Xbox is wildly profitable? xbox (original + 360) has lost MS tens of billions of dollars in its history (not an exaggeration). The fact that its just now (the last 2 quarters, an no more) pulling in profits in the hundreds of millions means that they'll break even in 5-10 years.
If you gave me $10, and I gave you back $0.50, would you consider it a "wildly profitable" venture for yourself?
And in fact, they've made that sale 8,650,000,000 times so far (current outstanding shares).
http://www.dividend.com/dividend-stocks/technology/applicati...
EDIT -> You're ignoring that the division DOUBLED profits over the last year, what if they maintain that growth rate?
Or 1/4 of that growth rate?
Either way YES, that's a solid return on investment.
That's a terrible argument structure. You might as well cut straight to "What if we just assume I'm right?" and be more honest about it.
http://www.joystiq.com/2010/04/23/xbox-division-posts-165-mi... says $165 million in profits on $1,670 million (1.67 billion) in revenue for the division. Saying "doubled their profits" sounds impressive, but it's not sustainable; say rather instead "increased their quarterly revenue by 5%" (or so, give or take a bit depending on the real numbers) for a better view of what that really represents. Still nothing to sneeze at (I'd take it), but not the same picture at all.
Having conceded that its trending positively, in this specific business, you're only as good as your last console. Nintendo is probably the only company that can lean heavily on its brand to get it through a poor hardware iteration (its brand and its so-far good-as-gold portable product).
The mere fact that both Sony and MS now sell hardware that imitates the Wii's functionality should tell you this isn't a poor hardware iteration.
I believe that overall, Xbox will be profitable for Microsoft, it gives them a foot in the user's living room and could be used to stream content onto their TV. But wildly profitable ? Probably not. You've got to be Nintendo to do that : sell your hardware with a good margin from day one and sell millions of every Mario/Zelda game that you release.
Nintendo is king because they build the hardware, sell the software and have the vision thanks to Miyamoto. It's really the Apple of video games.