Console manufacturing is a tough business — all of that plastic and silicon isn't free, you know, and to add insult to injury you've got to sell that expensive hunk of electronics at a loss. Microsoft's entertainment division has been bleeding money since the original Xbox — but in this eWeek interview Microsoft's Robbie Bach says that is about to change:
Right now we're doing a pretty good job. We're humming pretty well in the business. Our costs are a little higher than we'd like, [but] we're pushing those down; there are good initiatives underway to drive that. Game attach rate [is at the] highest level in history for a game console at this stage in the life cycle. The same with our peripheral attach rate. Xbox Live has over 6 million members.So, it's a business that will be profitable next year-we'll make money next year and that will be the first time, which is pretty exciting. And then the next two or three years are the place where you need to make tracks, and the next two or three years are where you have to make money.
You've got to wonder — if the Xbox had been designed by any other company, the ones without Microsoft's deep pockets, would it still be around today? We've seen plenty of wannabe-video-game-console-manufacturers come and go, and we've even seen some well-established companies (Sega, Atari) exit the market because the funds were running out. How much money would Microsoft have to lose on the Xbox before finally pulling the plug?
2 comments on this topic
24. May - 8:28 am
Hell, they should be making a profit considering how many people have gave the $140 dollars to get their damn thing fixed!!!!
24. May - 9:48 am
Not a bad point, Zane — but I bet that most of your $140 goes towards “fixing” all the busted consoles that are still under warranty. I’m almost on my third!