

not to mention that the inclusion of a HD port was the obvious sign of Sony's idea to include it,

Yeah, it was an obvious sign of their idea to include a HD port. Lots of older consoles have also included ports, too. Some even had talk, prototypes, and releases of massive re-writable storage devices for those ports.

which they couldn't for the pricing reasons.

And Microsoft couldn't include those extra processors and RAM for more power they obviously wanted because of pricing reasons.

I'd hardly say Microsoft forced it on anyone considering it was already planned much before, and was obviously going to be included in the PS3 - Xbox or no Xbox.

Um... I'm not sure how you read his message wrong, but he was clearly talking specifically about a BUILT-IN hard drive. He's saying that Microsoft's decision to actually build hard drives into their systems has raised the expectations for game systems.

Whether Sony planned it or not, his point is that Microsoft has made it unacceptable to release a new system without one. Agree or disagree is up to you... at least don't go off on a tangent.

 

[marconelly!]

I think I was pretty clear when I said that it's quite obvious how next Playstation console would have a hard drive - Microsoft or not, Xbox or not. Releasing a HD as an add-on for PS2 was more than a hint for that.

 

[Magnum PI]

i don't see how microsoft could have made unnacceptable to release a new system w/o built-in hard drive.

how much does the HDD bring on the table for the player ?

mp3 ? data caching ? blinx ? MMORPG ? bad sectors ?

which one of these features made the HDD an indispensable item ?

mp3 is nice..

data caching too.. but they better improve the access time on the media. and if the data is layed you correctly on the media access times are no problem.

and size of memory cards will increase (128 MB+)

do you believe players of other consoles think 'if only i had a built-in hard drive in my console...' ?

 

[Lazy8s]

Magnum PI:

i don't see how microsoft could have made unnacceptable to release a new system w/o built-in hard drive.

how much does the HDD bring on the table for the player ?

mp3 ? data caching ? blinx ? MMORPG ? bad sectors ?

which one of these features made the HDD an indispensable item ?

mp3 is nice..

data caching too.. but they better improve the access time on the media. and if the data is layed you correctly on the media access times are no problem.

and size of memory cards will increase (128 MB+)

do you believe players of other consoles think 'if only i had a built-in hard drive in my console...' ?

When the first game system came out supporting audio output, were you also complaining how primitive the beeps and bloops sounded and questioning its potential to significantly enhance the gaming experience?

Like any other component in your game system, the usefulness of a hard drive as a tool for making better games is limited to the developer's creativity.

 

[archie4oz]

And the 64DD was available even before that.

And the FDS more than a decade before the 64DD... Keep in mind that neither are hard drives...

Yeah, it was an obvious sign of their idea to include a HD port. Lots of older consoles have also included ports, too. Some even had talk, prototypes, and releases of massive re-writable storage devices for those ports.

And your point? Never mind the V1 and V2 boards used the port instead of the internal bay because they were using older EE and GS, whereas at least the V3 boards had the newer EE (and later boards V4+ had the newer GS). Also because they had envisioned a 30-50GB drive for the system (which of course ended up 40GB) it would've been *WAY* too costly (expecially when you factor in the PS2 launch time) to build it into every system, hence the "optional" nature of it. Also rather than a build in, they chose a 'user-serviceable' unit because they were playing around the idea of a 15GB low-cost drive...

Whether Sony planned it or not, his point is that Microsoft has made it unacceptable to release a new system without one. Agree or disagree is up to you...

Microsoft hasn't forced the issue or made the lack of one "unacceptable," being another platform vendor with an HDD though they HAVE validated the idea of an HDD as core component of a console.

 

[Magnum PI]

out supporting audio output, were you also complaining how primitive the beeps and bloops sounded and questioning its potential to significantly enhance the gaming experience?

what you say could be pertinent if we are talking about audio coming to the consoles.. but we are speaking about HDD !

Like any other component in your game system, the usefulness of a hard drive as a tool for making better games is limited to the developer's creativity.

i see you avoid answering to my question....

the fact is the HDD has not proven to be the next best thing.

do you think the fact MS choose to integrate an HDD will dictate sony to integrate one in the PS3 ? you're dreaming...

why would console manufacturers increase production costs, decrease reliability, make their console a bigger and heavier box, for something that adds so little ?

maybe they'll do.. maybe not..

and like i said it isn't like there will be no alternative to what HDD brings to the table: more performant media, memory cards with bigger capacity, or even microdrive..

 

[Lazy8s]

archie4oz:

And your point?

I was being facetious with him. He was going off on a tangent about add-on peripherals while the original point was clearly discussing the effect of Microsoft making a console with a built-in hard drive. Saying what Sony planned and what ended up actually becoming practical in reality for them are two different things.

And the FDS more than a decade before the 64DD... Keep in mind that neither are hard drives...

Wasn't my implication. I was just poking fun at the lack of relevancy of such an observation with the use of another irrelevant observation.

Just because the NES had an optional modem, did that mean the SNES, N64, and GameCube were then going to be designed with built-in modems?

Such design decisions result from market conditions and opportunities, not because of past examples or precedent.

Never mind the V1 and V2 boards used the port instead of the internal bay because they were using older EE and GS, whereas at least the V3 boards had the newer EE (and later boards V4+ had the newer GS). Also because they had envisioned a 30-50GB drive for the system (which of course ended up 40GB) it would've been *WAY* too costly (expecially when you factor in the PS2 launch time) to build it into every system, hence the "optional" nature of it. Also rather than a build in, they chose a 'user-serviceable' unit because they were playing around the idea of a 15GB low-cost drive...

Yes, having a built-in hard drive wasn't one of the principles around which they designed the PS2... which was my point about relevancy in the first place.

Microsoft hasn't forced the issue or made the lack of one "unacceptable," being another platform vendor with an HDD though they HAVE validated the idea of an HDD as core component of a console.

And I agree here.

It's an issue of how much Microsoft has forced the other manufacturers' hand on the built-in hard drive aspect. I think they have placed significant pressure, especially if Sony or Nintendo expect to launch head to head against the hard-drive-equipped Xbox2, but I wouldn't put it passed Sony/Nintendo to buck a trend if they perceive it to better suit their needs (cartridges on N64, two controller ports on PS2).

 

[Lazy8s]

Magnum PI:

and like i said it isn't like there will be no alternative to what HDD brings to the table: more performant media, memory cards with bigger capacity, or even microdrive..

Yep, I agree. I also feel the hard drive as we know it will be going the way of the dodo sooner rather than later.

 

[Guest]

PS3 with Bluray technology is nice!
No need for bulky and violatile HDD! Every game itself will be a HDD too!

Then again, will Sony be so generous to include a Bluray lens in PS3? How about the cash rich Microsoft

 

[maskrider]

i don't see how microsoft could have made unnacceptable to release a new system w/o built-in hard drive.

how much does the HDD bring on the table for the player ?

mp3 ? data caching ? blinx ? MMORPG ? bad sectors ?

which one of these features made the HDD an indispensable item ?

mp3 is nice..

data caching too.. but they better improve the access time on the media. and if the data is layed you correctly on the media access times are no problem.

and size of memory cards will increase (128 MB+)

do you believe players of other consoles think 'if only i had a built-in hard drive in my console...' ?

I for one do not like to have a hard disk in my consoles, more moving part means higher chance of a hardware failure.

And I don't think there is a need for the hard disk with DVD as the storage with big memory cards (bringing a memory card to a friend's place is a lot better than bring your console there), but it seems like the current memory card on X-BOX is close to useless as the games don't like to save on it but save to the hard disk instead.

Unlike other consoles, the X-BOX memory card is just like a virtual peripherial, or may be it exists just for the sake of existence.

 

[BenSkywalker]

Marco-

I think I was pretty clear when I said that it's quite obvious how next Playstation console would have a hard drive - Microsoft or not, Xbox or not. Releasing a HD as an add-on for PS2 was more than a hint for that.

Very good point. Just like the SNES having a port for a CD-ROM drive proved that the N64 was going to have a CD-ROM drive built in, and the multi-tap for the PSX proved beyond a shadow of a doubt that the PS2 was going to have four controller ports, and the N64 having the 64DD was proof positive that the GameCube was going to include a sizeable rewriteable media drive included. No arguing there with so much history on your side

Archie-

Microsoft hasn't forced the issue or made the lack of one "unacceptable," being another platform vendor with an HDD though they HAVE validated the idea of an HDD as core component of a console.

Simply look to the staggering sales of FFXI on the PS2 in the US for proof of that

Magnum-

what you say could be pertinent if we are talking about audio coming to the consoles.. but we are speaking about HDD !

If we talk about good audio, then they are one in the same. Custom soundtracks would have me shelling out $100 for a GC HD without hesitation, when looking at multiplatform games custom soundtracks are by far my biggest concern when chosing which platform to purchase games for.

do you think the fact MS choose to integrate an HDD will dictate sony to integrate one in the PS3 ? you're dreaming...

why would console manufacturers increase production costs, decrease reliability, make their console a bigger and heavier box, for something that adds so little ?

There is this very small item that Sony and MS have mentioned in passing, on line gaming. With a HD you get to download new levels, can enter multiple different football leagues and track full statistics without filling up multiple mem cards, you can release your cornerstone franchises in more then one market(Square). A title like AnimalCrossing on line simply begs for a HD, as do MMORPGs. The Sims On Line fell a bit flat so EA decided to pump it up adding new content. MS can do the same for XBox titles, no such luck for the others.

and like i said it isn't like there will be no alternative to what HDD brings to the table: more performant media, memory cards with bigger capacity, or even microdrive..

All of which would pale next to a 200GB HD. Sony forced the issue of optical media. You could spend a good deal of time listing all the ways carts are superior to CDs, greater storage capacity and lower total cost win out by a huge margin. Such is the case with a built in HD.

Maskrider-

I for one do not like to have a hard disk in my consoles, more moving part means higher chance of a hardware failure.

So you think Nin was right sticking with carts for the N64?

 

[V3]

Simply look to the staggering sales of FFXI on the PS2 in the US for proof of that

Did it finally came out in the US ?

It did quite well in Japan, outselling nearly all of Xbox games