For now, however, Xbox users are primarily males between the ages of 15 and 34. Microsoft has not yet captured the mainstream consumer in the same way its rival Nintendo has with the Wii console.
Microsoft tried to address that last week by unveiling a friendlier user interface for its online service and by adding games that anyone can play, including karaoke and trivia titles.
For The Record
Los Angeles Times Friday, July 25, 2008 Home Edition Main News Part A Page 2 National Desk 1 inches; 36 words Type of Material: Correction
Microsoft: An article in Business on Thursday about Microsoft Corp.'s online prospects said Don Mattrick is an executive vice president for the software company's interactive entertainment business. He is a senior vice president in the division.
The company also hasn't articulated a strategy for enabling consumers to take their content with them without hauling around their consoles. Sony, which announced its long-awaited movie download service for the PlayStation 3, lets customers transfer their movies or shows to the PSP, Sony's hand-held console.
Microsoft aims to break even on the costs of the console, earning money on the games instead. To really break into the broader market, though, it needs to sell a console for less than $200, where more than 75% of hardware sales occur. Microsoft currently sells its Xbox 360 for about $280 to $400, depending on the size of the hard drive.
Bach said that although he will eventually get to $200, there's no rush. "Right now, we have strong demand at the price we're at," he said.
Analysts appreciate Microsoft's expanded access to consumer living rooms and the potential for bigger profit down the road.
But they say that as impressive as the entertainment division has been in staving off Sony and Nintendo, it hasn't performed a miracle, and it isn't a reliable guide for what will happen with online search and advertising.
In search, Microsoft is a distant No. 3 behind Yahoo, which is a distant No. 2 behind Google.
"It's like this never-ending, vicious spin cycle," Thill said of Microsoft's online campaign. "They just can't seem to snap out of it and have some clear direction."
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joseph.menn@latimes.com
alex.pham@latimes.com
