Xbox One Lost $400 Million for Microsoft Within First Eight Months


Posted By | On 09th, Aug. 2014 Under News | Follow This Author @Pramath1605


The Xbox division has almost never made money for Microsoft, except for during the Xbox 360’s latter years. And even then, overall, the Xbox division has always stood in the red. But the sheer enormity of that amount can almost never be understood.

For example, Microsoft just revealed that during its first eight months on the market, the Xbox One lost $400 million. Just to point out, losses of like that for Sega for three years (ironically, with Sega Saturn, their third mainstream console, just as Xbox One is Microsoft’s third) basically put them out out of business. Of course, Microsoft is no Sega, but Xbox has always been a sticking point with investors, and these massive losses are unlikely to help.

“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,” Microsoft’s report said.

“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.”

Basically, an increase in revenue by $1.7 billion, and then an increase in costs by $2.1 billion, leading to a $400 negative differential.

Damn. Just…

And it’s not like the console is setting the world on fire either. Microsoft and Xbox really need to do something, and fast.


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  • Talal AlReyami

    Thanks for deleting my comment but can you do some basic math by adding the profit MSFT gain from selling games, Xbox live, Xbox music and Xbox video?

  • bardock5151

    This was all covered over at dual shockers, basically there isn’t an issue and Microsoft doesn’t need to do something fast because there wasn’t really a loss. For more information head on over to dual shockers.

    • demfax

      The Xbox division likely had an operating loss for the quarter.

  • GHz

    “And it’s not like the console is setting the world on fire either. Microsoft and Xbox really need to do something, and fast.”

    Like maybe finally having a world wide release. Just using a little common sense and guessing. 13 territories only 5m consoles, how does that average up compared to 8m 72 countries?

    Then there is the issue of games. One year in, holiday closing in fast. What games are we all looking forward to play. And damn..2015 is literally just around the corner now. Games, games, games, games, games. We’ve seen plenty and who are promising more AAA? What have we seen and read with our own eyes? Who’s more prepared out of the two companies? Again just using my common sense. Can you try that Pramath?

    Don’t let me get into who got the better network infrastructure.

    • demfax

      Tier 2 countries will do very little for Xbox sales. An extra 5-10% a month at most after the launch month. Xbox has almost no presence outside of the 13 countries they already launched in. The global picture is accurate as-is.

      The 13 countries Xbox One already launched in account for 90% of 360 sales. The remaining markets are tiny.

      September is going to be a mountain of crow for certain people constantly screaming about 72 vs 13 countries. PS4 will outsell Xbox globally in September, like every other month.

      PS4 has many great AAA games that gamers love. That’s why it’s 9.3+ million in sales and growing. Sony’s large number of well funded 1st parties will ensure PS4 has a ton of great AAA exclusives, as many or more than PS3.

      PSN is vastly improved and Sony is continually investing more into improving it.

    • GHz

      I never once said that the Xbox will outsell PS4. Globally, the PlayStation brand is a more recognized brand than the Xbox brand. Sony did a fine job at establishing that. Anyone with a brain knows that when both MS and Sony decided to launch together that the popular Sony will outsell MS. You Sony evangelist however make up myths like being second place in sales is an utter failure in this business. How ridiculous.

      The fact is MS have yet to fully launch. You and I both know that both will be successful IF Sony manages to keep their heads above water. Don’t be naïve.

      Now here’s an even more important point. Do you know MS won last gen? It was because not only were they selling consoles, but those consoles were a window to a robust online service. XBL won it for MS last gen. Services is key. Global reach is key. Being connected is key. XBL was good at that, and MS made more money with each XB360 sold than Sony made with each PlayStation 3 sold. It was all about that service attached to the XB brand. That’s the true platform, the real XB.

      You should work for a big company because you are very sure of yourself! Go work for financial giants like UBS AG, Goldman Sachs and advise them. But you’ll probably get tossed out the window the moment you start spewing your forum garbage, because nothing matter to these companies but the bottom line. They know where the money’s at, and it’s not in Sony’s camp.

      Sony own leadership have already stated that to expect less AAA games. Sony will depend on 3rd party heavily in that regards. Sony could’ve sold 20m PS4’s, but if you don’t have a global reaching, secure network to allow the creation of even more creative services, you’re not with the times.

      Now for my POV. Only an opinion. Sony PS4 is the last ruminant of what video gaming use to be. It’s built on old ideas that the leadership at Sony believed would last. It’s a network run world now, and at least Kaz understands that they made a grave error. Sony has put itself in a position where it can go extinct like the Dodo.

      At least Kaz finally get it. This is what your boss had to say couple months back. It’s 2014 dude and only now they want to invest!? Why should I listen to you when the real news outlets are saying different.

    • demfax

      You are lying and making things up.

      Sony is on its way to recovering from years of losses and recently posted a quarterly profit as almost all of their divisions were profitable. They are not going bankrupt.

      Sony has total assets worth US$148.893 billion dollars. It is still one of the largest corporations on the planet, ranked 233 in The World’s Biggest Public Companies on Forbes.

      It’s sad PS4 is dominating so badly that ignorant microsoft fanboy shills are left desperately wishing Sony would go bankrupt. Keep dreaming, it’s not happening. Sony’s games division is making a profit and is well funded.

      Tier 2 launch will do very little for Xbox sales. Xbox One has been selling less than Xbox 360 the last 3-4 months. At this rate Xbox One will sell less than 360 total.

      The Xbox division has never made a net profit, it is a multi-billion net loss for MS. That is why MS shareholders want to get rid of it.

      PS3 outsold 360 last gen in hardware and software.

      PSN is vastly improved and Sony is continually investing more into improving it.

      Nobody said expect less AAA games on PS4. You are lying and making things up. PS4 will have as many or more AAA games as the PS.

      PS4 will continue to be hugely successful, Xbox will continue to lose MS money and cause more shareholders to demand it be sold off.

    • GHz

      “We’ve been saying that the number of AAAs might be getting smaller because the cost of development for AAAs is getting higher,” he said. “But there are so many indie games and great games coming out almost every week or every other week. We’re seeing it on PS4. I hope you’re seeing it as well.” – Yoshida 18 JUNE 2014

      Yup good for Sony, they did good, but it wasn’t enough was it? Be real and put the I LOVE SONY sign down. Be real for once, and look at the reality of it all. Take a deep breath and read on. It’s real news 😉

      And you miss the whole thing about network is where the money’s at in this business. If hardware and software was so instrumental in succeeding in this industry Sony would not be in the predicament its in today. Didn’t you read what your Boss said this year? Even he realizes it, so why cant you? But maybe you’ll listen to a couple of devs instead.

      “However, when Microsoft announced the Xbox One we felt that what Microsoft was offering in terms of the platform feature set and Xbox Live presence was a great match for Sunset Overdrive.” – Insomniac Games

      “I personally talked to both Microsoft and Sony and explained that we need to find a way to have potentially hundreds-of-thousands of dedicated servers at a price point that you can’t get right now. Microsoft realized that player-hosted servers are actually holding back online gaming and that this is something that they could help solve, and ran full-speed with this idea.”

      “The Xbox group came back to us with a way for us to run all of these Titanfall dedicated servers and that lets us push games with more server CPU and higher bandwidth, which lets us have a bigger world, more physics, lots of AI, and potentially a lot more than that!” – Jon Shiring, Respawn entertainment.

      You can spin it like how ever you want, but the fact is these guys said what they said and in both instances they point to a better network infrastructure on MS end.

      As far as games go, GameCon is tomorrow. We’ll them (games) do the talking. 😀

    • demfax

      Yoshida is talking about the industry in general, not PS4. PS4 will have as many or more AAA games as PS3. Sony still has a huge number of 1st party studios working on AAA PS4 games. The games division is making a profit, is in a net profit, and is well funded.

      Sunset Overdrive and Titanfall could easily run on PS4 and PSN. Titanfall 2 will be on PS4 and it will run great.

      That article about Sony is meaningless. That is only a list of recommended stocks by the Japanese government. It has nothing to do with Sony’s finances.

      The fact is Xbox is a multi-billion net loss and Xbox One is losing MS money. All you are doing is spreading fanboy LIES, hate, and FUD about Sony in an article about Xbox.

      PS4 will continue to be hugely successful, no matter how many lies you spread about Sony in Xbox articles.

    • GHz

      Spin those citable information any which way you want. Doesn’t change the reality. Not one link I posted was my opinion. They are the expressed thoughts of people who are influential in their fields of expertise. I simply cited them. How you want to decipher what they say is up to you.

      The fact is both platforms are successful, but one company is poised and ready to take on the future and that’s MS.

      Can Sony bounce back sure! And I’m counting on it. But I also have to face the reality that it might not based on what the experts say.

      “Sony’s been rejected given its earnings. It must be humiliating for the management,” said Yasuyuki Suda,

      “Losses at the company have created negative return on equity that dwindling operating income and market value no longer counter.”

      “Yumi Takahashi, a spokeswoman for Sony in Tokyo, and Panasonic spokeswoman Megumi Kitagawa declined to comment on the index announcement.”

      All this happened on the 7th of this month. What rock do you live under? How am I spreading FUD when I’m citing from a respectable news organization? Oh wait, your much smarter than the analyst who sum up these conclusions. Gamingbolt NeoGaf and the rest are all right, and Bloomberg news is wrong. Anyone who cite them are spreading fud and are fanboys? That’s the world you live in?

      Gaming sites like this one bash XB1 on every turn because people like you enjoy it. The link from Bloomberg will never make it on Gamingbolt. It was to make a point. If ya’ll are so keen on spreading your POV as facts, then you shouldn’t have a problem with pple calling ya’ll out, and rebutting with citable real news! .

    • demfax

      The reality is you’re making things up.

      I wouldn’t call selling less than Xbox 360 month to month for the last couple months successful.

      MS shareholders won’t agree to spend further billions on Xbox when it shows little or no sign of turning a net profit.

      You don’t even know what a stock index is, let alone why it has pretty much no relation to Sony’s actual finances. You have no clue what you’re even linking to.

      You’re spreading “hurr Sony bankrupt” FUD and lies in an article talking about Xbox sales, trying to distract from the facts.

    • GHz

      You still don’t get it. Snatching up bogus articles w/o researching the source is not cool. This article is based off of a NeoGaf thread…NeoGaf dude!

      Don’t believe everything you read on the internet, especially from a gaming sites these days. If you read something that interest you, make it a habit of doing a follow up, with proper research. It aint hard. This article was created and geared towards pple like you because you are the perfect vessel to help spread this garbage. It’s w/o merit, and so I showed you and your buddy Pramath how to share information the right way. That is by going straight to the source, not no one sided backward game hating opinionated site like NeoGaf.
      But w/e dude, you’re the “smart” one.

  • Ippoletta
    • GHz

      Oh man if they do that, they’ll be plenty wrist slashing. PS4 fanatics are crazy. Anyways most popular gaming sites wouldn’t post that. But if Microsoft drops a dollar, it will headline for weeks and they would add that Xbox is DOOMED! It is what it is.

    • demfax

      This Microsoft Xbox article has nothing to do with Sony.

  • GHz

    I like how Gamingbolt moderators deleted my last post, Probably hit a nerve.

    Back to reality. In other news, As of Aug 7th 2014, Japan Shame Index Dumps Sony Stock, Adds Panasonic.

    “Panasonic is on its way to recovery while Sony is not,” said Keiichi Ito, a quantitative strategist at SMBC Nikko Securities Inc.

    The rejection of Sony, creator of the PlayStation, was expected by UBS AG, Goldman Sachs Group Inc. and at least four other brokerages. Losses at the company have created negative return on equity that dwindling operating income and market value no longer counter.

    “It’s not surprising Sony’s been rejected given its earnings. It must be humiliating for the management.” – Yasuyuki Suda, Tokyo-based general manager at Mito Securities Co.

    • otherZinc

      @GHz & Ippoletta,

      Thanks for or the “link” of real news that GamingBolt & n4g won’t cover.

      See, real business can’t be tricked like Sony fans on these biased sites can.

    • demfax

      This Microsoft Xbox article has nothing to do with Sony.

  • otherZinc


    Thanks for letting the gaming public know how irresponsible & inaccurate your site is by posting such a false article.

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