360 Loses $1.26Bn in 2006 Alone To Fight Sony

There's a fascinating article up on Next Generation that drops this tidbit: the Xbox 360 Division lost $1.26 billion in fiscal 2006.

Why is Microsoft willing to put up with this? Defense:

"Remember that Microsoft partly entered the game console business for defensive reasons," Rosoff said. "The company was concerned that a PlayStation successor would become the default gateway to networked entertainment in the home--Ken Kutaragi promised as much--and cut into consumer PC sales."
He continued, "It's very hard to calculate the worth of a defensive business. I personally think Sony will have a really hard time with the PS3--fewer games at launch, $200 price premium, and yet they're losing more money per console than Microsoft is on the 360. More long-term, imagine no PlayStation 4 and how Microsoft might profit from such an environment."

The 10 million number that Peter Moore keeps yakking about is apparently the magic number of consoles sold that guarantees third-party developers to choose you are their focus, guaranteeing heavy royalties. Great reading.

Next Generation? Could you post the source URL please?

360 sales aren't even as good as the original XBox, rushed to market? oh yes. They've built up a fair head start but it's not enough..



"In light of recent industry growth, two investment bankers from Wedbush Morgan Securities and Deutsche Bank examine the performance-to-date of Microsoft as a console manufacturer. Other than stating the obvious that the original Xbox is "all but abandoned," one analyst had this to say when comparing Xbox versus Xbox 360 sales:

"The Xbox 360's installed base is still smaller than the original Xbox's equivalent after the same number of months of sell-through. Xbox 360 sales are even more lackluster if you consider that the original was an unproven product that was trying to sell-in against the hugely popular PS2 ... In 2001, the PS2 was consistently selling-through >300K units a month, whereas the Xbox 360 has not broken 300K since its launch in November."

Those numbers suggest that initial momentum for the original Xbox was better than the 360. So could the Xbox initiative as a living room defense strategy against Sony (as it's partly believed) actually be hurting the 360's potential? "