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Microsoft Xbox Division Sees $426m Profit In Fiscal 2008
by Brandon Boyer
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July 18, 2008
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Microsoft has announced its fourth quarter and full fiscal year results, showing recovery from the $1.1 billion loss in Xbox 360 warranty charges in 2007, as its Xbox division sees first-ever yearly profits - of $426 million, up from its nearly $2 billion total loss the year prior.
Xbox 360 hardware and software and PC game sales were the primary contributor to the Entertainment & Devices division's fourth quarter sales rising 37 percent year over year to $1.5 billion. Yearly sales rose 34 percent to $8.1 billion.
Fourth quarter losses were $188 million, down sharply from the $1.2 billion the year prior that resulted from the company extending the Xbox 360 warranty from one to three years, after 'red ring' errors persisted across numerous consoles.
The company says it shipped 1.3 million Xbox 360 consoles during the fourth quarter ending June 30th, 2008, up from 0.7 million the year prior. Yearly shipments were also up, with 8.7 million consoles sold in fiscal 2008 (the year to June 30th, 2008), compared to 6.6 million the year prior.
Overall, Microsoft took in sales of $15.8 billion in its fourth quarter, up 18 percent, and $4.3 billion in profit, with sales also up 18 percent for the full year to $60.4 billion - with $17.7 billion profit.
Said COO Kevin Turner, "Delivering $60 billion in annual revenue is an outstanding accomplishment and a testament to the powerful combination of great technology solutions and strong execution by our partners and global sales and marketing teams. The outlook for fiscal year 2009 is positive given the breadth of our impressive technology portfolio and the expanding collection of online services we are bringing to market."
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I disagree with you guys on the positive outlook from here on forwards though. They've decided to do away with making games themselves and are paying 3rd parties to promote their consoles instead. SONY has already shown how unsustainable that is, and with the Wii appealing to 3rd parties more and more, Microsoft could be in a lot of trouble when they switch their operations to focus on the new US console leader more.
Geoff, you may not like the PS3's titles this holiday but when matched up with the 360's there is a huge one that they have no answer for - LBP. This product has all the right things going for it (a look the masses will adore, ease of use, fun cooperative play, and MySpace,Facebook like features) and if Spore does as well as it most likely will then LBP is the next step for the PC and handheld crowd that has yet to dip their toe into the next-gen consoles. Even Reggie said this should have been a Nintendo game, which means that it could resonate with a lot of Wii fans.
Right now, I think it is really hard to tell how things are going to go in the next year or so; though I do believe the new Banjo game and Viva Pinata 2 will be the best things to counter LBP. Also, I still think price is an issue for the PS3 in the eyes of many parents.
Personally, there are some great looking games on the PS3 that I would like to try such as Uncharted and MGS4, but I just can't justify the price of the system for only a handful of games. I think Microsoft has done a much better job when it comes to putting quality software on the console. At this point my biggest concern is trying to figure out how I'm going to afford all the great games coming out in the next 5 months.