Microsoft has reported that their Q3 earnings from the entertainment division netted a loss of $388 million – all because of the develoment and marketing of the 360.
Microsoft’s reaction?
“Our business model anticipates that while we currently sell Xbox 360 consoles at a negative margin, product cost reductions and the future margins on sales of games and other products will enable us to achieve a positive margin over the Xbox 360 console lifecycle.”
This process has already begun with the development of the new 65nm chips that will replace the 90nm chips currently in the 360 early next year.
Microsoft’s “meh” reaction has been surprising to many – including Wall Street. The news resulted in an 11% tumble in MS shares.
Still, you have to wonder what Microsoft’s priorities with the XBox project really are. I have always thought of their entry into the video game business as a means of injecting a Microsoft OS into our living rooms. Could this be the true purpose of the XBox?
Microsoft is a software company, and $388 million is a drop in the bucket compared to the $10.9 billion ($3.89 billion profit) they earned in Q3. How much more do they stand to make if they can use the XBox 360 has a “trojan horse” of sorts for their OS?
Posted by Sean
