| Procrastinato said:
I have never bought into the "XBox 360 is not the majority of EDD" theory, to explain away the losses, personally. The Zune is peanuts, in comparison to the 360 and its incoming/outgoing revenue, and as you stated, Windows Mobile is a non-factor, since it basically breaks even. All the PC accessories (keyboards, mice, and MS sells a LOT of them at profit) are included in EDD as well, I believe, and that's a pretty hefty chunk of income. So then... without the supporting factor of the accessories (which likely far outweigh the losses incurred by Zune), what is MS doing to put them in the red? Is the X360 incurring losses? As I said, I suspect serious R&D, which doesn't bode well for the X360's lifespan. I believe Microsoft is continually spending a load of R&D money, not just $150M in one chunk -- I don't understand your basis for that theory at all. |
The gist of it is this. The Xbox 360 comprises a large proportion of the revenue in the EDD but reading between the lines with their statements over many years gives a pretty similar and large proportion for Xbox 360 revenue, however Xbox 360 specific liabilities are a fraction of the whole. Something else is chewing through the profit on the Xbox 360s. To me that something is likely to be the other named operations in the division as well as the named/unnamed R+D projects. The fact that they are doing R+D to a significant degree doesn't mean anything for the Xbox 360s lifespan, because we simply don't know what it applies to.
Now non Xbox 360 related revenue fell 42% for the year. Since the Zune isn't big enough it implies that the only other big product, Windows mobile is losing money as thats the only other product with overall revenues high enough to cause problems. So I would say that Windows mobile is almost certainly losing money at this point as Microsoft fights to compete in the mobile space with increased investment whilst revenue itself is declining. Windows mobile broke even before they combined it with the division and soon after they significantly increased the resources of that unit.
Named projects which are liabilities at this point:
- Natal (Windows/Xbox 360 versions)
- Surface
- Windows mobile + Windows mobile 7 development
- Zune HD + Zune
- 1st party development for the last few quarters at least is probably losing money.
As for unnamed projects, im sure they have many which never see the light of day. Btw, that $150M chunk was a one off charge which explained why they were unprofitable last quarter.
Tease.
