Rick Sherlund believes it would benefit Microsoft to quit the console business.
While Sony has indicated that losses for the PlayStation 4 won’t be as high as the PS3 when it first launched, it seems the Microsoft’s Xbox division is currently burning through many a pretty penny in the lead-up to the Xbox One launch. Nomura analyst Rick Sherlund has revealed the division is costing Microsoft $2 billion per year.
Interestingly, he also reveals that the Entertainment and Devices group – of which the Xbox, Windows Phone and Android are a part of – is profitable, it’s almost entirely due to the royalties garnered from Android. Considering that Microsoft bought Nokia and now directs its Lumia, it will be interesting to see just when it creates a bump in profits for the group.
Meanwhile, Sherlund believes that Microsoft should quit the console race altogether and stands to lose $2.5 billion a year on Xbox, Skype and Windows Phone if Android profits are not factored in. The Xbox One will be releasing on November 22nd, so that seems impossible at this point. Nonetheless, it’ll be a rocky start for an already bleeding Microsoft.