The software giant is paying a heavy fee for penetrating to the gaming console market. The sales figures are up, but at a reduced price, so the business still generated loss of whopping 209 million USD. Microsoft is a very wealthy company, and it can afford to make loss with the Xbox, while establishing itself on the market, but how long is it willing to?
However, the operating loss at the division was a very substantial $209m - illustrating just how difficult Microsoft is finding it to make money out of the Xbox. Compare this with closest rival Nintendo, which made just shy of half a billion dollars profit in the year to 31 March - and expects a billion dollar profit in the current financial year.
Of course, Microsoft has arguably never needed to make money out of the Xbox, only to establish itself as a market player. After all, despite the losses incurred by Xbox, the company as a whole still made $1.32bn in the quarter (down slightly due to $1.89bn in settlements with Sun Microsystems and the European Commission) and added over $3bn to its cash and short term investment reserves, bringing the cash pile to an astonishing $56.4bn.The Register