by "current pc"?

I'm not sure about ownership, but the head off MM left LionHead to start MM.

uhhh... No... you obviously didn't get the memo... the entertainment division of microsoft and the xbox 360 are already turning a profit...

Did they already recover everything they invested? uhh No... but no one is expecting them to do that only within 3 years of the xbox 360 launch...

The original xbox was made to introduce a new product.

The xbox 360 was made to pickup from where the original xbox left it and to acquire as much marketshare as possible and to create brand awareness... and hope that they can at least beat the PS3 in terms of marketshare in a few regions... which so far they did in the US, Canada, UK and others.

The next xbox will pickup where the xbox 360 left it... but it will enjoy an already established XBox live environment, a ton of xbox live arcade games and retail games that will be Compatible since they made sure they didn't make the same mistake they did with the licensing of the graphic card.

You are obviously ignoring completely how hard it is to introduce a new product in a very competive market... and ignoring the fact that Microsoft is trying to expand their core business into hardware...

Do you think Microsoft would be bothering with deals with Netflix, Zune, Media Center, Windows Vista and Windows 7 integration with the xbox 360, IPTV, etc... if they weren't interested on "hardware"?
What you are saying goes against the direction that the company has take over the years...

And you think that now that the xbox 360 is generating profits... they will just drop it!?

Now, it's possible that Microsoft might made deals with other hardware manufacturers so they create their own hardware that will include the xbox OS... but as long as Microsoft can make money on hardware there will be a Microsoft xbox... nevertheless this wouldn't make Microsoft weaker...instead it will create more competition for Sony if 3-5 xbox made by different manufacturers hit the market and they all can play the same games...

people better hope that this is not the case... imagine a price war between hardware makers to create the cheapest xbox in the market?

I didn't say they weren't. And I'm not saying I agree with financial big brains when they talk about MS games changing direction in the future, but currently making $400 million a year, it will take them 6 years to break even from what was spent on the 360 in R&D and extending the warranty. No one would blame Microsoft, certainly not their shareholders, if they switched direction a bit on focused on their strength, software, after a decade of a games division that over that time hasn't made a dime.

Nobody is saying they should just drop the 360, we're talking about after it runs it's course. And certainly MS has proved in the past that even they don't have a limitless ability to absorb loses before switching course. Just look at Webtv, or Windows ME. You brought up some vaild points regarding current 360 spending but as I said, the financial calls I've been a part of, no one is talking about the 360's features - they're all talking bottom line - MS doesn't look set to make back their investment on the 360. This was supposed to be where the hard work of introducing the Xbox in the first place pays off and it doesn't look good. Also, there is speculation that the latest price cuts are cutting into the little profit they were making. Right now XBL subscriptions are the only thing keeping the games division afloat. Take that away and they're losing money again.

Like I said, this has nothing to do with the 360 and everything to do with the next gen - if there is a next gen for MS. I think there will be but this isn't the same company as it was with Gates at the top. Why on earth would they try the same strategy again that lost them money for a decade? I believe MS means to do exactly what they said, put out a cheaper digital distribution hub next go around.

Please stop with this, you have no clue what your talking about. First the way you always talk about Microsoft, I highly doubt you would be part of any circles regarding their future.

And Secondly, ""it will take them 6 years to break even from what was spent on the 360 in R&D and extending the warranty"" you are talking about Sunk Costs, there is no account out there that records how much money any company lost and how much they need to make to break even on these kinds of things.It just gone, they don't keep track of it. In the end if the product is making a profit. Or in this case the Division is making a profit it is doing fine. Here is the definition http://www.investorwords.co...

Also "Also, there is speculation that the latest price cuts are cutting into the little profit they were making. Right now XBL subscriptions are the only thing keeping the games division afloat. Take that away and they're losing money again." Please provide a link, or some news article that backs this please, because I have heard nothing of the sort.

With the lastest price cuts, are you sure they're making a profit anymore? I haven't seen any updated financial statements from MS recently, but I'd be surprised if their games division is making a profit now with these price cuts and slower sales in the US. Even with the November spike, they're still down 7% this year in their biggest market according to NPD numbers.

Darkride you wish it were more than 7%. You should compare Microsoft's 7% down to other companies in today's financial times.

Microsoft wanted a cut of the pie and they got it. Not only that, they penetrated the MTV market and made a new generation associate the word "fun" with "microsoft," a boring office software company. I'm sure they care about losses from the xbox brand and subsidiary gaming division but they will make it back in time regardless of how well the xbox 360 is doing. Whatever they lost is irrelevant. The new "Microhard" has penetrated MTV culture

The MTV generation (that's me) hated Microsoft and everything it stood for (not me). Microsoft was the corporate monster - assimilating everything. We used to joke that they were like the Borg. We watched MS crush company after company, the whole time engaged in bitter lawsuits where we would here things like MS execs emailing each other that they would "Crush the air" and of companies like Netscape by strong arming every single retailer they could, and plain leveraging their own platform and making it incompatible on purpose with everyone else.
The 30 something generation grew up distrusting everything about Microsoft. 20 something probably don't even remember all the news, all the lawsuits, all the dirty laundry that went along with that. They were the worst of evil empires.

Apparently now they're "FUN!"

Look, I'm not anti Microsoft by any stretch of the imagination. I'm just a 30 something professional that wants to cut through the crap around here because I love video games. Love the industry, love playing games...but I hate how so many are ignorant about how the industry works...how the financial side of things work that when you even mention it you're attacked. If people want their opinions heard, they should at least make the effort to get informed rather than spew whatever pops into their heads...and that goes with pretty much everything. Don't know something? Confused? How about you look into it rather than just spout off?

Not you in particular. Just ranting a bit.

That 7% down for 2008 vs 2007 isn't going to just disappear unless the 360 suddenly sells what they did last year in the last 2 weeks of Dec, plus an extra 1 million consoles. That simply is not going to happen. 2008 sales for the 360 will be less in the US than they were in 2007, there's no hope in that changing now with 2 weeks left to go.

As for my question above about profit - I was speculating that MS games division might not be making a profit after these price cuts. You don't know if they are, I don't know if they are and we won't know until MS's quarterly financials come out. This has nothing to do with Sony.