Console launches are an expensive affair. It takes a considerable investment to make the tech in the first place, and consoles often have to be sold at a loss just to make them appealing enough to consumers. Microsoft isn’t in any financial trouble, but the Xbox One certainly isn’t making them any dough at the moment.
Over on NeoGAF, user zomgbbqftw got a hold of Microsoft’s 10k filing. In it is the following quote:
Computing and Gaming Hardware revenue increased $3.2 billion or 49%, primarily due to higher revenue from the Xbox Platform and Surface. Xbox Platform revenue increased $1.7 billion or 34%, due mainly to sales of Xbox One, which was released in November 2013, offset in part by a decrease in sales of Xbox 360. We sold 11.7 million Xbox consoles during fiscal year 2014 compared with 9.8 million Xbox consoles during fiscal year 2013. Surface revenue increased $1.3 billion or 157%, due mainly to a higher number of devices and accessories sold.
Computing and Gaming Hardware gross margin decreased slightly, due to a $3.2 billion or 59% increase in cost of revenue, offset in part by higher revenue. Xbox Platform cost of revenue increased $2.1 billion or 72%, due mainly to higher volumes of consoles sold and higher costs associated with Xbox One. Surface cost of revenue increased $970 million or 51%, due mainly to a higher number of devices and accessories sold, offset in part by a charge for Surface RT inventory adjustments of approximately $900 million in fiscal year 2013.
Okay, so the increase in Xbox platform revenue was 34% bringing in $1.7 billion. However, Xbox platform cost increased 72%, costing $2.1 billion. The difference is $400 million. Now, obviously there are all other sorts of things to take into account – an increase in sales and future sales, Xbox Live subscriptions, all that good stuff. However, it is interesting to see that while Microsoft keeps lauding their launch as a huge success, they’re laying off tons of people and reporting some rather extensive losses in the Xbox department.
Do you think this is part of the normal ebb and flow in business? Will we see this turned around in future financials or should we start comparing the Xbox One to the Wii U? I might be helping to contribute to their income soon – not long now until the Xbox One launches in South Africa; who will be joining me in dishing out some precious dough for one?
Last Updated: August 8, 2014
Alien Emperor Trevor
August 8, 2014 at 15:12
I don’t think that’s anything to worry about. If it’s the same in a years time then possibly. It’s also a nice thing for their tax liability.
And no, I don’t want one.
Sir Rants A Lot Llew
August 8, 2014 at 15:16
I don;t think there are any reasons to worry. The world is in a general economic slump so it will pick up again
Rince
August 8, 2014 at 15:30
Nothing to worry about. Always takes 2/3 years to bring back the investment.
Jagsta
August 8, 2014 at 15:38
Xbox itself is making more money than the whole of Sony. So much irony in there.
PS: What’s with the pro-XBox article? Next you gonna say Diablo 3 will run at 1080p on the Xbone.
Hammersteyn
August 8, 2014 at 16:43
it will actually
demfax
August 9, 2014 at 13:16
Xbox division has never turned a net (total) profit in its history.
Jim Lenoir (Banana Jim)
August 9, 2014 at 14:08
Yep! The sad truth. If I can recall correctly in total over the course of the last 10 years they’ve actually lost $3 billion through the xbox division (and that was in 2013 – before they boned themselves with the xboner).
http://www.neowin.net/images/uploaded/asfd3221125511352.jpg
http://media.tumblr.com/tumblr_m676lvEoqV1rpya30.gif
demfax
August 9, 2014 at 14:30
Xbox and Surface are perennial net losers for Microsoft. It’s why shareholders want to get rid of them.
freekface
August 9, 2014 at 22:04
Your trying to spread FUD pal nothing more, I have both Xbox One and PS4 and just about every site I visit I have seen you posting this sort of junk about MS and Xbox.
demfax
August 10, 2014 at 12:29
Wrong, I was correcting a liar who lied “Xbox itself is making more money than the whole of Sony.” Which is wrong, and a lie.
Jim Lenoir (Banana Jim)
August 8, 2014 at 16:41
http://static.gamespot.com/uploads/original/428/4283637/2413868-mob8pn6.gif
Hammersteyn
August 8, 2014 at 16:43
Hahahaha
Skyblue
August 8, 2014 at 16:47
Scary thing is how much money MS still make.
Hammersteyn
August 8, 2014 at 16:44
I don’t think that’s anything to worry about.it’s still early days, look how long it took before the PS3 turned a profit
Jim Lenoir (Banana Jim)
August 8, 2014 at 16:46
MS: “Yo boners… deal with it”
http://thechive.files.wordpress.com/2013/01/gifs_201.gif
Weanerdog whats my password
August 8, 2014 at 18:37
Firstly most of the layoffs are from the Nokia division. So really due to the duplication of phone developers and low end Symbian handset development. Yes they canned some of the xbox departments like the entertainment division, but the numbers were small. The real concern is if they can claw back the development costs through cheaper hardware down the line due to the fact that it is established hardware and architecture that are using so the cost reductions will be less than for the 360. But Sony are also in the same boat.
demfax
August 9, 2014 at 13:17
PS4 is already turning a profit for Sony. The games division made a profit last quarter.
freekface
August 9, 2014 at 22:06
Ahh and here you are talking up Sony.
Making it sound as if it’s all fine and dandy at Sony, when we know that’s far from true don’t we?.
Pieter Smal
August 8, 2014 at 20:08
Cannot sell games… internet connection required to play… blah blah blah… whatever!
Ryanza
August 9, 2014 at 11:54
Xbox One is costing Microsoft much more than money. Xbox One is destroying what’s left of Microsoft’s corporate image. Microsoft is seen as the bad corporate DRM machine. The ultimate corporate middleman. The One stop shop for shit. The Xbox One is not seen as a gaming console. Gamers are buying a gaming console and that’s a PS4. Netflix and ESPN users, and those who can’t find the tv remote, are buying XBox One. How do you turn a video game console into a corporate fuck with your life box.
So Xbox One is costing Microsoft a great deal.
freekface
August 9, 2014 at 22:19
So what games are these gamers getting on the PS4 (me being one of them) that the Xbox One hasn’t got something equally as good ?
And look how many more AAA titles the xbox One still has to come this year .
Netflix,etc ! Have you actually even used a PS4 you do know they do rental etc as well right ?.
You know I have to PAY Sony subscriptions to listen to music and watch non Blu-ray disc movies on PS4 because it’s all DRM but I can have music and stream for free on the Xbox.
Will you be paying those rip off prices for PS NOW ?, I won’t, I don’t like that it’s just a DRM system either
You fanboys with only the one console are the worst type of all.
Ryanza
August 10, 2014 at 13:26
Ok. First off. ‘How much is the Xbox One costing Microsoft?’ I spoke about how Xbox One and Microsoft is viewed by a lot of people now. Why would I focus on Sony with this topic.
Second. If I want to watch Netflix, I will watch it from a app on my TV, a app on my blu ray player, hell there is a Netflix app on everything now a days. Same can be said with streaming music and video from a PC. So when I turn a gaming console on, I am going to be playing games.
Digital sales can be really tricky because you not really getting a product. It’s more of a service than a product. So when you download digital games, music, movies, you not getting a product, more like just a license to use and these companies are trying to “protect” control what you do with those licenses.
So once you have a disc in a case product. Something that’s real in your hands. Something you can do anything with. Once a company wants to act as middleman and take your product and give you a DRM license instead then you need to worry. I still don’t know why Steam is so popular. I think all those who are against Steam went over to console based gaming and that’s why there was major outcry against Microsoft’s DRM console.
So once the product which is the disc in a case gets put into a machine and then you can only use that disc on a certain profile, console, program, then you need to stop supporting that.
And you know you are just a fanboy when you keep on calling others fanboys when they speak bad about certain companies. Last gen my comments were against PS3, so I was a Microsoft fanboy then? This gen my comments are against Microsoft so I’m a Sony fanboy? I’m against DRM so that makes me a fanboy of what? CD Projekt RED.
What else was there. Games that’s now on PS4 that can be compared to Xbox One. The consoles are less than a year old. Give them time to create games. You going to see Sony focus on JRPG’s in the coming years to get the console selling in Japan. Sony doesn’t really compare to the games found on Xbox. So if you HAVE to play Halo, Forza and Gears, then Xbox is a MUST for you. If you want to play something new and different, then you will enjoy the PS4 and WiiU. If you like multiplatform games then the games will look better on the PS4.
freekface
August 10, 2014 at 15:30
Seriously !, you put up about MS and got a reply, do you really think you need to write an essay in response ?, your not convincing me I own both consoles I see the good and bad in BOTH of them.
You should try and do the same thing, it’s bit stupid making out one console can do no wrong whilst making out the other is always bad.(especially if you don’t even own one)
Ryanza
August 10, 2014 at 16:25
buy both consoles lol. I will buy the console that plays the next GTA game the best. And I’m guessing that console will be the PS4.
The Witcher 3 and Cyberpunk 2077 is coming. I want to play those games on the PC. buy both consoles lol. More like get two graphic cards.
PS4 is the best video game console and Xbox One is the best console to play Halo on. I don’t nit pick all those added, pay for, features.
I’m going to be anti Microsoft till the next round of consoles come out. Maybe then Microsoft will try to go for the best console instead of being a all round shit box.
buy both consoles lol. I didn’t want and still don’t want to buy the PS3. And I will never want to buy the Xbox One. I can only put up with one company’s shit at a time. Right now I’m trying to put up with Steam, Origin and Uplay’s shit. 3 fucking companies. Don’t support DRM.
What else. You took my original comment to a whole different level. So it took an essay as you said, just to respond.
How much is the Xbox One costing Microsoft? There’s the topic, now post your own comment instead of trying to justify other peoples comments.
crizz1066
August 9, 2014 at 18:46
Not that it’s a huge loss to m$, it is a huge loss of face. I don’t think the xbox devision has ever made a profit god how much money the wasted in R&D on that kinect!! Perhaps now the x1 will be sold off to a company who actually know what they are doing.
freekface
August 9, 2014 at 22:45
Seems like small change compared to the PS3 loses for the first TWO years
“PS3 loses Sony $3.3bn”
http://www.mcvuk.com/news/read/ps3-loses-sony-3-3bn
Do you think Sony should of sold off the PS3 to someone who knew what they were doing to ?.
“Even if the platform is ultimately successful, it may take longer than expected to recoup the investment, resulting in a negative impact on Sony’s profitability,” the report said.”
Ryanza
August 10, 2014 at 13:41
Sony invested heavily in that Cell processor and the gaming code had to be perfect to work on PS3. So PS3 started out with good ideas and then the, get two jobs, come out of Sony and people said fuck you. The games is what got people interested in PS3 again and by then the Xbox 360 was just looking old.
$1bn+ for Microsoft for it’s RROD problem.
So both companies had a hard start and that’s why the last gen took 8 years, to try and get some money out of it all.
This gen is different. Sony should be making a profit per console sold. Microsoft should be making a profit per console sold. So 5 years should be a good number for this gen. I just hope that CPU can keep up 4 years from now. Xbox One’s GPU can’t even keep up now. lol.
demfax
August 11, 2014 at 13:42
What’s the first word out of a microsoft shill’s mouth in an article about Xbox losing money and floundering in sales? “Sony”.
freekface
August 11, 2014 at 15:10
He like you is another who posts all negative crap about Xbox one all over the place so like your posts they need a bit of realism and balance..
Owning both consoles I don’t need to take sides I feel secure enough with my choices and don’t need to start crap negative comments about either of them, but I will happily reply to people that do, just to put a bit of balance and realism to it.
Jim Lenoir (Banana Jim)
August 9, 2014 at 19:25
Pieter Kruger does your boner also take this long to boot up? Is everything this slow on the xboner? Holy crap!
Ryanza
August 9, 2014 at 20:41
Xbox. Stop listening. lol.
Ryanza
August 10, 2014 at 13:47
One of the main reasons why I stopping using my Xbox 360 was because of the long loading for anything you want to do. And all because of that Metro dashboard and Xbox Live. I was hoping that Xbox One with new hardware and more ram would sort those loading issues but it seems like it didn’t.
The Xbox One is really not build for low internet speed users. That’s why we are tier 2.
freekface
August 10, 2014 at 17:20
That’s rubbish it’s just a faulty console, the person is just an irritating exaggerating whiner who obviously knows it’s faulty but is trying to make some sort of “look at me everyone” show of it.
He even went to whine about Thief loading time but then released it was the wrong console.
Jim Lenoir (Banana Jim)
August 10, 2014 at 21:22
But it’s so slow… and the console is so HUGGGEE!!! I think it’s the Hodor effect. The bigger a device, the stupider it is. Hodor.. Hodor.. or in this case.. Boner.. Boner… Boner.. Watercooler… Boner…
Ryanza
August 11, 2014 at 00:43
http://i1230.photobucket.com/albums/ee499/RurouniZel/Systems_gameofthrones_zps1e83333a.jpg
freekface
August 11, 2014 at 11:28
An advantage of having both machines is that you can laugh at the bulls#it people try and have you belive on the internet, it’s amazing that grown adults get involved in it especially when you think at the end of the day they are nothing more than electronic game toys.
Tulipdame
August 10, 2014 at 20:15
Way ahead of you, sister. Imported it in March. Will be buying a second one locally in the next year or less. Totally worth it. Can’t wait for Destiny, although I’m buying it on 360 and One