Microsoft Games Division in Red for Q2, Hardware Est. Cut Options

[Xbox-Scene]

Microsoft Games Division in Red for Q2, Hardware Est. Cut Posted by XanTium | January 25 18:22 EST

From next-gen.biz: [QUOTE] According to Microsoft's fiscal Q2 results, expenses from Xbox 360 marketing, repair and an increased warranty period--not to mention the Zune launch--kept the firm's entertainment division in the red for the quarter. The Entertainment and Devices Division reported an operating loss of $289 million for the quarter ended December 31, 2006, relatively flat compared to a $286 million loss a year prior. The division, which houses Xbox, PC and videogames software, the Zune media player, interactive TV products and mobile embedded devices, posted a fiscal first-half loss of $383 million. Although Microsoft said that the cost to make Xbox 360 hardware lessened, these gains were offset by development and marketing expenses related to Xbox and the Zune's November launch, along with the new Xbox 360 warranty and related hardware repairs. The company had originally planned to sell 13-15 million Xbox 360s by the end of the fiscal year, but following the earnings release, Microsoft CFO Chris Liddell cut the forecast to 12 million. Overall, Microsoft reported a 28 percent decline in quarterly net profit as it deferred $1 billion in sales as a result of the Windows Vista delay. The new OS is set to launch January 30. Net profit for Q2 stood at $2.63 billion, while sales were up 6 percent to $12.54 billion. [/QUOTE] Full Story: next-gen.biz

[quenlin]

I wonder if the X360 business by itself is profitable yet.

[DMAddict]

Just another welcomed tax write-off I'm sure.

[TRYMYZ]

How can you compete with a company that can take a loss quater after quarter, year after year? I think the final tally for the Xbox project should be around 8 or 9 BILIION in losses. Oh well, we the consumer are benefiting.

[dhrandy1]

I think there losses are there own fought. They should have addressed the problems the xbox had a little sooner.

[Mr Invader]

http://www.videogamesblogger.com/2006/11/1...76-per-sale.htm

In contrast, the HDD-equipped Xbox 360 has a manufacturing and materials total of $323.30, based on an updated estimate using costs in the fourth quarter of 2006. This total is $75.70 less than the $399 suggested retail price of the Xbox 360.

What's making Microsoft lose money are NOT the Xbox 360s themselves, it's the marketing, warranty replacment, new advertisments etc. Their cost will never turn into a profit, though as neccessary as they are. The Zune didn't help either, it's hard to make a new piece of hardware without a loss around launch. Plus, the costs of Vista and Office 2007... the list goes on. But for anyone to say that the 360s are so damn expensive is very naive at this point.