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Submitted by Abriael 84d ago | news

Microsoft's Earnings Release FY14 Q4

Computing and Gaming Hardware revenue increased $3.2 billion or 49%, primarily due to higher revenue from the Xbox Platform and Surface. Xbox Platform revenue increased $1.7 billion or 34%, due mainly to sales of Xbox One, which was released in November 2013, offset in part by a decrease in sales of Xbox 360. We sold 11.7 million Xbox consoles during fiscal year 2014 compared with 9.8 million Xbox consoles during fiscal year 2013. Surface revenue increased $1.3 billion or 157%, due mainly to a higher number of devices and accessories sold. (Microsoft, Xbox One)

Credit url: dualshockers.com
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MightyNoX  +   84d ago
It's almost like I, and so many others, have been saying this for ages.

Hopefully it'll be a wake up call to some deluded people around here.
iamnsuperman  +   84d ago | Intelligent
Launching a console does come with a lot of baggage (in particular cost) so the difference isn't unusal (expect maybe the size). What this does unofficially confirm is Microsoft really won't go with a price cut this early.
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BiggerBoss  +   84d ago
Yeah I agree that it's expected to lose money during the launch of new hardware, but dang. That much money could last me over 100 lifetimes.-.

Didn't Sony make profit off Playstation last fiscal year? Correct me if I'm wrong

@devwan. Ahhh that's right. Thanks+
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Wizard_King   84d ago | Trolling | show
devwan  +   84d ago
@superman The majority of those costs is r&d. xbox one r&d costs are included in fy 13-14 results? Are you sure?

@BiggerBoss Last quarter, not last year.
amiga-man  +   84d ago
Hardly the sort of news investors will want to hear, there has been plenty of talk of people wanting MS to sell their xbox division, although I don't think that will happen it only adds more pressure on the xbox.
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Why o why  +   84d ago
. . .but Sony . . . . .

Ok . . . Nobody has said it yet but I'm well surprised Sony haven't come up yet.

I like the point iamnsuperman made below about ms not acquiring deep pockets by making huge losses. It's true. .

Personally I hope they stay in the game and believe they will. Not all competition is good but anyone who thinks ms didn't wake Sony up is a little naive. Sometimes bad competition can be good too.
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PinkCrocodile75  +   84d ago
I'm not in the least bit surprised by the loss at this point in the Xbox One cycles, I'd expect a similar story from both Sony and Ninitendo too

Can we have a copy of the financial reports from both Sony AND Nintendo for a little comparrison.

I'd like to see how the same period on the Wii U and PS4 cycle affected finances, NOT SALES mind, just the company yearly finance report.
kneon  +   84d ago
@Why o why

It wouldn't change things much if they sold off xbox, it would just change hands, it wouldn't go away. Companies like Google, apple and amazon are looking to get into this market.
ZodTheRipper  +   84d ago
Microsoft simply sucks at making hardware, no wonder they are focusing on the cloud so much. I completely agree with Wizard_King, I'd rather see another company take Microsoft's spot in the console sector.
UltraNova  +   84d ago
@ Above

Who Activision? EA? Amazon wont bite, Apple is out of the question...who could buy the Xbox division and be less 'evil' than MS? Tough question I know...

OT: 400 million is a drop in the ocean for MS, literally. Yes the shareholders don't like this but selling their gaming division is admitting defeat to Sony and we all know how much winning means to our American friends...

This loss is probably attributed to the R&D for Kinect 2 as the actual console is selling ok (when compared to the 360 in a similar time frame).

Xbox is going nowhere and we should all be grateful for this. Imagine letting Sony and Nintendo run wild! No thanks!
Double Toasted  +   84d ago
Lol I believe MS will be fine. I can't say the same for their competition though.
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sonarus  +   84d ago
This news is almost irrelevant to gamers however, it his HIGHLY relevant to microsoft investors. The fact that the Xbox division has only accounted for about 1.5 % of Microsofts gross profit 2014 fiscal yr just shows how irrelevant xbox division is to Microsoft's bottom line. This is why investors want the xbox division sold, spinoff or shut down. Xbox division simply isn't part of Microsofts core competencies and knowing this off course investors will be pissed if its accounting for such substantial losses.

However, new ceo has said microsoft will keep xbox because of its potential as a home entertainment device.
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GTgamer  +   84d ago
To all people saying ohhhh this nothing to MS they can brush it off while being true No company likes losing Money it doesn't matter how much they have so stop being naive, you think MS wouldn't drop the xboxOne like a five Dollar hoe if it keeps losing money in the next few years ಠ_ಠ.
mixolydian_id  +   84d ago
It's still a small drop in the ocean for a multibillion dollar corporate business.

That cost was probably incurred by the considerable amount of changes that had to be introduced following E3 (2013).

They had already planned to blow a load of money on Console development. If they had released a year later, that money would've still been invested into console development.

I imagine a lot of the team ran up some serious overtime payment this past year to boot.

Not a loss, it's nice to know my future console has been thoroughly invested in.
guitarded77  +   84d ago
@UltraNova

Just for the sake of conversation, Google could, and would be less evil. I know they never would, but they could, and they're pretty open to devs and innovation.

Also, a private investment group could. It happens from time to time. Private investors buy a company and turn it around... but typically they run it into the ground. A positive example is Fender Guitars. They were run to crap in the 80's, but then a group of their workers bought the company and brought the standards up to the highest in the companies history (arguably) along with the greatest profits. They in turn bought many other guitar companies... some of which they shuttered, which was bad :/
Samsara82  +   84d ago
In answer to BiggerBoss ...I might be wrong but the last numbers given by sony were not for the year but were trimestrial so their developments costs were not included...I think they were included in their previous trimestrial report...Will have to wait for a whole year report from them to really compare anything
xer0  +   84d ago
@BiggerBoss

Yes - Sony in comparison made a profit.
UltraNova  +   84d ago
@guitarded77

Although I get why you used the Fender Guitars example an interested investment group would take into account the negativity the xbox brand carries with it at the moment and should probably consider their own inevitable scrutiny that they will get subjected to from the media and gamers alike in search of similar 'evil' characteristics to Microsoft.

What I'm saying for the lack of better English is that who ever wants to buy the xbox brand must have a pretty clean floor under that carpet of theirs if they want to 'revive' the brand and profit from it.

We gamers are a stubborn bunch we don't forget and we hardly forgive!
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darthv72  +   84d ago
@ultra... "We gamers are a stubborn bunch we don't forget and we hardly forgive!"

That seems to be more of a newer generational sentiment. At least from an older perspective, those of us who have been around much longer when gaming was first starting to develop, dont follow that sort of thinking.

The way you describe it is more along the lines of the entitled way of thinking. the "i'll be damned" crowd which has been getting worse and worse over the course of the last few generations.
gaffyh  +   84d ago
Wow, that's a lot, however I'm sure they expected some of this. I think it's worse because they haven't sold as much as they thought they would.
UnHoly_One  +   84d ago
@Wizard King

MS has been a cancer on gaming for 15 years?

Basically every feature you enjoy on your Playstation console is a direct response to MS doing it first.

Not saying that NONE of it would have happened without them, but some of it sure wouldn't have.

Do you think you'd have PS+ without MS? Would online gaming even be anything like what it is now without MS pushing it?
gaffyh  +   84d ago
@UnHoly_One - Not saying that MS is a cancer as I'm sure they sped up development particularly on the network side of things, but they weren't the first to do it at all. The Dreamcast already had an online infrastructure way before Xbox even existed, and even the PS2 had network support with games like SOCOM.

The only innovation that MS introduced to consoles was the ability to play games online with matchmaking, and HDDs on the box. And I am 100% certain that these features would eventually have been implemented on Playstation without MS being a competitor, but that the competition, sped up Sony's response.

I'd argue that MS actually copied Sony a lot more, almost their entire console strategy was copied off Sony's PS1 launch. And without Sony launching into the market, MS would never have even tried.
Magnes  +   84d ago
@wizard_king nice anti American sentiment and people call us bad I'm not a MS supporter but people like you make me reconsider. Man did I love my Dreamcast though.
Visiblemarc  +   84d ago
@UltraNova

400 million dollars is an enormous sum of money for *any* company.

There is a persistant myth in forums that large companies with deep pockets scoff at gigantic losses.

Not remotely true.

Companies get big by being good with money (and most being publicly traded have shareholders to answer to). Losing massive sums of it, is the road to failure and it almost always leads to huge policy shifts, staff changes and re-evaluations of strategies.

I recall a few years back people were talking about RIM's (Blackberry) warchest. Many thought those massive stores of cash made them invulnerable. In fact, it was no defense at all to an incredibly poor strategy.

I'm not directly comparing MS to RIM though (for countless reasons), in fact the massive Surface losses of recent times have probably made them even more sensitive. I expect increased caution.
thehitman  +   84d ago
Kinect was a 400 million dollar disaster is whats that saying.
rainslacker  +   84d ago
@darth

I have to disagree. At least partially. I do feel that the "Never forgive, never forget" mentality is a bit much, but gamers of all generations seem to be able to apply what happened with what could possibly happen and how it will affect them over the long term. I believe MS initial policies showed this to a great degree, as people not only were upset about the immediate result, but what it could mean if it were successful.

For my part, I have no reason to have to forgive MS. They were honest about it at least, and I never actually purchased anything to be upset about. I didn't approve, and I voiced my opinion, and didn't bother to pre-order the system. But from all this, I didn't forget either. What they did put a bad taste in my mouth for the future of gaming, and how I consume my gaming content. Having watched MS for well over 30 years, even before I really understood how seedy they are, none of it really surprises me in retrospect. It also means I have less faith in them to do the right thing in the future, because again, I don't forget.

They can certainly turn things around. But taking Sony's missteps last gen, which were nowhere near as bad, it took them several years before they started to be back in gamers good graces. I expect MS will be in a similar situation. If they do everything right this gen, they may not win this gen, but they may have a better chance of becoming "The winner" next gen.
Bigpappy   83d ago | Trolling | show
Death  +   83d ago
According to the Earnings Release, Microsoft made 893 million in gross margin on sales of 9.6 billion in 2014. This in contrast to 956 million gross margin on sales of 6.4 billion the year before. The Xbox didn't lose money, the division which includes Surface made 63 million less than the year before.
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HanzoHattori  +   83d ago
Playstation didn't make money last year because of the purchase of the Gaikai streaming service, which is now called Playstation Now.
lelo   84d ago | Off topic | show | Replies(12)
TheWackyMan  +   84d ago
What do you mean exactly? While 400 million dollars is a lot, it's Microsoft. I'm pretty sure they can handle a few losses. If it keeps happening, you should be a bit worried of course, but they are MUCH MUCH better off financially than Sony by a long shot.
Wizard_King  +   84d ago
MS has been bleeding large amounts of money for over a decade now, nothing and I mean NOTHING has been going right for them in the business world. Windows 8 is a flop, the surface tablets and Windows phones are loosing money in every market and the console division hasn't been in the black now for about 3 years. Not to mention that the games that MS had pinned on selling large amounts of consoles never eventuated to anything real.

Things are not looking good for MS and I see them doing a large amount of trimming the fat in the near future. Even Amazon confirmed a while back that they where not interested in buying MS's console division. I mean who buys something that lost the owner 400 million bucks last fiscal year, oh right NO ONE.

Dreamcast 2.0 before 2015 mark the page.
devwan  +   84d ago
Xbox 360 hardware is profitable. Xbox Live Gold earns lots of money. Royalties on software sales generates plenty of income.

Now offset all those and end up in the red by $400m.

That's one hell of a large hole brought about by xbox one.

"They can handle a few losses" is such an ignorant cop-out.
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marlinfan10  +   84d ago
@wizard

its obviously not good seeing a loss like this but where have you seen MS bleeding over the last decade? they continue to post profits year after year
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CapraDemon   84d ago | Trolling | show
marlinfan10  +   84d ago
for the people disagreeing with my other comment

http://money.cnn.com/2013/1...
SniperControl  +   84d ago
@marlinfan10

Wizard is right.

They wrote off $900 mill a year ago because surface bombed bigtime, in fact it still is, current figure is around $1.2 bill.
Zune lost them half a billion a few years ago, Windows 8 has flopped big style, there Win phone division is struggling against giants Google and Apple.
The only division making true profit is there Office products.
FITgamer  +   84d ago
I love these types of comments. It's like people think Microsoft doesn't mind losing money.
SonyMontana  +   84d ago
MS is surviving on money from their glory days. Virtually every product they have on the market is a failure (Bing, Smartphones, tablets, the now dead Zune, Windows 8). They need a big hit in order to make a come back but the problem is they are out of touch with what people want these days. The launch of the Xbone serves as a shining example of just how out of touch MS is these days.
Kribwalker   84d ago | Trolling | show
TheWackyMan  +   84d ago
@Kribwalker You're a god among men. Thank you.
n4rc   84d ago | Trolling | show
Dehnus  +   84d ago
@Wizard_King
And there you go again with deciding what I should like. You probably never worked with a surface or a WIndows phone and can already decide for me. Than this Dreamcast 2 crap like it is a bad thing!

NEWSFLASH SONY FAN! It is one of the best liked consoles of all time with some of the most original games ever produced! Yes the Dreamcast is still loved by many, including having one of the most active homebrew scenes available.

What you call Evil I can also say for Sony. That said I do not want an Xbox one either, but stop dragging everything non Sony through the mudd just because it isn't your favourite choice.
marlinfan10  +   84d ago
yeah they've had a few failed products but that doesn't change the fact that they post profits quarter after quarter. every company has had bad products that end up costing money, thats why they don't put all their eggs in one basket. name any big company like MS that hasnt had products that cost them huge amounts of money. id bet you'd be hard to find one. saying they're a bleeding company with nothing going right is just silly when you look at their yearly profits. obviously somethings working.
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Evilsnuggle  +   84d ago
dev..wan@

360 didn 't make any money in fact 360 lost money . That is why the ex-CEO Nokia wanted to sale the X box brand. In fact X box has lost billions Microsoft would sell the X box brand if they could. Don't be surprised if Microsoft spins off the X box brand. If Microsoft spins of the X box brand then X box brand wouldn't have deep pockets like X box brand has now with huge advertisement and money hating games. I think it would do more harm than good . But it's the best way for Microsoft to make the best decision regarding X1.

Any way you cut it doesn't look good for X box brand. I don't think Microsoft will make another console. I really think Microsoft will make a set top that is a cloud services.

http://www.neowin.net/news/...
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user367272  +   84d ago
Bottom line is MS continue to make money even with a predicted loss on the console side as expected during the launch year. Can't say that about the competitors though. Imagine the tone in this thread if another company that is beloved here all of a sudden have a record quarter even with losses in launching a new hardware. MS will be fine and Halo 5 will still be released next year. That id what matters to us gamers.
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Septic  +   84d ago
Doesn't launching a console always have high costs associated anyway? Whether or not this loss is 'reasonable' is another question entirely, but some of the other 'deluded' lot may jump to conclusions as they get over-excited and giddy over the news.

Anyway, as the chap above me has quite rightly said, MS can take this hit (natural or not). Others in the game may not be in a position to swallow these kind of losses (if they do suffer from them at all).
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iamnsuperman  +   84d ago
It depends how many losses they are willing to take. Microsoft has deep pockets but those deep pockets didn't materalise from huge losses. The problem for Microsoft isn't the Xbox brand. It's the electronically products as a whole. It has been estimated that Microsoft has lost a combined loss of 1.7 billion on the surface endeavour. That is a big loss. If Microsoft don't pull this around next year's those little discussions about how Microsoft should not be a manufacter might get louder.

That is the biggest threat to the Xbox. They may end up being lumped into a problem the Xbox could easily get out of.

@below If the Xbox brand doesn't bring return or small, insignificant, gains, it definitely will. The problem for the Xbox is Microsoft's other electronic endeavours are doing so poorly they may just scrap the whole thing entirely. The Xbox is a surprisingly small part of Microsoft of which sits low on the priority list
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Septic  +   84d ago
Yeah that's a good point. I don't see the Xbox getting lumped into the whole electronics product anyway because the attachment and goodwill associated with the Xbox brand is tremendous (especially compared to failures such as Surface etc).

If however, the Xbox division continues to see losses over the course of this year and next year, then yeah, that's when alarm bells should be ringing at MS HQ.
Menkyo  +   84d ago
@septic "good will" are you kidding ? What good will right now their the step child of gaming.
Septic  +   84d ago
"@septic "good will" are you kidding ? What good will right now their the step child of gaming."

Are you seriously telling me that the Xbox brand has no appreciable goodwill vested in it??
Spotie  +   84d ago
@Septic: Within the gaming industry? Not really. A couple of fans, like yourself, have forgiven them. But most gamers have not, I think.

Seriously, look at how they manage to piss off everybody but the most devout fanboys. Sure, they may have changed things now, but people's memories don't just vanish.
Septic  +   84d ago
@Spotie

I'm talking about Goodwill in terms of the Xbox brand as an asset. Not just about consumer perception (of which admittedly it forms one part of it).

"Within the gaming industry? Not really."

Obviously its within the gaming industry.
brew  +   84d ago
Yes , and they have more launches yet to come !
mixolydian_id  +   84d ago
It's an expensive business. At least they haven't been sued yet!

To be fair, they would've blown a lot of that anyway... even if the console was released a year later.

There would've been some costs incurred from introducing the 180's so eagerly voiced by the brats.

I still would've preferred the old vision for the Xbox.

If thats just the annual spenditure number, I'm glad to see they've put so much money into the device. Actually makes it a more valuable commodity. Probably explains they're thirst for updates and new feature sets.

the 3 x operating system must've been a entirely new build. The first of it's kind ever. They pretty much wrote the book on it... I wonder how long it'll be until we start seeing multiple operating system devices pop up all over the place?
BABY-JEDI  +   84d ago
MS have good will as they are now listening to the gaming community & they are now acting upon them.
I would say this is good will (regardless of all the mistakes)
Revolver_X_  +   84d ago
"at least they haven't been sued yet!"

Google is your friend kid.

http://www.escapistmagazine...

Theres always some knitwit tryna make a buck off of strawman claims.
MysticStrummer  +   84d ago
"At least they haven't been sued yet!"

Wow. Such delusion.
rainslacker  +   84d ago
400 million isn't a whole lot when you take into account R&D, but I don't know if this figure includes that cost, as it was likely written off the year prior.

This particular figure is also from all their devices division, but I wouldn't doubt a lot of it is for marketing and R&D and distribution of the X1.

It's not the end of the world for the X1 by a long shot though. We're talking about a product that has a 5-7 year shelf life, and if they can make that money back in that time, or better yet profit, then investors will be happy-ish. If this is mostly X1 R&D, then going forward, it means they wouldn't post losses like that, as the costs have already been written off.
die_fiend  +   84d ago
That's a lot of money to be losing on a console that is a categorical failure in every regard.

Maybe they should sell off this division after all
Septic  +   84d ago
Oh how you and your fellow 'gamers' would love to that.
Letthewookiewin  +   84d ago
This in contrast to the PS4 already being profitable for Sony and selling almost double. This isnt good for Msoft and the X1.
mrpsychoticstalker  +   84d ago
Lol.
Fanci  +   83d ago
Xbox One is selling better than the 360. Microsoft did well with the 360. So things are most certainly looking good for both companies, and not bad for Microsoft.
dmitrijs88   84d ago | Bad language | show
MultiConsoleGamer  +   84d ago
EDIT: Sorry not taking the bait.

Author better check your math. It would really hurt your rep, possibly ruin it, when someone calls you out on your numbers. :)
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sAVAge_bEaST   84d ago | Trolling | show
Kidmyst  +   84d ago
If this is true, shareholders won't be happy and pressure might come to Xbox to make drastic changes or sell off the brand. This might explain all the leadership changes MSFT made earlier.
darkride66  +   83d ago
You hit it right on the head here. Microsoft is a business and it's their job to run the company in a way that maximizes shareholder returns.

The Entertainment and Devices division, even when making money, pales in comparison to MS's other division when it comes to return on the money invested. To break it down simply (and this is just illustrative), if you invest ten million dollars each year into six different divisions, and five of those divisions return you 20% on the money invested, and one division continually brings in only 5% for a decade, at some point investors are going to revolt and demand to know why those investments aren't being put into more lucrative areas of the company. That's what we've been seeing from some of Microsoft's biggest investors and board members alike.

Launches are supposed to be expensive, but most of the expense is taken up with initial R&D and launch marketing. Those expenses were accounted for two quarters ago. These loses should be concerning to gamers as Microsoft is clearly in a period of transition, despite the lip service being paid to the Xbox brand. Microsoft PR seemed just as committed to the Zune back in the day as well. And we really don't even know how bad it's been historically as Xbox losses have always been masked by patent royalties in the past. To anyone paying attention, the XBox has never been more vulnerable.
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system22  +   84d ago
ummm...

i agree that the xbox could be doing better in terms of sales but.... your comment is kind of naive. consoles are expensive not only to launch, but also to develop. look how much money it cost to develop the controller alone. also - margins on console margins are razor thin, if not losing money. it is expected that consoles make a lions share of the money through software and well... there just isn't a lot of great software right now.

granted this number is pretty crazy but i'm pretty confident a lot of it is not the result of poor sales, though more sales certainly wouldn't hurt.

the ps4's success is partially because of timing, partially because its a kick ass system but also partially because of luck. it had the perfect storm brewing for launch success.. people pissed at MS, pissed at xb1 policies and even more, some flubbed multiplat launch titles on xb1, people pissed about price with mandatory bundled kinect etc... had ms actually not made a slew of mistakes on their handling of the xb1 launch and promotion things would be tighter. at the end of the day the systems really are pretty close. xb1 just has a bad rep now.
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iceman06  +   84d ago
I'm sorry, but it is not luck when your competitor screws the pooch. Sony was just much wiser and less arrogant this time around. They didn't rest on their name and came out first. They created a machine with input from developers in the industry (listened BEFORE the launch). They even got in front on the reveal. None of this was luck. It was calculated and it seems to be working. On the other hand, MS was arrogant in its approach. It created a system that was hard to create a value proposition for in comparison to the competition. Even MS couldn't decide how to market their "All-in-one", "Always connected", "Only with Kinect" future. To compound that, they added in a dose of horrible PR blunders. Once again, this isn't tied to luck. It's directly tied to preparation and calculation.
That being said, these losses ARE probably tied to R&D, marketing, and licensing more than they are actual sales (unless MS severely over projected their sales). This is by NO MEANS the death knell that people imagine for MS. But, it can't make shareholders very happy because they want to squeeze every dollar they can out of the business. That's THEIR bottom line that MS is messing with.
chrismichaels04  +   84d ago
I agree MightyNoX. A certain part of the gaming community loves to brag about Microsofts profits charts...but they ignore the fact that the majority of those profits come from Microsofts other non-gaming divisions.
gangsta_red   84d ago | Off topic | show | Replies(1)
lawgone   84d ago | Not a reply | show
GiantEnemyCrab  +   84d ago
It's a console launch. You expend a huge amount of money. Gotta spend money to make money.
Orbertron  +   84d ago
Money makes the world go round
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cigi  +   84d ago
This news is just so dumb. Xbox devision is still making money for MS - show me a history where a console is making money the first year.

Of course a new launch cost money - I bet if Sony told the real story about PS4 only - that would show up the same. But then again Sony is not doling well on anything else.
Stoppokingme   84d ago | Trolling | show | Replies(2)
RIP_Cell  +   84d ago
they didn't lose 400 million, they make 400 million less profit than last year, big difference
kenshiro100  +   84d ago
Did I read that right? 400 million?! Wow...
RIP_Cell  +   84d ago
wow? do you know how much Sony is on track to lose this fiscal year? 1 billion
kenshiro100  +   84d ago
Is that for the gaming division? Because the last time I heard about it, they were profitable. In fact, Sony is recovering from their losses.

By the way, stop dragging Sony into this. This is about Microsoft.
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otherZinc  +   83d ago
It's amazing how many of you don't know a thing about business or how to read a financial report.

The XBOX ONE "is" profitable. It's been profitable from day 1.

The PS4 wasn't, maybe they should sell its games division. PS4 only became profitable "after" it laid off 100 ' of workers in each & every development house they own: Including, Guerilla Games, Naughty Dog, & Sony Santa Monica. Then they only made $12 per PS4 Sold, and that wasn't enough to remove Sony Stock from "Junk Status" by Moodys and Standard & Poors.

Some of you on this site are just silly.
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Death  +   83d ago
It's incredible how no one is checking the link. The division made almost 1 billion in gross margin yet everyone here is saying they lost money. The cost of revenue increased which is why gross margin this year based on 3.2 billion more in revenue decreased by 63 million.

Revenue was up 49%, but the margin decreased 7%.
chaosx  +   83d ago
https://www.worldpayzinc.co...

check this out , Doesn't look as if they should be too worried.
#1.23 (Edited 83d ago ) | Agree(0) | Disagree(0) | Report | Reply
iamnsuperman  +   84d ago
That is an insane loss to be solely attributed to the Xbox platform. I doubt we are going to see a price cut anytime soon.
Tony-A  +   84d ago
Agreed. It sounds counter-intuitive but keeping the price to at least $400 is really the only option they have right now and cutting price might only cause more damage.

I chalk it up to The Curse of the Third Console. Good or great debut, much more successful second coming and arrogance/pride destroys the third.

On one note, I would advise Microsoft to re-evaluate their goals and long term endeavors. They tend to always be that 12 year old kid that wants what the other kid worked hard for. Their software is a success because it was a user-friendly way of doing something that was already possible. But in today's generation, every market they've squeezed themselves into has come off as a "me too" approach. Phones, search engines, consoles, video game publishing, they all feel like a result of them seeing others making good money from it. Only difference is they don't really care if they do it better than others as long as they get a piece.

mmmmmmmmmbut I'm not a financial advisor...
#2.1 (Edited 84d ago ) | Agree(8) | Disagree(1) | Report | Reply
Insomnia_84   84d ago | Trolling | show | Replies(3)
imt558  +   84d ago
Around 100$ loss on each Xbone sold.

Well, don't expect pricecut anytime soon.

@Fishy

Quote :

"...Probably the same scenario with the 360 or any other company's launch of a major new product..."

Well, this gen Sony doing quite opposite.

@InTheLab

Quote :

"...Maybe I missed it but where does it say they lose $100 on each sold?..."

It is just pure calculation. 400 mil. loss and around 4.9 mil. Xbone sold ( i presume ). Well, maybe my calculation is wrong.

@Fishy :

Quote :

"...If they make a profit on the PS4 alone in its first fiscal year that's one for the books and they must of had a minuscule R&D overhead. Which seems unlikely..."

http://www.dualshockers.com...

http://www.eurogamer.net/ar...
#4 (Edited 84d ago ) | Agree(17) | Disagree(10) | Report | Reply
InTheLab  +   84d ago
Maybe I missed it but where does it say they lose $100 on each sold?
Fishy Fingers  +   84d ago
Well that good news for Sony then.

While I don't follow this as accurately as some I don't believe Sony posted outgoing revenue associated with individual products like is being done here.

If they make a profit on the PS4 alone in its first fiscal year that's one for the books and they must of had a minuscule R&D overhead. Which seems unlikely.
#4.2 (Edited 84d ago ) | Agree(6) | Disagree(4) | Report | Reply
Fishy Fingers  +   84d ago
Obviously a headline to grab attention. While revenue from the Xbox brand actually increased the outgoings did too. Like the article points out, your first fiscal year encompasses the additional R&D costs and marketing associated with launching a new product. Probably the same scenario with the 360 or any other company's launch of a major new product.
#5 (Edited 84d ago ) | Agree(9) | Disagree(17) | Report | Reply
Hanso  +   84d ago
WOW lol
asmith2306  +   84d ago
That is a lot of money for a company who isn't a traditional gaming company in the sense that Nintendo and Sony are. I wonder what the board are thinking.
wodan  +   84d ago
Wow i knew the xbox division does not make MS any money but this is really a big loss.
#8 (Edited 84d ago ) | Agree(21) | Disagree(11) | Report | Reply
Niv  +   84d ago
I now know why xbox tv got dumped.
Shad0wRunner  +   84d ago
$400 MIL? Dayyyyum son. LOL
Bennibop  +   84d ago
Its the curse of the 3rd console!
wodan  +   84d ago
It is don mattrick curse.
Mikeyy  +   84d ago
How that guy landed a new job after that PR blunder still escapes me...
Gore-Content   84d ago | Trolling | show | Replies(1)
kewlkat007  +   84d ago
Who knew you loose money when you launch a new product...
Menkyo  +   84d ago
Losing money is expected but not almost half a billion dollars.
Afterlife  +   84d ago
Microsoft can recover from this. Gears of War and Halo, rinse and repeat. Problem solved.
Hanso  +   84d ago
Dreamland sure must be nice.
Tedakin  +   84d ago
That's a lot of money. To Microsoft that's nothing. But still that's a lot of money.
SaveFerris  +   84d ago
MS has flipped the switch, promoted Spencer to concentrate on games, cut TV, dumped Kinect and are about to launch in China, Japan and other countries. That's gotta be costing them quite a bit of money.
Now MS has to play the waiting game to see if it pays off.
grassyknoll  +   84d ago
Maybe this 400 million is for the Xbox division as a whole, so that's all the profits of the 360 + a extra 400 million spent on Xbox One. We could be taking anything from 600 million to a billion lost. That's far far higher than expected I imagined.
#17 (Edited 84d ago ) | Agree(14) | Disagree(4) | Report | Reply
chaosx  +   84d ago
I don't see why gamers would be happy about this….. we need all consoles making money or it ends up being bad for everyone.
Tedakin  +   84d ago
Fanboys above are actually saying this makes them happy. Get rid of either Xbox or Playstation and see how awful gaming becomes with one supreme console, and nothing to keep it in check.
grassyknoll  +   84d ago
No we don't. Competition means there are winners & there are losers. Sony & Nintendo are not only in competition with themselves, but PC, mobile, tablets, Netflix, the gym(!) Etc. They have to make complying hardware & software or they'll die too.
marlinfan10  +   84d ago
they're just little kids that don't really understand anything. thats the conclusion ive come too. i find it hard to believe anyone over the age of 13 would act like some do on this site
Qwagy UK  +   84d ago
Just imagine how good the xbox one could of been with that money invested in a decent GPU.
mhunterjr  +   84d ago
Smh at those who think this has to do with poor sales...
Revenues are up, and the losses have been attributed to increased sales over the previous years.... Which means the platform is expected to be a loss leader... As is the case with most console launches ...

All this talk about dreamcast 2.0 is laughable.

"While the Xbox Platform’s revenue increased by $1.7 billion, the cost of said revenue increased by $2.1 billion. Both the differences point at the Xbox One’s launch as their primary cause. That’s a $400 million difference in gross margins."

This means that since launch, they've been losing money with each sale ... Having more sales wouldn't change that...
#20 (Edited 84d ago ) | Agree(8) | Disagree(16) | Report | Reply
HugoDrax  +   84d ago
Exactly! people see the headlines and comment without reading anything. Where is the article on N4G regarding this little tidbit? Because they sure mention the word PLAYSTATION in this article a few times.

http://bloomberg.com/news/2...
Chris12  +   84d ago
How typical for dualshockers to offer an other clickbait article, which ignores the two key points.

1) Xbox revenue is up 34%
2) 'We have to keep in mind that this kind of result is pretty much to be expected at the launch of a new product'

In other words, there is no story other than strong Xbox sales, yet out come the kids to fight. SMH
gfk342  +   84d ago
Ouch!
This explains Microsoft's CEO recent declaration according to which Xbox brand is not a core product for Microsoft. Adding the fact that Microsoft is not interested in keeping the exclusives for Xbox fans and also the closing of Microsoft studios, I'm afraid that hard times will follow for Xbox.
#22 (Edited 84d ago ) | Agree(14) | Disagree(5) | Report | Reply
KirbysDump  +   84d ago
Look guys. I probably put £1000 of money into buying this thing and games, headset etc. I spent that fixing the clutch on my car. If it it goes pop, I'll just chuck it in the skip.
NexGen  +   84d ago
I don't know what it means, but I'm going to start saying "just chuck it in the skip."
castillo  +   84d ago
This sucks but am hoping they come out on top and winning the consoles marathon. Go MS/Xbox
enfestid  +   84d ago
How did this story get approved? It's completely incorrect. These figures are the differences in changes, not the total amounts.

The $1.7 billion is the increase amount of revenue, while the $2.1 billion is the increase amount of cost of revenue. $1.7 billion is cited as an increase of 34 percent, while $2.1 billion is cited as an increase of 72 percent. $1.7 billion is 34 percent of $5 billion, while $2.1 billion is 72 percent of $2.9 billion.
CapraDemon   84d ago | Trolling | show | Replies(4)
Abriael  +   84d ago
You understand that the article says *exactly* that? Thought I'd point it out before you explode.

Did you actually read the article itself, or just the neogaf post that generated it?

The fact that the neogaf OP didn't notice, doesn't mean I didn't.
#25.2 (Edited 84d ago ) | Agree(12) | Disagree(4) | Report | Reply
enfestid  +   84d ago
I'm not about to explode, I'm just pointing out your inaccuracies. You wrote an article that is incorrect, and your headline reflects that. The fact that you've edited the article several times since it was originally published (which can be seen in the Google and Bing caches) doesn't change the incorrect headline that you're using in an attempt to generate clicks.
Abriael  +   84d ago
@enfestid: The edits were made just a few minutes after the article was posted. Didn't really need your "help" for that.

The headline has also already been clarified and the mods have been asked to reflect the change here via ticket.

Mind you. The headline was still correct before and after the clarification. A loss in gross margins is still a loss. It's been clarified just for the sake of immediacy.
#25.2.2 (Edited 84d ago ) | Agree(12) | Disagree(6) | Report
Ron_Danger  +   84d ago
@Abriael

It's no use. His eyes are shut and his fingers are in his ears. Maybe instead of using dollar figures to explain it to him, use crayons or M&M's. That usually helps children comprehend things that adults understand everyday.
Dehnus   84d ago | Trolling | show
MCTJim  +   84d ago
because its easy to spin financials like this.
GW212  +   84d ago
No need to spin them here.
dcbronco  +   83d ago
I think you two are ignoring Enfested's main point. The 1.7 billion is an increase over the previous year. And if you really wanted to understand stand what goes into making that number you can look it up on Microsoft's investors page on their site. So it does actually equal over 6.7 billion in revenue for hardware. Which does now include computer equipment like Surface. The revenue for transactions on Live are included in a different total. Transactions includes all dlc, music, movies and Apps sold on Live. I can't remember which one royalties from games is in. Live subscriptions goes with hardware though.

The new way they do their financials will make it easier to see Xbox makes money. And now that clueless analysts can see that we won't see anymore ignorant"sell off Xbox" at least from the likes of Bloomberg and Forbes. Though on this Pachter has been on the money.

So as I eat an M & M, I do so knowing I've said this for years and now it will be much easier for others to see as well.

Also see the line in Microsoft's earnings statement on cash on hand and cash equivalents. It's at over 85 billion now and if you look at it down the line you will see that it has grown over 11 billion or more per year for the last five years. So no. Microsoft has not lost money for the last seven years like some here seem to think.
jcnba28   84d ago | Off topic | show | Replies(2)
TheEnigma313  +   84d ago
I think this loss has a lot to do with the failure of the kinect. I' sure they spent a lot of r&d for it.
HappyWithOneBubble  +   84d ago
The end is near for Xbox I can almost taste it.
Abriael  +   84d ago
Oh please. It isn't even close.
ghostrider32  +   84d ago
It's safe to say you threw a barbeque when the Dreamcast went out of commission.
04STIBluByU  +   84d ago
No, but I threw one when the OG Xbox was canned lol!
quenomamen  +   84d ago
Damn I bet they would kill to sell as many X1s now as they did Zunes years back.
Mikeyy  +   84d ago
I still have my Zune 120gb. Love that thing.

There is still no comparable 7 years later.

64gb ipods are too small for me and the large capacity ipod has the crappiest interface ever. Also itunes is horrid for people like me with 100+ gigs of music. I can't stand apple products.
Master-H  +   84d ago
Most of it is probably due to that BS device they call Kinect R&D costs, buying out timed exclusives/dlc must have not been helping either.
HappyWithOneBubble  +   84d ago
Like the Titanfall exclusive deal most likely benefited EA and Respawn instead of MS.
Abriael  +   84d ago
Actually, it's the opposite. The Titanfall exclusive deal most probably benefited Microsoft, and not Respawn/EA.

Microsoft got a lot of promotion out of it, and a highly anticipated exclusive.

EA and Respawn got less sales.

It's not rocket science to understand who reaped the benefits.
Mikeyy  +   84d ago
The deal doomed titanfall if anything.

Game would have sold triple as multi plat
Cueil  +   84d ago
I don't know what you two are smoking... MS financed titanfall making it almost 100 percent profit for EA... that's why it's exclusive
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