Microsoft Q1 2009 Earnings Release (10/23), Xbox 360 Ships 22.5 Million

http://www.microsoft.com/msft/earnings/FY09/earn_rel_q1_09.mspx

Results for the Fiscal Quarter Ended September 2008

Revenue: $15.06B
Operating Income: $6.00B
Net Income: $4.37B

Breakdown by Business Segment

Segment Revenue (In millions)
Client $4,218
Server and Tools $3,406
Online Services Business $770
Microsoft Business Division $4,949
Entertainment and Devices Division $1,814
Unallocated and Other ($96)
Consolidated $15,061

Operating Income (In millions)
Client $3,267
Server and Tools $1,151
Online Services Business ($480)
Microsoft Business Division $3,311
Entertainment and Devices Division $178
Corporate-Level Activity ($1,428]
Consolidated $5,999

We shipped 2.2 million Xbox 360 consoles during the first quarter of fiscal year 2009, compared with 1.8 million Xbox 360 consoles during the first quarter of fiscal year 2008.

Xbox 360 Total = 22.5 Million

So they're still making a profit then?DAZZER7

So they're still making a profit then?DAZZER7

As a whole no, that's going to take a LONG time, however, the software is profitable. It's all right there.

[QUOTE="DAZZER7"]So they're still making a profit then?SolidTy

As a whole no, that's going to take a LONG time, however, the software is profitable. It's all right there.

So for Q1 09, they've decreased a little. I think that is because of their stance in not reducing the price for their console. With the price drop, they could probably have an increase for the next yoy.

And they're still using attach rate? That's a useless statistic by itself.

It'll be interesting to see Q2 09 results and see if they can match the 08 results.

As for the 22.5 million, I think MS will end up around 33 million by the time this gen is over.

[QUOTE="DAZZER7"]So they're still making a profit then?Stevo_the_gamer

Actually they are in the black. They would be in the red if they were still losing money. The EDD hasn't lost a profit in nearly 2 years and has gained over 1 billion in the last 5 quarters.

Actually they are in the black. They would be in the red if they were still losing money. The EDD hasn't lost a profit in nearly 2 years and has gained over 1 billion in the last 5 quarters.

RonnieLottinSF

So for Q1 09, they've decreased a little. I think that is because of their stance in not reducing the price for their console. With the price drop, they could probably have an increase for the next yoy.

And they're still using attach rate? That's a useless statistic by itself.

It'll be interesting to see Q2 09 results and see if they can match the 08 results.

As for the 22.5 million, I think MS will end up around 33 million by the time this gen is over.

Zhengi

Sure, but Halo 3 also launched last year in fiscal Q1 2008. Shipping 2.2 million in the summer quarter is pretty good IMO. If the XBOX360 ships what it normally ships in fiscal Q2, which is around 4.4 to 4.5 million, the XBOX360 will have shipped around 27 million by end of 2008, surpassing the original XBOX.

Also it looks like XBL is still surging. 14+ million members and counting. The attach rate is also godly at 8.1 per unit.

That 33 million prediction is laughable by the way considering this generation won't be over until maybe late 2011 meaning it still has 3 years left after this year. So you believe the 360 will only ship another 6 million units in 3 years, during its golden years?

[QUOTE="DAZZER7"]So they're still making a profit then?Stevo_the_gamer

If the division had taken loans to finance its operations that it now needed to pay back, that would be an ongoing liability. But they didn't; they just had the capital. The E&D division has no debt (as does Microsoft as a whole.)

Xbox is profitable. Full stop, end of story.

[QUOTE="RonnieLottinSF"]

Actually they are in the black. They would be in the red if they were still losing money. The EDD hasn't lost a profit in nearly 2 years and has gained over 1 billion in the last 5 quarters.

Stevo_the_gamer

No that is not how it works. Being in the red means your still losing money, they are not. They are in the black, making profit but with that said they still need to make up for the original xbox.

They are not "in the red". The Entertainment and Devices division is profitable, period. The investments made over the past few years to get it to this point are considered sunk costs and are not held against the division in any way.

If the division had taken loans to finance its operations that it now needed to pay back, that would be an ongoing liability. But they didn't; they just had the capital. The E&D division has no debt (as does Microsoft as a whole.)

Xbox is profitable. Full stop, end of story.

UnnDunn

The Xbox brand has made Microsoft lose money, and this isn't just a handful of change they lost as well -- we're talking in excess of over 5 billion dollars of losses. I find the Xbox hardly profitable for them. :|

[QUOTE="Stevo_the_gamer"][QUOTE="RonnieLottinSF"]

Actually they are in the black. They would be in the red if they were still losing money. The EDD hasn't lost a profit in nearly 2 years and has gained over 1 billion in the last 5 quarters.

Grady420

No that is not how it works. Being in the red means your still losing money, they are not. They are in the black, making profit but with that said they still need to make up for the original xbox.

[QUOTE="Grady420"][QUOTE="Stevo_the_gamer"][QUOTE="RonnieLottinSF"]

Actually they are in the black. They would be in the red if they were still losing money. The EDD hasn't lost a profit in nearly 2 years and has gained over 1 billion in the last 5 quarters.

UnnDunn

No that is not how it works. Being in the red means your still losing money, they are not. They are in the black, making profit but with that said they still need to make up for the original xbox.

No they don't what?

[QUOTE="UnnDunn"]

They are not "in the red". The Entertainment and Devices division is profitable, period. The investments made over the past few years to get it to this point are considered sunk costs and are not held against the division in any way.

If the division had taken loans to finance its operations that it now needed to pay back, that would be an ongoing liability. But they didn't; they just had the capital. The E&D division has no debt (as does Microsoft as a whole.)

Xbox is profitable. Full stop, end of story.

Stevo_the_gamer

The Xbox brand has made Microsoft lose money, and this isn't just a handful of change they lost as well -- we're talking in excess of over 5 billion dollars of losses. I find the Xbox hardly profitable for them. :|

Profitability is measured per accounting period (ie. per quarter.) No-one cares what happened in previous quarters, they only care about the health of the organization now. Right now, Xbox is profitable.

[QUOTE="UnnDunn"]

They are not "in the red". The Entertainment and Devices division is profitable, period. The investments made over the past few years to get it to this point are considered sunk costs and are not held against the division in any way.

If the division had taken loans to finance its operations that it now needed to pay back, that would be an ongoing liability. But they didn't; they just had the capital. The E&D division has no debt (as does Microsoft as a whole.)

Xbox is profitable. Full stop, end of story.

Stevo_the_gamer

The Xbox brand has made Microsoft lose money, and this isn't just a handful of change they lost as well -- we're talking in excess of over 5 billion dollars of losses. I find the Xbox hardly profitable for them. :|

No one said they did not lose a lot of money, we said they are in the black while you said they are in the red which they are not. Being in the red or black means how your company is atm and not overall. They have not made back their money from the original the xbox but they are currently making profit as opposed to still losing money.

No they don't what?

Grady420

[QUOTE="RonnieLottinSF"]

Actually they are in the black. They would be in the red if they were still losing money. The EDD hasn't lost a profit in nearly 2 years and has gained over 1 billion in the last 5 quarters.

Stevo_the_gamer

"In the red- Of or relating to a firm or the operations of a firm that are deemed unprofitable. The term derives from the color of ink used to show losses on financial statements. Compare black."

"In the black - Of or relating to the profitability of a firm or the operations of a firm. The term derives from the color of ink used to enter a profit figure on a financial statement. Compare red."

http://financial-dictionary.thefreedictionary.com/Red

http://en.wiktionary.org/wiki/in_the_black

http://en.wiktionary.org/wiki/in_the_red

The EDD at this point in time = profitable since they are making money for MS. Unprofitable would mean the EDD would still be losing money. They aren't. Green of course would mean all back debt has been recouped and all money made after is considered net.

The EDD hasn't posted a loss for 6 or 7 quarters I think, but they are still in the black and a long way from being in the green. Of course MS will tell you that the division is in the green because the money lost was not of loan, but in business terms the EDD = black.

[QUOTE="Grady420"]

No they don't what?

UnnDunn

I never said they were not making a profit, the other guy did. I was making a comparison to how much they made to how much they invested which is why they are not in the green.

Woah. Three guys have set me in place. :o I stand corrected then -- however, either way, I'll still stand on my point that the Xbox brand as a whole is no where even close to being profitable for Microsoft.

[QUOTE="Stevo_the_gamer"][QUOTE="RonnieLottinSF"]

Actually they are in the black. They would be in the red if they were still losing money. The EDD hasn't lost a profit in nearly 2 years and has gained over 1 billion in the last 5 quarters.

RonnieLottinSF

"In the red- Of or relating to a firm or the operations of a firm that are deemed unprofitable. The term derives from the color of ink used to show losses on financial statements. Compare black."

"In the black - Of or relating to the profitability of a firm or the operations of a firm. The term derives from the color of ink used to enter a profit figure on a financial statement. Compare red."

http://financial-dictionary.thefreedictionary.com/Red

http://en.wiktionary.org/wiki/in_the_black

http://en.wiktionary.org/wiki/in_the_red

The EDD at this point in time = profitable since they are making money for MS. Unprofitable would mean the EDD would still be losing money. They aren't. Green of course would mean all back debt has been recouped and all money made after is considered net.

The EDD hasn't posted a loss for 6 or 7 quarters I think, but they are still in the black and a long way from being in the green.

[QUOTE="Zhengi"]

So for Q1 09, they've decreased a little. I think that is because of their stance in not reducing the price for their console. With the price drop, they could probably have an increase for the next yoy.

And they're still using attach rate? That's a useless statistic by itself.

It'll be interesting to see Q2 09 results and see if they can match the 08 results.

As for the 22.5 million, I think MS will end up around 33 million by the time this gen is over.

RonnieLottinSF

Sure, but Halo 3 also launched last year in fiscal Q1 2008. Shipping 2.2 million in the summer quarter is pretty good IMO. If the XBOX360 ships what it normally ships in fiscal Q2, which is around 4.4 to 4.5 million, the XBOX360 will have shipped around 27 million by end of 2008, surpassing the original XBOX.

Also it looks like XBL is still surging. 14+ million members and counting. The attach rate is also godly at 8.1 per unit.

That 33 million prediction is laughable by the way considering this generation won't be over until maybe late 2011 meaning it still has 3 years left after this year. So you believe the 360 will only ship another 6 million units in 3 years, during its golden years?

I think Halo 3 helped to sell about 550k consoles that month. It was an increase of about 250K from a normal month.

But we have to distinguish an important factor here. First, the chart is showing shipped numbers, not sold numbers. Halo 3 would have no effect on the shipped numbers and even if it did, the effect would be around only 250k more units shipped.

And lastly, MS also stuffed the retail channels last year as well. They stuffed the channels to reach the 10 million consoles number and barely shipped any consoles for the rest of the year. We still don't have a good idea of what the 360 normally ships and I wish they wouldn't have done that.

Also, the attach rate is good, but like I mentioned, it's a meaningless statistic by itself. When you put in the install base, which should be around 20 mil, that attach rate really isn't that impressive. I wonder about XBL as well. They like to combine gold and silver subscribers to inflate the number. I wish they would break it down as to how many people actually pay for XBL.

No, I think my 33 million prediction is right on the money. They'll end up around there. The 360 will be entering its 3rd year of being on the market by the time the holidays hit. I think you're way too optimistic with your figure of 27 million shipped. 27 million shipped does not mean 27 million in the hands of customers. When I say 33 million, I mean 33 million in customer hands. Once more, we have to make that distinction between the two.

And the time a console sells the most is not during its golden years. Most of the sales of a console are in the early years. They start to lose momentum as they get into their "golden years". Otherwise, game consoles would keep going on and on. For the 360, it should start losing steam.

Good thing they had the RROD, though. They'll get some of those repeat customers to buy another one when their consoles die ;)

Woah. Three guys have set me in place. :o I stand corrected then -- however, either way, I'll still stand on my point that the Xbox brand as a whole is no where even close to being profitable for Microsoft.

Stevo_the_gamer

Think what you want. MS has netted over 1 billion via the EDD the last 6 or so quarters and they owe nothing. Looks like a profit to me.

Woah. Three guys have set me in place. :o I stand corrected then -- however, either way, I'll still stand on my point that the Xbox brand as a whole is no where even close to being profitable for Microsoft.

Stevo_the_gamer

[QUOTE="Stevo_the_gamer"][QUOTE="RonnieLottinSF"]

Actually they are in the black. They would be in the red if they were still losing money. The EDD hasn't lost a profit in nearly 2 years and has gained over 1 billion in the last 5 quarters.

Grady420

No that is not how it works. Being in the red means your still losing money, they are not. They are in the black, making profit but with that said they still need to make up for the original xbox.

What you trying to imply? :P

[QUOTE="Stevo_the_gamer"]

Woah. Three guys have set me in place. :o I stand corrected then -- however, either way, I'll still stand on my point that the Xbox brand as a whole is no where even close to being profitable for Microsoft.

UnnDunn

Nice, MS have made another nice profit on with the Entertainment Business, the 360 is a real success.

With that said, why is that last quarter they made a loss? Also, the HEAVY marketting they are putting in into the European market and the 360 price cut (hence reduction in profit), which quarter was that in?

[QUOTE="RonnieLottinSF"][QUOTE="Zhengi"]

So for Q1 09, they've decreased a little. I think that is because of their stance in not reducing the price for their console. With the price drop, they could probably have an increase for the next yoy.

And they're still using attach rate? That's a useless statistic by itself.

It'll be interesting to see Q2 09 results and see if they can match the 08 results.

As for the 22.5 million, I think MS will end up around 33 million by the time this gen is over.

Zhengi

Sure, but Halo 3 also launched last year in fiscal Q1 2008. Shipping 2.2 million in the summer quarter is pretty good IMO. If the XBOX360 ships what it normally ships in fiscal Q2, which is around 4.4 to 4.5 million, the XBOX360 will have shipped around 27 million by end of 2008, surpassing the original XBOX.

Also it looks like XBL is still surging. 14+ million members and counting. The attach rate is also godly at 8.1 per unit.

That 33 million prediction is laughable by the way considering this generation won't be over until maybe late 2011 meaning it still has 3 years left after this year. So you believe the 360 will only ship another 6 million units in 3 years, during its golden years?

I think Halo 3 helped to sell about 550k consoles that month. It was an increase of about 250K from a normal month.

But we have to distinguish an important factor here. First, the chart is showing shipped numbers, not sold numbers. Halo 3 would have no effect on the shipped numbers and even if it did, the effect would be around only 250k more units shipped.

And lastly, MS also stuffed the retail channels last year as well. They stuffed the channels to reach the 10 million consoles number and barely shipped any consoles for the rest of the year. We still don't have a good idea of what the 360 normally ships and I wish they wouldn't have done that.

Also, the attach rate is good, but like I mentioned, it's a meaningless statistic by itself. When you put in the install base, which should be around 20 mil, that attach rate really isn't that impressive. I wonder about XBL as well. They like to combine gold and silver subscribers to inflate the number. I wish they would break it down as to how many people actually pay for XBL.

No, I think my 33 million prediction is right on the money. They'll end up around there. The 360 will be entering its 3rd year of being on the market by the time the holidays hit. I think you're way too optimistic with your figure of 27 million shipped. 27 million shipped does not mean 27 million in the hands of customers. When I say 33 million, I mean 33 million in customer hands. Once more, we have to make that distinction between the two.

And the time a console sells the most is not during its golden years. Most of the sales of a console are in the early years. They start to lose momentum as they get into their "golden years". Otherwise, game consoles would keep going on and on. For the 360, it should start losing steam.

Good thing they had the RROD, though. They'll get some of those repeat customers to buy another one when their consoles die ;)

Woah. Three guys have set me in place. :o I stand corrected then -- however, either way, I'll still stand on my point that the Xbox brand as a whole is no where even close to being profitable for Microsoft.

Stevo_the_gamer

All in all, mission accomplished for MS. Now the challenge is in keeping up the 360 demand

I think Halo 3 helped to sell about 550k consoles that month. It was an increase of about 250K from a normal month.

But we have to distinguish an important factor here. First, the chart is showing shipped numbers, not sold numbers. Halo 3 would have no effect on the shipped numbers and even if it did, the effect would be around only 250k more units shipped.

And lastly, MS also stuffed the retail channels last year as well. They stuffed the channels to reach the 10 million consoles number and barely shipped any consoles for the rest of the year. We still don't have a good idea of what the 360 normally ships and I wish they wouldn't have done that.

Also, the attach rate is good, but like I mentioned, it's a meaningless statistic by itself. When you put in the install base, which should be around 20 mil, that attach rate really isn't that impressive. I wonder about XBL as well. They like to combine gold and silver subscribers to inflate the number. I wish they would break it down as to how many people actually pay for XBL.

No, I think my 33 million prediction is right on the money. They'll end up around there. The 360 will be entering its 3rd year of being on the market by the time the holidays hit. I think you're way too optimistic with your figure of 27 million shipped. 27 million shipped does not mean 27 million in the hands of customers. When I say 33 million, I mean 33 million in customer hands. Once more, we have to make that distinction between the two.

And the time a console sells the most is not during its golden years. Most of the sales of a console are in the early years. They start to lose momentum as they get into their "golden years". Otherwise, game consoles would keep going on and on. For the 360, it should start losing steam.

Good thing they had the RROD, though. They'll get some of those repeat customers to buy another one when their consoles die ;)

Zhengi

Well normally there is about a 1 million unit difference between shipped and sold. The 1 million = in the retail chain (either in the MS warehouses ready to be shipped, in the retail warehouses or in transit). Right now MS has shipped 22.5 million (end of September so that means they have already shipped possibly over 23 million) and they have sold around 21.5 to 22 million (in users hand) so they are fine.

And how am I being optimistic? MS has shipped 4.4 to 4.5 million units every fiscal Q2 for the last 2 years and this is going to be their best gaming lineup of any holiday season yet. Not to mention they have bundles and the price dropped WW. If anything I'm under cutting what could potentially happen, but I'll stick to what has happened the last 2 years for reference.

As far as XBL gold members go, Maj Nelson said after E3 2007, when MS announced there were 11 or so million XBL members, that 8 or 9 of those members = gold. I'd say there are over 10 million gold members by now at least.

Also when I talk golden years I mean its best years. The PS2, for example, sold the most during its 3rd, 4th, and 5th years. Of course I figured this was obvious, but the main reasons was because the gaming lineup ballons to over 1 thousand and the price continues to drop on a yearly basis, mainly because production costs drop. The two major selling 360 units (pro and elite) haven't even reached the consumer price point in which it really starts to take off of $200 (the pro should be there by next year). Once those two get down to that price point, the 360 should continue to sell very well.

As far as your 33 million number after it is all said and done prediction, like I said before, it is very laughable. By the end of this year, the 360 will have shipped around 27 million units and by the end of next year, it will probably be between 35 to 40 million units shipped, with 2 years left of this generation. More price drops are coming for the system and 2 more Halo games are on the way for the system. That in itself = tons of hardware being moved in the next 3 years. I'm not mentioning all of the other great games coming out for the system in the next few years either. I would be surprised if the 360 didn't ship to retail between 50 to 60 million units by the time its production is stopped. That is a very reasonable number for a system that has on average shipped around 9 million units per year since it launched and will probably be in production a few years after this generation waves bye, bye, since it is making MS money, unlike the original that never got out of the red.

You guys might not see.......even with a price drop the division posted a 150+ million profit.

I thought the price drop would lead to something in the negatives.

[QUOTE="UnnDunn"][QUOTE="Stevo_the_gamer"]

Woah. Three guys have set me in place. :o I stand corrected then -- however, either way, I'll still stand on my point that the Xbox brand as a whole is no where even close to being profitable for Microsoft.

Stevo_the_gamer

Well there really is no mountain to climb since they don't owe any one a penny, except themselves.

You guys might not see.......even with a price drop the division posted a 150+ million profit.

I thought the price drop would lead to something in the negatives.

-General_Ram-

You guys might not see.......even with a price drop the division posted a 150+ million profit.

I thought the price drop would lead to something in the negatives.

-General_Ram-

Well with the Jasper chipset in full production, the production costs went down, hence the price went down. I doubt MS would have dropped the price if they weren't going to continue to post a profit.

The chipset code named "Valhalla" could be in production as soon as this spring, meaning we will probably see another price drop by that time mainly because the production of the 360 will go down again.

[QUOTE="-General_Ram-"]

You guys might not see.......even with a price drop the division posted a 150+ million profit.

I thought the price drop would lead to something in the negatives.

RonnieLottinSF

Well with the Jasper chipset in full production, the production costs went down, hence the price went down. I doubt MS would have dropped the price if they weren't going to continue to post a profit.

The chipset code named "Valhalla" could be in production as soon as this spring, meaning we will probably see another price drop by that time mainly because the production of the 360 will go down again.

Valhalla if it is true, will be MSs get out of jail card. Costs will dramatically drop, but importantly, theyll be able to get out a slim console which could give it a whole new lease of life, especially in Japan

[QUOTE="UnnDunn"]

They are not "in the red". The Entertainment and Devices division is profitable, period. The investments made over the past few years to get it to this point are considered sunk costs and are not held against the division in any way.

If the division had taken loans to finance its operations that it now needed to pay back, that would be an ongoing liability. But they didn't; they just had the capital. The E&D division has no debt (as does Microsoft as a whole.)

Xbox is profitable. Full stop, end of story.

Stevo_the_gamer

The Xbox brand has made Microsoft lose money, and this isn't just a handful of change they lost as well -- we're talking in excess of over 5 billion dollars of losses. I find the Xbox hardly profitable for them. :|

[QUOTE="RonnieLottinSF"][QUOTE="-General_Ram-"]

You guys might not see.......even with a price drop the division posted a 150+ million profit.

I thought the price drop would lead to something in the negatives.

FirstDiscovery

Well with the Jasper chipset in full production, the production costs went down, hence the price went down. I doubt MS would have dropped the price if they weren't going to continue to post a profit.

The chipset code named "Valhalla" could be in production as soon as this spring, meaning we will probably see another price drop by that time mainly because the production of the 360 will go down again.

Valhalla if it is true, will be MSs get out of jail card. Costs will dramatically drop, but importantly, theyll be able to get out a slim console which could give it a whole new lease of life, especially in Japan

Well you have to figure marketing is in the millions, which isn't a big piece of the pie from a 1.8 billion revenue pull in. I also wonder how much of that went into R&D?

[QUOTE="FirstDiscovery"][QUOTE="RonnieLottinSF"][QUOTE="-General_Ram-"]

You guys might not see.......even with a price drop the division posted a 150+ million profit.

I thought the price drop would lead to something in the negatives.

RonnieLottinSF

Well with the Jasper chipset in full production, the production costs went down, hence the price went down. I doubt MS would have dropped the price if they weren't going to continue to post a profit.

The chipset code named "Valhalla" could be in production as soon as this spring, meaning we will probably see another price drop by that time mainly because the production of the 360 will go down again.

Valhalla if it is true, will be MSs get out of jail card. Costs will dramatically drop, but importantly, theyll be able to get out a slim console which could give it a whole new lease of life, especially in Japan

Well you have to figure marketing is in the millions, which isn't a big piece of the pie from a 1.8 billion revenue pull in. I also wonder how much of that went into R&D?

[QUOTE="-General_Ram-"]

You guys might not see.......even with a price drop the division posted a 150+ million profit.

I thought the price drop would lead to something in the negatives.

FirstDiscovery

http://www.microsoft.com/msft/download/FY09/Q1-09_10Q.doc

Entertainment and Devices Division ("EDD") offerings include the Xbox 360 platform (which includes the Microsoft Xbox video game console system, Xbox 360 video games, Xbox Live, and Xbox 360 accessories), the Zune digital music and entertainment platform, PC software games, online games and services, Mediaroom (our Internet protocol television software), the Surface computing platform, mobile and embedded device platforms, and other devices. EDD leads the development efforts for our line of consumer software and hardware products including application software for Apple's Macintosh computers and Microsoft PC hardware products, and is responsible for all retail sales and marketing for Microsoft Office and the Windows operating systems.

EDD revenue decreased primarily due to decreased Xbox platform and PC game revenue, partially offset by increases across other EDD product revenue. Xbox 360 platform and PC game revenue decreased $331 million or 22%, primarily as a result of the $330 million of incremental revenue from the launch of Halo 3 in the first quarter of fiscal year 2008 and decreased revenue per Xbox 360 console as a result of price reductions during the past 12 months. We shipped 2.2 million Xbox 360 consoles during the first quarter of fiscal year 2009, compared with 1.8 million Xbox 360 consoles during the first quarter of fiscal year 2008. Other EDD product revenue increased $216 million or 51%, led by increased sales of application software for Apple's Macintosh computers, the Zune digital music and entertainment platform, and mobile and embedded device platforms.

EDD operating income increased primarily due to decreased cost of revenue and sales and marketing expenses, partially offset by increased research and development expenses and decreased revenue. Cost of revenue decreased $251 million or 21%, primarily driven by decreased Xbox 360 manufacturing costs. Sales and marketing expenses decreased $27 million or 10%, reflecting a decrease in product advertising and bad debt expenses. Research and development expenses increased $145 million or 46%, primarily reflecting increased headcount-related expenses associated with the Windows Mobile device platform, driven by recent acquisitions.

For the remainder of fiscal year 2009, we expect revenue to be flat or to decrease relative to the prior fiscal year due to year-over-year variations in launches, volumes, mix, and prices across our portfolio of products and services. We expect sustained profitability for fiscal year 2009.

Microsoft

-cnc-

One important question i have is how much of the EDD is made up off games?

Microsoft is doing very well in the video game business . Plus the 360 has a great chance of hitting 30 Million since they have 22.5 Million already .

Well normally there is about a 1 million unit difference between shipped and sold. The 1 million = in the retail chain (either in the MS warehouses ready to be shipped, in the retail warehouses or in transit). Right now MS has shipped 22.5 million (end of September so that means they have already shipped possibly over 23 million) and they have sold around 21.5 to 22 million (in users hand) so they are fine.

And how am I being optimistic? MS has shipped 4.4 to 4.5 million units every fiscal Q2 for the last 2 years and this is going to be their best gaming lineup of any holiday season yet. Not to mention they have bundles and the price dropped WW. If anything I'm under cutting what could potentially happen, but I'll stick to what has happened the last 2 years for reference.

As far as XBL gold members go, Maj Nelson said after E3 2007, when MS announced there were 11 or so million XBL members, that 8 or 9 of those members = gold. I'd say there are over 10 million gold members by now at least.

Also when I talk golden years I mean its best years. The PS2, for example, sold the most during its 3rd, 4th, and 5th years. Of course I figured this was obvious, but the main reasons was because the gaming lineup ballons to over 1 thousand and the price continues to drop on a yearly basis, mainly because production costs drop. The two major selling 360 units (pro and elite) haven't even reached the consumer price point in which it really starts to take off of $200 (the pro should be there by next year). Once those two get down to that price point, the 360 should continue to sell very well.

As far as your 33 million number after it is all said and done prediction, like I said before, it is very laughable. By the end of this year, the 360 will have shipped around 27 million units and by the end of next year, it will probably be between 35 to 40 million units shipped, with 2 years left of this generation. More price drops are coming for the system and 2 more Halo games are on the way for the system. That in itself = tons of hardware being moved in the next 3 years. I'm not mentioning all of the other great games coming out for the system in the next few years either. I would be surprised if the 360 didn't ship to retail between 50 to 60 million units by the time its production is stopped. That is a very reasonable number for a system that has on average shipped around 9 million units per year since it launched and will probably be in production a few years after this generation waves bye, bye, since it is making MS money, unlike the original that never got out of the red.

RonnieLottinSF

Hmm... I wonder about that. I would surmise they are closer to 21 million rather than 21.5, but that is another issue because we don't have actual numbers of how many of them are in actual stores and how many are in customers' hands.

As for Q2, they definitely have had great sales the last two years, but I wonder if they will sustain those sales this year. The best gaming lineup is all subjective and one might even argue that it isn't as strong as last year. The price drop has actually been effect for most of the year in Europe, Australia, and Japan. It was in the US that we recently got the price drop and the sales of the console hasn't really exploded. Will they help during Christmas? Possibly, but I don't think they'll reach the 4.5 million you are predicting.

Hey, not that I doubt you, but I'd rather see it in their fiscal report rather than having them lump everyone together. It eliminates the guessing of how many people actually signed up, how many decided not to renew, how many aren't paying, etc.

The problem with your golden years example is that the 360 is not the PS2. There is no wave of momentum that is letting it outsell its second year by a lot. There is an increase, but if the increase is only a 6% increase or so, don't expect there to be the same trends as the PS2. In fact, the only one you can really compare to the PS2 is the Wii especially since the Wii is outcharting the PS2 in their respective lifetimes. The 360 is charting just a bit above the N64. That's why when I say 33 million install base, it's not that far off from where it'll end up.

You're just making predictions as well. You're not even sure if they'll ship that many units. If they do, then they're likely stuffing the retail channels again. No way will it reach 35 to 40 million by the end of next year. You're just being too optimistic about it. Price drops can only do so much. It has been shown this year already where the price drop happened in places like Europe where the Wii was more expensive than the 360 and yet the 360 wasn't able to even keep up with the Wii. The price cut helps, but you can only sell as much as demand for the console allows.

As for your projections, I think you are totally off if you believe it'll sell 50 to 60 million. The 360 is not even tracking the same numbers as the SNES and that console sold around 60 million units. At most, the 360 will track around 36 million by the end of its lifetime.