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In a recent article from Roger Ehrenberg, of Information Arbitrage, published by Forbes, once again raises the question, "At what point, regardless of its virtually endless financial resources, does Microsoft say 'enough is enough' in regards to its debt ridden console game division?"
This is a topic that comes up all the time among financial and industry analysts, ever since MS published their first financial reports on their Xbox division several years ago, and every year, their losses have only continued to grow.
Two years ago it became painfully clear that Microsoft's original Xbox would not only never return a profit, but when Microsoft pulled the plug on the original Xbox, they were over $2 billion dollars in the red.
Two years later, and Microsoft has now invested over $21 billion dollars on their total Xbox endeavors, and there are no signs that their Xbox division will ever be profitable.
Compare that to both Nintendo and Sony's console divisions, and it is a massive contrast in financials. In fact, Sony's PS2 division is still very profitable, and Nintendo's Wii division is already profitable.
Here is the article:
Adding to Microsoft's woes, even diehard XB360 & XBL fans are turning against MS in regards to its XBL pricing, add-ons, and additional game content.
Recently there have been several online petitions against these pricing issues, one of which was just on the pricing of the GHII 3-song downloads and talked about on this board. In just three days that Guitar Hero II DLC Pricing Petition got 10,000 signatures before it was closed.
Making matters worse, even Team Xbox is starting to put pressure on Microsoft to make XBL free of charge. In fact, Cesar Berardini even wrote an editorial last week on the subject, as well as other known issues with XBL, cleverly titled: "A Inconvenient Truth":
In the words of a great English bard... "Something is rotten in the state of Washington".
In all seriousness though, Microsoft's Xbox division is draining them of money, and unless something drastic changes, their debt will only continue to grow. Making matters worse is that due to the ever increasing size of games, they are going to have to come out with yet another Xbox in a relatively short amount of time in order to provide their customers with all the latest and greatest games from developers. Unfortunately though, this means yet another $10 billion dollar investment, with very little hope of ever turning a profit.
From a gamer's standpoint, it doesn't much matter right now. There are tons of games available for the XB360, but with only a 10 million user base and sales already leveling off, and no money coming in from the original Xbox, shareholders are losing patience with Microsoft's management, and may very well demand that Microsoft pull out of the console market.
After all, even MS can't justify a 5-year $21 billion dollar investment that isn't even coming close to paying off... it is after all a publicly traded company, and I would venture to guess, most investors with control over the largest numbers of shares are not hardcore gamers. They want to see results that turn into profit, and after five years, all they are seeing is a rising giant red figure!
This is a topic that comes up all the time among financial and industry analysts, ever since MS published their first financial reports on their Xbox division several years ago, and every year, their losses have only continued to grow.
Two years ago it became painfully clear that Microsoft's original Xbox would not only never return a profit, but when Microsoft pulled the plug on the original Xbox, they were over $2 billion dollars in the red.
Two years later, and Microsoft has now invested over $21 billion dollars on their total Xbox endeavors, and there are no signs that their Xbox division will ever be profitable.
Compare that to both Nintendo and Sony's console divisions, and it is a massive contrast in financials. In fact, Sony's PS2 division is still very profitable, and Nintendo's Wii division is already profitable.
Here is the article:
Adding to Microsoft's woes, even diehard XB360 & XBL fans are turning against MS in regards to its XBL pricing, add-ons, and additional game content.
Recently there have been several online petitions against these pricing issues, one of which was just on the pricing of the GHII 3-song downloads and talked about on this board. In just three days that Guitar Hero II DLC Pricing Petition got 10,000 signatures before it was closed.
Making matters worse, even Team Xbox is starting to put pressure on Microsoft to make XBL free of charge. In fact, Cesar Berardini even wrote an editorial last week on the subject, as well as other known issues with XBL, cleverly titled: "A Inconvenient Truth":
In the words of a great English bard... "Something is rotten in the state of Washington".
In all seriousness though, Microsoft's Xbox division is draining them of money, and unless something drastic changes, their debt will only continue to grow. Making matters worse is that due to the ever increasing size of games, they are going to have to come out with yet another Xbox in a relatively short amount of time in order to provide their customers with all the latest and greatest games from developers. Unfortunately though, this means yet another $10 billion dollar investment, with very little hope of ever turning a profit.
From a gamer's standpoint, it doesn't much matter right now. There are tons of games available for the XB360, but with only a 10 million user base and sales already leveling off, and no money coming in from the original Xbox, shareholders are losing patience with Microsoft's management, and may very well demand that Microsoft pull out of the console market.
After all, even MS can't justify a 5-year $21 billion dollar investment that isn't even coming close to paying off... it is after all a publicly traded company, and I would venture to guess, most investors with control over the largest numbers of shares are not hardcore gamers. They want to see results that turn into profit, and after five years, all they are seeing is a rising giant red figure!
