# Analyst: Microsoft’s Gaming Effort “Disastrous” – O RLY?

As a gamer, Roger Ehrenberg is a fan of the Xbox 360; unfortunately for Peter Moore, however, his day job is President of a Wall Street analysis firm. And the investor’s perspective is decidedly at odds with the gamer’s. To wit, as he writes on his blog:

“Gaming has been a disastrous endeavor for Microsoft, particularly from an investment perspective…” [Emph. mine]

His argument for a statement of such face-punching boldness is threefold: basically, 1) after blowing $21 billion over five years on their Home & Entertainment division, all Microsoft really has for its efforts is$5.4 billion in total operating losses, 2) the Xbox line has simply failed to take off in Japan, heart of the console industry, and 3) despite their stated intentions, the 360 has failed to diversify its audience much beyond hardcore gamers who own HDTVs.

It’s a solid analysis– read it all here. But is it correct? Short term, maybe. To take Microsoft’s side (and if I won’t, who will?), I can suggest three big picture rejoinders:

1 – Microsoft has finally bested Sony in the console wars.

After the first Xbox failed to capture the market away from the PS2, the 360 dominates over PS3, and looks poised to continue doing so.

2 – The Wii and the 360 aren’t directly competing.

While it’s true the Wii has succeeded magnificently, it did so by being an extremely cheap, non-HDTV console that has far less of the 360’s non-game features.

3 – The 360’s a full entertainment platform.

Where the Wii has revolutionary game functionality and Web browsing, the 360’s success as a next gen console will boost its appeal for downloading high-definition TV and films, and being a music/podcast hub for the Zune—content that the Wii can’t (so far) provide. (And hey: first console-based keyboard out the [next gen] gate.)

So—disastrous in terms of money spent versus profits (not) earned? Sure. A failure 3-5 years from now, when HDTVs are much cheaper and broadband is better and faster? I suspect not.

Hat tip: Infendo.