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Xbox games division ‘just about broken even’

Microsoft are having an interesting year. They have seen Google and Apple stake a claim in the mobile device and internet services market. Yesterday they announced a thorough reorganisation at the software company around devices and services.

It is true that the bigger the company, the more convoluted the staffing structure is. The reorganisation is said to ‘knock down organisational barriers while overcoming deep seated processes and cultural forces that have made it hard for Microsoft to respond fast enough to the changes in the markets.'

Microsoft have allowed their competitors to ‘sneak up on it' in the tablet computing and cloud services business and to eat into markets they should have dominated. The words of Rob Helm, an analyst at Directions on Microsoft.

Microsoft have introduced senior executives whose sole responsibility is technology. Analysts claim it is an important step forward for the corporation, keeping it refocused and faster to respond.

Research has shown that Microsoft have lost around $17 billion on their push into search and online services. Surprisingly, the Xbox games division, one of the most successful areas of the business have ‘just about broken even'. This is one of the companies biggest consumer successes. Part of the problem for the Xbox division has been the staggering returns inflicted on failed Xbox 360 consoles, known to fail quite regularly.

Wikipedia even has its own page dedicated to Xbox 360 technical problems and failures. In 2009, a report was published that indicated 54.2 percent of Xbox 360 consoles experienced a failure. It is estimated that Microsoft have lost billions of dollars in replacing and servicing failed 360 consoles.

Microsoft attempted to solve some of the failures later in the manufacturing process. Modifications included a reduction in the number, size, and placement of components, the addition of dabs of epoxy on the corners and edges of the CPU and GPU as glue to prevent movement relative to the board during heat expansion, and a second GPU heatsink to dissipate more heat. If they had spent more time in the R&D phase building the Xbox 360 to a higher standard they would have made money, rather than just breaking even.

Kitguru says: Xbox One to be a big seller? Let's hope it is built to a higher standard than the 360.

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