I know you would have to change your past analysis if you changed the software numbers but I don't see a way around .



My estimations for software number would be something like :

80% third parties at 12$ revenue, 10$ margin.

20% first party at 35$ revenue, 30$ margin ( console makers do make a killing on first party, they earn what a third party would earn + the licencing fee, MSFT made a fortune on Halo 3 last year, it will be tough to beat that this year)

This averages at 16.5$ revenue, 14$ margin for software.

PS : I think the real explaination for Q4 2008 loosing money is that it was the first quarter with Euro price cuts reduction and MSFT sold a lot more consoles in Euros than elsewhere that quarter and that price cut was huge ( 150$ time 1 million console sold in Others that quarter = 150 million$).

@ Ail or anyone,

can you guys check to see the breakdown (in general) of 1st and 3rd party software for XBox - as per VGchartz data?

that should be a good indication.

I can tweak the analysis and split up the software numbers - and see what numbers come up.

Thanks.

Well, that would differ from the stated numbers in the Quarterly report, which showed increases of $204 million in R&D and Marketing.  While Marketing will probably not go down, as we head into the holiday season, you've gotta figure that R&D is not going to keep going up 38%, and this was the major driver.  With what growth they are forecasting for Q1 and beyond, it's looking like M$ has some rosy expectations for gaming.

UHM, that is nice, but completely irrelevant to MICROSOFTS SOFTWARE sales. MSFT is not selling GTA or MAdden. Some other r company is. These are MSFT financial we are talking about, not rockstars. If MSFT gets a licensing fee from Rockstar, that would be listed under 'licensing revenue' or some other category not a 'software sale'. When they sell Halo, Age of Empires, Flight Simulator (all very popular software packages!) they are making ~ 75% gross margin on that sale....

 The 90 million software sales listed in the analysis above isn't microsoft sales for the year it's total software sales for the Xbox360.

Please go read the analysis...

So what I said IS relevant....

Microsoft by itself sells nowhere near 90 million units of gaming software/year......

I am sorry, I missed that. There is no way to combine them into one 90M lump. You have to account for the far more preofitable 1st party sales separtely.  However, you assertion that the 1st party is a tiny minority is not quite true.  MSFT is the publisher for 26M of the 94M games (of games that sold over a million).  That is over 27%.  So they get licensing fees for all all games, and publishing fees for, say, 25% of games. 

I still think the alternative analysis is better - $0 margin on HW but improving this year. People seem to think that HW prices fall in drastic amounts, but these consoles are fairly propietary and don't see the same scale reduction as consumer electronics.  Remember MSFT does not have to make a smart business decision around price cuts - they have the cash to lose money forever on this division. I wonder if they even bothered to do the financial impact assesement!

I hope in the next quarter, MSFT mentions other segment revenues or expeneses, to slowly fill up this jigsaw puzzle we call MSFT EDD financials.

Is there any data as to how much PC games, Consumer Hardware & Software revenues are?

PC games are lumped in with XBox stuff. I dont know where they put consumer hardware and software - I am thinking these include MSFT branded mice, keyboard, etc.
While software includes RETAIL VERSIONS of Word, Office, etc.

I am starting to think that if all those businesses are in the EDD (from my understanding), it may be more than $50 or $60 million.

But without any hard data, it's tough to figure out.

I'm not clear about where you think MS Office is record? 

@ heruamon

Entertainment and Devices Division (“EDD”) offerings include the Xbox 360 platform (which includes the Microsoft Xbox video game console system, Xbox 360 video games, Xbox Live, and Xbox 360 accessories), the Zune digital music and entertainment platform, PC software games, online games and services, Mediaroom (our Internet protocol television software), the Surface computing platform, mobile and embedded device platforms, and other devices. EDD leads the development efforts for our line of consumer software and hardware products including application software for Macintosh computers and Microsoft PC hardware products, and is responsible for all retail sales and marketing for Microsoft Office and the Windows operating systems. In April 2008, we acquired Danger, Inc. (“Danger”), a software-as-a-service company that provides mobile operators with an integrated end-to-end solution to deliver mobile data and Internet services to their subscribers.

So it includes mice, keyboards, etc., as well as retail sales of Office and Windows. I guess the ones that are not OEM versions.

So I'm not sure how much revenue they get from those.

However, maybe I lumped them all together with the Zune and Mobile segments.

So maybe all is good still.

Aaaaah....Got it.  EDD included far too much imho, and M$ will have to splinter it, going forward.  I can udnerstand puttign the consoles, media players and other things entertianment, but it makesit difficult to make meaningful appraisals based on what we know.