4 ms·
To your points above: a) In Microsoft's 2010 fiscal year (which has ended), its Entertainment and Devices Division (which includes the Xbox 360) generated $8.5
by mjfern 16y ago
To your points above:
a) In Microsoft's 2010 fiscal year (which has ended), its Entertainment and Devices Division (which includes the Xbox 360) generated $8.5 billion in revenues and just $679 million in operating income. Considering Microsoft's consolidated operating income in 2010 was $24 billion, this $679 million only accounts for about 3% of Microsoft's profits. And in any event the Xbox 360, the PS3, and the Wii may be irrelevant given the emergence of connected televisions, thin devices, and cloud-based gaming.
b) I am moderately pessimistic about Microsoft's prospects with its Windows Phone 7 OS. There are definitely some promising signs, such as WP7’s distinctive and innovative user interface and Microsoft’s extensive partnerships with smartphone OEMs, application developers, and carriers. But there are also some definite warning signs: WP7 isn’t market ready, and it’s already mid-October; Microsoft is making it difficult for developers to convert existing iOS and Android applications over to WP7; Microsoft’s brand is weak with consumers and the developer community, especially in the smartphone market; and WP7 comes with a price tag, while the competition is free, at least on a variable cost basis. There’s also the fundamental issue of competition, which includes several ambitious and innovative companies, especially Google and Apple, that have established platforms and abundant application markets. Here are some more thoughts on WP7: http://www.fernstrategy.com/2010/10/13/the-windows-phone-7-challenge/ http://www.fernstrategy.com/2010/10/13/the-windows-phone-7-c....
c) Bing has made some inroads in search, but laregely at the expense of Yahoo. For the year, I don't believe Bing has gained at all on Google. There are powerful network effects and learning curves in search, and tremendous scale economies. It will be very difficult for Bing to grow its share in search, much less overtake Google, unless Bing releases a game changing protectable innovation, or Google makes some kind of fatal mistake.
- aresant 16y agoFair points, counters: a) "may be irrelevant given the emergence of connected televisions" - Don't dismiss the millions of gamers that will buy in next generation for MSFT exlusives like Halo which popped off $200m in sale in a day, bringing net total Halo copies to ~34m sold. b) I argued for #3 which I think is in the bank with RIMM falling all over themselves. And the competition definitely isn't free, not even Android - http://www.businessinsider.com/android-costs http://www.businessinsider.com/android-costs - I believe we'll see a trend towards Win7 adoption from companies that aren't going for vertical integration. c) I believe this is the point that holds the most water. But to continue my contrarian rant I'd say that I put some credit into the argument that MSFT is fighting this war explicitly to distract Google's attention from desktop / mobile / etc.
- recoiledsnake 16y agoRegarding point a, the Entertainment and Devices division included Live, which they are heavily investing in, thus giving out a loss. The true profit of the XBox is much higher than $679 million. And what do you mean by 'Windows Phone 7 is not market ready, and it's already mid-October' ? They're launching in 2 days in Europe and in 3 weeks in the US. Also, from your linked article you write that Verizon won't be bringing out a WP7 phone in 2010 or 2011. Source?
- steveklabnik 16y agoDoesn't Entertainment and Devices also include the Mac Business Unit, as well? Yep, apparently, it does: http://en.wikipedia.org/wiki/Macintosh_Business_Unit http://en.wikipedia.org/wiki/Macintosh_Business_Unit
- contextfree 16y agoThey moved/are moving (not sure if it happened yet) Mac Office into the regular Office division, FYI. I guess it's probably not yet reflected in earnings statements.
- cryptoz 16y ago> And what do you mean by 'Windows Phone 7 is not market ready, and it's already mid-October' ? I'm not sure what the OP meant by that, but here are some guesses: 1. If your friend emails you his address and you want to see the Bing Map to the location, you have to find a pen and paper to write it down. Then you have to open the Maps application and manually type it in. This is because there's no copy+paste. 2. The web browser is IE7 + bits of IE8. This means very slow JavaScript, no HTML5, and a MS-locked-in web experience. 3. App developers cannot use sockets to access the internet, so most cool apps will be near-impossible to develop.
- recoiledsnake 16y ago1 is patently false. See here http://www.mykindofphone.com/bring-on-bing-for-windows-phone-7 http://www.mykindofphone.com/bring-on-bing-for-windows-phone... >For example, if someone sends you an address in an email, the phone will pick that up and turn it into a link. Click on that and you are in Bing maps Also, Copy paste in coming at the beginning of next year. 2. JavaScript is fast enough. See http://www.youtube.com/watch?v=zgvphQx9MY8 http://www.youtube.com/watch?v=zgvphQx9MY8 There's no HTML5 though but I fail to see how it creates a 'MS locked-in web experience'.
- InclinedPlane 16y agoMicrosoft's E&D division not only includes xbox et al it also includes Windows Mobile development (coughkincough) and Live and a bunch of other crap. The xbox part of E&D is doing very, very well, and making a tidy sum for the company.
- Retric 16y agoYour being overly generous. Consoles operate on a lifecycle that goes R&D > Manufacturing > subsidized early adopters > mass market > end of life. Over that cycle mass market and end of life are only profitable if they cover R&D costs and the subsidy to early adopters. Based on their sunk and the fact the 360 is not going to last 20 years they have yet to manufacture a profitable console.