Microsoft's Entertainment and Devices Division, responsible for products like its Xbox 360 console and Zune portable media player, has been hit with a string operating losses since its inception over five years ago. However, division President Robbie Bach believes the tide may finally turn starting next year. In an interview with eWeek, Bach explains that while his division will continue to deal with associated costs of business and manufacturing/production, it is also poised to begin reaping the benefits in areas which make money for Microsoft's console business.

There are three ways to make money on an Xbox. Generally it's not on the hardware itself; we'll probably be gross margin neutral on that over the life cycle of the product and try to break even on that.

The pieces are in place to drive the proverbial billion dollars. Specific date—oh, that's going to depend on what happens in pricing, which partly we control, partly we don't. You know what happens in component costs—mostly we have pretty good influence over that, but there are places where we don't. Pricing on memory goes up and down seemingly like a yo-yo, so [we have to manage] through that.

So, it's a business that will be profitable next year—we'll make money next year and that will be the first time, which is pretty exciting. And then the next two or three years are the place where you need to make tracks, and the next two or three years are where you have to make money.

Wolfwood via eweek.com »