| The XBox line over the decade has cost them a fortune. Until relatively recently when manufacturing costs dropped Microsoft were selling the hardware at a significant loss which means that you have to sell a certain number of games just to break even. This isn't an uncommon model for consoles (the Wii was an exception being profitable as a console from day one) but it was pretty extreme for Microsoft who were basically making an aggressive play for market share and damn the expense. Up to 2005 the XBox gaming division (including hardware and games sales) had lost $4 billion (http://www.forbes.com/2005/09/12/microsoft-management-softwa...) on a total investment of over $20 billion and it continued to lose money up to 2009 including a cost of $1 billion for replacing bricked XBox360's in 2007 (http://www.engadget.com/2007/07/05/xbox-360-warranty-extende...). All in all I'd estimate up to 2009 total losses up to or even in excess of $6 billion. In 2009 it finally posted it's first profit - $165 million, though it's probably worth noting that as a percentage of the $6 billion it had lost to that point this is basically nothing. They have a total installed user base of 41 million consoles (360s) world wide. This puts it slightly ahead of the PS3 (38 million) - though it should be noted that the PS3 launched a year later and is currently selling faster - but way behind the Wii (79 million) and the PS2 (over 140 million). It's likely that by the start of 2011 once Christmas is out of the way they'll be last place in terms of installed user base - not a great reward for all that money spent. (If these numbers don't feel representative of what you see it's worth noting that the XBox is far stronger in the US than in Europe and Japan). On the positive side Kinnect is apparently priced so that it will be profitable from day one, they do have a decent installed user base for new games sales and live subscriptions, and console production costs are now a lot lower than they were which means that the next three or four years (the likely remaining life of the console) will all be profitable, however it would seem unlikely that they'll be able to bring the total investment to break even for the life of the XBox range. Maybe we have different definitions but for me that's not only not a success, but it's not far off being a disaster, particularly given that this isn't a tale of a couple of years of growth at the expense of profit, but a decade long tale. |