I read two articles on the Xbox 360 today at dailytech.com:
The first article I mention (from 30 July 2007) says that Microsoft’s entertainment division is spending over US$ 1 billion for customer service issues resulting from defective Xbox 360 consoles, and that the division will lose US$ 1.89 billion this quarter (after having lost US$ 1.28 billion from a previous period.)
I was talking about this with some colleagues today, and my theory was that Microsoft had never made a profit selling game consoles, but that the company has such deep pockets that they can keep on pouring money into the Xbox or its successor until it becomes the dominant player in the market - Microsoft can afford many missteps, but smaller companies competing with it could only afford one or two mistakes before they are crushed by the giant from Redmond. I was told that I was wrong, Microsoft is actually making a profit on hardware sales of the Xbox.
So my questions are:
Including only hardware sales of the video game console
- Has Microsoft ever made a profit over a certain time period (e.g. a quarter)?
- If you add up the numbers for the whole length of time that Microsoft has been selling the Xbox, has the company made a profit overall?
Including hardware sales and software sales
How much does the answer to those two questions change if you include, along with hardware sales, the sales of software (Xbox games made and sold by Microsoft)?
What would the answers to the same questions be for Sony and Nintendo?