Friday April 27, 2007 4:08 pm
Microsoft’s Xbox Quarter: Losses Shrink, So Does Revenue
Yesterday, Microsoft reported their quarterly results for the period ending March 31, 2007. Overall, the results were good for the company, moving to record profits based largely on getting Vista and the latest version of Office out the door. Still, for gamers, one thing has stood out – while losses in the Entertainment and Devices Division shrunk, so did revenues.
Dean Takahashi at Mercury News describes this reduction in sales as a “disturbing trend.” Since Microsoft doesn’t break out revenues by subgroup in the Entertainment division, it’s really hard to understand where this leaves the Xbox 360. Comparing March totals, Xbox 360 sales were down around 30% year-over-year, but this reflects a time period where Microsoft was still pretty much in the initial honeymoon phase of the console launch. Microsoft notoriously had supply problems during the first few months, but by March had seemed to catch up with demand, so the company was probably still dealing with early adopters.
More interesting is Takahashi’s dissection of the company’s ongoing losses with the Xbox 360. Even with cost reductions in hardware and having a really strong tie rate, the company is still losing money per console. With the estimated figures in the article, this projects to $53 lost per console. We can’t really know what the financials behind the Xbox 360 are, but project this to Sony, where their tie rate is much lower and the console hardware cost is much higher, or Nintendo, who claims to make a profit on each console sold, regardless of software sold later.
Read More | Microsoft’s Q3 Results
Read More | Mercury News
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