Why haven't Sony and Microsoft left the console business yet?

[mugs]

Originally posted by: Game Boy
Such as wanting to lose even more money because their imnstalled base is too low to support game sales? "Complex" indeed.

No.

First of all, MS has sold plenty of Xbox 360s. Excluding repairs, they're making a profit on each console, and it consistently has many of the top games each week. MS is doing fine.

Sony - it is really to early to tell how well it will do.

By complex, I think he was referring to other benefits of getting their consoles into people's homes. For Sony, one of the big benefits is speeding up the adoption rate of Blu-Ray and the sales of Blu-Ray movies.

For MS, the Xbox 360 has made them a provider of on-demand HD video content; the Xbox 360 also serves as a companion to Windows with its media center capabilities. It will also be usable as an IPTV set-top box. Essentially, the Xbox (and now the Xbox 360) got Microsoft into people's living rooms, which is where they want to be for the future.

 

[darkswordsman17]

Originally posted by: Game Boy
Such as wanting to lose even more money because their imnstalled base is too low to support game sales? "Complex" indeed.

You can say its simple economics but its anything but.

There are several reasons why Microsoft ok'ed the Xbox. One of those is so they could mess with VoIP and some other things on a closed environment. It benefits the graphics side of their software (Direct X anyone?). So while you might think the Xbox was just about games, there's more to it than that. Live is a big part of Microsoft's vision for future digital communication.

Also, it puts Microsoft into the home theater segment at a much lower price than it would have been before (as in a HTPC) so they would gain a larger installed base. The 360 is a great device to function as a terminal in Microsoft's Home Server setup.

Its only going to get bigger too. Wait until IPTV starts to show up. The 360 will be a great device for that as well. Let's not forget the Live Marketplace. Its given Microsoft a way into the digital distribution realm (think iTunes). Thats only going to increase with the launch of the second gen Zune.

Pretty much all of that applies for Sony as well, only the PS3 also gives them a way to spread Blu-Ray.

When you consider all of that, you can't really call either one a losing business venture when they are boosting their overall bottom line via the rest of their products/services.

Another area that is completely untapped for either of them, but I personally think would be a major step, is for after a couple of years when they've shrunk their systems (made them more efficient, smaller, and most importantly cheaper) they could actually convert them into inexpensive PCs for 3rd world countries a la the OLPC project. This wouldn't be really a money thing but more one of goodwill (would be a great project for Bill and his foundation).