Not the same. According to a Businessweek study done buy isuppli Microsoft in 2005 lost $125 on each 360 it sold. Microsoft taking $126 hit per Xbox 360 - News at GameSpot (Notably, almost half of what HP is losing on the TP.) But the big point is Microsoft developed and published it's own highly profitable games through Microsoft Game Studios. Look at what Microsoft is and always has been. Microsoft was flat out a software company already. But not only that it had already been making PC games so this wasn't something totally new. By contrast HP is not a software company. They are a hardware company trying to learn to sell software, and largely enterprise software at that. So they aren't going to just start making great software for consumers all of a sudden. Not saying never but it takes time and vision. And from what i've heard of HP play it's not yet their strong suit.
Originally Posted by sorli
The software HP would be making would not nearly cover the loss like Microsoft selling one halo game would cover their xbox loss. One xbox sale probably covers half the xbox 360 loss. One touchpad game sold at say 99 cents to $5 won't remotely cover half the loss. Microsoft was making or publishing "must have games" like Halo. It brought people to the platform. HP has no such app yet that's has been able to do that. Hell i don't think Apple has any single tablet or phone app that means as much to ios as Halo as a franchise meant to xbox and xbox 360. And even so if you look at most of Apple's tablet and phone apps they are part of the OS. They are free. Thus they don't generate revenue other then being one more "feature." Like garageband is free on a ipad isn't it? so that's the market. It would be hard for HP to come in and then try charge every user for every little app. They'd have to be at least be much better then the average app fair. Like does apple charge for final cut or imovie on a tablet? Like something upgraded like that. But Halo was just one of several apps they could profit from.
You can hardly rely on people to buy apps. Let alone enough to cover losses. I don't buy apps for my pre for varied reasons i won't go into. But even if they do there's no need to. The phone/tablet works ok without them. A 360 is basically useless, especially in 2005 you buy a game. So Microsoft could expect people to buy games. Plus Halo is a Microsoft published franchise and it's massive and like a sequel to a tent-pole movie, it's got return buyers on a regular basis to rely on as profit with every new version of Halo. People won't keep buying new versions of that $5 app. Most will likely expect a free upgrade.
Microsoft was not struggling financially when they introduced the 360 and had the cash to burn. Microsoft had $35 billion in cash in 2005 and earnings of 1 billion per month. source: Microsoft names Chris Liddell CFO - Computerworld HP i don't think is on similar financial footing. HP as $12.9 billion in cash reserves and just spent $10.25 billion of that on Autonomy Why HP is betting the farm on Autonomy — Tech News and Analysis So it doesn't have tons of cash doing nothing like Microsoft did to float tablet losses. They have just around $2 billion in cash. And add to that theat they, according to the conference call, were losing $332 billion per quarter on webos, and they'd be eating into that cash reserve at an alarming rate. And if you really want to know why HP's stock has been pummeled it's not cause of Webos. That's merely a manifestation of failure. It's because people think its, one, crazy to pay 80% of you're cash reserves on something unknown to most investors just to get your *** kicked by IBM, and second, they think they over paid in paying $10.25 billion. All that coupled with the decision to sever itself from a declining, but still profitable, division and it's largest by revenue division. But i digress the point is HP is not in a situation similar to what Microsoft was in at the time they were launching 360s. HP has had declining profits in their biggest departments in a sour economy so HP lacks the flexibility to just take losses. The unwillingness to carry losing business was flat out mentioned it in May of this year in a memo. “We have absolutely no room for profitless revenue or any discretionary expenditures.” HP CEO Expects 'Tough Third Quarter,' Memo Says - BusinessWeek that was in May when they had no room. Then months later it was true. It was a bad quarter. So they likely have less room for profitless revenue not more. That's exactly what floating a product with a $207 loss is. The very profitless revenue they had no time for.
Microsoft as a publisher also generates revenue from publishing 1st and 3rd party games. Just a few minor ones like Gears of War and Mass Effect. That sort of stuff is just more revenue. And again you're talking about games that cost a penny disk and a burner to manufacture. After a while it's just lots of profit at $60 a pop.
Add to that the current revenue streams they didn't have back at launch like selling avatar items, selling game add ons, a cut from other companies selling add ons and map packs, xbox live online gaming subscriptions (which actually were around in 2005 but you get the point), movies, licensing fees from espn, netflix, facebook, twitter just to be on the xbox live panel page, etc and they really can take losses on hardware because they have countless areas to make it back quickly. Hell, they'll make most of the loss back if they sell one $40 xbox live account, a $40 second controller and one $60 game. Right there, $140. Loss erased. And they do that often the very day a console is bought.
Originally Posted by jrstinkfish