I know in their last quarter they reported a profit, mostly thanks to the Halo 3 juggernaut. Do you think from this point on Xbox 360 will report profitable quarters?

IMO, I think they will have profitable quarters from now on.

Last quarter was pretty big for them ($150m+ profit) with only 2 weeks of Halo 3.

Now, they have ALOT of Xbox 360's being shipped out and sold at a profit to stores, and a huge load of income coming in from revenue from their profits of 3rd party software.

We'll probably have a few close months to where they nearly broke even (like next quarter, after Christmas, if GTAIV isnt out yet). But overall, we should see MS averaging a decent little profit from now on.

I'm with mrstickball here, I believe they'll be profitable from now on.

Halo 3 helped but it wasn't the only thing which made them profitable, and those other things will likely continue being true.

If the RROD problem is solved for good (on newly produced consoles), they'll likely keep raking it in from now on. 

I think that the Holiday Quarter with the massive softeware launches and the rest of the Halo 3 bump will make them profitable.

I don't know why everyone is assuming they are making all kinds of money off the consoles now. They were still losing money until the die shrink and then they drop prices and bundled games. The die shrink affected the CPU but not GPU so the added/redesigned cooling system is still their. They are pushing hard to shirk to 45 for CPU and the GPU to 65. I say at best they are breaking even.

1st quarter next year will be at a loss though, and it sales hit the same duldrums like they did this year it could be until next Holidays to push software high enough for profit. The console will keep getting cheaper but with added PS3 pressure we could see a price drop wipe out the GTAIV monies. When to they pay for that exclusive content. I am guessing with the release of the game which will also hurt profitability in the short term.

Don't forget that they are also going to start spending serious money developing the next-gen console soon. Probably next year if they want it to arrive in 2011-12.

I think 2009 will be all profit.

So to sum up. Two quarters of profit, 3 of loss, then profit until 1-2 quaters before launch of next system.

Dschumm, MS has been making a profit on each premium 360 sold since at least last November. They were selling premiums for $400 and it cost them $323 to produce. The best thing for their bottom line was Sony's outrageous pricing model as it allowed them to hold off on cutting the 360s price for an extra year here in North America.

There have been repeated links from various places stating that the 360 was now profitable on each console... With the CPU and GPU die shrinks, they have most certainly reduced costs and I'm sure they will further do so. Yeah, Halo 3 brought in some big bucks, but holiday software sales on the 360 are going to be a major boost. Lots of consoles sold, TONS of software sold, plus having RROD charges in the rearview mirror leads me to believe MS is going to have a VERY profitable quarter over the holidays and will most likely stay in the black until their next console unless there is another round of price wars.

Also... Anyone care to take a stab at what Microsoft's next quarter earnings will look like -- specifically for gaming? They made something like $150M Q1 2008 (July Aug September) with a huge initial shipment of Halo 3 to retailers but this quarter will see sustained hardware sales increases as well as a holiday of great software sales? Possibly double that number? Maybe $300 to $350 million? Q2 2008 will be Oct/Nov/Dec 2007 timeframe and I am thinking it will be will be quite stellar indeed.

From VGC's monthly US totals for Q1 2008, the Xbox 360 sold approxmately 10,431,000 units of software. For Q2, 2008, we have October at 4.023 million and November to date at 7.972 million units. That leaves us with December. I would guess that number will increase rather significantly again, but not double again as it did from Oct-Nov. Last year the pattern was roughly a double from Oct-Nov and then about 50% again from Nov-December... That would give me an estimate of about 12 million units of software for December or a total for the Quarter of about $24 million units in total. That's a lot of software. My guesstimate is that they will also sell about 2.5 million consoles in Q2 vs. about 1.1 million in Q1 2008... Yes, this is America only but I suspect Europe will roughly follow the same growth pattern and Japan is too small to change the trend significantly.

OK I give you that they might be making some money on on the consoles(Those cost figures don't count promotion, the bundling, shipping, retailer gets couple dollars, etc.) If they were making $77 on each premium starting last year why were they still losing money? They dropped the premium drice $50 and added games. Yes the die-shrink helps but it does os in the long term. Any money they make from the consoles in minimal. If they were making a lot I bet they would drop prices further to push thiei marketshare. Why would they have lost money last quarter when you take out Halo 3? The profit they made last quarter was due to SOFTWARE.

That is how MS has structured things. They are still burning capital trying to win over Japan and parts of Europe. They are still buying up exclusives and starting work on the next console. They keep dumping money into Live so it will stayt light-years ahead of the competition.

So if they can continue to push tons and tons of software then they will be profitable. I just don't think that will Q1-3 of next year will be quite enough. I expect modest losses.

MS is very patient. They only had 1 profitable quarter on XBox and only 1 so far on the 360. They have turned a corner but they are not about to risk domination later for a few million in the black now. They have done it once and that satifies investors and bosses, this quarter is probably a gimmie, and so they wll be unleassh as much money as they need to next year to keep beating Sony.

this quarter i suspect they will, they move masses of hardware.
next one after that who knows? but i think they will if there aint a pricecut

No. I know people who are still having RROD problems on brand-new systems.

The - but the fact is, the new falcons have much less RROD problems. Most of the "RROD" threads I've seen on various forums seem to have many, many less posts now, despite a massive increase in unit sales.


There were a few reasons as to why the X360 wasn't profitable last year at this time, despite a reported profit on the X360:

#1. Retailer incentives. Microsoft sold the X360 at a huge discount to retailers during last Christmas. Remember the $100 gift cards with a X360 purchase? MS took a hit on that. This year, there is no such thing. Each X360 is going for face-value.

#2. After Christmas, Microsoft had pitiful shipping numbers. With the X360 profitable, did it really matter when MS was barely shipping over 500,000 hardware systems? Even at a $50 profit, that's only $25m in profit. Barely enough to really turn it around.

#3. Lack of first-party software. Aside from Gears of War being published by MS, there has been a major drought of uber-IPs that MS has helmed. Before MS turned a profit we only had 1, 1m first party seller (FM2). The rest were MS published, or 3rd party.


Having said that, MS has litterally none of those things to hamper cash flow. The X360 is selling for a much higher profit, with only a $50 drop. The Xbox 360 is selling through MUCH better, and unless MS does something insane, they aren't stuffing the channel (if anything, they're under-shipping, as I haven't seen a X360 since the beginning of November where I live). Therefore, MS is assured more than 500k units every 3 months to sell at a profit.

Add in the fact that Halo 3 has probably shipped another 3-5m units this quarter (H3 shipped around 3.5m or less for MS's last quarter), other decent first-party IPs like Lost Odyssey and PGR4 no longer being deved, but returning profits....It should be good.

IMO, we should see the X360 profit anywhere from $150-$250m for the H&E Department this quarter. The X360 should ship anywhere from 4-5m hardware units this quarter, but have much less than the 2m units that were still in warehouses when Christmas was over.