http://www.gamedaily.com/articles/news/xbox-division-doubles-profit-in-q1/
Microsoft is trying its hardest to make sure that the Xbox business stays profitable, and so far so good. Today, although the company as a whole saw revenues and net income decline (14% and 18% respectively) for the first quarter ended September 30, the Entertainment and Devices Division (which houses the Xbox and PC games businesses) experienced a boost in operating income, thanks in part to reduced Xbox production costs.
Net revenues for the quarter were basically flat at $1.89 billion, but operating income jumped 96% from $159 million to $312 million. The non-gaming portion of the division (meaning Zune) dragged business down, Microsoft said. "EDD revenue was flat with growth in Xbox 360 platform and PC game revenue offset by decreased revenue from the non-gaming portion of the business. Xbox 360 platform and PC game revenue increased by $96 million or 8% due mainly to increased revenue from Xbox Live and Xbox 360 video games, offset in part by decreased revenue per console resulting from price reductions during the past 12 months," the company stated in its 10-Q.
Microsoft shipped 2.1 million Xbox 360 consoles during the first quarter of fiscal year 2010, which is slightly down from the 2.2 million Xbox 360s shipped last year at this time. The good news is that Microsoft continues to gain production efficiencies in making the Xbox 360. "EDD operating income increased primarily due to decreased operating expenses. Cost of revenue decreased $103 million or 10%, primarily due to decreased Xbox 360 platform costs, offset in part by increased royalties to partners related to increased Xbox Live transactions," the company noted.
The big story for Microsoft overall right now of course is Windows 7. The software giant seems pleased with the early reception for the new operating system. "The worldwide launches of Windows 7, Exchange Server 2010 and Windows Server 2008 R2 are exciting milestones for Microsoft, our partners, and customers," said Kevin Turner, chief operating officer at Microsoft. "We are pleased by the early positive response we are receiving for these products."
