Great thread. ..we need more people with their intelligence,..

Yes they did. They shipped 10m 360s from June 2008 to March 2009.

For those questioning 10m, let me summarize from MS annual report:

Xbox 360 shipped
Dec 2005 - June 2006 : 5m
June 2006 - June 2007 : 6.6m
June 2007 - June 2008 : 8.7m
June 2008 - March 2009 : 10m

Total = 5 + 6.6 + 8.7 + 10 = 30.3m as at March 2009


VGChartz reports sold 30.22m as at 2 May 2009.

Dont believe me go read http://www.microsoft.com/msft/reports/ar08/10k_fr_dis.html

Okay, if we're talking about the number they shipped to retail, then that's true, but still.....

I think the one thing that everyone is forgetting is that the 360 is not in a division by itself. It's in a division with a bunch of other products and services. That being said, no matter how you try to analyze it, there simply is no way to tell for sure whether the 360 or the other products are losing or making money. There is actually more evidence to support that the 360 is not a "cash cow" considering that MS posted a 31 million dollar loss last quarter.

The fact that there is no conclusive evidence to support the 360 being consistently profitable renders this whole thread moot.

Great thread and proof that MS can make money.

Still their entire business model generates profit so the XBox and the next XBox is here to stay. MS 4 lyfe ;)

On the contrary. Of course no one will know for sure as none of us work for MS (at least I dont) but the whole point of the OP was to show that based on mathematical evidence, a large majority of the revenue is made by gaming and a large portion of the costs seem to be non-gaming related.

The evidence is that gaming revenue (360 and PC) alone is $5bn which is 77% of the total revenue. We know that the costs of $6.2bn are made up of cost of revenue (48%), R&D (21%) and Others (31%). Therefore based on the reports, we can see a large part of revenue being generated by gaming and alot of the costs are tied to non-gaming. That is why there is a lot of evidence to support that the 360 is profitable. Thats all, no one can pinpoint the exact numbers, but there is alot of implied evidence here.

The costs this quarter are split like this - cost of revenue (60%), R&D (27%) and Others (13%). SO yes, there there is a loss because of increased cost of revenue and R&D, and there is no numbers given for the gaming revenue alone. Admittedly, this 3-month period proves the point less so than the last 9-months but the general evidence is still there.

Which is impossible. Sony in their glory days took in $5 billion per year from their whole Playstation business. Not MS. $5 billion in revenue devided with 10 million X360s would mean each X360 is associated with $500 in revenue. Ridiculous.

(remember that MS' gaming business is almost entirely made by revenue from the X360 and things associated with the X360 such as software, controllers, Xbox Live, while the revenue from PC is negilible since MS don't publish any PC games nowadays, and sales of MS mice and keyboards is peanut money)

I hope these numbers were true, I'd be very happy. But they aren't. $5 billion in Microsoft gaming business revenue in just 9 months is impossible.

I'd estimate it something like this:
$150 revenue for each X360 sold = $1.5 billion
periferals (~20% of console revenue): ~ $300 mill
80 million games sold in 9 months x $7.5 license fee from each game = $600 mill
Xbox Live subscriptions: 10 million x $30 = $300 million
Other Xbox Live revenue (Arcade games and movies): ~$300 million
PC games, mice and keyboards ~$250 million
---------------------
total gaming revenue: $3.25 billion

And there goes the whole argument of this thread out the window.

That still isn't conclusive evidence. As a matter of fact, it's largely gross speculation.

As Slimebeast said, SCE in its best years was pulling in 5bn/yr in revenue, so there's no way in the world that the 360 is pulling that much.

Also, why is it that in a thread that's supposedly discussing profits do people keep bringing up revenue? They are two different things. Even if you want to say that it's other products that are running up the cost, there's no solid evidence to prove that, either. At best, it's speculation, and at worst, it's ignoring facts when you consider that MS spends a lot more money than Sony and Nintendo on advertising and on third party support.

@Slimebeast

Its not impossible at all and you need to catch up with the times. If you still dont believe any of us, hit the link to the annual report and go read yourself.

No, its not $500 per 360 obviously, it includes software, accessories, Xbox Live, and as much as Games for Windows suck, they still make money. If I remember correctly, there was a good report recently that Xbox Live alone is over $1bn per year.

To give more perspective, the total 9-month revenue of all MS combined is $45bn (so $5bn is not hard to believe at all). This quarter for 3 months, the total MS revenue is $13.6bn (of which $1.5bn is EDD and if 77% holds again, total 360/PC is $1.1bn). And anyway, these are calculated mathematically or published numbers.

Are you doubting these numbers because you are comparing it to Sony? Well you cant really do that because that was so long ago and the game industry is very different now.