The next Sony report is the last one where the gaming division will be reported separately... Afterwards it will be together with VAIO and Walkman so we'll have to keep guessing what happened, like we do today with MS.

My company posted a 55% drop in their release today. This economy is hurting all the big dogs.

I'm surprised it's only 32 million lol. To be fair with the price cut and their aggressive marketing they could have done far worse. It's all releative of coursem 32 million would be disasterous for many companies to lose.

 Cutting and pasting from the 10Q report - more details as to where the losses come from.

Entertainment and Devices Division

* Not meaningful

Entertainment and Devices Division ("EDD") offerings include the Xbox 360 platform (which includes the Microsoft Xbox 360 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 Apple's Macintosh computers and Microsoft PC hardware products, and is responsible for all retail sales and marketing for Microsoft Office and the Windows operating systems.

Three months ended March 31, 2009 compared with three months ended March 31, 2008

EDD revenue decreased primarily due to decreased sales of application software for Apple's Macintosh computers, partially offset by increased Xbox 360 platform and PC game revenue. The decrease in revenue included an unfavorable impact from foreign currency exchange rates of $38 million or two percentage points. Sales of application software for Apple's Macintosh computers declined 63%, reflecting the launch of Mac Office 2008 in the prior year as well as a decline in sales of Apple computers. Xbox 360 platform and PC game revenue increased 16%, primarily as a result of an increase in Xbox 360 platform sales, partially offset by decreased revenue per Xbox 360 console due to price reductions during the past 12 months. We shipped 1.7 million Xbox 360 consoles during the third quarter of fiscal year 2009, compared with 1.3 million Xbox 360 consoles during the third quarter of fiscal year 2008.

EDD operating income decreased primarily due to increased research and development expenses and cost of revenue. Research and development expenses increased $66 million or 18%, primarily reflecting increased headcount-related expenses associated with the Windows Mobile device platform. Cost of revenue increased $52 million or 6%, primarily driven by increased costs associated with the Xbox 360 platform, reflecting the increase in console and video game sales.

Nine months ended March 31, 2009 compared with nine months ended March 31, 2008

EDD revenue decreased primarily due to decreased Xbox 360 platform and PC game revenue and included an unfavorable impact from foreign currency exchange rates of $47 million or one percentage point. Xbox 360 platform and PC game revenue decreased $51 million or 1%, primarily as a result of decreased revenue per Xbox 360 console as a result of price reductions during the past 12 months. We shipped 10 million Xbox 360 consoles during the first nine months of fiscal year 2009 compared with 7.5 million Xbox 360 consoles during the first nine months of fiscal year 2008.

EDD operating income decreased primarily due to increased research and development expenses, partially offset by decreased cost of revenue. Research and development expenses increased $317 million or 30%, primarily reflecting increased headcount-related expenses associated with the Windows Mobile device platform, driven by recent acquisitions. Cost of revenue decreased $60 million or 2%, primarily driven by decreased Xbox 360 platform costs.

Looks like the price cut was definitely felt, but looks like R&D also caused a lot of the loss.  360 and PC revenue increased though, which is good.

Does this mean they're losing money on each 360 sold (or at least on the Arcades) after the price drop?

I figured they still would've been turning a decent profit (hell, any at all) at the $199 price point, given how many revisions they've made to the hardware by this point.

Could the losses have been incurred by something else in the division?

Microsoft Has $13.65B Quarter, Sells 1.7 Million Xbox 360s

By Michael McWhertor

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Software giant Microsoft announced its quarterly earnings today, boasting $13.65 billion in revenue, with $1.57 billion of that from the division responsible for the Xbox 360. That means some bad, some good.

Revenue was down across the company by six percent on lowered software sales, but Microsoft's net income for the quarter (roughly, the company's profit) was also down to $2.98 billion. While netting almost three billion dollars is nothing to sneeze at, it represents a decline of 32% in net income from the same period last year. The Xbox division also saw a drop.

Sales of 1.7 million Xbox 360s couldn't stop the Entertainment and Devices Division from seeing a decline in revenue, which Microsoft figures was a 2% year-over-year drop.

Microsoft, trying to keep things on the positive tip, says that the Xbox 360 showed "strong" unit sales in its third quarter results PowerPoint. Xbox 360 sales were up some 30% from Q3 2008, but we'd expect the lower price on the console to have had some sort of impact on the division's total revenue.

The Xbox 360 is showing an improved attach rate as of the last quarter, with 8.3 software units and 3.9 accessories sold per console.

Microsoft Reports Third-Quarter Results [Microsoft] [Image Credit]

Mac Office sales are down, which hurts their profits for E&DD this quarter. Mac Office is a still a huge profit for this division, although MS will never admit how much.

Like always, picking out what made or lost money in E&DD is practically impossible. There are way to many products in there to assign any loss (or profit) to any one product.

Plus whatever they are doing with the new Zune, and Windows mobile doesn't help either

Its really impossible to say, the only information of value is shipment numbers really.