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Xbox Could Drain Billions from Microsoft

According to analyst reports, Xbox could cost Microsoft as much as $2 billion before breaking even in five years.

Game Developer

March 7, 2001

1 Min Read

In a comprehensive report on Xbox’s impact on Microsoft, Merrill Lynch analysts Henry Blodget and Justin Baldauf estimate that the company will need to pump billions into the console, losing as much as $130 on each Xbox sale if the price is set at $299, in order to reap returns as high a $1 billion a year after Xbox breaks even in 2005. Figures in the report are largely based on Xbox taking the number console spot behind Sony’s Playstation 2, and the company's fortunes could be dramatically different if Xbox takes the lead from PS2 or falls behind Nintendo’s Gamecube. The report estimates that Microsoft will sell five million Xbox units in its fiscal 2002 year, followed by eight million the following year and ten million by 2004.

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