Xbox Still Not Profitable; Sony Reports Profit

The biggest question that Xbox journalists should be asking is: when will Microsoft ever make a profit on this thing? That’s what businesses are created to do…make money. Xbox has just seemed to do the opposite, losing the company money since its inception in 2001. With the added expense of vamped up Xbox 360 production (in which Microsoft loses an estimated $125 per unit) and marketing , the game division is still losing money. All of this comes on the same day that Sony announced profits, despite heavy PlayStation 3 expenses.

Quarterly revenue for the division responsible for Microsoft’s Xbox/Xbox 360 increased from $571 million in 2005 to $1.056 billion in 2006. Meanwhile, its quarterly loss jumped from $175 million in 2005 to $388 million in 2006. It just goes to show that the world’s largest publisher can talk a good game, they just don’t have the profits to show for it. Microsoft CFO Chris Liddell put a good spin on things: “We extended our market leadership position in next-generation gaming and turned a major corner in the quarter with our Xbox 360 console supply.”

Meanwhile, as was alluded earlier, Sony reported profits for their financial year today. Revenue for the game division of Sony netted $8.2 billion in revenue, but only $75 million in income, mainly due to RandD costs involved with the PlayStation 3. The PlayStation 2 was still the big item for the company, shipping 16.2 million units, compared to 14 million PSPs. The PlayStation Portable, despite a tepid response in Japan, has been a driving force for growth in the division.