Microsoft tries the same market strategy again?

Microsoft's new gaming console Xbox 360 was released last week and currently the sales are soaring this close to the holiday, where a fatso in red clothes gets stuck in your chimney. But does Microsoft really earn money for every console sold? Xbox is known to be sold cheaper than the production cost, with a loss of $125 per unit. The reason for this is to gain market shares and instead earn the income through game sales and licensing.

Playstation 2 (81,390,000 units sold) managed to excessively win the last console war and the Xbox (19,900,000 units sold) came just above the Gamecube (18,030,000) in second place. According to Forbes, the Xbox division has lost $4 billion (10% of Microsofts total sales) in four years, and they "only" tied with Gamecube with roughly 17 percent of the console market (not counting handhelds of course). A research by iSuppli shows that this time Microsoft will take a $126 hit for every Xbox 360 sold, but this time, they are first to market and ready for the christmas sales.

I think all three companies are using great strategy for this console war, with Microsoft getting ahead of the competition, stealing market shares before the Playstation 3 is released spring 2006, currently the leader in the market that stole the E3 show this year. Revolution rumored to come june 15 2006, taking itself outside of the competition by having a price tag lower than both PS3 and Xbox360, and a new controller that forces developers to create innovative games for the console.

Total Worldwide Console Hardware Sales

NES: 61,780,000
Sega Master System: 13,000,000
Nintendo Gameboy: 118,420,000 (possibly includes color?)
Sega Game Gear: 8,650,000

NEC Turbografx 16: 2,500,000 (est.)
Sega Mega Drive (Genesis): 30,750,000
(Sega CD): 2,500,000 (North America)
(Sega 32X): 50,000-200,000 (est.)
Nintendo SNES: 49,020,000

Atari Jaguar: 10,000 (est.)

Nintendo Virtual Boy: 770,000

Panasonic 3DO:* 700,000 (est.)
Sony Playstation: 100,000,000
Sega Saturn: 9,260,000
Nintendo 64: 32,930,000

Game Boy Advance / GBA SP: 65,740,000
Nokia N-Gage: 1,300,000

Sega Dreamcast: 10,600,000
Sony Playstation 2: 81,390,000
Microsoft Xbox: 19,900,000
Nintendo Gamecube: 18,030,000

Nintendo DS: 2,840,000
Sony PSP: 510,000

* Panasonic never released any sales figures for the 3DO

Also, I recommend to read Forbes article about Microsoft's Midlife Crisis, unrelated to this except for the figures on the Xbox loss.

Microsoft's Red-Ink Game (Xbox 360, 2005)
Will Xbox drain Microsoft? (Xbox, 2001)
Microsoft's Midlife Crisis
Total Worldwide Console Hardware Sales
Hack-a-day, Xbox 360 Impressions