Microsoft Reveals XBOX Losses

Microsoft Reveals XBOX Losses

by November 15, 2002

From Gamespot:

Microsoft yesterday filed its results for the financial quarter that ended on September 30, and the new report provides a clearer breakdown of how the company’s individual divisions are performing. Microsoft’s home and entertainment division–which consists of its Xbox, PC games, consumer software, and TV groups–accounted for a loss of $177 million for the period of July 1 through September 30. During the same period the previous year, before the Xbox launched, the same division had losses of $68 million.

The Xbox is the primary focus of the division, and Microsoft’s report emphasized the impact of the marketing costs involved with the promotion of the console on the financial performance of the division. While the home and entertainment division posted greatly increased revenues of $485 million for the quarter, the high costs involved in marketing Xbox products were cited as the primary factor behind the division’s increased losses. Microsoft has said it plans to spend $2 billion to establish the Xbox console in the market, and it no doubt has the money to spend. Increased profits in other divisions completely offset Xbox-related losses, and the company posted a net profit of $2.7 billion for those three months.