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Microsoft game-unit income up 30% in Q2

PC and Xbox 360 gaming rises $228 million, but increased loss per console and Kin cancellation puts Entertainment and Devices division $172 million in the red during April-June quarter.

First, the good news: Microsoft's gaming business is booming. For the three months ending June 30, the software giant reported that its PC and Xbox 360 gaming business saw a 30 percent increase in sales, with game-based revenue reaching $228 million. The tally was dragged down somewhat by the production cost of the new 250GB and 4GB slimline Xbox 360s, which includes built-in N-wireless connectivity. Notable first-party releases during the quarter include the long-awaited Alan Wake, an Xbox 360 exclusive from Max Payne creator Remedy Entertainment.

Microsoft remains cash-flush, thanks in part to PC and Xbox 360 gaming.

Microsoft remains cash-flush, thanks in part to PC and Xbox 360 gaming.

Now, the not-so-good news: The Entertainment and Devices division of Microsoft's business saw revenues slip 22 percent and take a $172 million loss. That wasn't the fault of game sales, though. The division also includes the unit behind Microsoft's stillborn Kin mobile phone. After just six weeks--and reportedly dismal sales--the company yanked the cord on the social-network-optimized device, which had been targeted at the youthful demographic known as "'tweens." It is now focusing its mobile efforts on Windows 7-based phones and has transferred the staffers behind the doomed project to its core business.

Overall, Microsoft profits were up--way up, in fact. The company reported a record $16.04 billion in revenue for the April-June quarter--an increase of 22 percent over the year prior--with profits of $4.52 billion, a 48 percent jump. Diluted earnings were per share at $0.51, a 50 percent increase over the same period in 2009.

Microsoft also has ambitious plans for its gaming business for the year ahead. As it announced during its Electronic Entertainment Expo press conference, the company will launch its Kinect motion-sensing system on November 4. It will be offering the controller-free, camera-based system solo for $150, or bundled with the (normally $200) 4GB Xbox 360 console and the minigame compilation Kinect Adventures for $300. In September, it also will be reportedly offering a limited edition, silver-finish $400 250GB Xbox 360 bundle packed in with Halo: Reach and two controllers.

78 Comments

  • kennythomas26

    Posted Aug 22, 2010 10:09 am GMT

    ah ah its cheaper to have a 360 and that is why it's out selling the PS3.

  • masterj94

    Posted Jul 29, 2010 11:26 pm GMT

    Video Games FTW

  • PvtCaboose23

    Posted Jul 25, 2010 6:42 pm GMT

    Congrats to Microsoft for making so much money

  • Gelugon_baat

    Posted Jul 24, 2010 4:07 am GMT

    Well, at least Microsoft knows which aspect of itself it needs to improve upon, huge profits or no.

  • parhar67

    Posted Jul 24, 2010 12:59 am GMT

    Thunderstarter

    Your saying they need to drop the price for kinect? First off one kinect can have 4 players. How much money do we need for 4 players to enjoy the full potential of ps move? Lets see. Move controller 49.99 move navigator 29.99. 80 bucks. 80 times four equls 320 bucks. add a PS eye which is what 35 bucks? so 4 players on the ps movie equals 355 dollars. Now lets see 4 players playing the wii today. Lets say you already have a wiimote and a nunchuck that came with your console. So a wii mote costs according to futureshop 45 bucks. 45 times 3 equals 135. Nunchucks costs 25 bucks so 75 dollars.135+75 equals 210. Oh but wait now games are supporting wii motion plus. Futureshop has a wiimote and motion plus for 60 bucks. so 60 times 3 equals 180 bucks. so 180 plus 75 equals 250. Im also giving you the benifit of the doubt of already having a wiimotion plus wii mote and nunchcuck with your console. (which is unlikely to have all 3 out of the box)

    so in the end

    kinect 4 players equals 150
    ps move 4 players equals 355
    wii 4 players (full potential) equals 250 +

    lol so who needs to bring down the price of what?

  • LOXO7

    Posted Jul 23, 2010 6:33 pm GMT

    Kin is half the word Kinect is ...

  • Thunderstarter

    Posted Jul 23, 2010 5:36 pm GMT

    @monson215202: That and if they brought down the price point by $100 and made non-Wii game knock-offs for it. Oh, and if they got some real 1st party support. When people play the demos at gamestop they'll think, "Cool! Let's buy a 360 and...what? $400? And it only has 6 games? I already have a Wii. Pass."

  • Midnightshade29

    Posted Jul 23, 2010 4:38 pm GMT

    MS doesn't do squat for pc gaming the last game thy put on pc was in 2007. They killed 4 of thier best talleneted pc game devs... RIP: Ensemble , ACES, Fasa, and freelancer team.. you will be missed but not forgotten as your games live on in pc harddrives.. Maybe greedy M$ didn't want you because you didn't sell out to the casual noobified xbox, way to hold your ground, you 4 will be forever remembered as the best devs ms ever bought and the dumbest decision for selling a dev ever.

  • topsemag55

    Posted Jul 23, 2010 4:06 pm GMT

    Microsoft is making a ton of cash with Windows 7 sales. Not to mention in the PC gaming world they are more concerned with maintaining the code for Direct-X, and granting WHQL approval to graphics driver versions.

  • monson21502

    Posted Jul 23, 2010 2:32 pm GMT

    @Thunderstarter, if you think kinect wont be a system seller your sadly mistaken.... once they set up more kintect demo stations in places like gamestop and wal-mart and parents see it more. its gonna sell like crazy this winter.

  • Vadamee

    Posted Jul 23, 2010 2:20 pm GMT

    A lot of Sony fangirls on this page... Nintendo and MSFT are the only two that are making money...So I guess Sony is "DOING IT ALL WRONG"

  • FlashCharge

    Posted Jul 23, 2010 2:14 pm GMT

    Although their has been an increase in gaming phone apps, it will never replace the console or PC as the most desireable gaming device. True gamers and even casual gamers love that 32 plus LCD screen over a 3" or even 9" screen. It is hard to tell how kinect will do or even 3D gaming for that matter. It will take several years before anyone can tell. Oh the future!

  • deviant74

    Posted Jul 23, 2010 1:22 pm GMT

    fps_d0minat0r yep yep yep except for the kinect. The kinect will do better then everyone is thinking. If it came with a sword with a analog stick on it.

  • Thunderstarter

    Posted Jul 23, 2010 1:04 pm GMT

    @monson21502: Kinect is not a system seller as of now, the pre-orders are practically non-existent. I'd replace Kinect with Fable III, as much as I dislike the series, I think that will sell a least a few thousand 360s.

  • monson21502

    Posted Jul 23, 2010 12:40 pm GMT

    its gonna go up even futher soon, halo reach, kinect, then gears 3. 3 big system sellers imo

  • SneekyRatchet

    Posted Jul 23, 2010 12:37 pm GMT

    blah blah blah sales this and sales that *sigh*

  • parhar67

    Posted Jul 23, 2010 12:24 pm GMT

    n0matter

    you said "Even with the release of the resized 360, Sony is still out-selling Microsoft"

    This week alone (according to vg chartz) MS has sold almost 307 thousand units to sonys 129...so ya the ps3 is really outselling the xbox right? your logic of all three consoles is stupid at best. Only thing ps3 has on the 360 is blu ray. Thats it. Anything else the ps3 can do microsoft can do and better. Why? Because all those things you say ps3 multi tasking is all software. MS has way better software than the ps3. How many 360 consoles have you heard of bricking after a update from microsoft? 0. How many ps3's have bricked after a forced update from sony....which later they make you pay for....a ton. As for it being a kiddie fps machine i belive your highest selling game is COD MW 2. So more people are playing a FPS on a ps3 than anything else. LOL. Rethink your logic then comeback and talk some more.

  • KC_Hokie

    Posted Jul 23, 2010 11:31 am GMT

    @ LtReviews- Actually MS makes little off the consoles themselves. They make profit off the games, accessories and everything over Xbox Live.

  • Syk0_k03r posted Jul 23, 2010 10:58 am GMT (does not meet display criteria. sign in to show)

    Syk0_k03r

    Posted Jul 23, 2010 10:58 am GMT (hide)

    maybe M$ can finally send me 360s that don't die within a year!

  • LtReviews

    Posted Jul 23, 2010 10:51 am GMT

    @tripleseed

    The fact that they are reporting earnings does not mean they are going to be healthy in the future. And I'm not pretending to be a market analyst. I'm just relaying what actual market analyst from the financial times and the wall street journal are saying: Console makers have over-saturated the casual gaming market with tech that they are no longer buying- and handheld systems are being replaced/combined with phones- and this is causing a problem for Nintendo.

    Microsofts profits aren't very indicative of how they are doing in terms of consoles. How many RROD's there are have little to no effect really. Their profits come mainly from computer software. Game-unit income is not very relevent to Microsoft as a whole. I doubt people are going to be rushing to their stocks because of video game sales.

  • Xx619MysterioxX

    Posted Jul 23, 2010 10:00 am GMT

    lmfao, So many Fanboys in this Article, Get over it. There Both or shall I say All Great Consoles with there Capabilities.

  • XanderZane

    Posted Jul 23, 2010 8:46 am GMT

    I need to buy more M$ stock. This is good news for Microsoft. Now they need to put some of those profits into making more exclusive quality games. I never even heard of the Kin. They didn't market it well at all if no one ever heard of it. Apple marketed the iPhone to death. I think M$ can come up with something just as good, but they need to market it for everyone. **************************************************************** ffviiifreak

    cause we are champions my friend badda bunn...jk screw the new xbox they should have done something for existing xbox owners oh well. Also kinect will bomb. Its just a fact.
    *******************************************************
    I don't know. It was #24 on Amazon's best sellers list for VideoGame/Hardware last week. Today it's #13 and apparently it was higher then that, as it looks like it dropped a few notches. XBox 360 Slim is now #14, just ahead of the PS3. The PS3 Move isn't even in the Top 100. lol!! I didn't know you could pre-order Diablo 3 now. Gotta pre-order my copy.

  • Yajarobi

    Posted Jul 23, 2010 8:27 am GMT

    I just want to see sony burn

  • ccputgat2m

    Posted Jul 23, 2010 8:19 am GMT

    @riariases

    The ps3 has less of an appeal cause XBL is better than the PSN, the ps3 is more expensive, the 360 came out first and although its more powerful, the games on the ps3 arent any better than the 360 version. With that being said, I bought my ps3 for the blu ray capability, free online and better relaiblity than the 360. At the end of the day, if all you want to do is play games, buy a 360.

  • riariases

    Posted Jul 23, 2010 7:57 am GMT

    @yeastori

    Yeah right. There are more casual gamers than there are hardcore gamers. Thats why the 360 and Wii have sold more than the PS3. Because they both have a bigger appeal over the PS3(and because they're cheaper). Anyways, almost everyone on my basketball team, the people I play tennis with and go to the pool with every day, and so on, own a 360. And they're the most active people ever. They don't have time for playing games all the time so if they can get active while playing games, I know for hell they will.

  • Dire_Weasel

    Posted Jul 23, 2010 7:45 am GMT

    Time to spend all that money on waggle and party game collections!

  • CodyTG

    Posted Jul 23, 2010 7:45 am GMT

    Everyone complains, but the numbers show they are doing something right, I would do the same thing they are doing if it made me that much cash. Why all the talk about Kinect? That isn't what this article is about. As far as that goes, do you not think that Microsoft has thought of all these little ideas about gamers before they thought of making Kinect? There are intelligent business people and have considered all the bad things you are saying WAY before you thought of them.

  • yeastori

    Posted Jul 23, 2010 7:39 am GMT

    I wish I bought some of their stocks, when they were just a small company, too bad I was only 8 years old, dang. Still this Kinect crap is gonna be another reason the lose money, only hardcore player buy xbox, most casual so with Wii or the PS3, xbox is taking the core for granted, and the first sign of this is when they change Natal to Kinect. It went from a cool name to a casual name, clearly a marketing tool for non core gamers.

  • mbranco_00

    Posted Jul 23, 2010 7:37 am GMT

    As a company I hope that MS stops the stillborn releases of device that have no market. The kin was a stupid idea to release when the company was already working on mobile windows 7 platform. Hopefully they will learn from this and not release devices that are under supported.

  • PixelAddict

    Posted Jul 23, 2010 7:28 am GMT

    Love 'em or hate 'em, this is good for gaming. Nintendo is also realizing very high profits as well. The competition will only make the games and the gaming systems better.

    I imagine NOBODY would have predicted this 10 years ago, when the Big N was a distant 3rd and people were talking about them going the way of Sega... and only publishing software. Massive turnaround this generation!

  • swamptick

    Posted Jul 23, 2010 5:27 am GMT

    Kudos to Microsoft for giving gamers what they want! It says a lot that fans of ALL systems are commenting on this story! I think it's great that good or bad, people can't stop talking about Microsoft. Too bad the same can't be said for Sony.

  • Wings_008

    Posted Jul 23, 2010 3:51 am GMT

    that's a lot of money!

  • fps_d0minat0r

    Posted Jul 23, 2010 3:49 am GMT

    never herd of kin but got an image of it up and it looks ugly.
    too bad they didnt pull the plug on kinect as well, alan wake and crackdown 2 could have done with a bigger budget.
    360 slim was a wise decision but it should have been on the market a long time ago.

  • The-Techspert

    Posted Jul 23, 2010 12:34 am GMT

    great, now we have a peripheral named after a discontinued phone, instead of one named after a phone marketed at tweens and tweets

  • weedman1985

    Posted Jul 22, 2010 11:22 pm GMT

    It doesn't change the fact that they are greedy scum.

  • Pete5506

    Posted Jul 22, 2010 10:34 pm GMT

    Thats a good chunk of money

  • Tripleseed

    Posted Jul 22, 2010 10:24 pm GMT

    @amaan4ever: Jeeeesus, did you even read the same article?

  • soulless4now

    Posted Jul 22, 2010 9:56 pm GMT

    I don't think I've ever heard of "Kin." Guess that's how bad it bombed then. lol

  • Tripleseed

    Posted Jul 22, 2010 9:52 pm GMT

    @TerrorRizzing: I take it by your name you're trying to say Terror Rising...or something? Anyway, retard I hope you can one day put your fanboy fever to rest and realize that competition is a GOOD thing. If you eliminate one company from the console race, we're just one step closer to having a monopoly (Sony would be the next to go). And do you really, honestly want the Japanese to dominate the videogame world again?

    @reeree746 and @LtReviews: So says the guys who don't make anywhere close to $4.52 billion in four months...Obviously they're doing something right, just leave them be and quit pretending like you're market analysts. Also, reeree, who are you to say they haven't fixed the RROD problem? I've had my current Elite for about two and a half years now, and it's working just fine. From what I hear, the newer models perform even better than the Elites.

  • Gypsyhunter666

    Posted Jul 22, 2010 9:25 pm GMT

    @ LiinkzISaG ur by far the smartest person here

  • ffviiifreak posted Jul 22, 2010 8:31 pm GMT (does not meet display criteria. sign in to show)

    ffviiifreak

    Posted Jul 22, 2010 8:31 pm GMT (hide)

    cause we are champions my friend badda bunn...jk screw the new xbox they should have done something for existing xbox owners oh well. Also kinect will bomb. Its just a fact.

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