Microsoft still losing money on Xbox

DESPITE posting a 22% increase in revenue for its Home & Entertainment division Microsoft continues to make an operating loss on the arm amounting to $179 million, bringing the yearly loss to $391 million. This is down from a loss of $1.2 billion last year, so not too bad, but the Xbox remains a big money loser for Microsoft. When I asked Stephen McGill, head of UK marketing for the console, if Microsoft was expecting to make money on the Xbox 360 he shrugged and told me: “We're thinking long term.” Microsoft figures that the console market is a highly lucrative one, especially when mixed in with its larger home entertainment designs, and is willing to pocket a loss in the short to medium term for a long-term money spinner.

If it pays off, then Microsoft could stand to make back losses on the Xbox inside a few years, though it is still surprising that it is willing to bankroll the console at a loss through more than one generation. µ