hiice9itsmeagain

When Will Microsoft Own Up to the XBox 360 Bomb?

360 has sold at least 8-9 million worldwide..NPD figures say 5.3m for th USA. Now add Canada, Australia, Europe, Japan, and a few for the rest of the world.

PS3 has never outsold 360 in US. Worldwide, it's tough to make a case also. PS3 sales are so low in Japan that when you combine Japan+USA, 360 is still outselling PS3, although barely. So you'd just have to guess at EU sales, which I'm sure PS3 won last month, but I dont know that they'll win going forward.

"Third place in market share". [Not Really]. A solid first place worldwide, despite that Japan refuses to buy it for petty reasons. Sure, Wii will overtake 360 in WW sales soon enough, PS3 however, probably never will.

Microsoft can do what they want with their money. If you dont like it, Robbie Bach said go invest elsewhere. BTW, since Sony is already 2+ billion in the hole, shouldn't they also go pay their shareholders instead of these hare-brained videogame schemes? Oh wait, that somehow never applies to Sony..

I've already covered in irrefutable detail how 360 is doing great and and I'm sure MS is very pleased with it. Any profits made from it are just icing on the cake, yet the system will likely be profitable when all is said and done.

When Will Microsoft Own Up to the XBox 360 Bomb?

360's main competition is the PS3. Which of course, the article conveiniently ignores. Of course, 360 is more or less destroying the PS3. USA sales to date are 5.3m 360, 1.2m PS3, and 360 has outsold PS3 every month both have been out, where Xbox rarely outsold it's competitor PS2.



5.4 billion losses..who cares? Microsoft has 30 billion in the bank it's shareholders are begging it to spend. 5.4b over six years now, is less than 1B a year, a paltry figure to MS. All that to establish a very powerful Xbox brand in that time, was worth it.



MS is poised to defeat Sony for the high end of the market within two generations, nuff said.



Also Japan is important, but the USA is far MORE important. MS cant do well in Japan because Japanese are extremely nationalistic and for the most part wont buy American industry products. Blaming MS for that is just stupid.



Nintendo can do all it wants with the Wii, the problem is the Wii is not a trojan set top box. That is what MS and Sony are worried about. MS needs to worry about Sony, and they're killing Sony. MS wants to be set up where you get IPTV on your Xbox, you stream PC media on your Xbox, you download movies and TV on your Xbox. So far, it's working out great.

And losses are part of the (non-Nintendo) model, as this maroon might need to learn. How much has Sony lost on PS3 so far? The idea is to win it back over the second half of the life cycle, which it's looking good for 360 to do that for sure.

Does this guy ever look at Sony and say they need to get out of the business? See that's what I dont understand. MS is MUCH richer than Sony as a corporation, yet over the years I've heard so much about how MS is losing too much to continue. But nobody ever says Sony needs to get out of the market. Sony has been barely making a profit, and their videogame division has been losing BILLIONS to support PS3 over the last couple years. Which company is really in a better position here? Where are the constant call that Sony needs to leave videogames? Huh? Huh? Where? It's like "look, Ms is losing billions! They need to leave the industry" "Well, look at Sony over there. They're losing billions too!" "Oh, well, dont worry about Sony! It's ok whenever they lose billions on videogames no problem nobody talk about it or suggest they need to leave the business!". Sorry, that crap is not flying with me.

Like I say, this [analyst] is not very knowledgable about this business. If he was, he should know the normal (not Nintendo) model is, lose money for the first 2-3 years of a console, gain it back and more on the last 2-3 years as hardware costs decrease and software sales rise. It's called CYCLICAL. So how is he surprised that 1.5 years in 360 project has lost money? Seriously how? Has he checked Sony's game division losses? Wow, I think he'll find that shocker, they have a new console and they're losing a lot of money right now! In fact their losses put microsoft's 360 losses to shame! In fact, if he even goes back to check the uber succesful PS2's early years, it lost Sony a lot of money at first too!

This is like videogame business 101, and this guy claims to be a financial analyst writing about this industry. What a joke.

The Xbox, it's true, never gained it's losses back, BUT, the reason was it was built on a bad hardware model. MS bought the chips from Nvidia and Intel who did not lower prices. This time around, MS owns the IP of the chips in 360. They can shop the fabbing anywhere they want, which leads to competition and lower prices, consequently 360 hardware will not be a money pit late in it's life like Xbox was. It will be more like Sony's PS2, which lost a lot of money early on but where is it today? Dirt cheap, profitable hardware, and selling a lot of profitable software. This is a very key point the author doesn't understand, the key difference in the Xbox business model versus the Xbox 360 business model. I recomend for more info on all this, to educate himself as he is obviously very uneducated in this market, he should read Dean Takahashi's book "The Xbox360 uncloaked". This will all be explained in there.

This guy doesn't understand the simple fact that unlike Xbox, Xbox360 is poised to begin making money in years 2 and 3 and on. He's looking at a snapshot 1.5 years in and seeing a small picture, and he doesn't understant the business at all. He could have looked at a snapshot of PS2 1 year in and declared it a failure too, based on his very own reasoning here.

His last sentence:

"With Nintendo edging them out in the gaming market and Apple doing the same in the OS market, MS may quickly find themselves with no profitable divisions left. Don't laugh: it happened to Sony. It can happen to MS just as easily."

Is a joke and proves he's just a dime a dozen virulent Microsoft hater. Apple edging ms out in the OS market? Check their market share sometime dude, I think it's like 2.5%. Apple in the PC space is a corpse. Apple delayed Leopard so they could get Boot Camp to work with Vista. That's Apple's big hope for selling it's OS these days, "hey, you can run Vista on it too! Please buy us..please?" Oh, and wasn't it linux that was supposed to kill windows two years ago? Whatever happened to that? Apple has it's niche market for rich ladies but it's never going to interrupt MS PC dominance as log as you can buy a decent windows laptop for $599 or desktop for $399 a price Apple can never match with their proprietary (and low volume) hardware model.

Anyways back to Xbox360. Looking clearly at the situation we see: Xbox 360 is poised to be profitable, is DESTROYING it's real competitor Sony (outselling it 2-1 monthly in the USA). And as I said, who cares about Nintendo? Nintendo doesn't want to be your set top trojan horse box, and as such they're really not any threat to MS no matter how much they sell. They're a small narrowly focused gaming company, and that's all they'll ever be. A toy company, essentially.

Next we need to talk about Japan. Which is the bigger market USA or Japan? Well, USA=300 million population, Europe=..I dunno, 400-700 million, Japan =128 million. Japan's population is also aging rapidly. Japan has become less and less imprtant in the global games market arguably. Xbox1 pretty much proved you dont need Japan at all to succeed.

Here's another big thing, Western games dont sell in Japan. So guess what, Western developers, crucial to USA and Europe markets, dont care about Japan! They care about..USA 1, Europe 2. And oh look, those happen to be 2 places where Xbox 360 does well. Hmm, lets say Electronic Arts, biggest third party in the world, has a hot new epic game they want to develop. Well, this game will feature hi-def GFX, so the Wii is out. Which will it go to, PS3 or 360? Well, take a guess..360 has ~ 5X the userbase of PS3 and growing...this game is certainly not going to be PS3 exclusive.

Japan has rejected the PS3. It's setting new record sales lows every week and selling under 60k a month there right now. It sold a new record low 13k there last week. Wii is destroying it in Japan. As such, all Japanese devs developing epic high-tech games looking to sell big must look to the West, and what do they see? Xbox360 dominating. Hmm, wonder why DMC4 just jumped ship to 360? Wonder why MGS4 will? Wonder how long Final Fantasy 13 is a PS3 exclusive? It's simple economics my friend. Why would Square stick to PS3? It has an anemic userbase in all territories. They'll either go to 360 also, or go to Wii. They HAVE to. Do you see now?

Finally I want to touch on the Wii. I've already explained how, Wii does not really compete with 360 or PS3. So, even IF it keeps selling as great as it is now, it really will hardly affect the 360. But I think there's a good chance that users tire of the Wii, and that it's sales slow as HDTV gets further adopted. This may or may not happen, but the point is it can only be good for microsoft. If it does, there's a very good chance 360 and not Wii will end up the #1 console in the West, perhaps worldwide.

Xbox 360 has a price cut, Halo 3 and tons of other big epic software (Too Human, Forza 2, Lost Odyessy, Blu Dragon, Shadowrun, Mass Effect, Bioshock) coming this year. It's currently outselling PS3 ~2-1 each month, which will clearly continue all of 2007, and it already has a huge install base lead. It's really lined up incredibly nicely for MS.