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Microsoft Loses $289 Million in Q2 With Xbox 360
By William Usher: 2007-01-28 00:20:05
Any gamer who has been keeping track of the constant claim of 360's shutting down, burning up and crashing, you’d have to wonder how well that fairs for Microsoft’s profits. Well, it doesn’t fair well for their profits. That’s why they lost millions of dollars in expenses for replacements and repairs for the Xbox 360. But it’s not all stormy weather and blue velvet forecasts for M$. According to Gameindustry.biz, “Despite the US $289 million loss, the Entertainment Devices division was responsible for US $2.63 billion (EUR 2.03) profit during the second quarter.” So while there were loses, Microsoft still pulled out on top with some pretty big profits. Microsoft even posted a $1.3 billion increase in profits for the first quarter and a $1 billion increase in profits for the second quarter. But despite these profitably acceptable numbers, Microsoft is cutting back the production of Xbox 360 units. The scheduled 15 million production estimates for 2007 will be cut down to 12 million units for fiscal 2007. But maybe Microsoft is also getting a little wet behind the ears with the super-success of the Wii and the possible super-star rise of the PS3 for 2007. Cutting back on production units just might save the company on producing dust collectors; because what’s worse than having 3 million units sitting on the shelf next to an empty space where the Wii used to be?
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January 28th, 2007 at 03:42
Hmm.. I think your article might need to be reworked to a degree. As it is now, it vastly misleads its readers.
Whether or not claims for Xbox 360 console repairs have actually risen is another matter, but what I feel is directly misleading is this sentence: "That’s why they lost $289 million dollars in expenses for replacements and repairs for the Xbox 360." After reading multiple sources, including the link in your article, I believe you've misread something.
Here's a quote from another article on Microsoft's response to the loss:
"The company said development and marketing expenses related not just to the Xbox 360 hardware, but also the launch of its portable media player Zune (also part of the E&D division) offset those revenues, bringing losses to a similar level to last year's. The E&D division includes the Xbox 360 hardware and software, PC games, the Zune digital music and entertainment device, TV platform products for the interactive television industry, and mobile and embedded devices."
Which indicates heavy marketing and the launch of the Zune ( newly incorporated into the division) as main factors for the similar loss. This makes sense, seeing as teh Zune hasn't done exceedingly well so far.
An update or correction to your article would be appreciated, though I apologize if I'm in some way mistaken.