Microsoft's has Record Revenue. Huge Losses on XBox Division.

[bapenguin]

GamesIndustry.biz (http://gamesindustry.biz/content_page.php?aid=14339) reports that Microsoft had record setting revenue of 11.84 billion USD for last quarter. Even with that good news comes word that their Home and Entertainment division (the group that heads up XBox) lost over 290 million.

The Home and Entertainment division - which includes the Xbox arm of the business - saw revenues of USD1.56 billion and a substantial loss of USD 293 million, compared to USD 1.37 billion revenues and a USD 55 million profit in the same period in 2004. The continued impact of component shortages for its Xbox 360 console have been cited as the main reason for the loss in profits, though MS officials have stated that the manufacturing troubles are now being resolved.
To be expected at the beginning of a console life cycle. Either way, both numbers are way too much money for one company to have.

[fitbabits]

It's interesting to me how this story is being reported elsewhere. Some less-than-stellar sites are pointing to the numbers as doom and gloom for Microsoft and an indicator of how they've already lost the next generation battle. Of course, they are focusing solely on the H&E division, not the overall picture.

Anyway, I agree with bapenguin - that's a crap-load of money. Please sir, can I have some (more)?

[Doctor Setebos]

The Xbox never made a profit, and it looks as though the Xbox 360 isn't going to help Microsoft meet its goal to make the H&E division profitable by FY 2007 (http://www.directionsonmicrosoft.com/2006top10.html). At least, it looks doubtful. While I'm not of the mob making wild aggrandizements regarding the DOOM of Microsoft (or the lack thereof), one has to wonder how long shareholders will allow these attempts at market inclusion to continue hemorraging capital from the cash-heavy Windows division. It's not at all like Nintendo, who may be in 3rd place worldwide but makes veritable bucketloads of money from their products.

[bjornbarspingvinen]

11.84 billion dollars in revenue...damn
290 million dollars lost on pushing the xbox brand ain´t much then. I don´t think MS is worried about losing money, they are in this for the long wrong. And asking me, I think their new console is only one step in bringing Xbox live integration to the homes to as many people as possible. That much money is scary power....

[Vandenh]

At least they are not firing 15000 people and going to Hawai ;)

Nothing really to see here people. Bill gave (http://news.bbc.co.uk/2/hi/business/4653338.stm) away $600M today for TB research.

[fitbabits]

The Xbox never made a profit, and it looks as though the Xbox 360 isn't going to help Microsoft meet its goal to make the H&E division profitable by FY 2007 (http://www.directionsonmicrosoft.com/2006top10.html). At least, it looks doubtful. While I'm not of the mob making wild aggrandizements regarding the DOOM of Microsoft (or the lack thereof), one has to wonder how long shareholders will allow these attempts at market inclusion to continue hemorraging capital from the cash-heavy Windows division. It's not at all like Nintendo, who may be in 3rd place worldwide but makes veritable bucketloads of money from their products.
Microsoft's H&E division actually did make a profit this time last year:

Last year the division made a profit of $55 million during the same quarter, and revenues stood at $1.37 billion - a figure which has increased to $1.56 billion this year. Microsoft blamed the drop in profits on continuing supply problems with certain Xbox 360 components, but said that they're working hard on a solution.
Source (http://www.eurogamer.net/article.php?article_id=62650)

This loss would have been planned for, so there's no major surprise here.

[fitbabits]

At least they are not firing 15000 people and going to Hawai ;)

Nothing really to see here people. Bill gave (http://news.bbc.co.uk/2/hi/business/4653338.stm) away $600 today for TB research.
Two things:

1. It was 10,000 people!
2. It was $600 million!

Go Bill & Melinda!

[Vandenh]

>2. It was $600 million!

Some people reply faster than I can hit my edit button ;)

[Reanimated]

The only shareholder that determines what moves Microsoft makes is Bill Gates, so any talk of "how long will shareholders tolerate this" is moot, because they'll tolerate it as long as Bill says so.

[fitbabits]

>2. It was $600 million!

Some people reply faster than I can hit my edit button ;)
I figured I would reply before someone else jumped all over you for factual inaccuracies. Ask The Keck - I did the same to him one time. :)

[Yeti2005]

I think one reason the first Xbox lost so much money was because they didn't own the IP to the hardware and thus weren't able to redesign it to make it cheaper to build (like Sony did with the PS2). Fortunately they own the IP to the 360 so I'm sure they'll shrink the CPU die size over time, possible combine the two GPU chips, etc.

Bill G. already stated that MS is in the console business for the long haul I think that's a good thing. Competition is good for the consumer.

[camberiu]

To be expected at the beginning of a console life cycle. Either way, both numbers are way too much money for one company to have.

According to whom? How much is "too much to have" and who decides it? They certainly did not steal the money nor did they force anyone to give it to them. Some might say that their business practices are "unethical", but that is bullshit.

They compete against a completely free product (Linux) and yet there are still millions of people willing to give them money. Maybe thsoe millions of customers are misinformed or ignorant, but even so, this does not make Microsoft "bad" for getting the money.

[kokyunage]

2. It was $600 million!

Go Bill & Melinda!

I was actually read an interesting article/book exerpt/don’t_remember_what_it_was talking about Bill Gates and how he is changing from an entrepreneur to a philanthropist. He wrote about how major entrepreneurs of the past two centuries made the same change to be remembered after their death. Ironically, this causes their major corporations to lose that “hunger” and edge. And usually they are never the same as they were in the heyday when the leader was a money hungry power grabbing beast versus a “good do’er”. He predicted the same thing for Microsoft.

I wish I remember remembered where I read this. Might have been at Borders a few weeks ago. It was a great read and very educational. I’ll try to find it…

[Rakael]

Microsoft isn't going anywhere, nor is the XBox line. The doom people are utter fools if they think Microsoft would let anything this high profile fail. Besides, there are many such as myself who are still waiting to get their hands on a 360.

[fitbabits]

According to whom? How much is "too much to have" and who decides it? They certainly did not steal the money nor did they force anyone to give it to them. Some might say that their business practices are "unethical", but that is bullshit.

They compete against a completely free product (Linux) and yet there are still millions of people willing to give them money. Maybe they are misinformed or ignorant, but even so, this does not make Microsoft "bad" for getting the money.
I think someone got out of bed on the wrong side this morning. :)

I don't recall bapenguin saying that it was "bad" (your quote) that Microsoft had so much money. Rather, he simply stated that it was too much money for one company to have - simply an observation, no accusations attached.

[fitbabits]

I was actually read an interesting article/book exerpt/don’t_remember_what_it_was talking about Bill Gates and how he is changing from an entrepreneur to a philanthropist. He wrote about how major entrepreneurs of the past two centuries made the same change to be remembered after their death. Ironically, this causes their major corporations to lose that “hunger” and edge. And usually they are never the same as they were in the heyday when the leader was a money hungry power grabbing beast versus a “good do’er”. He predicted the same thing for Microsoft.

I wish I remember remembered where I read this. Might have been at Borders a few weeks ago. It was a great read and very educational. I’ll try to find it…
It could have been a recent issue of Time magazine - Bill/Melinda and Bono shared their People of the Year award.

[Chris_D]

To be expected at the beginning of a console life cycle. Either way, both numbers are way too much money for one company to have.

I'm certain MS has a far better idea about this than anyone who posts here.

[camberiu]

I think someone got out of bed on the wrong side this morning. :)

I don't recall bapenguin saying that it was "bad" (your quote) that Microsoft had so much money. Rather, he simply stated that it was too much money for one company to have - simply an observation, no accusations attached.


Oh, sorry for "misunderstanding" what you meant. Do you care to explain why it is "too much much money for one company to have?". How much money should a company like Microsoft have?

[Chris_D]

nguin saying that it was "bad" (your quote) that Microsoft had so much money. Rather, he simply stated that it was too much money for one company to have - simply an observation, no accusations attached.

Well I disagree, not that he or I are in anyway qualified to make such an observation.

[fitbabits]

I'm certain MS has a far better idea about this than anyone who posts here.
So no-one else is allowed to voice their opinion because Microsoft knows best? That's like saying we cannot be unhappy with the situation in Iraq because Bush (the Commander-In-Chief of the armed forces) knows best.

Some people just like to nitpick.

[fitbabits]

Oh, sorry for "misunderstanding" what you meant. Do you care to explain why it is "too much much money for one company to have?". How much money should a company like Microsoft have?
Dude, you're barking up the wrong damn tree! :)

[bapenguin]

According to whom? How much is "too much to have" and who decides it? They certainly did not steal the money nor did they force anyone to give it to them. Some might say that their business practices are "unethical", but that is bullshit.

They compete against a completely free product (Linux) and yet there are still millions of people willing to give them money. Maybe thsoe millions of customers are misinformed or ignorant, but even so, this does not make Microsoft "bad" for getting the money.

I'm not saying it's bad, or it makes them evil or whatever. It's more of a nature of the beast scenario.

They are simply a huge company with more money than they know what to do with. There are plenty of smaller upstart companies with equal talent that have little to no revenue. It's sort of a "not fair" type thing.

[bapenguin]

Well I disagree, not that he or I are in anyway qualified to make such an observation.

Since when do you need a certificate to have an opinion?

[Chris_D]

So no-one else is allowed to voice their opinion because Microsoft knows best? That's like saying we cannot be unhappy with the situation in Iraq because Bush (the Commander-In-Chief of the armed forces) knows best.

Some people just like to nitpick.

No, just I get kind of tired of this need to tack on daft comments after nearly every news post here. If the original poster really feels the need ot say something I wish it could at least be an intelligent attempt to kick start to discussion rather than just trying to produce a flame war (pro or anti MS? Whatever..). There are plenty of posters here that will post something contraversial without the news poster being stupid about it.

[fitbabits]

I'm not saying it's bad, or it makes them evil or whatever. It's more of a nature of the beast scenario.

They are simply a huge company with more money than they know what to do with. There are plenty of smaller upstart companies with equal talent that have little to no revenue. It's sort of a "not fair" type thing.
You bastard. And who the hell are you to decide what they do with their hard-earned money? Don't forget that Microsoft started off in a bedroom - a small company by anyone's definition. :)

Sorry, I guess I caught the hyper-critical bug that's going around. :rolleyes:

[jacktion]

Yeah. This is not a problem for MS. Xbox has never made a profit. Xbox 360 is not making a profit. And Xbox 360 is selling worse than the original Xbox did both in the US and Japan. But when Bill can give away 600 million I don't think he is worried about a 290 million loss for a video game system.

With that said, how long will MS run their Xbox division with losses like this? MS can take the hit but after a while, annual losses of hundreds of millions of dollars has to wear on a company, and their stockholders. If any other company had produced the Xbox they would have gone bankrupt long ago. It is funny how people consider the Dreamcast an example of failure and the Xbox a symbol of success but Xbox has lost way more money. Only the fact that MS has so much money has saved them.

I think Sony just posted their stuff and they are losing money hand over fist too.

On the flip side, Nintendo's third quarter profits were double what last years were.

[fitbabits]

No, just I get kind of tired of this need to tack on daft comments after nearly every news post here. If the original poster really feels the need ot say something I wish it could at least be an intelligent attempt to kick start to discussion rather than just trying to produce a flame war (pro or anti MS? Whatever..). There are plenty of posters here that will post something contraversial without the news poster being stupid about it.
But look! A discussion has been started and you've had the opportunity to make your point (and make it well). There are numerous websites out there that don't even allow that.

[Chris_D]

Since when do you need a certificate to have an opinion?

Why don't you at least go on to say why you think MS revenue is too high, or why their console divisions losses are too great. Losses in the early life of a new console are hardly unusual so I don't see why this should suddenly be considered to be different.

Anyway, if I was a MS shareholder I would be more than happy with their attempts to break into new ground. I don't think that rely9
ing on their current OS and Office suite domination would be necessarily a good thing, considering the challenges from linux, osx, open office, etc. A company that doesn't expand into new markets will eventually either die or be taken over.

[camberiu]

It is funny how people consider the Dreamcast an example of failure and the Xbox a symbol of success but Xbox has lost way more money. Only the fact that MS has so much money has saved them.


One big difference was that the Dreamcast was Sega's CORE business. The Xbox is NOT Microsoft's core product or cash cow. On the big scheme of things, the Xbox is somewhat secundary for Microsoft and more part of a defensive strategy than anything else.

[Chris_D]

But look! A discussion has been started and you've had the opportunity to make your point (and make it well). There are numerous websites out there that don't even allow that.

Well fair enough. But like I say in my post just above, often the original poster will provide the news post, then with a couple of contraversial lines, presumably of their choosing, without any actual supporting arguments. Admittedly they can sometimes be quite amusing, but in this case it just comes off as somewhat unreasoned and daft.

[ldi222]

I dont think MS has a 4 year lifecycle planned for this console either. I suspect the 360 will have a longer span on the shelfs than the xbox did and should become profitable after a few years, especially if they manage to take away greater marketshare from sony this time around.

[fitbabits]

Well fair enough. But like I say in my post just above, often the original poster will provide the news post, then with a couple of contraversial lines, presumably of their choosing, without any actual supporting arguments. Admittedly they can sometimes be quite amusing, but in this case it just comes off as somewhat unreasoned and daft.
I love the word 'daft'! Seriously.

Anyway, I believe the point of the comments under the quotes is to kickstart a discussion. Sometimes they are banal, sometimes they are funny, sometimes they are insighful, but they almost always start a discussion - for better or worse! And you always have the opportunity to agree or disagree with what's been said.

As for your point about original posters not supporting their comments - that's something that is mostly out of our control (unless we are the ones submitting the news). Some people choose to lob a written grenade and just duck under cover while all hell breaks loose. :)

[bapenguin]

Well fair enough. But like I say in my post just above, often the original poster will provide the news post, then with a couple of contraversial lines, presumably of their choosing, without any actual supporting arguments. Admittedly they can sometimes be quite amusing, but in this case it just comes off as somewhat unreasoned and daft.

No sense putting a book of comments underneath going into the ethics of capitalism and small business. You are looking into the subject WAY too much.

1.56 BILLION ANYTHING is an insanely large amount of anything, whether it be money or whether it be peaches in Animal Crossing: WW. :)

[Citizen Philip]

It's okay to say Microsoft is gushing money from an open wound from an unprofitable venture, and in the same breath say they don't mind either. You don't have to tell us "good things" about them either, to make up for their financial loss. They are another faceless corporate entity who will screw you as much as the law will allow.

I would agree that the work B&M Gates do is a great thing, but that's their money. Tell me when a multinational corporation donates half a billion dollars, but I won't hold my breath.

The only comment I can offer towards 360 and PS3 is: the longer their is a shortage the more it wrecks the install base for the 360. Launching first without a product readily avaliable is going to make potential customers annoyed.

Let's all give a cheer for open source software and the future toppling of OS monopolies! Huzzah! ;)

[Cool AN]

I wish I was a Microsoft stock holder.

[Librum]

Well, that's fantastic. And I don't see anything 'unfair' about it either, unless you think some people being more successful than others being inherently unfair.

And I'm sure Gates would rather give the money to charity than to the government (I know I sure would), so it's no wonder he's doing what he can to dole it out while he's got the chance. Of course he can't give away Microsoft's money - it isn't his - and companies, unless they're non-profit, generally don't start handing out huge sums of cash without possibility of return, since that's just not what they're in business for.

But I couldn't agree more with the issues regarding the problematic shortages of the 360 - at the very least they're wasting all the pre-release hype by making people wait months to even have the chance of buying one.

[fitbabits]

I would agree that the work B&M Gates do is a great thing, but that's their money. Tell me when a multinational corporation donates half a billion dollars, but I won't hold my breath.
Em, half-a-billion dollars is equal to $500 million, so $600 million is greater than half-a-billion. No need to hold your breath!

[Citizen Philip]

Em, half-a-billion dollars is equal to $500 million, so $600 million is greater than half-a-billion. No need to hold your breath!

I've read about their work before. As I recall that was THEIR money. It had nothing do with Microsoft directly, unless you believe the company you work for should get the credit whenever you make a charitable donation that originated in their stocks you sold/your pay check.

How much is Bill worth? was it 3-4 or 30-40 billion?

[Cool AN]

I've read about their work before. As I recall that was THEIR money. It had nothing do with Microsoft directly, unless you believe the company you work for should get the credit whenever you make a charitable donation that originated in their stocks you sold/your pay check.

How much is Bill worth? was it 3-4 or 30-40 billion?

I think it was in the high sixties.

[MosBen]

I'm surprised no one's mentioned that, from a tax perspective it's sometimes beneficial for a company to have divisions that lose money. If you're a company and you're just sitting on a big pile of money that's not doing anything it's going to get eaten up in taxes. Now, I'm certainly not wild about the fact that most major companies use loopholes in the tax code to skirt their tax liability, not that I'm saying this is necessarily a loophole, but the bottom line for Microsft is that they've got over eleven billion in profits, which is a pretty damned good year. Losing three hundred million dollars isn't chipping away at anything if the company is consistently posting profits overall, so as long as Windows and Office keep selling like gangbusters the Xbox can keep losing money and the company will be as healthy as ever. Actually, and this is only speculation, but as the Xbox becomes more and more accepted and potentially turns a profit the tax benefit of the division will evaporate. Maybe MS is expecting this in the not too distant future...didn't we hear rumors of some kind of portable media device which could be the new tax write off?

[dotbomb]

The number I'm seeing is $900 million pledged (http://news.yahoo.com/s/nm/20060127/hl_nm/davos_health_tb_dc_4) by Bill and Melinda. Either way $600 or $900 million is not a drop in the bucket. Very nicely done.

I'm glad to see him turning the corner and giving back in a huge way.

[fitbabits]

The number I'm seeing is $900 million pledged (http://news.yahoo.com/s/nm/20060127/hl_nm/davos_health_tb_dc_4) by Bill and Melinda. Either way $600 or $900 million is not a drop in the bucket. Very nicely done.

I'm glad to see him turning the corner and giving back in a huge way.
To date, the Bill & Melinda Gates Foundation has given away $28.8 Billion.

Source (http://www.gatesfoundation.org/MediaCenter/FactSheet/).

[bapenguin]

To date, the Bill & Melinda Gates Foundation has given away $28.8 Billion.

Source (http://www.gatesfoundation.org/MediaCenter/FactSheet/).

Damn it...where's my cut? ;)

[dotbomb]

Damn it...where's my cut? ;)

They sold you an xbox 360 at a loss. That's your cut... and mine too.

[DeviantBoi]

GamesIndustry.biz (http://gamesindustry.biz/content_page.php?aid=14339) reports that Microsoft had record setting revenue of 11.84 billion USD for last quarter. Even with that good news comes word that their Home and Entertainment division (the group that heads up XBox) lost over 290 million.


To be expected at the beginning of a console life cycle. Either way, both numbers are way too much money for one company to have.

Hahaha ... get your lips off of MS's ass and realize that the XBox never had a profitible year ... it posted losses even until the end of its life cycle.

[fitbabits]

Hahaha ... get your lips off of MS's ass and realize that the XBox never had a profitible year ... it posted losses even until the end of its life cycle.
I hope you like humble pie:

Last year the [Home & Entertainment] division made a profit of $55 million during the same quarter, and revenues stood at $1.37 billion - a figure which has increased to $1.56 billion this year. Microsoft blamed the drop in profits on continuing supply problems with certain Xbox 360 components, but said that they're working hard on a solution.
Source (http://www.eurogamer.net/article.php?article_id=62650).

Would sir like some whipped cream with his pie?

[camberiu]

but the bottom line for Microsft is that they've got over eleven billion in profits, which is a pretty damned good year.


They got eleven billion in revenue, not profits. Their profits were around 3.6 billion. Not shabby at all, but it is important to understand the difference between revenue vs. profit.

[Balthasar]

The only shareholder that determines what moves Microsoft makes is Bill Gates, so any talk of "how long will shareholders tolerate this" is moot, because they'll tolerate it as long as Bill says so.
Since when does being a majority stockholder give one unilateral power? Microsoft is not a privately-owned corporation, you know.

[51|RandoM]

Let's all give a cheer for open source software and the future toppling of OS monopolies! Huzzah! ;)

Ha, as if the two were even remotely related.

[Citizen Philip]

Ha, as if the two were even remotely related.

You're right. Microsoft, software monoplies, large amounts of money sitting around in bank accounts and OSS have no common thread.

[Balthasar]

...He wrote about how major entrepreneurs of the past two centuries made the same change to be remembered after their death. Ironically, this causes their major corporations to lose that “hunger” and edge. And usually they are never the same as they were in the heyday when the leader was a money hungry power grabbing beast versus a “good do’er”. He predicted the same thing for Microsoft.
The captains of industry in the 1800's were all philanthropists at some time. Sometimes he sounds like J.D. Rockefeller (http://en.wikipedia.org/wiki/Rockefeller).

[goc_sin]

I'm curious as to how the Xbox console line will become profitable in the future if it's not profitable now? Maybe components will be cheaper in the future or a streamlined design for more efficient components?

[fitbabits]

I'm curious as to how the Xbox console line will become profitable in the future if it's not profitable now? Maybe components will be cheaper in the future or a streamlined design for more efficient components?
"We will wind up cost-reducing the product every year," and given the use of licensing technology rather than buying off the shelf components, Microsoft should easily be in a position to do so.
Source - Computer & Video Games Online (http://www.computerandvideogames.com/r/?page=http://www.computerandvideogames.com/news/news_story.php(que)id=125729)

[jacktion]

As I recall that was THEIR money. It had nothing do with Microsoft directly, unless you believe the company you work for should get the credit whenever you make a charitable donation that originated in their stocks you sold/your pay check.


These are different situations. This is not like a clerk at McDonalds donating 10$ to United Way. Bill owns MS. It is his company. His money and MS's money are essentially the same thing. So when Bill donates 28 billion to charity you say it has nothing to do with MS? I disagree. We have to give a big thank you to MS that this is possible.

[copasetic]

I hope you like humble pie:


Source (http://www.eurogamer.net/article.php?article_id=62650).

Would sir like some whipped cream with his pie?

Maybe you should keep the pie for yourself.

He said they have never made a profit in a year. If you would read your quote it says the took in a $55 million profit in one quarter. However, this is just about the only quarter ever that division has made a profit since the release of the xbox.
In fact, the xbox division (xbox is by far the primary in product in said division) has lost over $4 billion dollars.
Forbes (towards the end) (http://www.forbes.com/home/technology/2005/09/12/microsoft-management-software_cz_vm_0913microsoft.html)
suck on that

[dotbomb]

Bottom line is MS can afford to sink money into a losing division to attempt to crush competition and win market share. That's quite an enviable position for any company to be in.

Being a business owner who has clawed his way to profitability over 3.5 years I'm really jealous of other companies' success. It takes amazing talent, the right products, and lots of balls.

I honestly hope that great things are done with all this money. Bill's philanthropy is nice (no extremely wonderful) but I'd like to see MS, the company, develop some truly great products worthy of all their profits.

Bill can spend his money on humanitarian projects and medical research but I want MS to develop consumer products that really enhance our lives. Otherwise they've squandered a great opportunity as a tech corporation.

[fitbabits]

Maybe you should keep the pie for yourself.

He said they have never made a profit in a year. If you would read your quote it says the took in a $55 million profit in one quarter. However, this is just about the only quarter ever that division has made a profit since the release of the xbox.
In fact, the xbox division (xbox is by far the primary in product in said division) has lost over $4 billion dollars.
Forbes (towards the end) (http://www.forbes.com/home/technology/2005/09/12/microsoft-management-software_cz_vm_0913microsoft.html)
suck on that
There appears to be a little confusion here [on my part]. I was clearly referring to quarterly earnings, not yearly - I overlooked the yearly qualifier in DeviantBoi's post, for which I apologize.

Oh, and the humble pie was lovely. :)

[goc_sin]

Source - Computer & Video Games Online (http://www.computerandvideogames.com/r/?page=http://www.computerandvideogames.com/news/news_story.php(que)id=125729)

I was more curious about how they will be able to make money in the future, if their console are always taking a loss. The article link you gave me just seems to talk about price cuts each year for the 360. When will they be able to build a console that actually makes a profit instead of a loss or maybe their strategy is through licensing.

[copasetic]

It was clear how? He said, 'year.' Seems all the confusion was on your side.
I wish I had esp....

[fitbabits]

It was clear how? He said, 'year.' Seems all the confusion was on your side.
I wish I had esp....
Dude, get off your high-horse. Read my reply. I acknowledged the confusion was on my part.

[GWhite]

I wish I was a Microsoft stock holder.
Why!!?
You want to own stock that grows don't you? Microsoft stock is relatively static.

[copasetic]

Dude, get off your high-horse. Read my reply. I acknowledged the confusion was on my part.

Sorry for the offense. You always come off so arrogant and pass on the blame with vagueness or sarcasm so often, I couldn't help it.
Your reply was vague. 'Here' - evil avatar? thread? post? And sarcasm in the written language?

[fitbabits]

Sorry for the offense. You always come off so arrogant and pass on the blame with vagueness or sarcasm so often, I couldn't help it.
Your reply was vague. 'Here' - evil avatar? thread? post? And sarcasm in the written language?
Wait, I come off as arrogant and pass the blame? First time anyone's said that about me... :( I clarified the 'here' part for you!

[Zanzibar]

I was more curious about how they will be able to make money in the future, if their console are always taking a loss. The article link you gave me just seems to talk about price cuts each year for the 360. When will they be able to build a console that actually makes a profit instead of a loss or maybe their strategy is through licensing.

The consoles will come down in costs, but also will come down in price. MS may ALWAYS sell the consoles at a loss; perhaps, over time, the loss will just be less and less.

But the model for video games doesn't just consist of the consoles. There's also the licensing fee that Microsoft charges the publishers for each game sold (which is around $7-8 per unit, I believe), and also the accessories (extra controllers, memory cards, hell, even the gigantic HDD for the X360 that will come down the pipe soon). THAT'S where the division makes its money back.

[fitbabits]

I was more curious about how they will be able to make money in the future, if their console are always taking a loss. The article link you gave me just seems to talk about price cuts each year for the 360. When will they be able to build a console that actually makes a profit instead of a loss or maybe their strategy is through licensing.
I think that as cost decrease the losses will decrease. Will Microsoft ever make a profit on the Xbox 360? Who knows, but it's a given that console manufacturers (with the possible exception of Nintendo) sell their consoles at a loss and make up for it with software.

Same thing applies to printers and the cartridges, I guess.

[copasetic]

Wait, I come off as arrogant and pass the blame? First time anyone's said that about me... :( I clarified the 'here' part for you!

Well, condecension and arrogance often accompany one another. Case in point is bold.
Also, just because you think I'm being arrogant, which I'm sure you do, doesnt exclude yourself from the same. \
/time to go

[rein]

/time to go

good. :D


The message you have entered is too short. Please lengthen your message to at least 10 characters.

[fitbabits]

Well, condecension and arrogance often accompany one another. Case in point is bold.
Also, just because you think I'm being arrogant, which I'm sure you do, doesnt exclude yourself from the same. \
/time to go
You asked for clarification, I clarified for you! You, sir, are now acting like an ass for the sake of acting like an ass.

Time for bed is it?

[bapenguin]

Well, condecension and arrogance often accompany one another. Case in point is bold.
Also, just because you think I'm being arrogant, which I'm sure you do, doesnt exclude yourself from the same. \
/time to go

Oh the irony of this post.

[goc_sin]

Same thing applies to printers and the cartridges, I guess.


I think you are right on the money there... That could account for the $10 extra game cost to help out with the loss of the hardware itself.

[Citizen Philip]

These are different situations. This is not like a clerk at McDonalds donating 10$ to United Way. Bill owns MS. It is his company. His money and MS's money are essentially the same thing. So when Bill donates 28 billion to charity you say it has nothing to do with MS? I disagree. We have to give a big thank you to MS that this is possible.

By all means disagree, but the money is his. I'm sure his tax forms also clearly define what is his and what is not. There is no secret to where the money came from, but the choice to spend is entirely up to B&M. MS has stockholders, directors, etc. they have no say in where the Gates' spend their money, because it's not their money.

If Bill Gates decided to spend the money to goto Mars (which he could afford to do) and put up a flag of himself, it's the same as I spending all my money to fly to some remote island and put up a flag of myself. Except his trip would be infinitely more cooler than mine :(

...

and he could still afford to live more comfortable on the remainder in his bank account than any of us ;)

What I'm saying is: the credit for charity belongs to him, his wife and his charitable organization that gifted the funds. No one or anything else.

[Zanzibar]

By all means disagree, but the money is his. I'm sure his tax forms also clearly define what is his and what is not. There is no secret to where the money came from, but the choice to spend is entirely up to B&M. MS has stockholders, directors, etc. they have no say in where the Gates' spend their money, because it's not their money.

If Bill Gates decided to spend the money to goto Mars (which he could afford to do) and put up a flag of himself, it's the same as I spending all my money to fly to some remote island and put up a flag of myself. Except his trip would be infinitely more cooler than mine :(

...

and he could still afford to live more comfortable on the remainder in his bank account than any of us ;)

Well, it's a fair question, can we attribute Gates' donations as being on behalf of Microsoft? Being that Gates is still the top guy there, and that the money he takes home is money that he himself designates when he writes himself a Microsoft check to his own bank account, I think it's fair to say that Gates is using the publicity of donating (Microsoft's!) money to help public opinion of Microsoft. He could donate the money anonymously if he didn't want Microsoft to take credit for it, couldn't he?

Gates and Microsoft will always be inexorably linked.

[Phades]

Why!!?
You want to own stock that grows don't you? Microsoft stock is relatively static.

I too would love to own a bunch of Microsoft stock.

I think you missed the point. If he owned enough Microsoft stock already, he'd be a happy fellow. He didn't say he'd love to go buy a bunch right now. Ask Bill if he's complaining that all his Microsoft stock is pretty static....

[doyama]

In terms of the 'losses' in the MS Gaming division this is par for the course. Historically the gaming division has NEVER made any money, ever. Only in one quarter did it make a relatively 'small' profit was during the launch of Halo2. Even then they were pratically yelling that this was a 'blip' and the division was far from ever being profitable. Over the lifetime of the Xbox MS has lost, by even conservative estimates 1-2 billion dollars. You'd have to scour through all their filings to get the totals, it might even be higher but I'm being conservative.

Bill's MS stock is generally non-liquid. Whenever Bill sells any big chunk MS stock it must be announced. If he starts dumping stock too fast, investors will panic and the stock price will plummet. If you've been watching the SEC filings, he's been slowing bleeding MS stock over the past decade at a relatively constant pace.

It seems a lot of that money goes into his philanthopic efforts in the Bill and Melinda Gates Foundation. They do a wide variety of donations but they're very picky about what to donate to. I wonder if his philanthropic streak is really coming from his wife Melinda more than himself. She's as smart as Bill though without the ruthless business streak :P Just today their foundation donated $600 million to fight TB in Africa.

Bill Gates does not donate on behalf of Microsoft. He does so on his own behalf through his foundation. Obviously he'll be linked and associated with Microsoft until the end of time but I think he uses his public image at least through his foundation to try and address some health issues in the world today.

[trip1eX]

GAtes only owns x amt of shares of microsoft. IT's no different than you and I owning shares of microsoft except of course he owns a ton of them. He doesn't own the company altho he is the largest shareholder, but he doesn't have nowhere near 51% of the shares. And of course he has certain restrictions on when he can sell his shares.

IF he needs cash he sells MS shares. He also has been diversifying his portfolio a bit. But it's still nothing compared to what he owns in MS shares.

Gates make $100,000 or something like that per year in salary.


What you really should be saying is that Gates is donating our money. The public's money. That would be more accurate. MS' monopoly on a couple of pc software markets keeps prices high and gouges customers more than if there was competition. And in effect 'steals' money from our pockets because of this lack of competition. Therefore it's us donating a big portion of that money to charity. Money that in a healthy competitive environment wouldnt' be there for MS.

[mister_slim]

I'm curious as to how the Xbox console line will become profitable in the future if it's not profitable now? Maybe components will be cheaper in the future or a streamlined design for more efficient components?
In the quarterly report, MS mentioned they don't expect to break even on the hardware any time soon. Software licensing should offset that somewhat.

[AniAko]

1.56 BILLION ANYTHING is an insanely large amount of anything, whether it be money or whether it be peaches in Animal Crossing: WW. :)

You want to be #1 on the google seach don't you??????? :D

I personally feel google has been designing pretty user-friendly, fast, plain software. They're an example of a "start-up" company, although they're well along their way, which retains many talented thinkers re-inventing what windows has done, and in most cases, making the little improvements noone seemed to notice as nuances prior. If they had even some of that revenue, they could be even better I'm sure

[camberiu]

What you really should be saying is that Gates is donating our money. The public's money. That would be more accurate. MS' monopoly on a couple of pc software markets keeps prices high and gouges customers more than if there was competition.

Are you really saying that you could not install a Linux OS on your machine if you wanted to?

[Kelegacy]

I honestly hope that great things are done with all this money. Bill's philanthropy is nice (no extremely wonderful) but I'd like to see MS, the company, develop some truly great products worthy of all their profits.



Jeez, now THAT'S an idea I would like to see come to fruition. Great post by the way, even though I butchered it for my own means.

[Tohoya]

Those predicting gloom and doom for microsoft after this need to read Opening the Xbox. Microsoft can keep losing money forever and still achieve its goals it had when making the xbox: preventing Sony's unilateral control of the living room, and thus preventing them from being able to turn their attention to MS's PC empire.

[TheKeck]

Jeez, now THAT'S an idea I would like to see come to fruition. Great post by the way, even though I butchered it for my own means.

4000?! 4000 posts!