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Slowing Sales and a Loss... Microsoft's Game Division Suffers a Shortfall

Krunal | July 19, 2007 | Industry News | Xbox XBOX 360 Company 
It hasn't been long since Microsoft extended the warranty on all XBOX 360's by three years for the Three Red Lights problem, Microsoft today announced that the Entertainment and Devices Division (EDD) is currently in the red by $1.89 billion.

This is not surprising as the cost of the extension was estimated to be around $1.06 billion as well as a reduction in the number of XBOX360's sold. During the fiscal year 2007 (ending June 07), Microsoft had managed to ship 6.6 million consoles, 1.6 million more than the previous year, however this is worrying when you take into account that for almost half the previous year, the XBOX 360's weren't on sale. During the April 07 - June 07 quarter the sales failed to pass the million mark, only shipping 0.7 million units during the time.

However it isn't all bad news for Microsoft which managed to increase the annual revenue by 28% from $4.76 billion taken in last year, to this years $6.08 billion.
But while Microsoft's game-industry efforts proved costly, they were more than made up for by the company's other businesses. Despite the $1.06 billion 360 warranty charge, the company saw a $3.04 billion net income on $13.37 billion in revenue during its fourth fiscal quarter, 11 percent higher than the same period in 2006. For the full fiscal year, the company saw $14.7 billion of net income on revenues of $51.12 billion, a 15 percent increase over the prior fiscal year.

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  • 1 thumbs!
    volacide | July 20, 2007
    "Microsoft had managed to ship 6.6 million consoles, 1.6 million more than the previous year, however this is worrying when you take into account that for almost half the previous year, the XBOX 360's weren't on sale."

    Wow, that isn't very good news at all and really puts it into perspective.
  • -2 thumbs!
    Red_Phoenix | July 20, 2007
    Microsoft should just stick to computers, gaming isn't their thing.

    This is their second generation and it's doing just as bad as the first.
  • 0 thumbs!
    Storm | July 20, 2007
    They can't quit now, there's millions of Americans who have a 360, me being one of them Plus, they've invested too much in the gaming industry to just end it.

    But for sure...Microsoft aren't doing too well in this department. Shame, really.
  • 1 thumbs!
    DarrylR | July 20, 2007
    Already in the red and with a big debt :/.
  • 0 thumbs!
    Cdemon | July 20, 2007
    quote
    This is their second generation and it's doing just as bad as the first.
    Yeah, surpassing a goal in half the time it took your predeccesor to is really as bad. *bleep*.
    • -2 thumbs!
      Existenz | July 20, 2007
      Not hard to do when there is no other console for people to buy... Now there are options the Xbox 360 sales have all but ground to a very slow triccle, with the PS3 and Wii selling lots each month.
    • 0 thumbs!
      Final Blade | July 20, 2007
      Well i have to agree with Existenz, Xbox was alone for a year which they got up to 7 million and only increased it by 3 up to now.

      DOn't forget the ps3 also surpassing its gaol by hitting over million in 6 months, faster than ps1 and ps2 did.
  • 1 thumbs!
    FRoGBuster | July 20, 2007
    the BOX is the second DREAMCAST story... Lot of good games... but incompetent business practice and strategy lead to downfall. I bought a new computer, and I tried to get Microsoft Word on it, but I realize I have to pay $200-300!!!! For a text writing program! Come on! Now I see why there are some people who refuse to get Word on their computers. I did too, and just write paper on a free open-source program now. I can't stand M$ ripping everyone off.
  • 1 thumbs!
    xsynergyx | July 20, 2007
    Beaten to the punch.

    I wonder how many more articles, concerning the downfalls of the Xbox 360 there will be. Oh well, they'll make up with their computer things.

    Microsoft could've just made sure their console was ready to ship instead of paying $1 billion to fix their problem.
    • 0 thumbs!
      tidus04 | July 20, 2007
      Down and down, that is all they seem to be doing. Hope they can turn it around =/
    • 0 thumbs!
      Final Blade | July 20, 2007
      Well if more bad news starts they could see xbox turning into a dreamcast system. Or on the flip side maybe they do find a way to fix this, but will it be enough. I mean when they fix this problem PS3 could have the games it needs to compete and climb back in with steam. And if thats the case MS would probably be over run by the wii and ps3.
  • -1 thumbs!
    Capn Droid | July 20, 2007
    About the only good thing they've done with gaming either involves computer performance, or Halo series.
  • 0 thumbs!
    Storm | July 20, 2007
    Why do people always 'thumbs down' me for my opinion on Microsoft? Sigh...Sony fanboyism at it's best. I don't even think that comment of mine even showed anything stupid or useless, but more the truth.
    • -2 thumbs!
      Final Blade | July 20, 2007
      Well i don't know why, but it seems to be universal, happens to me as well.
  • 0 thumbs!
    BANDITO ATTACK | July 20, 2007
    i bet they have all their top scientists out researching why things aren't going as planned.
  • -1 thumbs!
    Cdemon | July 20, 2007
    quote
    Not hard to do when there is no other console for people to buy... Now there are options the Xbox 360 sales have all but ground to a very slow triccle, with the PS3 and Wii selling lots each month.
    Which is why the X360 still sells as many, if not more, than the PS3? The wii is just impossible to compete with at the moment.. too new and too cheap.
    • -1 thumbs!
      Final Blade | July 20, 2007
      Oh yea there selling right now, if i recall correctly they lost sales for there system, sounds like there falling back rather than climbing. Xbox sales has plummeted to 60% and thats alot for a console, i don't expect them to be getting back for awhile.
  • 1 thumbs!
    Silver Mirror | July 20, 2007
    I heard that there losing 1.9 billion dollars for the warranty on the 360
  • 0 thumbs!
    Cdemon | July 21, 2007
    quote
    Xbox sales has plummeted to 60% and thats alot for a console, i don't expect them to be getting back for awhile.
    That's 60% from the fourth quarter in 2006. EVERY console sells less during the summer because during the holiday seasons, video games are sold like hotcakes.

    You're so *bleep*ing stupid. Seriously.

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