Forums - Microsoft Discussion - Analyst: Xbox "generates" $2 billion in losses for MS. Hides it with patent royalties

Microsoft is generating $2 billion per year in revenue from Android patent royalties, says Nomura analyst Rick Sherlund in a new note on the company.

For the past few years, Microsoft reported the revenue and operating losses of Entertainment and Devices, which was the group that housed Xbox, Windows Phone, and those Android royalty payments.

That group always seemed to be profitable, but Sherlund says it's largely because of the Android money.

Sherlund says that if you back out the Android profits, Microsoft is probably losing $2.5 billion on Skype, Xbox, and Windows Phone. Of that, $2 billion in losses are attributable to the Xbox platform.

http://www.businessinsider.com/microsoft-earns-2-billion-per-year-from-android-patent-royalties-2013-11

I say DAMN if true




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I can't believe this, asked an xbox exec I know. Will update if I know more

LoL @ Business Insider

MS posted a profit for the EDD even before Android was on the market or Skype was acquired.

Entertainment and Devices Division

(In millions, except percentages) 2009 2008 2007 Percentage
Change
2009
Versus
2008
Percentage
Change
2008
Versus
2007
Revenue $7,753 $8,206 $ 6,139 (6)% 34%
Operating income (loss) $ 169 $497 $(1,898) (66)% *


"Microsoft is not good at the game of capitalism. They don't believe in naturally being better than their opponents. They create artificial advantages [content] to even pose a threat."

S.T.A.G.E criticises Microsoft.

Btw. This was my favorite Business Insider article:

http://www.businessinsider.com/samsung-releases-ces-teaser-video-for-new-tv-2012-12?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29

Samsung teases a new smart TV and Business Insider calls it a "wannabe Apple TV"... even when there is not Apple TV available or even announced. This is quality journalism right there.



"Microsoft is not good at the game of capitalism. They don't believe in naturally being better than their opponents. They create artificial advantages [content] to even pose a threat."

S.T.A.G.E criticises Microsoft.

If you consider R&D for the Xbox One and it's massive warehouse of servers in this, then I see no reason why it this isn't true. But if they can take money from patent on a product they don't even make, let them. :P

Not quite sure why Skype is failing though, isn't that used by millions around the world to communicate?

Hmm, pie.

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How does M$ make money from skype? I know people use it for free.


"Sherlund believes Microsoft needs to spin out Xbox."

no wonder why he says that xbox is losing billions...

Face the future.. Gamecenter ID: nikkom_nl (oh no he didn't!!)

The Fury said:
If you consider R&D for the Xbox One and it's massive warehouse of servers in this, then I see no reason why it this isn't true. But if they can take money from patent on a product they don't even make, let them. :P

Not quite sure why Skype is failing though, isn't that used by millions around the world to communicate?


Skype was profitable in 2010 and MS bought them in 2011.

" Revenue rose from $718.9 million in 2009 to $859.8 million. Even better, Skype had an operating profit of $20.6 million in 2010"
http://www.fierceenterprisecommunications.com/story/skype-posts-profit-2010-ipo-now-way/2011-03-13

since then, the usage doubled.

http://techcrunch.com/2012/07/19/skype-at-microsoft/



"Microsoft is not good at the game of capitalism. They don't believe in naturally being better than their opponents. They create artificial advantages [content] to even pose a threat."

S.T.A.G.E criticises Microsoft.

DirtyP2002 said:

LoL @ Business Insider

MS posted a profit for the EDD even before Android was on the market or Skype was acquired.

Entertainment and Devices Division

(In millions, except percentages) 2009 2008 2007 Percentage
Change
2009
Versus
2008
Percentage
Change
2008
Versus
2007
Revenue $7,753 $8,206 $ 6,139 (6)% 34%
Operating income (loss) $ 169 $497 $(1,898) (66)% *

Well actually Rick Sherlund said that and Business Insider just reported it and somehow there has to be some weight to this guys' words otherwise MS stock wouldn't have made such a huge jump after he announced that MS might split of it's "money losing businesses Bing and Xbox under a new CEO"

That being said I also have difficult time believing Xbox is losing money, unless of course they are buying all consoles and live subscriptions themselves.



Prediction: The PS4 will outsell the Wii U and 3DS combined

Apparently I won my bet with prinz_valium

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DirtyP2002 said:

Btw. This was my favorite Business Insider article:

http://www.businessinsider.com/samsung-releases-ces-teaser-video-for-new-tv-2012-12?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29

Samsung teases a new smart TV and Business Insider calls it a "wannabe Apple TV"... even when there is not Apple TV available or even announced. This is quality journalism right there.

Does he mean this Apple TV?

http://www.apple.com/appletv/

That's the third gen Apple TV which released early last year.

@OP: Sounds strange considering the Xbox 360 HW has been profitable for years now and they make a lot from XBL revenue (which is why Sony is doing their PS Plus now). That's not even counting any money they get from software sold. Unless they are talking about the money that was also lost during the og Xbox days.




starcraft: "I and every PS3 fanboy alive are waiting for Versus more than FFXIII.
Me since the games were revealed, the fanboys since E3."

Skeeuk: "playstation 3 is the ultimate in gaming acceleration"