Analyst: Microsoft Loses $2 Billion on Xbox Annually


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There has been this drumbeat from analysts for MS to end their Xbox division, along with just bout anything consumer oriented. 

 

Where is the drumbeat for Sony to get rid of its PS division and stick to finance since it does so well in that market and yet loses money in consumer markets like TVs and home consoles?

 

Where is the drumbeat for Google to get rid of Android since it doesn't actually earn Google any money.  The vast majority of their money is from ad revenue, nothing else.  all of their other projects are funded by that profit. 

 

Where is the drumbeat for Apple to drop its desktop business since the clear majority of its profits are in mobile?

 

My point in all of this is why is it that MS is not allowed to use profits from one division to grow into a new market that either loses money or breaks even, while other companies seem to get a pass.  I always thought there was a value to a company overall that sometimes cannot be calculated based on profits.  Android for example.  It doesn't earn Google any money, but its a gateway to serve more ads, which do generate profit.  Likewise Bing.  It doesn't earn money on its own, but it has resulted in services that MS has brought into all of its major software that does generate profit.

 

And grocery stores should clearly stop selling fruits and vegetables because they make way more profit selling junk food!

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You know what this means right? It means the xbox is doomed, should be canned and all xbox exclusive games should go multiplatform.

 

This is not as fun for you all to hear when it's not being posted in the nintendo section, is it?

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Here's even a report neowin posted back in January:

https://www.neowin.net/news/report-microsofts-xbox-division-has-lost-nearly-3-billion-in-10-years

This isn't even including the billions MS has spend on the xbox one console.

 

An now you start seeing things like:

https://www.neowin.net/news/elop-would-consider-dumping-xbox-and-bing-if-he-becomes-microsoft-ceo

and

http://ca.ign.com/articles/2013/11/07/microsofts-first-party-pc-game-development-being-expanded

once again Microsoft is giving it another go.

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Why reinvent the wheel when you already have a box in every home. It's more complicated than that obviously, but Steamboxes have a long road ahead of them. Not saying they can't/won't be successful, but if MS did sell the Xbox division then it might be a good buy for Valve to boost their efforts with Steambox. And like you said in the other topic re:disc installs/downloads, there may be a time when you buy 1 game and can play it on any hardware tied to a service. Valve already do that with Steamplay and I'm sure it'll expand with Linux/SteamOS. Go one step further and say you buy an Xbox and you can play there too. I'm sure that type of deal gets messy because publishers might see a dip in sales, but Sony already did something similar in 2011 with Valve and Portal 2's release.

 

As for Amazon/Google, if rumours are true they're already working on games or a console of sorts. Put it this way, they're already in the business of selling digital downloads, not just for games, but movies, music and books. That's all the same things MS are struggling to do right now. If you're Amazon or Google you don't need to keep Xbox as a closed eco system, it can be argued it would be even stronger if it was open.

 

 

But that's the problem I have with the idea that any of those companies would buy out the xbox division.  They all either already have plans in motion, or have created plans to follow through on.

 

If they were to buy Xbox just to turn around and gut it, what's the point?  If Valve were to get it, just to turn it into another steambox, then why waste the money on the purchase. 

 

It just seems like they would not be interested in buying a closed platform console division when they can build their own 'open' platforms for cheaper.

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There has been this drumbeat from analysts for MS to end their Xbox division, along with just bout anything consumer oriented. 

 

Where is the drumbeat for Sony to get rid of its PS division and stick to finance since it does so well in that market and yet loses money in consumer markets like TVs and home consoles?

 

Where is the drumbeat for Google to get rid of Android since it doesn't actually earn Google any money.  The vast majority of their money is from ad revenue, nothing else.  all of their other projects are funded by that profit. 

 

Where is the drumbeat for Apple to drop its desktop business since the clear majority of its profits are in mobile?

 

My point in all of this is why is it that MS is not allowed to use profits from one division to grow into a new market that either loses money or breaks even, while other companies seem to get a pass.  I always thought there was a value to a company overall that sometimes cannot be calculated based on profits.  Android for example.  It doesn't earn Google any money, but its a gateway to serve more ads, which do generate profit.  Likewise Bing.  It doesn't earn money on its own, but it has resulted in services that MS has brought into all of its major software that does generate profit.

 

All those discussions go on all the time. Particularly Sony and Apple.

 

Google are already distancing themselves from Android of their own accord anyway.

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He goes on to say that this loss "is concealed by the hugely profitable Android royalties" that come out of licensing deals on Microsoft-held FRAND patents related to the Android OS.

Yeah please read up on what FRAND is. None of Microsoft's patents that OEMs pay for are considered, or licensed under FRAND terms.

Since this moronic analyst can't even get something that basic right, I'm going to call BS on the rest of his "analysis".

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You know what this means right? It means the xbox is doomed, should be canned and all xbox exclusive games should go multiplatform.

 

This is not as fun for you all to hear when it's not being posted in the nintendo section, is it?

 

 

How easy it seems to be for 'analysts' or just forum posters to set off a chain of  reactions that can best be described as depressing.

 

Literally, on the eve of the next gen of consoles, its already over.  Pack it in, close the doors. :laugh:

 

I'm glad I don't live solely through the internet community because that has to be a most depressing life.  You can go outside, get some fresh air, and then come back in to start up your ps4/x1 and relax.

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But that's the problem I have with the idea that any of those companies would buy out the xbox division.  They all either already have plans in motion, or have created plans to follow through on.

 

If they were to buy Xbox just to turn around and gut it, what's the point?  If Valve were to get it, just to turn it into another steambox, then why waste the money on the purchase. 

 

It just seems like they would not be interested in buying a closed platform console division when they can build their own 'open' platforms for cheaper.

 

A lot of the time when these companies buy other companies, isn't because of what they're producing, but what they own :p

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Here's even a report neowin posted back in January:

https://www.neowin.net/news/report-microsofts-xbox-division-has-lost-nearly-3-billion-in-10-years

This isn't even including the billions MS has spend on the xbox one console.

 

An now you start seeing things like:

https://www.neowin.net/news/elop-would-consider-dumping-xbox-and-bing-if-he-becomes-microsoft-ceo

and

http://ca.ign.com/articles/2013/11/07/microsofts-first-party-pc-game-development-being-expanded

once again Microsoft is giving it another go.

 

You bother to notice how the report neowin posted and what this analyst posted don't match right?   The neowin post says that in 10 years MS "lost" $3billion because of the Xbox.   Now you have this new analyst saying they lose $2 billion a year? 

 

The Elop story is also BS, he never said anything to anyone.   

 

The fact MS want's to push PC gaming again doesn't mean Xbox is dead or dying or doomed, it actually means they're going to push Xbox Live into the PC more again.   They already started to do so with building Live right into Windows 8.x.    I bet the "core" games they talk about will be sold through the Windows Store directly or at least from their Xbox.com website.

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All those discussions go on all the time. Particularly Sony and Apple.

 

Google are already distancing themselves from Android of their own accord anyway.

 

Your right, I have seen them, but right now the focus is all on MS.

 

I mean I get why that is.  Its like there is blood in the water for sharks.  MS is picking a new CEO, they are launching a new console that had plenty of bad pr especially early on, they are still getting over the hump with Win 8 and pc sales in general are declining.  There is a lot of uncertainty out there for MS right now.

 

My point is that companies often prop up divisions that are not making a profit with money from divisions that do.  They aren't doing it because they just don't have the heart to close them.  They do it because they have a need that is filled by that division.  Sometimes its a gateway for pushing services that they profit from and sometimes its to gain a foothold in a new market that they believe will lead to future success and profit. 

 

How are Google distancing themselves from Android by the way?  I hadn't noticed that considering their latest announcements. 

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A lot of the time when these companies buy other companies, isn't because of what they're producing, but what they own :p

 

 

If you mean patents, then sure that happens a lot.  Google bought Motorola for way too much cash, not for their mobile business, but for the patents.

 

I'm not sure how that would work for Xbox, but who knows. 

 

If it were bought for that, then that's the same as killing it outright.  There would be no Xbox at that point, just a company using patent to make whatever they are going to make.

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Read this last week. It's no wonder investors are calling for them to branch the Xbox division out into a separate business.

 

which takes me back to my original quote a few days back. some businesses are worth more when in pieces rather than the whole. also I find that hard to believe that MS would lose 2bn per Xbox unit annually. then we'd ALL be saying how retarded MS really is. MS would fold because no investor would be willing to take the risk at divedend time.

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Spinning off Xbox gets hard and harder as they integrate it more and more under a single windows core.

 

MS' current plan to unify all of their devices would make it much more difficult for any single piece to spin off on its own I would think.

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In the newest financial report MS posted with their new reorg structure in which E&D is not like it used to be.  Right now WP is with Windows and part of the OS group, it's no longer in the same group with Xbox.   Right now the "devices" group is just Xbox and Surface.  Heck I think they even put MGS in another group, I can't remember the name of it though but it should be part of the same group that also works on Windows 8/WP apps and the Bing apps to?   To that extend I don't even know if patent royalties/licensing is part of the same devices group to. 

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A company has to convince share holders or placate them enough to convince them why actions that cost them money should be continued.

Most share holders care about one thing, making money.

 

If you pitch about how you need to lose money in the short term, to stay relevant, be a trail blazer with consumer trends.

if you don't start delivering on the promise, they start demanding change of course, and i you ignore it, they may force the change by removal of current leadership. 

 

I know it wasn't until the Xbox360 that it started xbox division started operating at a profit, but that was reversed with the ROD issues and the cost of repairs, extended warranty.

I've not been been aware of if the xbox division making / losing money since then.

 

Microsoft has made some big bets, with expectation of always on internet and kinect technology. The reaction to always on line model did not go the way Microsoft predicated. 

There still gambling on the kinect, which isn't a bad thing. If they get it right, there a trail blaizer in it and become the clear leader. If there not, they've lost money

 

A lot of people can predict direction technology is going in and see examples of it happening now. When it happens, and how is a different matter.

Steve Jobs, is one of the few people that managed to get it right most of the time. 

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They've [Microsoft] managed to grow it into one of the biggest names in gaming in just 10 years and taking 2nd place from Nintendo.

 

well it's probably not to hard given that Nintendo is pretty much known as the 'kiddie system' brand (or at the least they are not targeted towards the core gamers) ever since Gamecube to date as the last time Nintendo was a serious player with the more adult/serious gamers was with N64 and that was in 1996. so if Microsoft ever dropped out of the game business Sony would have no real competition then.

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You know what this means right? It means the xbox is doomed, should be canned and all xbox exclusive games should go multiplatform.

 

This is not as fun for you all to hear when it's not being posted in the nintendo section, is it?

 

Do you work for Nintendo or have money invested in the company or something? You're obsessed with defending that company against any criticism.

 

------------

 

Sherlund isn't alone in this view: In January, Forbes analyst Adam Hartung also described the Xbox business as a distraction and today it was reported that Stephen Elop, one of the candidates to replace outgoing Microsoft CEO Steve Ballmer, said he will sell off the division if he gets the job.

 

Read more at http://www.escapistmagazine.com/news/view/129463-Microsoft-Loses-2-Billion-Per-Year-On-Xbox-Analyst-Says#DMCtzf2SJ217w09W.99

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I will say the latest Urlacher/Lewis commercial is pretty nice. I'm just not sure TV without ATSC/QAM OTA tuner support is going to reach critical mass. Though MS says they want to support live TV in every way it is presented throughout the world including over the air.

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Do you work for Nintendo or have money invested in the company or something? You're obsessed with defending that company against any criticism.

 

 

Oh. i'm sorry. Is it not allowed to make the same kind of generic 'doom' post on a story of this type only cause it's outside of that specific section?

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Where does the patents belong? If they are part of the Xbox division then if you sell off Xbox they would be selling off the patents too. Unless the patents can be retained and the Xbox division sold separately. If that is the case then this guys is not too smart because he can easily say Microsoft is masking the Xbox loss with profits from Windows or Office. Anyone can say that. Microsoft is masking it's losses with its gains. Hmm... genius. I still do not think Xbox should be sold. Microsoft needs to do better at making it profitable. Reduce costs and increase profit. Of course they are a huge corporation so its not like they have not thought about that. They are probably doing the best they can but supervision top down need to make a huge push to change that. Microsoft already has lots of patents with their controllers, Kinect, etc. Now they need to start finding use for that technology for other purposes and use it or their patents to make money.

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People have been saying this crap for decades.

 

Yeah, EVERY console manufacturer sells the console at a loss, but they more than make up for it with sales of 3rd party games (licensing profit), 1st party games (pure profit), accessories, and nowadays online subscriptions.

 

If Microsoft or any other game company was LOSING $2 billion every year on a single product for a decade, the board of directors would flip.

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Read this last week. It's no wonder investors are calling for them to branch the Xbox division out into a separate business.

 

Sony's stock went up a few months ago on rumor they were spinning off their electronics division and over the past few years their P&L has been total crap.  They're losing money in just about every sector - electronics, phone, movies..  i think they only made money on Justin Timberlake lol

 

http://www.sony.net/SonyInfo/IR/financial/fr/13q2_sony.pdf

 

Adjusted earnings of (.19) cents a share.. aka a loss..

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Oh. i'm sorry. Is it not allowed to make the same kind of generic 'doom' post on a story of this type only cause it's outside of that specific section?

 

 

I think you have an exaggerated sense of how much criticism Nintendo gets.

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