Microsoft Admits It Will Never Make Money on First Xbox Generation

Speaking to financial analysts on Wednesday, Microsoft Chief Financial Officer (CFO) John Connors admitted that the company still loses money on every Xbox it sells and will likely never make money on the first-generation video game console. However, he has high hopes for Xbox 2, which could arrive as early as next year. "The real crossover, though, in terms of profitability delta, is when we get to the next generation of the Xbox console," he said. "With the current cost of goods, which we have taken down fairly dramatically, there's no way to make money on the console in this first generation. So the key is, how do we do the hardware design, the chipset design, and the supply-chain design with version 2? If we do as expected, we have a good crossover point where that big negative number is no longer a negative number, and because of the size of the revenue and the size of the percentage that is negative, when you have a crossover, that's a good contribution in terms of bottom line." This statement almost makes sense if you read it enough times.