Business guru, Roger Ehrenberg, has concluded that the Xbox 360 has been a “disastrous endeavor” for Microsoft after reviewing Microsoft’s financial statements and comparative sales figures.

Ehrenberg is a Wall Street business guru who’s behind the influential Information Arbitrage blog.

Writing in Forbes, Ehrenberg said that the Xbox360’s early failure in Japan, and game developers’ lack of willingness to invest in high-risk Xbox 360 projects, has made the Xbox 360 less attractive compared to rival consoles.

During his review, Ehrenberg found that that Microsoft has invested over $21 billion in Xbox over five years, with $5.4 billion of cumulative operating losses.

“Xbox 360 doesn’t appear to be the silver bullet to turn things around,” he concludes.

Irrespective of whether Microsoft is targeting mainstream gamers or hardcore gamers, Ehrenberg believes that the company has a big problem on its hands:

“Sure, the Xbox 360 can be righteous and cool with hard-core gamers, but this is not a sufficiently large user base to recoup the magnitude of investment Microsoft has made in its gaming platform. So if this is Microsoft’s strategy, it’s got a problem. And if the strategy is really more mass-market, then it’s got some serious repositioning to do relative to the Wii, which is both cheaper and more accessible to Ma and Pa and Timmy and Tammy gamer.”

Ehrenberg looked at how well each of the next-generation consoles did in Japan in the first 18 weeks, and noted that even the much-maligned PlayStation 3 did better than the Xbox 360. He says that this does not bode well for the Xbox 360.

Without question, Japan is an important and critical market for building a globally successful gaming platform, and an early read of the tea leaves does not bode well for the Xbox 360.

Ehrenberg concludes his analysis by telling Microsoft to have a long, hard look at its gaming strategy:

At what point, regardless of its virtually endless financial resources, does it say “enough is enough”?

Other commentators have railed against Ehrenberg’s analysis, arguing that Microsoft has long acknowledged that developing a gaming platform was going to be an arduous and expensive process, and pointing out the benefits of the Xbox 360 over its rivals.

However, Ehrenberg does raise a valid point.

While Microsoft does have deep pockets, it does also have to deliver profit to its shareholders.

Unless it can deliver a decisive blow in the increasingly competitive games console market, it will have to start considering whether it is actually throwing good money after bad.

Sorce :http://gamer.blorge.com 

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