Originally Posted by LuisDias
Could you provide evidence that the XBox is *still* a financial hole? They are selling a lot, and I really doubt they aren't already in the green. Kinect will be a huge success too, so I don't think that XBox really counts as a failure. At least they are shipping real products with real impressive innovation, and they will have the possibility (will they have the vision?) to make a similar move of Apple "Back to Mac", and bring kinect technology "back to pc". Yes, multitouch on the vertical screen may be stupid, but kinect tech may bring incredible novelties on the future UIs of operating systems.
I know it's easy to do a big MS landslide of snark remarks, but I think that Xbox really stands out from the general mediocrity provided by MS. Windows 7 is also not really that bad.
Uh, you can have a positive balance sheet in a given quarter... that doesn't mean it has compensated for the years of astronomical losses.
Yes, look at this quarter, or even the last half dozen, and you may see MS have just about sold more Xboxes than have been returned. Ooooh, it's in the green!
Look at the overall product, though, and it has still lost money. Tons. Need links? Just add up all the quarterly reports -- with the real bottom lines.
Apple just had a quarterly call to analysts. Looking at the iPad:
Apple gets a lot out of its R&D budget. Much more than MS. You can take Apple's TOTAL R&D budget for the last several years if you like (iPad and everything else as well). Take estimated operating and material costs for the ramp up in production for X millions of units for the two or three months leading up to launch early this year. Add all these millions up.
Now look at the revenue that Apple just announced for the last two quarters on the iPad alone (when they sold a million or so in the first week!). Those several billions of revenue probably covers ALL the costs listed above! When Apple says they have 4 Billion in profit this quarter, and put billions away in the bank -- it is because they already dealt with all their costs. They aren't shifting things around from previous years or quarters. They have no losses or debts that they have to cover with revenue from other areas of their business. I bet the iPad is, actually, profitable already; and it is only six months old.
I believe that when MS says the Xbox is now "making money" it is because it is comparing its current revenue to its current costs. Heck, they don't have to manufacture any in the current quarter -- they have a bunch of unsold stock in the channels! So, of course, ANY that they sell (after they take off all the returned ones) are free and clear...at least as far as figures are concerned for the current quarter. MS also has to sell some at good margins to cover all the loss leaders and discounted units. Apple doesn't have to worry about margins on ANY single unit of ANY of its products; Apple runs a tight ship from start to finish and plans ahead. The debts and losses on the Xbox  in the past will have been covered by the enormous profits they were getting in their profitable businesses like Office. If their profits are similar now, and they have no current Xbox losses to cover, I guess it means they are selling less of their profitable products.
Simply put, from different things I have read, I think the Xbox has, overall, cost MS more than it has made MS, to date. But of course MS is not going to come right out and say that or make that easy to add up (just as Apple doesn't break out individual products sometimes). It's like the Channel Tunnel -- you can say it is making a positive operating profit right now... but that does not erase the years of bad debt, re-financing, losses, and complete hole that it was for many years because it went over budget and was mis-managed.
Edit: If you put the quarterly results side by side (and I am just making this up, so don't quote me), just for fun, you might have gotten something like this for several years:
Apple -- 20 billion in revenue, 4 billion of that is profit.
Break it out: 1 billion profit from Mac, 1 from iPhone, 1 from iPod, 1 from iPad.
MS -- 20 billion in revenue, 4 billion of that is profit.
Break it out: 8 billion in profit from Windows and Office (afterall it doesn't cost a lot to generate license numbers for OEM's), minus
4 Billion from assorted losses and bungling and crazy marketing schemes that try to disguise the same old stuff with new names.