BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific
BBCi NEWS   SPORT   WEATHER   WORLD SERVICE   A-Z INDEX     

BBC News World Edition
 You are in: Technology  
News Front Page
Africa
Americas
Asia-Pacific
Europe
Middle East
South Asia
UK
Business
Entertainment
Science/Nature
Technology
Health
-------------
Talking Point
-------------
Country Profiles
In Depth
-------------
Programmes
-------------
BBC Sport
BBC Weather
SERVICES
-------------
EDITIONS
Friday, 15 November, 2002, 10:48 GMT
Xbox losses fail to rock Microsoft
Xbox stand at Motor Show, BBC
The Xbox is struggling to find fans
For the first time Microsoft is revealing how much money it is losing on its Xbox game console.

Documents filed with the US financial watchdog show that Microsoft's Home and Entertainment division, which includes the Xbox, lost $177m (112m) in the three months to 30 September.

Since the Xbox was launched Microsoft has been forced to cut its price twice to boost sales.

The documents also reveal that four of the seven divisions of the company are operating at a loss.

Cash pile

The figures revealed in the documents filed with the Securities and Exchange Commission were prepared with Microsoft's internal accounting system.

These figures have been eagerly awaited by industry watchers and analysts as they give a more detailed picture of the state of Microsoft's business than does the accounting method used to report quarterly earnings.

In the quarter ending 30 September, Microsoft's Home and Entertainment division reported revenues of $505m.

It lost $177m, up from a loss of $68m in the same period in 2001. This loss is by far the largest of Microsoft's unprofitable divisions.

By comparison Microsoft's mobile devices division lost $33m and its MSN net service lost $97m.

Gaming experiment

The loss in the home entertainment division has been put down to the high cost of marketing the game console and absorbing the cost of the price cuts Microsoft has been forced to get people buying it.

The losses of the division look set to accelerate as Microsoft launches the Xbox Live service which lets people play each other via the internet.

It said it would spend $2 billion over five years to fund this online venture.

Despite the losses Microsoft will not have to rein in its marketing and promotional efforts any time soon. The company has a cash pile of more than $30 billion to fund expansion.

Even if it did not have this huge amount of cash on hand the $3.5 billion profits from its operating system and software divisions in the quarter more than offset any loss.

See also:

03 Oct 02 | Business
27 Sep 02 | Technology
24 Sep 02 | Technology
24 Jul 02 | Technology
26 Jun 02 | Entertainment
26 Jun 02 | Science/Nature
06 Jun 02 | Entertainment
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Technology stories are at the foot of the page.


E-mail this story to a friend

Links to more Technology stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |
Programmes