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Xbox 360 will make profit next year?
Author: Joe MartinPublished: 4th May 2007
The Xbox 360 is projected to become profitable for Microsoft next year, largely thanks to the growth of Xbox Live.
In fact, Robbie Bach, President of Microsoft's Entertainment and Devices Division, recently told eWeek how Microsoft is projecting the sales are really panning out in his section, which manages the Zune and of course the Xbox 360.
Robbie was quoted as saying that the Xbox 360 was the "hardest piece of consumer electronics hardware to produce in the world."
He also revealed that the Xbox 360 would begin making profit for Microsoft next year if sales projections were reached in time.
Bach reckons that the growth of Xbox Live and sales of Xbox 360 peripherals will contribute to their income massively.
Of course, with the 360's successor undoubtedly already being worked on, one has to wonder how long it'll be before the black plummets back into the red.
Has the Xbox line been a triumph for Microsoft, or is it just falling apart slower than expected? Give us your opinions in the forums.
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Comments (24)
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But no dout their accessories are making up a good portion of their profit, with the pricess most 360 add ons go for it's no wonder. I think introducing the elite might have pushed than back from hitting their target income and trying to get out of the black. I thought MS was already profitting, although very little from the 360 (it was either that or breaking even on cost to make vs current selling price).
I wonder how long it'll take for Sony to make the same announcement with the PS3...
[ontopic] But what exactly is he trying to tell us? They were smart enough to build a console actually able to make profit? They overprice their accessories to make profit? They overprice the games?
<A88>
http://www.eurogamer.net/article.php?article_id=76038
Only rumours, hence no news article on it.
L J
Microsofts problem is the Japanese market. Breaking even in six years without touching japan is quite an achievement - the 360 has sold very very well after all. Sony has a massive headstart in Japan, yet Bill Gates has never really been able to crack it over there.
I bought the other 2 contoller for my system for 75$(USD).
The wireless network adaptor is also way too overpriced, but the 360 controllers on the other hand are totally worth their $35 price. I love the 360's controller even though my friend has had some major issues with the rechargable battery packs.....they feel so much more expensive than the cheap NyKO's or MadCatz they have demoed at Targets and they sure stay charged for a good while when they're fully charged....
So, while it may be "worth" $35 in terms of its functionality and what we're all used to paying for console controllers, it is in a sense overpriced in that there's potentially 200% profit built into each one.
Thats the problem with consoles -- they can get a pseudo-monopoly going and make prices artificially high. This convinces users that the price is fair since its what they've been seeing for 10 years. If, on the other hand, there were many manufacturers making controllers for the 360 (or the PS3 or Wii...or the original NES for that matter) and allowed to set their own price, prices would fall down around $15 or so. You might have to do a little homework to figure out which ones were cheap-o things made in sweatshops...but you'd be able to get a good controller for much cheaper than they sell for now.
Of course, then it'd take even longer for Microsoft to start making a profit on their consoles...and we'd have other problems to deal with.
With due respect to MS's X360 division...it they aren't already making a profit, at 400 with 20-something month old hardware...they have a problem. If the XBox initiative will already be profitable next year, then it is indeed good news for them.
Still, I have the feeling that the X360 isn't really smoking hot right now. In Europe, at least, it seems to be quite irrelevant for a 18-20 month-old console. Outside the hardcore gamer demography, it doesn't seem to be a huge interest nor awareness in the XBox brand. the PS3, though, seems to be at least worthy of desire if expensive. Most casual gamers I know, are still the the "I'll get a PS3 in 1-2 years one it drops in price" mind share, and the "XBox what?"
That's what I was wondering. As I understand it, console developers barely ever make a profit on each unit of the console sold, it's part of the business model, that's why only massive companies can afford to do it. I'd imagine the PS3 and the 360 if sold at cost would be a hell of a lot more expensive than they are. IIRC, console companies make their money on the games, that's why they are so expensive, without the games even 50 million consoles sold is still a massive loss. Isn't that why the Dreamcast failed? They sold enough consoles, but there simply weren't enough good games, so Sega had to pull the plug on producing consoles to cut their losses.
If it's the devision as a whole, well I guess it makes sense, the massive marketing costs will probably take a few years to make back anyway, and they need more games to make some money. I'd be amased if Sony were making any money on their PS3 devision, the costs must have been astronomical in development, but the PS2 devision must be raking it in, console developments costs are probably tiny now and the games are still selling very well. IIRC, something like 60 -70% of all of Sony's profits came from the PS2 alone in recent years. To be honest I'm surprised Nintendo are making a profit on the Wii. To think it could be even cheaper and still not make a loss when it's price is one of the main selling points amazes me, one would think Nintendo would push the price way below cost (like everyone else does), sell even more Wiis and make even more money from the games. Odd really.
I have owned a PS3, purchased one for £290 with Resistance fall of man. Was a 60gb HK version when it was launched. I did resell but original purchased it because of wanting it. My general impressions of it were.. Very shiney.. Big... Heavy.. But the look does grow on you after a while and i personally prefered the "Look" to the Xbox 360.
Unfortunately the PS3 lacks in many areas and is to complex. Internet Browser (which is crapola), all the menu options.. It's all to fiddley. I don't think the market is ready for something like PS3, and even if it was. I don't think the PS3 would be ready for the market at that point. It's far to broad. It needs to simplify itself and have a clear direction. Instead of trying to meet every need.
Playstation 3 will suceed, it will sell millions and will outsell Xbox 360. Purely because it's a "Playstation". The brand is far to strong and no matter how much fanboys bash it online etc, the general public are the ones who'll buy it in droves and not hear about all the negatives. Although it will not be a white wash like Playstation 2 and will hugely damage the market share they have built up. Allowing for Xbox 720 or whatever they decide to name it to become a real problem for them in the future.
Wii is just well.. Wii.. I purchased one in france while on holiday and sold it back home... Beyond Wii sports and Excite truck i really saw nothing lasting about it. Great multiplayer console with my mates while drunk. It's in a different league however.. Graphics do matter to allot of gamers, whether you like it or not games like Gears of war etc major selling point is the eye candy. Wii will sell shedloads but doubt will hurt either PS3 or Xbox 360 in the market share department because of it's price point.
All in all i prefer Xbox 360. It's a much more focused system.
It doesn't completely balance it out, but people seem to forget that the PS2 generates both hardware profits, and continues to generate massive amounts of software sales. You can't ignore you can't simply push it aside and say "Sony is doing bad because of PS3 costs". They are making plenty of money back on the PS2, which they have been profiting from for a while now, that it can easily offset some of the costs going into the PS3. Yes they are still losing alot of money, but not so much that it will kill them, and that is thanks in part to the continues Playstation 2 sales along with software sales. Sony isn't losing as much in R & D because PS2 sales, part of the same division the PS3 is in (SCE) so that money is obviously pooled into the PS3.
And it's a bit outlandish to claim Blu-Ray a failure when MS themselves have announced a possible Blu-Ray attachment for 360. Hardly a failure if Sony's competition are even looking at picking up the format for movie playback on their own console.