Xbox Losing MS $2 Billion Per Year & Should Be Dropped

Linky

Poor lems, cant catch a break :/

In the lead-up to the Xbox One's release, Nomura analyst Rick Sherlund has suggested that Microsoft's Xbox division is costing the company $2 billion per year.

Sherlund says that while Microsoft's Entertainment and Devices group, which includes Xbox, Windows Phone and Android, is profitable, this is almost exclusively due to Android payment royalties.

Sherlund argues that Microsoft should consider dropping out of the console market altogether, which seems impossible in the immediate future, given that Microsoft are just about to release the Xbox One.

If Sherlund's claims are accurate, Microsoft is losing around $2.5 billion a year on Xbox, Skype and Windows Phone once Android profits are taken out of the equation.

Time to pack it up lems.

No wonder they haven't dropped the price in all those years :/ they cant possibly afford too

What if the new MS CEO wants to get out of the hardware business? They already have members on the board of directors who want to do this.

I think they have no choice but to leave the console industry, they are losing billions upon billions, and they are about to get absolutely demolished by the ps4

Things are looking bad for microsoft, and it's another kick in the chest to the already beaten down xbox brand :/ ohhhh how the mighty have fallen.

Hmmm... gonna reserve an opinion on this. It seems like the last 4 months or so has seen different financial analysts and MS investors make some interesting inquiries and moves over at MS. Ballmer stepping down right after he made the final restructure for his corporate plan, MS buying Nokia despite Nokia tanking, and these talks about investor concern into the Xbox, have got to be raising concerns.

Don't think it'll be anything that affects the next few months, but if this is true and people take a closer look at their books at the EOY reporting on March 31st... things may get interesting.

Cows may love to see this happen, but MS leaving the console industry would be devastating. MS keeps Sony honest, and vice-versa. If MS left the industry, Sony would basically have a monopoly.

I agree, Sony needs Microsoft just as much as Microsoft needs Sony.

But, Sony having the entire industry to themselves isn't bad, the ps2 is without a doubt, the greatest console ever made, and sony had the entire market back then.

I am a Sony fan but losing Xbox would be a disaster to gaming. I want Sony to win each gen but for Xbox to push it to the brink.

Competition is good for us. Many great games may have never been made if Sony had a comfortable lead.

Here's to a generation of laughing at the Xbox 720p with Kinect:-P

Sony as a company overall and as a gaming division is even in worse crap...So is everyone doomed?

PS2 was the result of Sony being afraid of Nintendo.

PS3 was the result of Sony being afraid of no one. Games, who cares, others will make them for us and yeah you're going to pay a premium price because this is playstation. Online/OS features, lol who cares. This is PS b....

PS4 was the result of Sony being afraid of MS.

Fail analyst, the 360 was making 70 dollars Profit per unit from late 2007.so obviously the 360 itself is contributing to the Profits made by MS entertainment and devices division.

The 360 makes them money so that can't be true at all.

Well it could always be worse, like Sony's Playstation division.

2 billion is nothing. Sony loses that much in a month.

Steambox to the rescue!

so according anyone Nintendo, Sony and MS should leave gaming.

Lemmings be mad.

He's right though. MS should leave the industry and Sega(never gonna happen though) should come back.

Up until last year Sony Fan thought Sony was bigger than MSoft as a company financially.

Sony Fan has no clue about numbers and financial statements.

More Sony Fan Clownery.

When the Xbone crashes and burns at retail, based Paul Allen and future MS CEO Alan Mulally are going to get the whole Xbox brand ditched.

We will soon all be free, friends.

..U Wot m8?, nobody made such a foolish claim that Sony was a bigger company than MS.

U probably mad that financial advisors, important MS shareholders,... want MS to dump Xbox.

Couldn't disagree with them, Xbox has been a total failure for MS.

Unlike sony,MS has a huge operating income,they can afford to take huge losses for years and still be perfectly fine.

Xbox 360 has been making 70 dollars per unit sold since 2007, it's been a resounding success for MS, Also, i saw PLENTY of cows Try to claim that SONY has more money and was a bigger company than MS before the news that SONY made a loss for FOUR consecutive years.

As it stands at the moment

SONY

Market cap=17.41bn

Enterprise value=27.84bn

Debt=17.51b

Microsoft

Market cap=318.73bn

Enterprise value=233.19bn

Debt=20.24

MS lost money the whole first Xbox generation and didn't fully recuperate everything they lost with the money they made on the 360, Sony pretty much has the same fate as they lost everything they made with the PS1 and PS2 on the PS3 and are still deep in the red even if they make a profit on the PS3 now .

The big loss now are probably development costs for the Bone going into the next gen .

This also might be a reason why the Xbone is so expensive, they don't want to bleed money for years again before they make a profit .

If one of them goes bankrupt the other one wont have to be competitive any more and will try to bleed you for every buck you own without investing .

Not buying this article unless they lost the 2 billion this year due to RaD on Xbox One and NFL deal, ect. No way with Live and a mid gen price hike they are losing 2 billion a eayr. No way. But this past year, yeah. Xbox isn't going anywhere. You don't invest the way they have and report operating revenue profits for years in every quarter and just hide 2 billion. Lets use some common sense here.

Xbox has a whole has made a $3 billion loss over the last decade, even with the recent profits.

With Surface and Bing under pressure to deliver, I doubt shareholders will have much patience for the Xbone circling the drain.

A success? Did you even read the article?

"Microsoft's Xbox division is costing the company $2 billion per year."

It's just a fact. Xbox has been a complete and utter failure for MS.

Read this article. Important shareholders want MS to get rid of the Xbox division.

http://microsoft-news.com/activist-shareholders-may-force-microsoft-to-sell-xbox-bing/

Just because the 360 is making a profit off the units does not mean the whole xbox division is losing money. They have employees to pay. They make games. They have R & D which costs millions upon millions which went into creating the new Xbox. They have servers. They have marketing that costs. Coupled with the fact that they abandoned the system over a year ago, xbox gold has lost some subs.

To pull out of one area will affect others. They are moving forward towards a unified eco system between Xbox, PC, Tablet and phone. During this transition period they will make a loss, especially coming up to a launch. The fact is Xbox is selling out and will sell well.

For those make stupid comments about being free, all console owners should be afraid. Neither Sony or Microsoft are really making a killing in the console market and both are at risk of disappearing (Microsoft pull out, Sony go pop).

Sony needs Microsoft as much as Microsoft need Sony.

They are both in too deep this console gen but who knows in the future.

The Article is BS, the xbox 360 itself has been in profit since 2007 and i highly doubt they are making a loss on xbox live, the fact that he claimed the Profits where almost exclusively coming from android royalties is obviously BS if the 360 itself is in Profit and they are making Bank from Live.

If you see Grabbing a huge chunk of your competitors market share, Making good per unit profit and raking in huge Profits from Xbox live fee's an utter failure then you need to get your head tested mate.

Please explain how the Xbox is losing MS 2 billion a year when both the hardware and the online multiplayer are both Profitable, in other words, what the Analyst is saying make absolutely no sense.

You do understand what the word 'suggested' means right?

Strong claims you're making. Where are your sources?

Hasn't sony lost more on playstation than MS on xbox in the last, say, 5-10 years? Maybe it's even since MS introduced Xbox? The last four years have been profitable for xbox from the financial reports i've read.

http://www.digitalspy.co.uk/gaming/news/a512543/microsoft-backing-incredibly-profitable-xbox-360-for-3-more-years.html

http://www.joystiq.com/2008/01/24/the-xbox-turns-a-profit/

http://www.joystiq.com/2008/04/25/the-xbox-360-turns-a-profit-again/

http://www.forbes.com/sites/velocity/2010/06/17/microsofts-xbox-live-is-making-boatloads-on-virtual-goods/

its painful to watch lems damage control :(

at least before it was funny seeing them make bs now they are just full time clowns.

Sshhhh don't tell Sony Fan but Sony is bankrupt..........

This is great news. Hopefully MS leaves the industry and stops trying to kill gaming.

u guys are idiots. although i dont like what m$ are doing with x1 i hope they dont go out of the console business. why do u think ps4 is so great? because they were forced to up their game. only reason i dont like x1 is because m$ tried to plays us as fools just like sony did with ps3.

Lol, they made $23 billion in fiscal year 2012 and were the 4th most profitable company worldwide. MS can afford to do anything.

Why is no one mentioning how sony loses even more money than this multiple times over every year?

bu bu bu xbawx is so profitable!!1!!

Dude!!!!! You know good and damn well he doesn't respond to facts or sources. You have to talk to him in the language he understands:

Moooooo! Moooo!!! SONY LOVES ME LIKE A GRANDPA! Moooo!

Also I will add these:

http://www.gamasutra.com/view/news/36011/Microsofts_Xbox_360_Division_Sees_132_Billion_Profit_For_Fiscal_Year_2011.php

http://www.gamespot.com/articles/microsofts-xbox-division-up-8-percent-in-q4-fiscal-year-2013-report/1100-6411705/

http://www.mcvuk.com/news/read/microsoft-xbox-live-growth-led-entertainment-division-to-profit-in-q4/0118805

Again, if the Xbox gaming division lost 2 billion its due to R&D, and the NFL deal and games for Xbox One. No way in hell they lose 2 billion a year since the 360 debuted. How many profitable fiscal year reports do you need to see concerning the gaming division?

They can afford it but it makes no sense to keep losing this kind of money every year on a unsuccessful product. If the Xbone is a flop and they don't make their money back from the NFL deals, TV deals and all those DLC and timed money hats and lose the marketshare they gained this gen back to Sony you better believe they will pull the plug on Xbox.

Keep thinking that. Xbox 360 was very profitable

If you're a Microsoft investor, and you find out your company is covering up losses in one division with profits from another division, would you not demand that the weak division be closed so you can make profits instead of just breaking even?

...but the entertainment division as a whole is profitable?

When Xbone tanks and it will, these loses will increase by a boatload.

That's the thing. They are making a profit. If revenue is generated in the black, investors don't care. And the cost of launching new devices always eat into that in years 1 and 2. That why stocks are a long-form game and not short term.

MS are playing the long game. Even though they're still losing money they have created a large fanbase of live gold users who will follow MS to xbone. Also the fact that MS isnt that far behind in preorders for a more expensive and less powerful console, speaks volumes. MS is selling above cost and Sony isnt. I also believe they have too much pride to ever pull the plug. They still havent given up on Windows Mobile.

Being the most popular =/= being the only one.

Having a monopoly means putting the prices you want, because no one can compete with you.

If Sony would have charged 200$ each game, I assure you PS2 would have failed. What stops them? Competition.

The XBox was better than the PS2 in pretty much everything aside from JRPGs (it still had some good ones though)