Microsoft Working on Xbox Hybrid

[Nick]

Beset by huge losses, Microsoft tries something new

It's no secret that the Xbox has left behind a trail of green blood on its slow journey to what it hopes is eventual market dominance. Microsoft has the deepest pockets around, and it was fully prepared to absorb an estimated $900 million in losses - on console sales alone - over an eight-year period. Unfortunately, the reality of competition with established video game leviathans Sony and Nintendo has left wounds far deeper than any previously projected.

Microsoft currently sells the Xbox to retailers for $175 per unit, about $150 less than it costs to manufacture and package. For comparison, consider that the Sony PlayStation 2, which also retails for $199, costs $185 to produce. Even with the Xbox's average of three games sold per console, Microsoft is dropping copious amounts of money on their next-generation console. It has been estimated that the losses will be in the neighborhood of $750 million this fiscal year and $1.1 billion the next.

Microsoft appears to be committed to staying in the race, steadily building market share. At E3, it unveiled a super-ambitious online strategy and a solid line-up of first- and third-party software. There has been no official word on how much of the company's $40 billion plus in cash reserves it is willing to go through before someone hits the panic button, but executives are hoping that point will never be reached.

Interestingly, Red Herring is reporting that work has been underway since last fall on an Xbox unit that will incorporate UltimateTV technology. The unit, squarely aimed at the supposedly waiting-to-explode set-top-box audience, would probably retail for around $500.

[MrKasualUltra2000]

as long as i get my Panzer Orta, its all good.

[Cheebs]

Damn, they lose that much on each Xbox! Well.... maybe they'll get lucky and Xboxs will start selling like shit. Errr...

I don't know about this "set top box" thing. That will turn alot of gamers off.

[Shin Johnpv]

i hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate the set top box idea

i hope they NEVER become the standard


and damn i bet MS wasnt expecting to lose that much that fast

[Nick]

Originally posted by Chibi Nappa
... maybe they'll get lucky and Xboxs will start selling like shit.

The more units they sell, the more money they lose, but MS is hoping that it can build a strong enough user base to reap massive rewards in the future.

If the company can reduce the cost of producing each console by the time the Xbox Live online community launches, it could benefit more from the increased sales that will probably provide. The important thing right now is to keep its software-to-hardware sales ratio high.

[piku]

I always thought Bill Gates created Microsoft so he could make lots of money.

Now I know he created it so he can show everyone how stupid he is. They are taking such a risk with this strategy it's not even funny.

[Brotherman]

The XBox dieing quick because of the death of Ultimate TV arguement just got a little weaker.

Anyway, as long as they have the standard X-Box as an option too, I'm cool with this.

[burgundy]

Originally posted by Chibi Nappa
Damn, they lose that much on each Xbox! Well.... maybe they'll get lucky and Xboxs will start selling like shit. Errr...

I don't know about this "set top box" thing. That will turn alot of gamers off.

If we've learned anything, it's that "gamers," as the term is used around here, aren't numerous enough to matter.

[EThugg]

Meh... if this was even accurate info (which I question), I'm not worried even a little about Xboxs future success. Xbox 2 will be dominant, or exactly even in market share as PS3. Well, that's my prediction...

[Korly]

I've been wanting Ultimate TV for quite some time, and if I can get something that incorporates the Ultimate TV service with the X-Box Live service, I'd DEFINATELY be interested.