In an interesting article from Fool.Com entitled Why the Xbox 360 Is a Loser, author Seth Jayson points out that the Xbox 360 is costing Microsoft big money. The article discusses how the Xbox 360 is part of a much larger plan that, if successful, will eventually lead to profits. It is no secret; Microsoft is losing money and lots of it on the Xbox 360. Microsofts home-and-entertainment division has already lost $293 million on $1.57 billion in sales. And as Jayson points out, the more popular the console becomes, the greater the loss. Make no mistake: For now, and for the foreseeable future, the Xbox 360 is going to cost Microsoft money. The consoles are sold at a loss, and the costs of launching the new system will continue to grow. The more popular the Xbox 360 becomes, the bigger the losses will be. commented Seth Jayson in his article. The reason being is two fold. Microsoft is in a marathon, not a sprint to beat Sony (PS3) and more importantly, to be #1 in the yet undefined home media PC market. Down the road Microsoft will be able to build revenue from video game sales, entertainment purchases, license fees, Internet advertising, and revenue from developing products for your living room But for the time being, the loss has investors wondering if the media giant is moving in the right direction. Only time will tell whether-or-not the long term plan will pay off. To be successful, Microsoft will have to depend on many factors, with one of the most important being, plenty of 3rd party support. |
