What do you think Microsoft's fallout plan should be?

if you mean DRM you might want to do some research sony has a patent that ties a disc to a system they announced a couple years back they were quite proud of they just didnt implement it, cows have short memories. personally idc about DRM i dont believe game stores should be allowed to resell games the way they do anyways, that hurts gaming as the devs dont see a dime in resold games. only poor people whine about drm. i commend you for toning down your extreme fanboyism for a moment your response

@juarbles: Sony was smart enough to not implement it and kudos to them, I don't disagree that ms has stumbled out of the gate this gen but characterizing those who own them are anti gaming doesn't make sense. I'm one of those ppl who own one, I also have the wii u and a ps4 and plan on building a pc rig in may. I'm all for good games on any system. Long live this gen I'm ready to enjoy all of it to its fullest.

The PS3 was in that position because they greatly underestimated their opponent MS. They were taken by surprise. They had to suddenly prioritise a lot of areas and realised that they couldn't monopolise the industry with the consumers and developers moving over. Even the hardware design of the PS3 is a testament to their old philosophy of 'my way or the highway'.

What I'm saying, is that instead of righting off the X1 this early, people should give it a chance. We'll get a clear picture of it in a years time. The PS4 is running off 'benefit of the doubt' because it hasn't even got good exclusives right now. So why not wait and see how both consoles turn out. I'm not saying the X1 will win, but I'm saying it's not going to be anywhere near that bad that it derserves a thread like this.

There is no competition with the Xbox One and PS4 since they are on two different sides of the spectrum that can't be compared. With that in mind, Xbox dropping out would not change a thing. They've done nothing but ruined the quality of the video game industry with their greed. Microtransactions, DLC, pay for all online access, proprietary headset jacks, and promotion of crappy casual games like Call of Duty.

Ha, people are acting like MSoft didn't just have a great quarter and year. The Xbox is making money, it is selling slightly less than a competitor that is a $100 cheaper, and has a monster in Titanfall........

2014 is going to be awesome!

Buy EA, Activision-Blizzard, and Take Two. Set price for those games at $40 for Xbox and $95 for PS.

LOL Microsoft.

Lems are being nickeled and dimed and they don't seem to care. :(

I think this is their last console. Their shareholders are already clamoring to drop the Consumer Devices division. If they don't drop Kinect and the price by $150, they're dead in the water this generation. Sony is already pulling away and they haven't even released in Japan yet.

It doesn't matter to Microsoft very much if the PS4 is outselling it as long as the Xbox is making money for them. It is making plenty of money and selling really well so they don' really need a "fallout plan"

That's not entirely true. There are two intertwined economic concepts at play here: ROI (return on investment) and opportunity cost.

A company might make a profit on a product or service, but if they can get a better return elsewhere, that's where their capital investment will flow. If Microsoft is only achieving net margins of 5% on Xbox (totally made up numbers, btw) and can get margins higher than that in other products or investments, they wouldn't hesitate to move investment to higher returning products.

First of all, the ROI of Xbox is higher than plenty of other Microsoft Business Divisions. Second, it is incredibly valuable to Microsoft to have a computer in everyone living room even if they don't make any money on Xbox directly.

Anyway, Microsoft is sitting on a 83 billion dollars in Cash. That is more than enough for Microsoft to invest in any product they want to without shutting down Xbox.

This is true to a larger extent than a lot of people know. The company for which I work has been moving away from SQL Server (towards MySQL) and Windows Server OS (towards Linux) where ever possible.

Microsoft's licensing has gotten ridiculously expensive on the business software and they don't really offer much outside of Office, Windows, SQL, and some Project management software (MS Project Server). Most real business software comes from Oracle, SAP, and IBM.

Microsoft does have a lot of cash on hand, but they aren't sitting on $83b, they're sitting on $68.31b, according to Forbes.

http://www.forbes.com/companies/microsoft/

Microsoft's business division, their bread and butter, is facing stiff competition, noted in another post of mine in this thread.

Since you seem to know, what are the margins on the Xbox brand, with links please?

I forgot about Sharepoint. We use the crap out of that for document sharing.

SQL server used to be pretty affordable, but in their infinite wisdom, Microsoft decided to license per CPU core rather than on a per CPU basis like they used to. We've actually moved some databases to Oracle 11g (which is freakin' expensive on its own) rather than buying more SQL Server licenses.

http://finance.yahoo.com/q/ks?s=MSFT (and it doesn't matter if it is 83 billion or 68 billion, the point is still valid)

I don't have any links to exact ROI for xbox, but Microsoft made more than 1 billion dollars on xbox last year. They have businesses that don't make any money (Bing and Windows Phone) so Xbox has to have a higher ROI.

http://www.zdnet.com/microsofts-16-billion-dollar-businesses-an-updated-list-7000019346/

Microsoft's business division might be facing competition, but they are are still posting record profits so that point doesn't really matter anyway.

I couldn't find profit margins for the Xbox brand alone, but for Fiscal Year 2012, the Entertainment and Devices (of which the Xbox brand is included) net profit margin was 3.7% with profits of $364m on sales of $9.593b.

Granted, the E & D division contains some of their less-than-popular brands like the Surface tablet and the Nokia phones.

https://www.microsoft.com/investor/EarningsAndFinancials/Earnings/PressReleaseAndWebcast/fy12/Q4/default.aspx

Yeah...I'm nerd for Financial Statements...

Has this been confirmed on the site?