Microsoft FY End Jun 2007 and FY end Jun 2008 – A MORE THOROUGH ANALYSIS

[bumidan]

FY end Jun 2007
Revenue = 6,083
Cost of Revenue = 4,194 (not including 1,060 RROD charge - which is a one time charge)

FY end Jun 2008
Revenue = 8,140
Cost of Revenue = 4,571

You can see that the COR is probably mainly due to Zune and X360 - as they are "physical products" with actual product costs.

Despite shipping about 2 million more consoles (don't know how many Zunes, but not that many as Zune is totally unpopular), their cost of revenue didn't actually go up that much.

So X360 Platform is likely making money now - on the gross margin side.
However, I think R&D (maybe Live expenses??) and Sales & Marketing expenses are going up so much more, that their profitability is negatively impacted.

Would X360 platform be successful if those expenses are reduced?
That is the big question.

Because if not, then X360 platform will hardly ever be VERY profitable - UNLESS Revenue increases dramatically.

Eg. Revenue = double = 16 Billion
Then profit = double = about $1 Billion