[Goronmon]

As for the Xbox, it's a huge loss leaders. The division is billions in the red. XBox 360 (which had a 33% failure rate) started to make a bit of money last year (or maybe the year before that)..but it's a fraction of what they've put into it.

From what I've gathered, the entertainment division has been making a profit since 2008. It's tough to get solid numbers on the contribution of the 360 to that, since the division contained things like the Zune for a while. I would be surprised if they don't end up profiting overall on the 360.

Sure, that might not make up for the losses on the original Xbox, but that generation was always about gaining a foothold, not making a profit. MS didn't have a horse in race until a year after the release of the PS2. To go from that to the market share that the 360 commands right now is impressive.

Eve that said I don't think making money on console sales was ever the main reason MS got into the market in the first place. I think they realized that gaming consoles were going to become an important part of household entertainment, even outside of gaming itself. Consoles are becoming one-stop shops for all forms of enterainment nowadays. I use my systems to watch disc-based media, streaming off other devices in my house, Netflix, etc. MS would be in a really tough spot if they had let Sony snatch up this market without putting up a fight.