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Xbox still a loser for Redmond

No profit yet for MS console

Whilst Microsoft's Home & Entertainment division, which incorporates the Xbox, saw revenues increase some 22% for the year, it still revealed total losses of $391 million - put down mainly to the cost of pushing the Xbox. The division made a loss of $1.2 billion last year, so this is a big improvement, but it demonstrates that the Xbox still has a long way to go before it turns a healthy profit - like both Nintendo and of course Sony have managed with their current generation offerings. It seems unlikely that Microsoft will turn a profit with the upcoming Xbox 360 either, with one Redmond representative replying when questioned: "We're thinking long term."

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It seems like Microsoft are prepared to continue to support the loss making product in the hope that they will establish themselves in what they see as the key 'living room' market, where the future of converging technology appears to be heading. The next-generation Xbox could be key for Microsoft then, as shareholders won't be happy to support another dead duck into the third-generation, if the Xbox 360 fails to challenge for market leadership - or at least break even.

More on this soon.

1. Does this include Xbox 360 development costs?

   Markusdragon Monday, 25 July 2005, 07:38:3