Robbie Bach interview..claims Xbox to be profitable in 08

[Rangers]

http://www.eweek.com/article2/0,1759,2125544,00.asp?kc=EWRSS03119TX1K0000594

Few interesting pulls:

Speaking to eWeek, Robbie Bach said: "It's a business that will be profitable next year. We'll make money next year and that will be the first time, which is pretty exciting."

"Xbox is the hardest piece of consumer electronics hardware to produce in the world, no debate," he said, admitting that "costs are a little higher than we'd like". Microsoft doesn't expect to make a profit on hardware alone, but "we'll probably be gross margin neutral on that over the life cycle of the product, and try to break even on that".

He speaks about profitibility next year as a foregone conclusion..hope that takes a price drop into account.

 

[dobwal]

http://www.eweek.com/article2/0,1759,2125544,00.asp?kc=EWRSS03119TX1K0000594

Few interesting pulls:





He speaks about profitibility next year as a foregone conclusion..hope that takes a price drop into account.

Well you would have to be a little dense to expect your console to remain at its original MSRP 3 years after launch.

 

[Rolf N]

He has confirmed that the XBox 360 hardware does not, and never has managed to break even, let alone be profitable.

 

[Rangers]

He has confirmed that the XBox 360 hardware does not, and never has managed to break even, let alone be profitable.

Where?

 

[one]

Where?

The last part of what Bach said.

Anyway it invalidates the assumption of iSupply and other forum goers et al.

 

[Rangers]

The last part of what Bach said.

Anyway it invalidates the assumption of iSupply and other forum goers et al.

This?

"we'll probably be gross margin neutral on that over the life cycle of the product, and try to break even on that".

Doesn't really state anything about 360 hardware right now. After all, there will be many price cuts in the future, 360 will have to break even in the end. Example, if 360 is making $50 right now, it will presumably be losing $50 after a likely $100 cut this fall. This sort of scenario has to repeat all the way down to $99.

That said, I never much believed isuppli's figures anyway, and I believe 360 hardware currently is probably losing some money.

 

[inefficient]

It's not like this is the first time MS execs have promised this and failed to deliver:
http://www.kotaku.com/gaming/microsoft/Xbox-360-profitable-by-july-145250.php

Microsoft executives have promised that the Xbox business would become profitable by FY'07, which begins in July 2006.

 

[Rangers]

It's not like this is the first time MS execs have promised this and failed to deliver:
http://www.kotaku.com/gaming/microsoft/Xbox-360-profitable-by-july-145250.php

So they've already failed to deliver in 2008. Interesting!

BTW, they already made public long ago the moveback date to 08, because of Zune mostly I think..

 

[Rolf N]

So they've already failed to deliver in 2008. Interesting!

BTW, they already made public long ago the moveback date to 08, because of Zune mostly I think..

The Zune launch was already used out as an explanation for the division's losses in the previous quarter. It didn't launch again, or did it?

 

[rekator]

The Zune launch was already used out as an explanation for the division's losses in the previous quarter. It didn't launch again, or did it?

Yes they probably relaunch the Zune!!

A problem with the xbox rentability it's we got the number for the entertainement division who got Xbox, Zune and other project more or less R&D…
It's difficult to know the reals numbers for the Xbox only.
I'm personnaly seeing the Entertainement Division like a R&D departement who don't care of profitability and be in Red volontary…

 

[fearsomepirate]

"Xbox is the hardest piece of consumer electronics hardware to produce in the world, no debate,"

I believe him, having seen pics of the, cluttered, amateurish mobo.

 

[mrcorbo]

It's not like this is the first time MS execs have promised this and failed to deliver:
http://www.kotaku.com/gaming/microsoft/Xbox-360-profitable-by-july-145250.php

So you think they will not be profitable in FY '08?

Would anyone care to predict that the gaming division will not be profitable in '08 and explain why?

 

[Todd33]

So you think they will not be profitable in FY '08?

Would anyone care to predict that the gaming division will not be profitable in '08 and explain why?

Is there a gaming division? I thought they masked all their console losses in the "entertainment" division?

 

[mrcorbo]

Is there a gaming division? I thought they masked all their console losses in the "entertainment" division?

Gaming business is probably more accurate. I specifically want to exclude Zune or Zune-related expenses or profits from the equation, hence me specifically not using the term "Entertainment Division". The point being if there is a press release saying that the 360 business is profitable, but the entertainment division is still losing money due to more Zune-related expenses (marketing & development expenses, launch of a flash-based model) I don't want to have people spin this.

So you gonna bite or are you not so confident they will have any losses to mask?

 

[Rolf N]

Gaming business is probably more accurate. I specifically want to exclude Zune or Zune-related expenses or profits from the equation, hence me specifically not using the term "Entertainment Division". The point being if there is a press release saying that the 360 business is profitable, but the entertainment division is still losing money due to more Zune-related expenses (marketing & development expenses, launch of a flash-based model) I don't want to have people spin this.

So you gonna bite or are you not so confident they will have any losses to mask?

Revenue, profit, loss, I don't think that commodity gadget is much of a factor either way, though it certainly was the plan to obfuscate some numbers when the division-lumping was performed. To cost money it would have to be produced in large numbers. To make money it would have to be sold in large numbers. Neither seems particularly likely at this point.

 

[Natoma]

http://www.eweek.com/article2/0,1759,2125544,00.asp?kc=EWRSS03119TX1K0000594

Few interesting pulls:



He speaks about profitibility next year as a foregone conclusion..hope that takes a price drop into account.

They'll definitely be more profitable if they continue making higher priced sku's rather than lowering the price of existing sku's.

 

[Ashok]

One huge problem for Microsoft is that by the time the 65nm 360s come out there will be millions of original hardware models out there that continue to fail. The machines people get back from Microsoft appear to have the same failure rate as new systems indicating that Microsoft doesn't have a long term fix for the current 360 hardware after a year and a half on the market. I don't see how things are going to be much better next year if Microsoft is going to have to continue replacing these current systems.

 

[taucias]

Share holders are getting agitated, perhaps?

 

[Platon]

I really wonder what is going on with MS and their complete inability to even make money of the xbox or I should say the xbox360. They are licencing all the chips and making them at the lowest cost possible as opposed to what happened with the original xbox, the whole 360 hardware assembly seems to also be the cheapest possible, with consoles breaking left and right and they still are not able to make money.

More worrysome is that they are selling games like crazy, with an insane attach rate and if that does not make the 360 profitable then what will? Most likely likely with the more consoles they sell, that attach rate will go down, and with a price cut, that they must have if they ever want to sell to "casuals" who don't by as many games as well things are not looking to bright...

 

[Rolf N]

Share holders are getting agitated, perhaps?

They seem a pretty numb bunch. CC after CC passes and they never extract any information out of Microsoft. Maybe they put some happy gas in the air conditioning.