@BKK2

I was referring to 19.5 as an unreal number if that is what is confusing you. That is a number of units in the channel that Microsoft cannot possible have unless the new manufacturers retooled their facilities in record time. Microsoft should still be working with the manufacturing rate they had early last month.

They have worked their way out of supply constraint by small margins. They may average 150,000 in weekly sales. They may sell 625,000 units to retailers monthly. That means they have 25,000 to 50,000 accumulation monthly of surplus systems within the channel. VGchartz says they have sold 18.35 million as of last week. They say they have sold over 19 million to retailers. That is a 650,000 difference. Given weekly depletion at its best they have added another 150,000 units into the channel. That would factor out to 800,000 units in the channel globally.

That means unless the new manufacturers have come into play they will still not have a million units in the channel for the launch of GTA IV. Even if the new manufacturers come into play they will still not have 1.5 million units. For reference when Halo 3 launched they were moving a quarter million units in the first week.

Basically in the short term they are far more likely to deplete the channel. Causing what is referred to as supply constraints. A month of strong sales can leave the channel depleted. Remember supply constrained doesn't mean that all the systems have been sold just the majority of them have been sold, and that could happen in as little as three weeks after Grand Theft Autos launch.

I hope you understand where I am coming from. Had the 360 sold over twenty million to retail it would probably not be a major concern, but right now the surplus of available systems is still recovering from the supply constraints of earlier this year it will not take much to shift them back.

come on...people are actually happy with 89m profit with all the things combined into the entertainment division?

Actually, MS, historically speaking, has tended to report in such a way that they downplay their performance and claim obstacles to additional organic growth, etc.  This usually results in market analysts being more conservative when projecting the next quarter's income, stock value, etc., allowing MS to outperform on a regular basis.

They tend to do the opposite of what you suggest. 

http://venturebeat.com/2008/04/24/microsoft-earnings-watch-more-yahoo-bluster-xbox-business-profitable/

That article says they spent $500million buying Danger to "jumpstart" its mobile devices devision. IS the mobile devices division part of the entertainment and devices division? If it is, then the Xbox 360 must have done incredibly.

The trick is that MS calculates, totally or in part, some expenses like “broad-based sales and marketing, product support services, human resources, legal, finance, information technology, corporate development and procurement activities, research and development and other costs, and legal settlements and contingencies” for some divisions, including Entertainment and Devices, in another mishmash report item that years ago was named "Other" and now, judging by where losses are reported, should be "Corporate-Level Activity".

I disagree and I'm not 100 percent sure you didn't just make that up, but I'm open to get proven wrong, as always.

I certainly guarntee you that Microsoft doesn't historically "downplay their performance" when it comes to their monthly reply to NPD, in fact, they make up what anyone outside of a court of law, would consider downright lies, if they were presented in a friendly conversation.

However, I conceed that I could be wrong about quarterly or annual reports...but I doubt it. 

Ha, now that sounds more like the truth. See ladies and gentlemen, it isn't a lie if you can't prove it in court, but it certainly is a lie in my eyes. It's enough of a lie, that if a kid told it to me, I'd give him a time out.

When you lose money on your gaming division, it looks bad. When you look bad, your rep takes a hit. It's a sign of weakness. MS is a pretty manipulative organization when it comes to their public memos.

It's absolute silliness to think that I would say MS is lying about their numbers. I'm simply saying, they presented us with numbers that aren't what we think they are. This isn't their game divisions profit. Their game division, more than likely, suffered a loss, but that's speculation. I can't prove that. I can only state that I stand by my belief that we can't know for sure and Microsoft sure as hell isn't gonna be forthcoming with bad PR.

I also submit that the likely reason that these numbers, Zune, sales, ect, are all mixed together in the first place, is so MS is able to manipulate what exactly they want to present to shareholders and the public, each quarter, without being held legally responsible for submitting false data.

Is anyone telling me that what I'm suggesting is impossible? 

Do profits from XBox Live go under Entertainment and Devices or something else?

Anyways, congrats to Microsoft.

They slashed the 360 price by 100 euros at the end of the quarter.

At most they sold 150k units at the new price in that quarter so that can't have affected their results that much.......