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MS CFO vows more resources to make Xbox succeed

And these aren't going ot be Redmond billions, either...

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Xbox is not going to go away, and Microsoft is ready to pour more resources into the games console, said company CFO John Connors yesterday. Connors, who was apparently being webcast to a closed Credit Suisse First Boston conference in Scottsdale, Arizona, was responding to the question of whether Microsoft had an exit strategy for Xbox.

The answer, clearly, is no, but Connors seems to have come close to conceding that Xbox, currently running way behind Sony's PS2, hasn't been anything like the success Microsoft intended. Microsoft will, he said, "double down and make it successful."

Depending on how you read this, he could have meant Microsoft intended to spend the same again. The huge numbers Microsoft execs casually toss around when talking up new projects are, as we've argued in the past, largely imaginary. You could think of these numbers, which often include large quantities of partner marketing spend that has nothing to do with Microsoft's coffers, as a special currency, Redmond Billions.

But in the case of Xbox the company clearly had to use real money, and has a continuing need to do so if it's going to stay in the game. The home and entertainment division, of which Xbox is a part, dropped $177 million in the last quarter, but that will only be a small part of the total spend on Xbox.

Connors, who was clearly doing 'things that might worry stockholders' duty, also observed that Microsoft's growth prospects would be hurt if Linux became "a phenomenon on the desktop." We'd have said it would be more a case of Microsoft's revenue prospects being hurt, given the dubious prospects for much further growth in Microsoft's core desktop market. But it's still interesting that Linux is crossing the money man's radar screen. ®

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