Microsoft vows more cash for Xbox

The software giant says it will pour more resources into its efforts to carve out a position in the $10 billion video game market.

Microsoft on Wednesday said it would pour more resources into its efforts to carve out a position in the $10 billion video game market rather than cutting its losses and exiting from the venture.

When asked if the software giant


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had an "exit strategy" for the year-old Xbox video game machine, Chief Financial Officer John Connors said in a Webcast: "The fallback position is probably to double down and make it successful."

Although Microsoft hasn't disclosed how much it has spent on the Xbox so far, figures released last month showed that the home entertainment division, which includes the Xbox, lost $177 million in the last quarter.

Analysts expect Microsoft to spend more than $2 billion over five years on the Xbox machine, which launched a year ago as part of the company's push to get its technology and software off the desktop and into living rooms worldwide.

Connors was speaking at the Credit Suisse First Boston annual technology conference in Scottsdale, Ariz., which was closed to media.

Japan's Sony, whose PlayStation consoles have been the best-selling video game machines in history, is competing aggressively with Microsoft to hold on to its leading market position.

Both the Xbox and the PlayStation 2 are now linked to the Internet, which is expected to fuel further growth in game titles as users play video games and compete against each other in virtual worlds from their living rooms.

Shares in Redmond, Wash.-based Microsoft closed down 17 cents to $56.54 on the Nasdaq composite index after trading higher for most of the day.

Story Copyright  © 2002 Reuters Limited.  All rights reserved.

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