X-Box: $-1,000,000,000 a year

[A Black Falcon]

Of course it's not cheap in the sense that they're just giving it away, but in the sense that Microsoft learned from their mistake with the Xbox. Microsoft has been forking out a huge amount of money for the GPU, and the deal they made with Nvidia concerning the royalties has proven to be one of the most expensive parts in the Xbox.

This time Microsoft owns all the tech themselves (they're not licensing it from the GPU maker). All they pay for this time is the production costs, and that will get cheaper over time (MS expects annual cost reductions). The royalty fee they were paying Nvidia never budged.

Plus, they are making the customer pay for the harddrive this time.

Sure, those things are all true, but they're still going to lose money on each system sold. Maybe not as much as they lose on X-Box, but a good amount. And almost certainly more than Nintendo will (might?) be losing on Revolutions. :)

Also, MS isn't losing money just because of hardware costs... it's also because of marketing -- MS has spent massive amounts marketing the X-Box, much more than Nintendo, but without Sony's marketshare to help make up for it... that's been a big drain. They're hoping for more marketshare this time of course with the early launch and stuff, and we'll see...

There's also the fact that like Sony they don't have nearly the first-party-titles focus Nintendo has (that brings in so much by so much focus on the titles that make them the most money), of course.

The Japanese developers can't ignore the American or European markets. They are individually bigger than the Japanese market (which is dwindling). They recognize that Xbox has a growing userbase, especially in the U.S., and it would be silly to just ignore that customer base.

True, but most people make games for their own market... figuring out what some other market wants isn't easy. Of course, you don't always know what your market wants, but you know better than what some other market wants... anyway, they don't totally ignore the Western market -- did you notice how Iwata said (in an interview I posted at TC a few days ago) that Western developers (and FPSes) were a big reason behind the 'nunchuck' controller, and that Western developers started liking the Revolution a lot more after they saw the nunchuck and not just the freestyle ('remote') part of the controller? -- but they definitely focus far, far more on the Japanese market than the American. Like Nintendo says it wants to win, and in the US as well as Japan, but they've always put more effort into winning in Japan, and more importantly their methods of trying to win are tailored for that market and not ours...

As for MS, they of course are doing the reverse... it should have more success than the Xbox in the short term in Japan if just because it's the first and this holiday season it's the best console on the market, but long term? We will see.

(as for ignoring the userbase, look at third-party games... there are a lot of (Japanese-developed) games that are PS2-only that, I bet if they had come from American developers, might have ended up 'PS2 and Xbox'...)

I don't have the gift of telling the future so I'm not going to touch the rest of what you said.

Oh come on, what's the fun of talking about future consoles if you're not going to speculate? That's the whole point of talking about them, really... :)