Cutting and pasting from the 10Q report - more details as to where the losses come from.
Entertainment and Devices Division
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Three Months Ended
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Percentage
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Nine Months Ended
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Percentage
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(In millions, except percentages)
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2009
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2008
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2009
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2008
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Revenue |
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$ |
1,567 |
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$ |
1,592 |
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(2)% |
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$ |
6,564 |
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$ |
6,616 |
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(1)% |
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Operating income (loss) |
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$ |
(31 |
) |
$ |
106 |
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* |
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$ |
299 |
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$ |
668 |
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(55)% |
* Not meaningful
Entertainment and Devices Division ("EDD") offerings include the Xbox 360 platform (which includes the Microsoft Xbox 360 video game console system, Xbox 360 video games, Xbox Live, and Xbox 360 accessories), the Zune digital music and entertainment platform, PC software games, online games and services, Mediaroom (our Internet protocol television software), the Surface computing platform, mobile and embedded device platforms, and other devices. EDD leads the development efforts for our line of consumer software and hardware products including application software for Apple's Macintosh computers and Microsoft PC hardware products, and is responsible for all retail sales and marketing for Microsoft Office and the Windows operating systems.
Three months ended March 31, 2009 compared with three months ended March 31, 2008
EDD revenue decreased primarily due to decreased sales of application software for Apple's Macintosh computers, partially offset by increased Xbox 360 platform and PC game revenue. The decrease in revenue included an unfavorable impact from foreign currency exchange rates of $38 million or two percentage points. Sales of application software for Apple's Macintosh computers declined 63%, reflecting the launch of Mac Office 2008 in the prior year as well as a decline in sales of Apple computers. Xbox 360 platform and PC game revenue increased 16%, primarily as a result of an increase in Xbox 360 platform sales, partially offset by decreased revenue per Xbox 360 console due to price reductions during the past 12 months. We shipped 1.7 million Xbox 360 consoles during the third quarter of fiscal year 2009, compared with 1.3 million Xbox 360 consoles during the third quarter of fiscal year 2008.
EDD operating income decreased primarily due to increased research and development expenses and cost of revenue. Research and development expenses increased $66 million or 18%, primarily reflecting increased headcount-related expenses associated with the Windows Mobile device platform. Cost of revenue increased $52 million or 6%, primarily driven by increased costs associated with the Xbox 360 platform, reflecting the increase in console and video game sales.
Nine months ended March 31, 2009 compared with nine months ended March 31, 2008
EDD revenue decreased primarily due to decreased Xbox 360 platform and PC game revenue and included an unfavorable impact from foreign currency exchange rates of $47 million or one percentage point. Xbox 360 platform and PC game revenue decreased $51 million or 1%, primarily as a result of decreased revenue per Xbox 360 console as a result of price reductions during the past 12 months. We shipped 10 million Xbox 360 consoles during the first nine months of fiscal year 2009 compared with 7.5 million Xbox 360 consoles during the first nine months of fiscal year 2008.
EDD operating income decreased primarily due to increased research and development expenses, partially offset by decreased cost of revenue. Research and development expenses increased $317 million or 30%, primarily reflecting increased headcount-related expenses associated with the Windows Mobile device platform, driven by recent acquisitions. Cost of revenue decreased $60 million or 2%, primarily driven by decreased Xbox 360 platform costs.
