mkdevo

Microsoft has confirmed it is working on future generations of its Xbox console.
The computer software giant admitted new versions of its games console were in development, following reports it was planning to release a combined digital video recorder and games unit next year.

Technology magazine Red Herring, which reported the move on Tuesday, also said that the Xbox had made huge losses.

It quoted a source as saying that Microsoft had estimated it would lose $750m (£490m) on the Xbox game console in the year to June 2002 - and a further $1.1bn (£720m) in to June 2003.

Xbox creator Seamus Blackley resigned in April

Microsoft has refused to comment on the financial forecasts.

But the company said in a statement: "Microsoft is committed to Xbox for the long term.

"We’ve made a substantial investment from a hardware standpoint and that investment is one that we remain committed to.

"We’re continuing to see great demand for Xbox worldwide. We’re on target to meet our fiscal year forecast of 3.5-4 million units.

Losses

"We are very pleased with our progress. Microsoft is in this business to win and we plan to do that."

The Red Herring article quoted author Dean Takahashi, who has recently written the book Opening The Xbox.

He compared the reported losses with the estimate given to Microsoft chairman Bill Gates in 1999 that the Xbox project could lose $900m (£590m) over eight years.

The magazine said that Microsoft was losing some $150 (£98) on each Xbox sold.

Red Herring also said that Microsoft engineers had been at work for about nine months on a project combining the company’s UltimateTV recorder with the Xbox.

The new machine could be launched next year for a price of around $500 (£325), said the magazine.

Microsoft is competing with Sony and Nintendo for a share in the global game market, which is expected to be worth $30bn (£20bn) in hardware and software sales this year.

All three companies make losses on their hardware products, but make up those losses with sales of the more profitable software.

Josh H

I don't think that's true anymore. I'm pretty sure I read an article a while back that stated estimates on how much it cost each company to make their consoles, and Sony was making a little money ($10 or less) per console. I don't remember what the situation was with the Gamecube, I think they might not have been able to make a good estimate, so they left it out. But I'm sure Nintendo is losing some money, probably around $25-50 per console, but that's just a guess.

Anyway the X-box was stated to cost $325 to make, which means they're losing $125 on each console. That's a big hit to take.

YujiNaka

yes that is a big hit.. and yes it is awesome for the users!

we dont have to pay for broadband adaptor, hard drive like PS2 people will!

good deal.

-Jim

Josh H

Yep, it's definitely a great deal.

Kellehair

Unless you're M$.

Shawn

They have 40 billion in cash, they're not hurting that badly.

Kellehair

They're certainly not going to go broke but their stock might be in a slightly better position if he didn't lose so much damn money on every Xbox sold. Nobody's happy to hear about this new Xbox either.

Josh H

Hearing about the new X-box is no big deal. Sony is working on the PS3 as well. I expect the new x-box will come out in fall 2006, the normal 5 year window in between systems. PS3 will probably come out in fall of 2005 as it's a year older.

Kellehair

There's been talk that it will be a lot sooner than that. Was that BS?

Josh H

Probably BS. There's been talk of a new version of the current X-box with Tivo type technology built in. Basically moving toward the set top box MS eventually wants to have in order to rule the entertainment center like they do the PC. Maybe that had you confused.

Anway, all this article says is confirm that they are working on it. It's basically just an announcement to reassure people that they are in this for the long haul.

All companies are constantly working on their next console after successfully launching the current one. Doing research and development, figuring out how powerful to try and make it, what can be done to make the games look and play better, etc.

Shawn

IMO, I highly doubt that Microsoft would let the PS3 have another headstart of a year. I think the Xbox2 or whatever it will be called will come out very close to the PS3's launch.

Grimfarrow

Agree with Shawn - Microsoft will likely jumpstart their machine and try to bring it before and around the PS3 launch.

Josh H

It's a no-win situation really. If they wait until 2006, Sony gets a head start. If they come out sooner, they're going to piss people off by bringing out a new system which will effectively kill support of the original system in under the five-year norm. Unless something drastically changes, I'm guessing the X-box 2 will be MS's last console.

Armando

Why do you think it will piss people off? I personllay think that video game machines should only last 3 years, but they should be backwards compatible. Also PS1 support is not dead yet and PS2 has been out for what seems like forever.

Kellehair

Because they don't want to spend $500 on a new Xbox just a few years after they spent $300 on the last one.

boobietheclown

I dont see this as being all that big of a problem. I think its safe to say that XBOX is more of a niche system, going towards a certain market segment. Older gamers in what the 17-29 range...??? As a whole these people use more of their disposable income on entertainment and tend to be early adopters. Thus, wanting the latest and greatest at sometimes ANY cost. I, fitting in that category, assuming MSoft continues to TRY to schedule quality releases would have no problem buying a newer system in 2 or 3 years. Especially if it has TIVO, but the dvd player would be enough...

just a thought.

Shawn

Once again, I highly doubt this. The entertainment center is too profitable for Microsoft to leave the gaming market. They knew they were going to lose a ton of money when they started work on the Xbox, and I doubt that they would leave the market because they lost a few billion dollars. (IMO)

zig

I just don't like Microsoft bringing their "business tactics" to the console world. They don't want to compete, they want to get rid of the competition and "win."

I also fit into the target demographic I suppose, but there's no way I'm going to buy a new console any sooner than 5 years after I buy the first one.

Kellehair

M$ obviously has no interest in being a niche system though.

boobietheclown

You are correct and right now it is. In releasing another system when or before the ps3 is released I think they could retain their portion of the market(the niche gamers 17-29 early adopters) and hopefully convince some of the ps2 crowd...

Who knows maybe not...

FalconH10

That would be corporate america not just microsoft... you think McDonalds is happy that there are Wendy's and Burger King's? I bet they wouldn't mind those two going out of business.

business==money
business!=ethics

johnglad

How long before Microsoft actually buys TIVO??? Ultimate TV didn't make it, but TIVO is the REAL DEAL. Could become one of the best buys Microsoft has ever made. My DirecTV TIVOs are the best invention I own. I'd give up any video game system without a 2nd thought before dumping my TIVOs.

neale

Isn't it possible that this new Xbox will simply be the old Xbox with DVR capability? Maybe they won't upgrade the gaming part at all(?). Just a thought.

gcribbs

I don't have to pay for a broadband adapter/ Hard drive for my PS2 either since I and most PS2 owners will probably not buy it

I think online play is something for a small group of players not the masses yet. I have broadband and have little to no interest in online gaming.

The XBox thought that everyone wanted Broadband and as a result is paying the price by absorbing the costs of hardware that is not selling them units.

joltaddict

Like they bought WebTV? I doubt it. The big Freestyle announcement was made today (coincidentally on the day of little Stevie Jobs MacWorld announcement ). Its officially the XP Media Center. I dont doubt theyre gunning for TiVo but it looks like the business plan is to keep pushing all apps into a set top box. Windows is going the home entertainment center route and the Box is the trojan horse.