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Record Xbox 360 Sales, Kinect Success Fuel Microsoft Quarterly Growth

Record Xbox 360 Sales, Kinect Success Fuel Microsoft Quarterly Growth

April 28, 2011 | By Frank Cifaldi

A record number of Xbox 360 console sales -- along with the rapid-selling Kinect -- helped to fuel record revenue results for Microsoft, which saw a 13% increase year-on-year for the first three months of 2011.

Company-wide revenue was reported at $16.43 billion, with the Entertainment & Devices Division -- which includes the Xbox family, the Microsoft Game Studios publishing subsidiary, and the Windows Phone line -- contributing $1.94 billion of that figure, up 60 percent from the $1.21 billion it brought in during the same period one year prior.

In all, 2.7 million Xbox 360 units were sold, up from 1.5 million in the same period last year, representing a new quarterly record for the nearly five and a half-year-old console. The Kinect add-on -- which debuted November 4 -- sold 2.4 million during the quarter, putting it well over 10 million sold life-to-date. Revenue for the entire Xbox 360 platform was up $712 million (69 percent).

In all, the EDD division made a quarterly profit of $225 million, a leap of 50 percent from the previous year.

"We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses," said Microsoft CFO Peter Klein. "Consumers are purchasing Office 2010, Xbox and Kinect at tremendous rates, and businesses of all sizes are purchasing Microsoft platforms and applications."

Overall profit for the quarter across the whole company for the tech giant was reported at $5.71 billion, up 10 percent on the same quarter in the previous year. According to Microsoft, its Windows 7 operating system has sold 350 million licenses to date, though revenue for its Windows division declined 4 percent, in line with PC sales trends.

Microsoft's outlook for the next quarter says that the Entertainment & Devices division will see a revenue growth of "roughly 25 percent."

[UPDATED: In a Gamasutra-attendend conference call that took place following the announcement of these results, Stifel Nicolaus analyst Tim Klassell asked Microsoft about the timing for the announcement of its next console, asking "Do you guys internally have a time point on when you have to make that decision?"

In response, Microsoft's Peter Klein said simply that the company is "really not talking about that," and is instead focused on the Xbox 360 and Kinect for the time being.

During the same call, Microsoft also spoke briefly to the success of Xbox Live, saying that the service "saw healthy increases in transactional revenue, which continues to exceed subscription revenue."]

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