Zune brings Xbox 360 down

Mike Bantick
Friday, 27 April 2007 14:03

Your IT - Entertainment

Microsoft have released Q3 financial figures.  The Entertainment and Devices Division (EDD) seems to be dragging its feet, despite Xbox 360 shipments now topping 11 Million.

Microsoft Corp have announced March 31 quarter revenue is up 32 percent to US$14.40 with an operating income topping US6.59 billion.  This equates to a net income of US$4.93 billion.

Microsoft attributes this boost in revenue to "robust demand" for the Vista Operating System.  All looks rosy, correct? The EDD however has seen a quarterly revenue fall of 21 percent to a lousy (although, feel free to put it in my bank account) US$929 million.

The EDD consists of Microsoft’s ventures into the entertainment arena, consisting of “Games for Windows”, The Microsoft Game Studios, Xbox 360 and Zune businesses.

Chris Liddell, Microsoft Chief Financial Officer, spoke to the Associated Press.  According to Liddell, the EDD drop of was not unexpected and that Microsoft was still set to reach its previous target of selling 1 million Zunes during the fiscal year.

Liddell also expects the company to reach a total of 12 million Xbox 360’s shipped by the same time.  This gives the newly produced Xbox 360 Elite with its HDMI connectivity and 120GB HDD just on a month to make an impact in the market place.

Microsoft makes a loss on each Xbox 360 sold due to hardware costs, although the Xbox 360 has become cheaper to produce and the company shipped 500,000 units during the reported quarter, this compares to the same quarter last year of 1.7 Million Xbox 360's.  That being the first real reported quarter of sales following the launch of the Xbox 360 in November 2005.

Meanwhile the portable music device, the Zune cut into the increased revenue of the Xbox 360 by having an expensive launch party in November 2006.

The expectation of Microsoft for the full financial year is; between US56.5 billion and US$57.5 billion in revenue with an operation income around US$22.5 billion.