Alarming drop in Xbox 360 sales nothing to worry about
By John Pospisil
Microsoft might be making money from Vista, but its Entertainment and Devices Division (EDD) is reeling after sales of its Xbox 360 next-generation console plummeted to just 500,000 units in the January to March period of this year, compared to 1.7 million units in the same period last year.
Revenue for EDD was down to $929 million for the January to March quarter, compared to $1.2 billion for the same quarter last year. Not surprisingly Microsoft blamed the drop in revenue on the sluggish Xbox 360 sales.
While EDD is still loosing money, it is loosing less money than before. Microsoft attributed this to improved Xbox 360 margins.
On a positive note, Microsoft said that the Xbox 360 should be widely available during the rest of the year, which should help to boost revenues.
No doubt doomsayers such as business guru Roger Ehrenberg will seize on the latest figures as proof that the Xbox 360 has been a disaster for Microsoft.
What he won’t understand is that both the Wii and the PlayStation 3 are still enjoying their honeymoon period, so of course Xbox 360 sales have been affected.
The fact is that with sales of 11 million units, the Xbox 360 is still far ahead of its next-generation competitors, the cheaper Wii console, which has sold around 7 million units (source Wikipedia), and the PlayStation 3, which has sold around 3.5 million units (source Wikipedia).
The real test for the Xbox 360 will come in the lead up to Christmas. Without the hype and excitement of new product launches, consumers will choose the console that offers them the best value proposition.
Offering a good balance between price and performance, and with the possibility of further price cuts, the Xbox 360 has a lot to offer.
It’s far too early to write off the Xbox 360.
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April 27th, 2007
Thank you for stating the obvious, no seriously. I’m glad you did, because nobody seems to take into account the 360 has been out for over a year and is still selling well. Let’s see how well the novelty of the wii and the big sticker for the ps3 hold out.
April 27th, 2007
Did I forget to mention what Halo 3 is going to do to sales just before the Xmas rush? LoL, yea, 360 will be just fine.
April 27th, 2007
Keep in mind that the Elite is affecting sales keep in mind that the 65 nm die shrink is affecting sales. Why would you buy a 360 today when in a few months the final product will be available. Have your fun now but when a Black 360 with a 120 GB drive (65nm die) and HDMI 1.2 hits the streets (with a price drop this xmas) combined with HALO 3. This sucker is gonna move. I have a 360 and for the most part I love it and I look forward to $pending a few hundred more to upgrade. Bring it on!!
April 27th, 2007
It’s “loosing” money is it? Nice.
April 27th, 2007
I too have a 360, and love it! I prolly won`t wait untill the 65nm chip comes, It still carries a 1yr warrenty, plus if you get one from walmart, just take it back if you get the infamous “red ring of death”. I`m one of the crazies that will try and get the new elite on sunday, but from what i hear, most stores are only getting 2-4 consoles, so wish me luck! If i cant get one, then I`ll have no choice but to wait.
April 29th, 2007
It’s amazing how fickle consumers can be. Of course it is still the honeymoon period for the Wii and…er…the PS3 as well. Last year 360’s sold amazingly well and you couldn’t keep them on the shelves. Wii’s are still selling well due to the “innovation” title (is it really that innovative?! C’mon!) and the false demand N has created. PS3 was also able to create some hype by limiting the amount of units available. We’ll see what happens when Wii’s are in ample supply on shelves along with large supplies of 360’s and PS3’s. Something tells me that the Wii and PS3 might want to have more than brand loyalty to sell their product, let’s see….how about frickin’ games! This holiday season games like Mama Cook Off, The Ant Bully, and Elebits aren’t going to move systems like Halo 3, Mass Effect, Alan Wake, Forza, and PGR4 will. When you’re no longer the only one on your block with a console, people will start looking for games and MS has that in spades.
Let’s face it, the elderly just aren’t going to be spending millions of dollars on Wii games this X-mas, the profit for developers is still going to be to developer high end games on the 360 for the hardcore spenders.
May 1st, 2007
I have a different take on the 360 and sales data. I don’t believe that MS will ever pull the plug on the xbox division - regardless of sales. I believe that MS saw that Sony was dominating the family room with the PS and MS didn’t want to give that ground to Sony. I believe that the xbox division will always be there to make sure that MS has an avenue, a product stream, that connects to the american family room. I believe that MS’s recent strategy with the 360 is more evidence of my point. Consider the way that you can order shows and movies on your 360 and the way it acts as an extender. When people like the Forbes anaylst only look at the numbers, they are failing to see the other, background reasons why MS is willing to lose so much. xbox isn’t going anywhere soon.
May 2nd, 2007
360 salea are dying, simply because the consoles themselves are dying.. The 360 has a horrendous relaibility record, perhaps the worst of any consumer device EVER.
Nobody wants it, because it will fail in warranty, and get replaced, then Microsoft will dump on you as soon as 12 months is up.
Thanks but no thanks…