Originally Posted by RichL
That statement is unfounded. Microsoft had recouped its R&D costs on the Xbox 360 by 2008.
No-one said anything about R&D particularly. There is also using it as a loss-leader for years in order to gain Market share and sell more profitable games. There is covering the failed devices that have been returned in large numbers. There is selling off warehouses of unsold stock at a discount when they stuff the channels. It all adds up.
I'll try and look up some of the articles that speak of these details. Just because the XBox division has a positive or profitable figure in its column for a given quarter, even the last two years, does not mean that it has made an overall positive contribution to MS in its whole history. There are a lot of sunk costs. I remember loads of articles over the last few years saying that due to the billions
sunk in and lost by XBox, it will be years
before it makes a positive contribution to MS' bottom line, no matter how well it sells. I don't see the bits and pieces that they creatively scoop over into the XBox column as really making a dent in all that yet. But I am very happy to be convinced otherwise. Trouble is, you have to take MS and pro-MS sites with a grain of salt -- goes back to that thing about character that I mentioned
The point is, mentioning XBox as a pillar of the company in the same sentence as Office and Windows seems a bit optimistic. The reason that MS can make a go of it and try to gain influence in other areas and markets is because of the creative "slush funds" enabled by Windows and Office. But, who knows, it may end up being a sound strategy: the former enterprise powerhouse formerly known as Microsoft, and which used to compete with that funny little company called Apple which made these "toy" computers, is now a powerhouse in the games industry; who'd a thunk it?
Whereas, Apple really does have four pillars: Mac, iPod, iPhone, iPad. Of course Apple is making less profit: 70% of the price of each of these is for quality components, engineering, manufacturing, assembly. When a XBox is sold at discount or at a two-for-one, I would bet that 50% of that
price is more than enough to cover the cost of the XBox. It should
be highly profitable for MS. But they do tend to bungle things, don't they? I think the only thing they don't bungle is their accounting.
The channel tunnel is currently operating "in the black", looking at one statement at a time -- this doesn't mean it hasn't been refinanced umpteen times, resold to new consortiums, off-loaded nor generally lost the stigma of going astronomically over-budget, costing the tax payer and generally being regarded as a bit of a black hole as a financial undertaking... But, no doubt, it's a great experience, it's useful and it makes travel between Britain and France extremely convenient, at least for train travel. When driving, however, as I do, I still take the ferry.