Business Insider: "Microsoft can no longer afford to keep investing in Xbox"

Ben Parfitt
Business Insider:

Financial news site Business Insider has questioned Microsoft’s ongoing ability to keep throwing money at its Xbox platform.

“Almost one year ago today, we laid out the nightmare scenario for Microsoft that could lead to its business collapsing,” the site wrote. “After laying it all out, we concluded, ‘fortunately for Microsoft, none of this is going to happen’.

“We were wrong. A lot changed in the last year. Microsoft's nightmare scenario is actually starting to take hold.”

And Xbox is one of the businesses that it believes may pay the price.

“The Xbox was never going to make up the slack, and Microsoft can no longer afford to keep investing in it,” it added.

“In a year of relative gloom, Microsoft's Xbox has become a big bright spot for the company. Kinect is great technology, people are still buying the console, and it's been a great entry point for Microsoft to take over the living room. But, for a company like Microsoft, Xbox isn't enough.

“Microsoft had $21bn in operating income last year. The Entertainment and Devices division, which is home to the Xbox had $364 million in operating income. So, as nice as Xbox is, it's not going to be enough to boost Microsoft if the rest of the business collapses.”

It’s certainly true that at least part of Xbox’s success has come from Microsoft willingness and ability to throw huge investment into the project.

There’s more to it than that, of course. Microsoft succeeded where others have failed in establishing its platform in the console sector by offering a pioneering online service, excellent hardware and fantastic third party titles. But none of that would have been possible without the computing giant’s formerly bottomless pockets.

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Tags: Microsoft , Xbox , expense , costs , business insider

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