From the MS 2008 Annual Report 10-K.
EDD operating loss increased primarily due to the $1.1 billion Xbox 360 charge recognized in the fourth quarter of fiscal year 2007 and Zune launch-related expenses.
The set aside was to cover expected additional costs associated with the new 3 year warranty for RRoD and E74 errors. Any previous losses for repairs either were covered by previous warranty setasides and those numbers would have been in the FY2006 report. The set aside was in FY2007 (2nd year 360 was on the market). FY2006 started July 2005. FY2007 started July 2006. 360 launched November 2005. The fact of the matter is RRoD was costly, but since FY2007 EDD division has been profitable and that profit is driven by the 360. The combined profits from FY2008, FY2009, and FY2010 will wipe out the large FY2007 loss which was because of the set aside. FY2011 (starting July) will again proove to be very profitable and wipe out the FY2006 loss. Not to mention that the 360 really is the only major product in the EDD division that is profitable.
Its libraries that sell systems not a single game.
