Microsoft released its quarterly financial report just this week, which held clues as to what the company is doing with the Xbox division. According to the report, console sales and profits were down within the Xbox division.
Microsoft’s Entertainment and Devices division houses the Windows Phone, Xbox and other minor devices. While the entire division managed to increase its profit by 15 percent to $596 by reducing operating costs, the Xbox division saw a drop in profit of $1.1 billion, or 29 percent year over year.
This was mainly attributed to the drop in Xbox 360 sales from 8.2 million last year to 5.9 million this past quarter. Microsoft wrote, "This was due mainly to lower volumes of consoles sold and lower video game revenue.”
While the Xbox 360 was the number one selling home console in the US for 22 months, its failed to overtake Sony’s PS3 for the number one spot globally. On the whole Microsoft reported $21.5 billion in revenue and saw $6.4 billion in profits.
While revenue was down in the Xbox division, Microsoft’s flagship product, Windows did help boost revenue by three percent. Microsoft’s stock dropped by two percent on the heel of its report.
While Windows seemed to have done decently last quarter, things are looking a bit gloomy for the OS this quarter with Windows 8 off to a slow start along with the Surface tablet. Last month, NPD analyst Stephen Baker stated, “I think everybody would have hoped for a better start,” using the words “shaky” and “tepid” in the report.
According to research firm, Detwiler Fenton the Surface tablet is selling poorly, with an estimated 500k to 600k units moved, way below Microsoft’s three to four million target.
There was an interesting note in Microsoft’s financials that revealed that research and development expenses have hit $98 million last quarter. It appears that Microsoft’s putting things into high gear as its most likely ramping up to unveil its Xbox 720 later this year.