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Microsoft Entertainment Games Hardware

Xbox Losses Double, Xbox Shrinks 676

seldo writes "According to ITWorld, losses in the last quarter at Microsoft's Home and Entertainment segment have doubled. From the article: 'The segment, which also includes Microsoft's TV platform and PC games, posted a quarterly operating loss of US$348 million, compared with $180 million in the same period a year ago.'" An anonymous reader points to similar coverage at, pointing out that the company also reports "profits for Office, and one small note about an undisclosed presumably Japanese company that Microsoft if propping up. So, the big question on my mind is, who is Microsoft secretly holding above water, and why? The fact that they are presumably Japanese, seems to point towards an XBox partner. Could this explain the sudden flood of Sega exclusive games?" Another anonymous reader writes "Microsoft will be showing a smaller sized Xbox at E3 this May. In addition to the smaller size of the hardware, the Xbox Lite will also be integrated with Media2Go allowing Xbox users to download digital content such as music and movies. Wonder what this means for all the current Xbox Mod Chips?"
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Xbox Losses Double, Xbox Shrinks

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  • They might have had a bigger market in Japan if it did!
  • by sql*kitten ( 1359 ) on Monday February 03, 2003 @04:30PM (#5217419)
    On the one hand, Microsoft are losing money, yay! But on the other hand, if they're losing money they must be selling more and more units, boo!

    Help, tell me what to think!!!
    • On the one hand, Microsoft are losing money, yay! But on the other hand, if they're losing money they must be selling more and more units, boo!

      Not necessarily-- could be spending more on R&D.
      • by grub ( 11606 ) <> on Monday February 03, 2003 @04:45PM (#5217589) Homepage Journal

        Not necessarily-- could be spending more on R&D.

        You mean giving more money to Apple? ;)
      • by Autonymous Toaster ( 646656 ) on Monday February 03, 2003 @04:52PM (#5217668) Homepage

        Not necessarily-- could be spending more on R&D.

        I hope not.

        While I am not one to engage in schadenfreude for its own sake and I certainly support people's efforts in the area of embedded technology in certain parts of the home, I think these losses are good news on the whole. It's not that Mr. Gates's presence in the video game console market is itself really that important in real life - it's that Microsoft has repeatedly exhibited expansionist tendencies, and it's been pointed out [] that the very name "Xbox" is intended to mean "Anything Box" (ie. the "X" is a cheeky metasyntactic variable []).

        Not to be a conspiracist, but to me this implies that they have much more on their minds than video games. Imagine if their intention is to further expand beyond the digital media space they've so far occupied and on into real-world objects? Imagine if they make something that could be used to (mis)create toast? I find these prospects very alarming, and thus the news of the Xbox's impending failure can't help but be a little bit of a relief.

        • I find these prospects very alarming, and thus the news of the Xbox's impending failure can't help but be a little bit of a relief.

          Who said anything about impending failure? It has been speculated widely that Microsoft is taking at least $100 loss on each XBox, aiming for market penetration, so they can earn the money on game purchases. Even losing 300 million in this particular segment, Microsoft made nearly 3 Billion in profit from Office and Windows. Microsoft is in this for the long run, they are not going to shutdown XBox just because of a growth in operating loss. As a previous poster said, the only thing this points to is an increase in sales. If you are losing $100 per item, and you sell 100 items then you have a loss of $100,000. If you are losing $100 per item and you sell 1,000,000 then you have a loss of $100,000,000. I realize that is overly simplistic, but the point is that I think Microsoft probably views this increase in operating loss as a good thing.
        • by pyrrho ( 167252 ) on Monday February 03, 2003 @07:02PM (#5218815) Journal
          imagine... imagine. Let me explain in clear terms. I worked in the game industry for 6 years, during the 3dO times, for example.

          There is NO DOUBT. The industry thinks that desktops are not the true consumer device and suspect they never will be! The true consumer general purpose computer is expected to be a console, it has to look right for the Stereo/VCR rack, it probably can't have a keyboard shipped with it because people fear the keyboard, but it will probably have to have a way to sneak one on (USB, etc).

          This is strongly believed and the only question is When, and What Price Point Wins. 3DO was an early bet, proven too early.

          Anyway, there is NO doubt (in my mind at least), that the Xbox is a specific attempt to use the Wintel platform to fill that imagined role as the ubiquitous "general" computer. It's also an attempt to own this platform, which so far they have just taken part in (a major, but not controlling, part), that is to de-commodotize it.

          Further, it's the smartest thing about the Xbox. Having to enter through the gaming industry is rough, however, very rough. It might have been easier to just sell the Xbox as a cheap PC to begin with...?
    • Myth. They produce a set number of XBOXes per month, and most likely won't reevaluate that number to match market demand for some time. In other words, by buying an XBOX, you're subsidizing a percent (whether or not it's less than 100%) of a cost they've already paid.
      If people stopped buying XBOXes, they wouldn't be making money.
    • by moc.tfosorcimgllib ( 602636 ) on Monday February 03, 2003 @04:53PM (#5217670) Journal
      Help, tell me what to think!!!

      It's Monday, so we like video games, so this is bad news. But it's February, so this is good news. But the day of the week is odd, so we're supposed to only bash Sony and Blizzard. But the day matches the 2-digit year, so we only especially make fun of Macintosh users. But it was posted AFTER lunch, so this is good news.

      Got it?
    • Help, tell me what to think!!!

      Close your eyes and think of England.

    • by killmenow ( 184444 ) on Monday February 03, 2003 @05:58PM (#5218331)
      Help, tell me what to think!!!
      You know, all jokes aside, I find this quite telling. On a site where (I presume) most readers/posters consider themselves free-thinkers, there still tends to be "group think" and the ideal of individualism gets swallowed up by our need to belong to a group. I think it says a lot about the human condition.

      Oh, yeah (almost forgot)...Micro$haft SUCKS!
  • xbox... (Score:3, Interesting)

    by bluenova ( 533033 ) on Monday February 03, 2003 @04:30PM (#5217422)
    I wonder just exactly what the content and delivery methods for media to the xbox will be? Surely it will contain the DRM tools that Microsoft is so proud of. Will you just be able to download pre-approved things from xbox live connection, or will you be able to share on a home network?
  • how to sell an xbox (Score:3, Interesting)

    by linuxislandsucks ( 461335 ) on Monday February 03, 2003 @04:30PM (#5217423) Homepage Journal
    Make the mod chips legal ..the linux users will buy the boxes by the hordes! :)
    • Make the mod chips legal ..the linux users will buy the boxes by the hordes! :)

      What, all 10 of them? And those users won't buy any games, instead they'll just download 'em. Oh yeah, that'll help the bottom line, I'm sure. I'm sure that MS is chomping at the bit to do that!
    • by Tom Courtenay ( 638139 ) on Monday February 03, 2003 @05:00PM (#5217744)
      Are you kidding me? If MS legalizes the mod chips then the Linux folk would completely abandon interest. They're only into it because they think they're thwarting "The Man".

      This isn't a troll either-it's the truth. I hope the system succeeds (I think it has, to a large degree) well into the next generation.

      As much as people love to hate on MS, they've changed the console world forever. There won't be any more consoles released without a hard drive-it changes everything once you've used it. The same thing applies to the network jack-plug it in and you're off and running.

      I know it's been said time and time again, but we play the games. Not the consoles.
      • by Inoshiro ( 71693 ) on Monday February 03, 2003 @10:04PM (#5220034) Homepage
        "If MS legalizes the mod chips then the Linux folk would completely abandon interest. "

        No, there are always people who like to modify things. I'm happy to just buy Sega games, Tecmo games, and the odd non-Sega/Tecmo game (Splinter Cell, for example) for use on my Xbox. Legally, I have the right to do whatever I want with my Xbox, including using it as a toilet. I can put any chips I want into it, even PowerPC chips!

        People don't want to modify their Xboxes because they legally restrained from that action, they want to modify them because it's a fairly compact (compared to a full tower PC) unit with all the important hardware for DTS/DD and HDTV in one unit.
      • Just where do I start?

        1) If MS legalizes the mod chips...
        I wasnt aware that MS had transcended its role as a soft/hardware manufacturer and entered into the realms of law. How exactly would MS legalize something? Hell if we're at it, I think I might start a company up and legalize pot.

        2) They're only into it because they think they're thwarting "The Man".
        Umm no. There are people involved in xbox-linux development for all sorts of reasons. Personally its so that I can run a quiet PC in my lounge and bedrooms with 800x600 res on BIG screen TVs. Much nicer and cooler (temperature) than running a 19" monitor. Most of the dev team do it for a personal learning challenge.

        3) There won't be any more consoles released without a hard drive-it changes everything once you've used it.
        Ummm no. I personally see solid state storage as a much more likely successor in the short to medium term. By sticking a PC HDD in a console you effectively place a 3-5 year life on the machine (at best). After that the drive dies, you're screwed. Sure this implaces a nice inbuilt obsolesence for MS to ensure you need to buy an Xbox2, but for me, I still like to play my Sega Genesis once in a while.

        4) No quote this time, but just to let you know. The modchip itself is completely legal in any country anywhere in the world. All it is is a BIOS chip. Its the BIOS code on the chip that has questionable legal status. The earlier BIOSes were all coded using a warez'ed version of the MS XDK, so the released code is illegal. Today however there is a completely legal, non XDK BIOS called Cromwell developed by (you guessed it) the xbox-linux guys (props to all an sundry).

        So yeah, its all just to thwart the asshat.
  • profits (Score:3, Insightful)

    by Anonymous Coward on Monday February 03, 2003 @04:31PM (#5217428)
    348 mill in loses, supported by the billions in profits in OS and Office
  • by govtcheez ( 524087 ) <> on Monday February 03, 2003 @04:31PM (#5217429) Homepage
    If the XBox gets smaller, what's Penny Arcade going to do for comic ideas?
  • Srashdot? (Score:5, Funny)

    by rampant mac ( 561036 ) on Monday February 03, 2003 @04:32PM (#5217451)
    "and one small note about an undisclosed presumably Japanese company that Microsoft if propping up."

    Nice Engrish

    • by bricriu ( 184334 )
      Nah, it's just one of those old-style, 18th-century 'S'es
    • by sryx ( 34524 )
      "and one small note about an undisclosed presumably Japanese company that Microsoft if propping up."

      Nice Engrish

      No, it's not a typo, it's ment to read aloud to sound like a lisp, basically it's how slashdot editors talk after being kicked in teeth so many times for typos! :P
    • Geez, it passes a spell checker, what do you want?
  • by gpinzone ( 531794 ) on Monday February 03, 2003 @04:33PM (#5217453) Homepage Journal
    Wonder what this means for all the current Xbox Mod Chips?

    It means that MS profits for next quarter will be higher from all the people flooding the market buying old XBoxes. :)
  • by tinrobot ( 314936 ) on Monday February 03, 2003 @04:33PM (#5217456)
    Obvious. The current mod chips are doomed, of course.

    If Microsoft goes through the trouble of reconfiguring the case, then rejiggering the motherboard is trivial. Wouldn't be surprised if they put a bullet-proof kryptonite cover over the chips or soemthing.
  • by jwdeff ( 629221 ) on Monday February 03, 2003 @04:33PM (#5217461) Homepage
    Wonder what this means for all the current Xbox Mod Chips?

    The same thing it meant the last time a change was made to the xbox.

    Time to make new mod chips.

  • by bob921 ( 574716 ) on Monday February 03, 2003 @04:33PM (#5217462)

    Now what will I use to crack open coconuts?
    • Presumably if you are using your Xbox to crack open coconuts you can just continue using the one you have. If you're not using an xbox to crack open your coconuts then just continue using whatever you have been.


  • by BrerBear ( 8338 ) on Monday February 03, 2003 @04:33PM (#5217463)
    It would have been much cheaper for Microsoft to bundle some of their own games, like Halo, with the Xbox. Instead they chose to bundle two games which Sega made exclusive to Xbox, and which didn't sell very well in their own right: Sega GT and Jet Set Radio Future.

    My guess is that Microsoft did this to appease Sega and boost sales of their titles, in order to keep Sega making Xbox exclusives.
    • by Saige ( 53303 ) <evil.angela@gma i l .com> on Monday February 03, 2003 @04:38PM (#5217514) Journal
      Sega's not making exclusives only for the XBox. Monkey Ball, anyone? Both were exclusive to the Gamecube, and big sellers also. Interesting that the company would choose to make exclusive titles for separate systems.

      And I so wish they had released Jey Set Radio Future non-exclusively, as I would have so bought that for my Cube already.
      • by gorilla ( 36491 )
        It's called hedging your bets. An exclusive deal is good for the console vendor, because people might buy the console in order to play the game. It's bad however for the programming house, because they're limiting the sales that they can get with that game. So if they sold only exclusive titles for one console, then they'd be betting the fortunes of the company on that console. By covering two of the leaders, they win no matter which one does best.
        • by Jace of Fuse! ( 72042 ) on Monday February 03, 2003 @05:08PM (#5217823) Homepage
          What Sega is doing is more like aiming their titles at the core audience of the respective consoles.

          Sonic, Monkeyball, and the like make sense on the Gamecube.

          Panzer Dragoon sOrta on the XBox makes sense.

          Shinobi on the PS2 makes a whole lot of sense, though I wish they had made that one cross-platform in the same way they did some of their other titles.

          I want NiGHTS on the Cube. That's all I can say.
    • I thought Sega was doing well since they tossed their hardware? Last I heard they had a quarterly profit. The article said that they were "propping up" the Japanese manuf., it doesn't sound like Sega needs propping?
    • They would never include the killer app for the system in the system package: Halo is a game that everyone who buys an Xbox will pay another $50 to get their hands on. They don't want the two prices to seem married, even though they are. They included two other games that would not have made much money anyway (and GT racing is actually pretty fun), to add value while minimizing the decrease in game sale revenues.
  • maybe i'm missing the point, maybe i'm old. but why are features like streaming video becoming more and more popular with consoles these days? am i the only person who use his game consoles for, well, games, and a pc for more 'useful' features?
    • I agree. I use a PS2 to play games and watch movies. That's it. They're also assuming that a good number of people have, or even want to pay for broadband. All I want is a good game console, period. They're still at least 10 years away from having any kind of digital convergence, with broadband in every home.
  • by grub ( 11606 ) <> on Monday February 03, 2003 @04:33PM (#5217468) Homepage Journal

    Increase the size of your XBOX in 10 days with our Herbal XBOX Viagra!
  • by GweeDo ( 127172 ) on Monday February 03, 2003 @04:33PM (#5217471) Homepage
    The only logical answer is Sega. There is no other developer out there that is giving the Xbox any kind of serious support in JPN. Xbox is only getting games from them that are on all three systems or nothing much at all. MS needs to figure something out with the JPN market if they hope to really fight in the Consoling gaming market. I don't see them getting any major head way though (but that doesn't upset me at all) due to these already tight partnerships: Nintendo has Capcom, Namco, Square, Sega (amusment vision) Sony has Square/Enix I know I am not listing all the JPN developers..but those are the big buys (for the most part)
    • Does Sega really need propping up? Aren't they still kicking butt in the coin-op industry? It seems more like Microsoft begging to keep their marriage in spite of lower console games sales. It seems reasonable to me that MS has projected the console sales much higher than what has come to pass, and that if it is truly Sega that is the JPN developer in question, they are not happy about devoting a higher budget to produce games on a console that isn't selling as well as they'd hoped; therefore, the games themselves aren't selling as well as Sega hoped; therefore again, Sega is threatening to quit developing on a not-quite-so-profitable platform.
  • Rare (Score:5, Insightful)

    by NixterAg ( 198468 ) on Monday February 03, 2003 @04:37PM (#5217509)
    MS bought Rare in late Sept. for $375 million []. I wonder how much of the $348 million reported as losses can be attributed to that acquisition.

    Like them or not, MS is in the console business for the long haul whether they turn a profit within the next 3 years or not.
    • wouldn't that be offset by the aquired asset?

      IAMAA, i am not an accountant.
  • by teamhasnoi ( 554944 ) <> on Monday February 03, 2003 @04:38PM (#5217519) Journal
    the size of the the Xbox Lite's controller will be roughly equal to Orson Wells after consuming a school bus full of kids on the way to fat camp. Oh, the bus is driven by pre-Subway Jared. And he has a ham in his pocket. Yeah.
  • by siphoncolder ( 533004 ) on Monday February 03, 2003 @04:40PM (#5217535) Homepage
    We've all known for a LONG TIME that MS isn't going to make money on the XBox for YEARS. How is this news now that they've posted a loss this far into it? Didn't we already KNOW that?

    MS has a history of going long-term with high-profile products, and it's paid off for them. This venture was no different, and losses were expected. Maybe if this story was posted say, 3-4 years down the road, it'd be newsworthy, since that's when MS is expected to BREAK-EVEN with the Xbox.

    This sounds like editor & zealot bait - fanning the flames of hate. Woo-hoo, MS is losing money?

    Woo-diddley-hoo, they knew it before we did. Get a grip.

    • Yeah, except 3-4 years down the road, we'll be seeing the next round of consoles, and Xbox sales will grind to a halt. It's called market saturation, and it's exactly the reason for the planned obsolescence of consoles. I wouldn't be surprised to see Sony drop the PS2 price again soon either, just to make sure MS never makes a dime off the XBox.
    • It's news because now we know; we have the numbers to support the hypoht...hypthos... theories we've discussed earlier.

      Yes, the idea of hard facts as opposed to speculation may seem un-/.-ish , but it does server a purpose.
    • by FatRatBastard ( 7583 ) on Monday February 03, 2003 @05:33PM (#5218074) Homepage
      MS has a history of going long-term with high-profile products, and it's paid off for them.

      Except this time they're on the hook for hardware. BIG DIFFERENCE (at least for MS). MS's usual modus op. is to bring in HW vendors to flesh out their visions, that way their only on the hook for the software R&D. If the product tanks (every version of the MS tablet up to now, early PocketPC, etc) MS has only eaten R&D costs. HP, et al will have to eat their own R&D costs plus the hardware costs (manufacturing ramp up, shipping, etc) of the product that tanked.

      Now, I'm not saying that the XBox will fail, or that MS aren't in it for the long haul. But being on the hook for hardware (and at a loss no less) is much more risky thank software only.
  • How? (Score:2, Interesting)

    by jwdeff ( 629221 )
    Current XBox hard drives are full size 3 1/2" IDE hard drives. The DVD Drive is a full 5 1/4" bay drive too. Both can be upgraded. Are they going to be replaced with more expensive notebook hard and dvd drives? If so, won't it drive costs up? Will the hard drives increase in capacity from the current 8, 10 or 20 GBs to make room for the music and movies?
  • by Anonymous Coward on Monday February 03, 2003 @04:41PM (#5217555)
    So if MS keeps posting losses on the xbox like this, the real question is, which will happen first?

    -Microsoft runs out of funds and has to close its doors.

    -Our sun dies
  • by mgmartin ( 580921 ) on Monday February 03, 2003 @04:42PM (#5217563)
    Coming from a big PS/2 background and advocate, I was converted to the Xbox from my brother. For the same price of a PS/2, I got Dolby 5.1 in all games, network adapter, built-in hard drive, etc. The Xbox is very cool, and from what I've read, the #2 console. So despite the current losses, I think there is a lot Sony has to live up to in its next gen console to even catch up to what the Xbox now offers. And #2 ain't bad for a 15 month console life span!
    • by Anonymous Coward
      The Xbox is an in-between system. Between the great exclusive games on the PS2 and the great exclusive games on the Gamecube, it gets the leftovers.
    • by ReelOddeeo ( 115880 ) on Monday February 03, 2003 @05:05PM (#5217792)
      Xbox is the #3 system.

      Sony Playstation: 50 million units
      Nintendo GameCube: 16 million (or 10-12 million depending on who you believe)
      Microsoft Xbox: 8-9 million

      Microsoft is not doing so well. Microsoft says sales of Xbox are on track. Yet what did Microsoft project they would sell? 9 million to 11 million. How many did they sell? 8 million, and they hope to sell 1 million more by June 30. Therefore Microsoft might possibly meet the low end of their projections.

      CNet: PlayStation 2 shipments top 50 million []

      CNet: Microsoft says Xbox sales on track [] ("We expect to finish our fiscal year with just over 9 million units sold worldwide," Koch said.)

      And finally, for the Microsoft shills that think Xbox will take the world by storm...
      Suppliers dim Xbox sales picture []
    • First off, I want to say I agree the XBox is a technically superior system. But this doesn't matter for the following reasons.

      All the other systems have Dolby 5.1 capability, it just depends on if the games support it.

      The network adapter and built-in hard drive don't mean swat because nobody will be taking full advantage of them until the other two consoles get them. Hold on, I'll justify why.

      It is because XBox is no where near #2 -- worldwide. It may very well be #2 in the USA, but with Japan's big gaming market, that doesn't mean dick. Take a look at the hardware console charts half way down the page.

      XBox is holding less than %5 the total market. And remember the GameCube came out 5 or 6 months after the XBox and holds around %15. Not many gaming companies are going to develope a game that utilizes the hard drive and network adaptor exclusively for the XBox. The market just isn't there.

      Hell, last year somewhere around 300-400 games came out for the PS2 -- remember all the Japaneese stuff we don't see. And only 68 for the XBox. Not to mention all the PS1 games that are still being produced.

      If you still don't believe me on the numbers search for the lastest sales annoucements from Sony, Ninetendo, and Microsoft on last years consoles. I don't remember Ninetendo's but Sony was around 50 million units and Microsoft around 8 million.

      Hell, most developers still make XBox games that look like ass and by the time they figure out how to take advantage of that hardware, the PS3 will be out.
      • by Namarrgon ( 105036 ) on Monday February 03, 2003 @05:45PM (#5218209) Homepage
        All the other systems have Dolby 5.1 capability, it just depends on if the games support it.

        Completely false. The GameCube doesn't even have a digital audio out. The best it can do is ProLogic II. The PS/2 can do pre-encoded Dolby Digital 5.1, good for cutscenes and DVDs, but nothing in-game. A (very) few games do in-game encoding to DTS, but this requires dedicating one of the two vector processors to sound encoding.

        With the Xbox, the Dolby 5.1 encoding is done by two dedicated DSPs on the sound chip, and is automatic for all games. It's the only one with the grunt (and the licence from Dolby) to do it.

        The network adapter and built-in hard drive don't mean swat because nobody will be taking full advantage of them until the other two consoles get them.

        There are ports of PS/2 games that have had custom soundtrack playback added, from the hard drive. There are a number of games that require the hard drive on the Xbox, Morrowind and Project Ego being a couple - PC ports may well require it. And of course, there are still Xbox exclusives that use it to good and occasionally innovative effect, such as Blinx.

        XBox Live is making very good use of the ethernet port. So are tunneling apps like XBConnect that let you play peer-to-peer online multiplayer Halo/Mech Assault/Tony Hawk/Unreal/whatever. Can't do that with just an iLink connector.

        Hell, most developers still make XBox games that look like ass and by the time they figure out how to take advantage of that hardware, the PS3 will be out.

        And I suppose developers will instantly know how to use the (considerably more complex) PS3 hardware to best effect? Quite the opposite - look at how long it took before the PS2 hardware got used properly. Xbox has a big advantage here, with its far easier/more familiar dev environment.

        Most PS2 games look like ass too. It depends on the quality of the game, of course. Halo is very nice looking, Rallisport Challenge looks superb, Splinter Cell is amazing and Halo2 is looking awesome. PS3 is still a while away, and Xbox2 is also scheduled for that timeframe.

    • Coming from a big PS/2 background and advocate, I was converted to the Xbox from my brother.

      I'm not trying to be a troll here, but don't undermine your position by calling yourself an advocate of any given platform. Changing from advocating one system to advocating another doesn't make you impartial, or show the overwhelming benefits of the system. Mostly it just undermines your credibility.

      For the same price of a PS/2, I got Dolby 5.1 in all games, network adapter, built-in hard drive, etc.

      You do get Dolby 5.1 in the X-box, which doesn't do you any good unless you have a high-end 5.1 setup. Cheap 5.1 setups are worse than good stereo setups, dollar for dollar. And as another poster pointed out, you can get 5.1 out of the PS/2, it just isn't compulsory that developers support it (as far as I know, I may be wrong).

      You also get the network adapter, but it costs as much to activate an X-box live account as it does to buy a PS/2 Network adapter, which includes a modem, so the point is kind of moot (unless you need a modem, at which point, why did you buy a Dolby 5.1 setup and not get broadband?)

      The hard drive is very, very cool, and I hope all future systems incorporate it.

      I think there is a lot Sony has to live up to in its next gen console to even catch up to what the Xbox now offers. And #2 ain't bad for a 15 month console life span!

      Ok, this is kind of silly. A lot to live up to in a next generation console? The PS/2 is significantly closer technologically to the XBox than the PS1 was to the dreamcast, yet the following generation of systems absolutely trounced the Dreamcast for power and overall playability. Every new console generation needs to be at least 10x as powerful to get off the floor. Is the X-Box more powerful than the PS2? Definitely. Is it 10x more powerful? Not a chance.

      The difference in power between the XBox and the PS2 is about a factor of 2, over a broad spectrum of games and pixel-pushing abilities. The XBox has hands-down better loading times, and lots of shiny polish. These are things that you should be pushing in the X-Box vs PS2 debate. The X-Box is satisfyingly faster and more responsive, which leads to a better overall experience. There are fewer games made for it, but you can tell the games that are made for it are just snappier.

      #2 in total domestic sales wouldn't be bad for a 15 month old system, but #2 in current sales is a major problem. According to MS and Sony estimates, Microsoft sold a shade under 500,000 X-boxes domestically this holiday season, while Sony sold over 4 million. While the system is still shiny and new, it needs to be making more sales than the current leader, not 8x less. For a system that will not see profitability at anything less than #1, this tremendous deficit in sales is a major problem. #2 is exactly where Microsoft doesn't want to be... Breaking even projections were based on a very successful launch and Christmas season, which they have failed to meet. #2 in domestic sales for a console already through its second Christmas is bad news.

      Nintendo is remarkably profitable at number #3 domestically and #2 worldwide, so this really is a race between Microsoft and Sony.

      That's not to say that the X-Box is without merit. That's to say that you picked the wrong merits to tout. Splinter Cell is an incredible X-Box exclusive, and there are plenty of great X-Box games to keep even the most jaded gamer's budget stretched. The PS2 has more good games overall, but what value the difference between 20 and 10 great games per year if you can only afford 5?

      And while the giant X may not be the most elegant of systems, you have to give Microsoft credit for creating the strongest system in a market known for blowing people away.


  • MS losing money on the XBox isn;t news to anyone, especially them. This is their first foray into a new market, they are just trying to get their foot in the door. The realized they wouldn;t make any money on this version of the XBox, they just wanted to keep Sony for completely dominating the market so the XboxV2 would have a chance. They came in 18 months later than the PS2, they don't have the partnerships that Sony has made over the years, they didn't even consider making money. But now that they are in the business and known, they can have a chance with XBoxV2 (which they can release to actually compete with the PS3. The XBox wasn;t about making money, it was about getting in the market so they could make money and be a real competitor later.
    • by binaryDigit ( 557647 ) on Monday February 03, 2003 @04:59PM (#5217742)
      This is their first foray into a new market, they are just trying to get their foot in the door. The realized they wouldn;t make any money on this version

      Hmmm, sounds a lot like a certain Japanese CE manufacturer a few years ago. I think that the thing that some people are missing is that I don't think that M$ is in this to become a dominant console manufacturer. A while back a story was posted here that discussed the xbox and WebTV and Gates had to decide which way to go with the foray into the console world. I think that had M$ wanted to be the "next Nintendo", this wouldn't have even factored into the discussion, as modding up a webtv would have been suicide. Nope, M$ wants to get into the home. They saw the PS2 as a threat to computing domination in the home, and lofted xbox as a pre-emptive strike. M$ is not expecting to take massive losses as a console manufacturer. If it looks like either xbox, or consoles in general, will never be anything more than gaming consoles, you will see M$ drop xbox faster than you can say "OS/2". After all, if M$ _really_ wanted to be a console manuf, then they would have done it back in the 3DO days, a nascent market that didn't have a dominant force yet.
  • Semantics (Score:3, Interesting)

    by Glonk ( 103787 ) on Monday February 03, 2003 @04:43PM (#5217575) Homepage
    In the same period a year ago, the Xbox wasn't even available for the entire quarter, and was only available in one region.

    Of course the losses have increased, they're actually selling more hardware now than before, and losing money on the hardware.

    The costs will go down over time. What with the smaller Xbox, larger software install base (== higher software revenues and profits), and all that.
  • I think Microsoft has to learn that they can't just make incremental additions to their hardware, or current customers will feel cheated. Although I don't personally own an X-Box, I know someone who does, and if Microsoft doesn't offer this Media2Go service to current X Box users, I know he'll be angry (What they're describing is actually pretty much what he wants, he has broadband, and wants to be able to get things like music and movies, but still pay for them, etc)
  • by binaryDigit ( 557647 ) on Monday February 03, 2003 @04:47PM (#5217621)
    OK, M$ was NEVER going to profit from xbox sales without getting the cost of the box itself down to either lower their loss on each box, or maybe show a profit (don't know exactly which point they're at right now). What's curious is that even though their using "commodity" parts, it has taken them this long to get the thing shrunk. You would think that with all the resources of the various portable manufacturers, they'd be able to tap into a lot of talent when it comes to making smaller/more compact packages. Heck, it's not like the things bleeding edge hardware wise, cooling should not be an issue, and performance isn't (as far as needing to increase it), so why has it taken SOOOOOO long to come up with a smaller cheaper (for M$) xbox? This is a critical time for xbox, it has to wait the entire year before the next holiday rush. In the meantime Sony will be starting to get the PS3 marketing machine into gear, so this smaller xbox is going to have to pull it's own thru this tough period. If it makes it to xmas, M$ is either going to have to rev the hardware again (smaller and faster/better) or pray that next xmas's sales are spectacular, or xbox won't live too much beyond '04.
  • by Greyfox ( 87712 ) on Monday February 03, 2003 @04:53PM (#5217672) Homepage Journal
    Microsoft's business plan has always been to give stuff away free or cheap, take over the largest segment of the market, THEN start charging. They can afford to lose a few hundred million until they achieve monopoly status in that arena too. Hell, Bill Gates probably has $100 million or so in his couch. You know how that loose pocket change just falls out...

    I bet you when the Xbox2025 comes out and is the last console on the market, MicrosoftAolTimeWarnerDisney will jack the price up to $2500. Which should just about offset the AOL losses...

  • by prockcore ( 543967 ) on Monday February 03, 2003 @04:55PM (#5217698)
    Everyone seems to be assuming that those losses can only be attributed to selling a ton of xboxes (at a loss.),,t269-s2129749,0 0. html
    says differently.

    Osha now expects Xbox-related revenue for Nvidia's fourth quarter, which ended 26 January, to total $40m on 800,000 units, down from previous estimates of $85m on 1.7 million units.

    According to that, they shipped less than *half* of the number of xboxes they expected to ship in the 4th quarter.
  • agreed to share technology so they can combine chips and therefore minimise the insides as well as costs?
    From what I recall one of the issues the XBox had was it was big and costly because the different companies refused to share info on their components. Whereas the PS2 was cheaper and smaller because they could combine manufacturing processes and reduce costs.
  • They may be losing money, but they have done want they wanted: become the number 2 console maker. Are they ever going to catch Sony? Probably not--but I'd bet for now they're happy beating Nintendo.

    And for those of you who insist Nintendo is number 2 (it is in Japan certainly, but not overall) there have been lots of stories in the past few weeks about Nintendo sales. Here's one [] about Nintendo and EA. Basically, EA sees growth for the PS2 and XBOX, but not for Gamecube. Also from the article: "Shares in Nintendo have been battered by growing concerns about slack GameCube business worldwide."

    And no, I'm not a PS2 or XBOX fanboy, so stop thinking I am. And no, I don't have a Gamecube, although if I could afford one I would for Metroid & Zelda alone.
  • by Matey-O ( 518004 ) <> on Monday February 03, 2003 @05:06PM (#5217798) Homepage Journal
    Slashdot LOVES articles that cast the Xbox in a poor light.

    Here's my take:

    Let's just say they 'cut bait' and stop production on the Xbox. What happens?

    My 8-10 games continue to function.

    The 6-8 games I'd like but don't yet own get CHEAP. (we have an Atari 2600 and 80 odd carts that we bought for pennies on the dollar in garage sales)

    My Xbox still makes a killer DVD player.

    I dunno 'bout you, but I feel I got my money's worth. On a dollar per hour basis, it's been a pretty good purchase.

    And yet, I doubt it's future is in jeopardy less than 4 months after announceing Xbox Live.
    • by Jason Earl ( 1894 ) on Monday February 03, 2003 @06:23PM (#5218525) Homepage Journal

      Yes, as an XBox gamer I have to admit that the XBox is a neat system, and it should be with the amount of money that Microsoft is spending per customer. When you plunk down your $200 for an Xbox you are actually getting hardware worth quite a bit more than what you pay. However, as a Microsoft investor, I happen to think that the XBox is the stupidest thing Microsoft has ever done.

      Microsoft simply loses too much money per customer to be able to turn a profit before Sony and Nintendo come out with their next gen consoles. The only reason that Microsoft hasn't pulled the plug is that they know how important the Wall Street analysts think XBox is for Microsoft's future. Microsoft has to come up with a new growth market if they want to justify their high Price/Earnings ratio, and right now the only real possibility is the XBox. If Microsoft dropped the XBox, then their stock price would drop. Since all of Microsoft's management are heavily invested in MSFT they would much rather have Microsoft waste money on the XBox then have the stock price drop.

  • So? (Score:4, Insightful)

    by Junky191 ( 549088 ) on Monday February 03, 2003 @05:18PM (#5217917)
    Still, MS generates $1 Billion in pure profit every month. They could absorb a money-losing Xbox division for 50 years if they wanted to.
  • by Dugsmyname ( 451987 ) <> on Monday February 03, 2003 @05:19PM (#5217928) Homepage
    Wonder what this means for all the current Xbox Mod Chips?

    The version 1.1 XBOX that started shipping in September of 2002 was hacked in about 1-2 weeks. This means that unless MSFT has really upped the ante with security, it will be more of a fun challenge to the MOD community, rather than a deterrent.

    It's been 6 months since they've changed anything significant on the XBOX, so I'm sure the MOD community is waiting for a new challenge.

  • XBOX losses ? (Score:3, Informative)

    by tmortn ( 630092 ) on Monday February 03, 2003 @05:36PM (#5218114) Homepage
    Hell they have sold 8 million units when essentially in competition with a system that had a year+ head start. Not to Mention Xbox figures to have a longer life than PSII and is in a great position to provide the higher value second tier system when PS3 hits the shelves and PSII game development falls off. Rough guess is at that point X-Box will be selling for 150 or less with a number of PC game ports hitting hard and heavy with alot of first efforts by primarily PC developers at the second teir game prices.

    I think PSII is going to have a rough second tier life... I think they really goofed not having more memory or making it upgradable and the lack of an intialy integrated hard drive. Hard drive space is likely going to be very very necesarry in the console market before long and Xbox will be sitting pretty as a value system while it will cost to upgrade PSII and its system memory is fixed with less than Xbox.

    Step two after PSIII hits the market they again hit the bleeding edge market late but this time with a system designed with all of their lessons learned ( IE better controller, smaller footprint ). They hope to break even but don't care if they take an ultimate loss again and take direct aim at whatever sony offers after the 3erd generation play station. The goal the next time around is to establish the system is worthy. Not to mention folks Xbox is not a garounteed loss yet, it may well break even or proove profitable in the long run.

    Frankly I think MS could deal without penetrating the Japanese market so long as they can garner game design support for US titles or generate a stronger console content generation industry over here. My guess is they are after making the US market able to stand on its own feet in competition. at that point its anybodies game... however penetrating Japans very protective domestic market in an area with so much domestic pride is to me is a very very very difficult.

    I am no Xbox fanboy.... my console system is a PSII and I love it... but it has its limitations and by all accounts it is a far more difficult system to develop for. X-box by contrast represents a set PC type of environment with similar development needs where you don't have to account for widely varying consumer hardware choices. This means given time and users the ease of porting PC titles will lead to more content from US game designers that have largely kept to the PC to date.

    It will be interseting to see what Sony does to pre-emt these strengths.... a late market PSII with budget price ( no more than Xbox), upgraded memory, and with the hard drive/ network card included might deliver a real coup de grace to Xbox sales of any sort and put M$ at a severe disadvantage with Xbox V2 if they don't launch with PS3 in the battle for the next genration whether its worthy or not.

    I hate M$ and little annoying things in their Xbox release like extra $$ on top of a too expensive release price to unlock DVD playback and an utter crap controller design seem to doom their venture. However, M$ is in it for the long haul and regardless of the people who back it I would love to see a stronger US console development market develop.
  • by badasscat ( 563442 ) <{basscadet75} {at} {}> on Monday February 03, 2003 @06:31PM (#5218590)
    I'm sorry, but this is more than $500 million MS has lost so far on Xbox, and that is big news no matter how you slice it. Does anyone honestly think MS got into this business in order to lose money? What would be the point? There are two possible reasons for MS to have gotten into the video game business, and only two:

    1. To make profits. This is self explanatory.
    2. To use the system to leverage their Windows business somehow, selling the system at a loss in order to eventually put some modified version of Media Center in your living room.

    They're failing at #1, and as far a I know, #2 would be illegal - it's basically exactly what they were found guilty of in court already.

    No company can continue to lose money at something forever. I'm sorry, but this is a publicly traded company and if I were holding MS shares there's not really anything MS could do at this point to convince me that getting into this business has been a good idea. Sony's profitable, Nintendo's profitable, MS is losing *large* amounts of money. What's wrong with this picture?

    Almost lost in this story is that MS is now saying they're barely going to hit the low end of their sales forecasts. You think they expected to lose $384 million? They probably wouldn't have if they'd sold as many consoles as they'd hoped - this means less software sold, and fewer royalty payments. The fact is the Xbox is not doing well, however MS wants to spin it.

    And regarding this Japanese company they're "propping up" - I would honestly doubt it's Sega, though it's possible. However, all of Sega's recently-released Xbox games were announced over a year ago (at the E3 prior to the Xbox's launch), and the only recent Xbox game I can recall being announced by Sega is Virtua Cop 3. That's honestly not a lot of support. More likely, the investment is in Tecmo - which has been devoting almost exclusive support to Xbox ever since its release, and which has two of the highest-profile titles ever released for the console - Dead or Alive 3 and Dead or Alive Extreme Beach Volleyball, not to mention the recently announced Dead or Alive: Code Cronus and the hinted-at Dead or Alive 4. All Xbox-exclusive. Sega, by contrast, hasn't released any million-sellers for Xbox, not even close, and hasn't announced much for the system lately.

The earth is like a tiny grain of sand, only much, much heavier.