Bach says Xbox to be Profitable by 2008

[Serapth]

GameIndustry.biz has the following interview (http://biz.gamedaily.com/industry/feature/?id=16047) with Robby Bach about Xbox profits.


"Right now we're doing a pretty good job," he said. "We're humming pretty well in the business. Our costs are a little higher than we'd like, [but] we're pushing those down; there are good initiatives underway to drive that. Game attach rate [is at the] highest level in history for a game console at this stage in the life cycle. The same with our peripheral attach rate. Xbox Live has over 6 million members.


"The pieces are in place to drive the proverbial billion dollars. Specific date—oh, that's going to depend on what happens in pricing, which partly we control, partly we don't. You know what happens in component costs—mostly we have pretty good influence over that, but there are places where we don't. Pricing on memory goes up and down seemingly like a yo-yo, so [we have to manage] through that. So, it's a business that will be profitable next year—we'll make money next year and that will be the first time, which is pretty exciting. And then the next two or three years are the place where you need to make tracks, and the next two or three years are where you have to make money."


Bach also explained the ways in which Microsoft can make money, mostly focusing on the standard "razor and blades" model, but also adding in services like Xbox Live and the sale of peripherals.


Guess rumours that the Xbox 360 is currently sold at a profit are false. I have thought all along that Xbox Live is more important to Microsoft then Xbox itself, this seems to confirm that.

[Mr.Green]

My favorite console manufacturer makes more money than yours etc...

[Gorvi]

I guess since they'll only be supporting it for one more year after that, they'll take what they can get.

Ba dum pshhh! ;)

[Wolfgang]

The 360 does have a pretty insane attach rate.

[KNOTE]

I guess since they'll only be supporting it for one more year after that, they'll take what they can get.

Ba dum pshhh! ;)

I know you like Sony a lot. Would you care for a friendly wager on which console has the shortest life cycle? ;)

[Silversmith]

Hey...um... Robbie,

I bet you would be profitable by now if you had more reliable consoles. Your just lucky you have good games and Sony doesn't.

[Gorvi]

I know you like Sony a lot. Would you care for a friendly wager on which console has the shortest life cycle? ;)
Oh, it's a joke. :p

And I have a feeling it'll be the PS3 unfortunately, they can't afford to give MS another 1 year head start.

[Xerxes]

Put better movies on the fucking system.

[bean19]

I thought they must already be making a profit this year based on the fact that the analysts say that the Premium should cost around $325 in components. Of course, I guess there is a bit that the retailers make off of the consoles and the costs of manufacturing and shipping, but I think they are probably losing very little (if anything) on console sales, and I would think that the fact that games are selling so well - as well as all the online stuff. Well, I can't see how the 360 isn't making a profit - though I can see how the division it is a part of is not doing well.

I wonder if the 360's poor manufacturing (the 360s that break) is hurting the bottom line a lot. Paying for fast-shipping on broken 360s and keeping all those repairmen on staff can't be cheap. . . though I think it must be less expensive than a lawsuit and the PR backlash of NOT providing this repair service. Plus, if they didn't, people wouldn't ever buy another Microsoft product. $400 is a big fucking deal. Still, Microsoft's response is good so far - but it has to cost.

I guess since they'll only be supporting it for one more year after that, they'll take what they can get.

Ba dum pshhh! ;)

Troll much?

No, we aren't going to listen to you bitch about how Microsoft is evil for putting out a next-gen console only 4 1/2 years after they launched the Xbox. . . AGAIN. You know the obvious counter-argument - that every console generation has lasted about 5 years AND Microsoft was smart to move to the next gen that was actually more than 6 years the way that that 5 year average is calculated (from the first console of one generation to the first console of the next generation) and 5 1/2 years if you don't count the Dreamcast. Plus, the move allowed people to start gaming in HD a year earlier than they would be able to otherwise and given gamers a great high-end console at an expensive but manageable price of $400. If Microsoft had politely waited for the competition to catch up, then gamers would have had to wait an extra year and instead of expecting killer games like Halo 3, Mass Effect, Blue Dragon, and Bioshock this year, we wouldn't be getting the really good games until 2008 (like the PS3).

I'll give you that ONE reply, but don't expect more replies if you continue to troll with off-topic and boring overdone arguments against Microsoft you have already made 30 times. This topic is about Microsoft making a profit in 2008.

Well, actually expect replies, but they won't focus on this issue as you've heard it all before. They'll focus on your bad behavior.

[Gorvi]

Troll much?

No, we aren't going to listen to you bitch about how Microsoft is evil for putting out a next-gen console only 4 1/2 years after they launched the Xbox. . . AGAIN. You know the obvious counter-argument - that every console generation has lasted about 5 years AND Microsoft was smart to move to the next gen that was actually more than 6 years the way that that 5 year average is calculated (from the first console of one generation to the first console of the next generation) and 5 1/2 years if you don't count the Dreamcast. Plus, the move allowed people to start gaming in HD a year earlier than they would be able to otherwise and given gamers a great high-end console at an expensive but manageable price of $400. If Microsoft had politely waited for the competition to catch up, then gamers would have had to wait an extra year and instead of expecting killer games like Halo 3, Mass Effect, Blue Dragon, and Bioshock this year, we wouldn't be getting the really good games until 2008 (like the PS3).

I'll give you that ONE reply, but don't expect more replies if you continue to troll with off-topic and boring overdone arguments against Microsoft you have already made 30 times. This topic is about Microsoft making a profit in 2008.

Well, actually expect replies, but they won't focus on this issue as you've heard it all before. They'll focus on your bad behavior.
Man, don't be a jackass, it was intended as a joke. And you're not one to talk about trolling. The PS3 won't have any games until 2008? You must be blind then if you can't see any good games coming this fall. Shit, I'm not trying to derail the thread, but when you over react like that to something that was said in jest, damn, calm down.
How the hell do you get 4 1/2 years out of 4 years anyway?

[Hellstorm]

Wii wins! /thread

[Serapth]

Wii wins! /thread
Then...

Gaming loses! /thread

[Loganrapp]

I read the title and thought it was going to be so much more awesome than it really was.

"Bach's back to life?! Holy shit!"

[bean19]

The PS3 won't have any games until 2008? You must be blind then if you can't see any good games coming this fall. Shit, I'm not trying to derail the thread, but when you over react like that to something that was said in jest, damn, calm down.

1. You weren't joking because you believe the criticism you made. That's like making a fat "joke" to a girl that you believed to be overweight a few years ago.

2. The PS3 will have some good exclusives this Fall? All I see is Ninja Gaiden Sigma (really this summer). Seriously, every other game in the lineup is also on the 360. Even if they have a few, that's not the same thing. The 360 had Gears of War in it's first fall after release. . . my point is that we would have had to wait ANOTHER year to get a bucket-load of excellent exclusives like Bioshock, Mass Effect, Halo 3, Blue Dragon, etc. (the list is longer than this). Hopefully, the PS3 will have a beefy lineup of exclusives like this one for their fall lineup in 2008. It's obvious that they do not have a beefy lineup this Fall.

3. Do you have anything at all to say about the topic? You actually ignored the on-topic portion of my post.

[bapenguin]

They may be breaking even or close to it on the hardware, but when you add in the other costs (distibution, packaging, etc) my guess is that's when they start to lose the money.

[Gorvi]

1. You weren't joking because you believe the criticism you made. That's like making a fat "joke" to a girl that you believed to be overweight a few years ago.

2. The PS3 will have some good exclusives this Fall? All I see is Ninja Gaiden Sigma (really this summer). Seriously, every other game in the lineup is also on the 360. Even if they have a few, that's not the same thing. The 360 had Gears of War in it's first fall after release. . . my point is that we would have had to wait ANOTHER year to get a bucket-load of excellent exclusives like Bioshock, Mass Effect, Halo 3, Blue Dragon, etc. (the list is longer than this). Hopefully, the PS3 will have a beefy lineup of exclusives like this one for their fall lineup in 2008. It's obvious that they do not have a beefy lineup this Fall.

3. Do you have anything at all to say about the topic? You actually ignored the on-topic portion of my post.
I have nothing to say on the topic because I don't care about it, I was only making a joke. If you choose to see it as something else, there's nothing I can do about that.

As far as exclusives, Lair, Heavenly Sword, MGS4, Warhawk, Ratchet & Clank, Uncharted, and Killzone 2 (questionable) may not be your cup of tea, but they're not "nothing". The PS3 has just as "beefy" a lineup for the fall as the 360 does.

Look, this isn't a "my console is better than yours" thread. I came in to make a stupid smartass comment, and that was it.

[Yellowman]

Then...

Gaming loses! /thread

Yeah of course, hardcore hardware driven gaming loses. Fanboys demanding the most insane specs each generation forcing console makers to sell at a loss just to keep up. Generic games released in yearly cycles with only slight touch ups but sold on name alone because they can't risk the investment. A console bundled with a proprietry storage format. An online marketplace nickel an' diming all the time. It's easy to point out faults with 'gaming' as you see it.

But making a console that a lot of people find fun to play even if it can't push the graphical boundries (or isn't even really being tested yet...) will destroy gaming? Nintendo are making mistakes, some of the same ones, but there are more people out there interested in what they are selling at the moment. That may change and if Nintendo drop the ball this fall, if the games don't come, it's over anyway. But if they do come, and if the controls work well and are significantly more intuitative than the ports etc that we are seeing at the moment, controls like in Wii sports, then we may see a significant change in the console market. For Nintendo, this is exactly like the DS fight but this time the games need to be really good to beat the graphical powerhouses (or PSP in the DS case).

Lets wait and see if they are before declaring the fact that Nintendo are destroying gaming. If the games suck, the console will run out of steam anyway.

[KingGorilla]

Serapth, we get it...you own Microsoft stock. And we are currently laughing at you.

[TheFlyingOrc]

My understanding is that they lose a large amount of cash on Xbox Live - I heard a statistic quoted that they would need to charge 10 bucks a month, instead of 50 a year...it may have even been more.

[KNOTE]

The Wii can't lose because they don't lose money on hardware. Nintendo is super smart in this matter.

[cp#]

I know you like Sony a lot. Would you care for a friendly wager on which console has the shortest life cycle? ;)

I bet that the 360 has the shortest life cycle.

[Serapth]

Yeah of course, hardcore hardware driven gaming loses. Fanboys demanding the most insane specs each generation forcing console makers to sell at a loss just to keep up. Generic games released in yearly cycles with only slight touch ups but sold on name alone because they can't risk the investment. A console bundled with a proprietry storage format. An online marketplace nickel an' diming all the time. It's easy to point out faults with 'gaming' as you see it.

But making a console that a lot of people find fun to play even if it can't push the graphical boundries (or isn't even really being tested yet...) will destroy gaming? Nintendo are making mistakes, some of the same ones, but there are more people out there interested in what they are selling at the moment. That may change and if Nintendo drop the ball this fall, if the games don't come, it's over anyway. But if they do come, and if the controls work well and are significantly more intuitative than the ports etc that we are seeing at the moment, controls like in Wii sports, then we may see a significant change in the console market. For Nintendo, this is exactly like the DS fight but this time the games need to be really good to beat the graphical powerhouses (or PSP in the DS case).

Lets wait and see if they are before declaring the fact that Nintendo are destroying gaming. If the games suck, the console will run out of steam anyway.


Wow there cowboy, you are jumping to conclusions. Anybody that is calling for Nintendo to win is an idiot. Ditto for anybody calling for Microsoft or Sony to win is an idiot. Last gen was bad for gaming, having one console as a runaway success, and thats why we saw so much of "more of the same" and why people are flocking to the Wii.

The best thing that could ever happen is for the market to be split almost perfectly even between Nintendo and ( Imho MS, but feel free to substitute Sony ) Microsoft. If not, a company becomes complacent and things go to shit.

But lets look at it this way... what happens if the Wii "wins". Suddenly big budget gaming pretty much dies. Why would Square spend millions or tens of millions on the next Final Fantasy, when they get a better ROI creating accessable games for the Wii? What happens to the hyper graphical FPS games like Resistance or GoW. These may not be your thing, but they are for a ton of other people.

Having companies push each other is a good thing... Live Arcade is probrably directly responsible for the virtual console. The WiiMote is without a doubt the reason behind the PS3 controller. In the next gen you will see a combination of motion sensative, rumble, online, high def, etc... that is a smatering of features from each company.

[KNOTE]

I bet that the 360 has the shortest life cycle.

Sweet! I'll take that. Let's wager a custom tag of the other's choosing. Sound good?

[Craigtheplague]

But lets look at it this way... what happens if the Wii "wins". Suddenly big budget gaming pretty much dies. Why would Square spend millions or tens of millions on the next Final Fantasy, when they get a better ROI creating accessable games for the Wii? What happens to the hyper graphical FPS games like Resistance or GoW. These may not be your thing, but they are for a ton of other people.

Having companies push each other is a good thing... Live Arcade is probrably directly responsible for the virtual console. The WiiMote is without a doubt the reason behind the PS3 controller. In the next gen you will see a combination of motion sensative, rumble, online, high def, etc... that is a smatering of features from each company.
Why wouldn't there be big budget titles for the Wii? They would cost less than titles such as Halo 3 or GoW because of graphics, but they can still be adventures of epic proportions. If the Wii "wins", it'll only lower the bar for graphics.

[Zanzibar]

http://img50.imageshack.us/img50/2937/iwataxy3.jpg

[roboninja]

Well, it does not sound good for a price drop in the near future then. Probably will not be getting a 360 until there is one...probably...

[51|RandoM]

Sweet! I'll take that. Let's wager a custom tag of the other's choosing. Sound good?

What happens when both of you lose?

The console with the shortest life cycle won't be the 360 or the PS3. :) Get ready to get in line for the Wii Advance 2 years from now.

[KNOTE]

Good point... this time with Waggle shoes.

[DaXIthR]

What happens when both of you lose?

What if you both lose the bet, but end being winners overall - in the big picture, at like, you know, life...because you learn a very valuable lesson about yourself in the process of losing a silly bet?

[Hellstorm]

Get ready to get in line for the Wii Advance 2 years from now.


360 Elite says, "Hi, I'm the first hardware upgrade to a next-gen system."

[Serapth]

360 Elite says, "Hi, I'm the first hardware upgrade to a next-gen system."


I think they mean where it splits the userbase. If the Elite included HDDVD and games started requiring HDDVD, then that would be a valid example.

[KarmaGhost]

Guess rumours that the Xbox 360 is currently sold at a profit are false. I have thought all along that Xbox Live is more important to Microsoft then Xbox itself, this seems to confirm that.That would be why MS is so goddamn crazy about charging for everything. This is where they're making the money.

[51|RandoM]

360 Elite says, "Hi, I'm the first hardware upgrade to a next-gen system."

Different situation. In my hazy prediction of the future the Wii Advance games will not be playable on a Wii(although the Wii games will play just fine on the Advance).

[MacD]

Huh? What rumours that the x360 was selling at a profit? I never heard that one and would have laughed my ass of when and if I did.