Microsoft game division revs rise 55%

While Sony and Nintendo are drawing attention with news of their next handheld systems, Microsoft is celebrating the success of its console efforts.

Today, Microsoft reported its earnings for the quarter ending December 31, 2010. Overall, the company did well, posting a profit of $6.63 billion on earnings of $19.95 billion. Specifically, the company's game department, the Entertainment and Devices Division, did very well, reporting $3.7 billion in quarterly sales--an increase of 55 percent over the prior year's three-month total of $2.38 billion. Operating income for the department was $679 million, up from $365 million the year prior.

One big reason for the Entertainment and Devices Division's success was the introduction of the Kinect during the holiday quarter. The system shipped 8 million units in the two months after it went on sale November 4, 3 million more units than Microsoft had forecast. The Kinect also helped boost Xbox 360 sales 21 percent during the quarter, with 1.9 million units of the console sold in December alone in the US. In 2010, domestic Xbox 360 sales increased 42 percent to 6.8 million units sold.

Xbox Live subscriptions also increased 30 percent during the October-December quarter. At the 2011 Consumer Electronics Show, Microsoft CEO Steve Ballmer said that the service now boasts 30 million registered users, a new record. Also during his presentation, he pegged the worldwide Xbox 360 installed base at 50 million units.

The Entertainment and Devices Division also includes Windows Phone 7, which sold 1.5 million units in six weeks, according to Microsoft. The phone, which has features that connect with Xbox Live, is now available on nine devices in 30 countries via 60 operators. More than 100 applications are being added to its marketplace each day according to Microsoft.

[UPDATE] In a conference call with investors, Microsoft executives said they expected the Entertainment and Devices Division's current-quarter revenue to increase 50 percent. For the full fiscal year, the company expects the division's revenue to be up 40 percent. Once again, the popularity of the Kinect and Xbox 360 were cited as factors for the uptick.