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[anothertech]

So we can all operate from the facts, here are the actual numbers Microsoft have reported every year since Xbox started. I note what type of number it is, and then what other business groups are lumped into it (since Xbox is never by itself). Note that these official Microsoft financials don't precisely line up to Psychotext's previously-quoted post. I'm not sure the reason for mismatch, but I've linked all the Microsoft reports so you can check them yourself.

Note that when a platform is listed without further explanation--e.g. "Xbox 360" or "Windows"--the figures include all associated royalties, subscriptions, accessories, etc. Only if segments are specified is anything left out.

Second, "consumer software" refers to educational and productivity titles.

Finally, the original Microsoft Surface platform is listed under its revised PixelSense name, in order to avoid confusion with the new Surface line of devices.

[b]Year ending
Jun 30,      Reported     Type                Including[/b]
[url="https://www.microsoft.com/investor/reports/ar03/alt/item_seven.htm"]2002[/url]        -$   874m     Operating Income    Xbox, PC/online games, consumer software and hardware, TV platform
[url="https://www.microsoft.com/investor/reports/ar03/alt/item_seven.htm"]2003[/url]        -$   924m     Operating Income    Xbox, PC/online games, consumer software and hardware, TV platform
[url="https://www.microsoft.com/investor/reports/ar06/staticversion/10k_fr_dis.html"]2004[/url]        -$ 1.337b     Operating Income    Xbox, PC/online games, consumer software and hardware, TV platform
[url="https://www.microsoft.com/investor/reports/ar06/staticversion/10k_fr_dis.html"]2005[/url]        -$   485m     Operating Income    Xbox, PC/online games, consumer software and hardware, TV platform
[url="https://www.microsoft.com/investor/reports/ar06/staticversion/10k_fr_dis.html"]2006[/url]        -$ 1.262b     Operating Income    Xbox/Xbox 360, PC/online games, consumer software and hardware, TV platform
[url="https://www.microsoft.com/investor/reports/ar09/10k_fr_dis.html"]2007[/url]        -$ 1.898b     Operating Income    Xbox 360, PC/online games, Zune, consumer software and hardware, TV platform, mobile and embedded devices
[url="https://www.microsoft.com/investor/reports/ar09/10k_fr_dis.html"]2008[/url]         $   497m     Operating Income    Xbox 360, PC/online games, Zune, PixelSense, consumer software and hardware, TV platform, mobile and embedded devices, retail sales of Office and Windows
[url="https://www.microsoft.com/investor/reports/ar09/10k_fr_dis.html"]2009[/url]         $   169m     Operating Income    Xbox 360, PC/online games, Zune, PixelSense, consumer software and hardware, TV platform, mobile and embedded devices, retail sales of Office and Windows
[url="https://www.microsoft.com/investor/reports/ar12/financial-review/discussion-analysis/index.html"]2010[/url]         $   517m     Operating Income    Xbox 360, PC/online games, Zune, consumer software and hardware, TV platform, mobile and embedded devices, Windows Phone, retail sales of Office and Windows
[url="https://www.microsoft.com/investor/reports/ar12/financial-review/discussion-analysis/index.html"]2011[/url]         $ 1.257b     Operating Income    Xbox 360, PC/online games, consumer software and hardware, TV platform, mobile and embedded devices, Windows Phone, Android patent licensing
[url="https://www.microsoft.com/investor/reports/ar12/financial-review/discussion-analysis/index.html"]2012[/url]         $   364m     Operating Income    Xbox 360, PC/online games, Surface, consumer software and hardware, TV platform, mobile and embedded devices, Windows Phone, Skype, Android patent licensing
[url="https://www.microsoft.com/investor/reports/ar13/financial-review/discussion-analysis/index.html"]2013[/url]         $   848m     Operating Income    Xbox 360, PC/online games, Surface, consumer software and hardware, TV platform, mobile and embedded devices, Windows Phone, Skype, Android patent licensing
[url="https://www.microsoft.com/investor/reports/ar15/index.html#discussion-analysis"]2014[/url]         $19.724b     Gross Margin        Xbox 360/Xbox One, OEM and consumer Windows, consumer Office and Office 365, Windows Store, Bing, MS retail stores, Windows Phone (not hardware), Android patent licensing
[url="https://www.microsoft.com/investor/reports/ar15/index.html#discussion-analysis"]2015[/url]         $17.680b     Gross Margin        Xbox 360/Xbox One, OEM and consumer Windows, consumer Office and Office 365, Windows Store, Bing, MS retail stores, Windows Phone (not hardware), Android patent licensing
[url="https://www.microsoft.com/investor/reports/ar16/index.html"]2016[/url]         $ 6.142b     Operating Income    Xbox 360/Xbox One, Mojang, PC software and accessories, Surface, Windows Phone, Windows, Bing, MSN ads, all patent licensing
[url="https://www.last10k.com/sec-filings/msft/0001564590-17-014900.htm#ITEM_7_MANAGEMENTS_DISCUSSION_ANALYSIS_F"]2017[/url]         $ 8.288b     Operating Income    Xbox 360/Xbox One, Mojang, PC software and accessories, Surface, Windows Phone, Windows, Bing, MSN ads, all patent licensing

Note the primary takeaway: Microsoft have never provided operating income or gross margin figures for Xbox by itself, much less net profit numbers for the division. And recently there's much more consolidation of business segments, leading to even less clarity. Only Microsoft employees could know for sure how profitable the Xbox division is, whether all-time or in a specific period.

This means, paradoxically, that Paul Thurrott is in a much better position to know the facts than GAF members or even investors. He might have sources who really know, unlike the average person. Of course, his sources could also be mistaken or inventing things, so his statements are second-hand and should be evaluated cautiously.

Looking over what has been released, my personal estimation is that Xbox probably was profitable in FY 2011, 2012, and maybe 2013. These are the peak Kinect years, before Xbox One came along and ruined the party. Of course, I can't know if I'm right; but I do think this is the most plausible conclusion that can be drawn, given the narrowness of margins every year else, and the patterns of other divisions grouped with Xbox.

And this is why I continue to say, we don't know shit one way or the other for the last decade.

Thx for putting that work btw. Makes things simple.

 

[notaskwid]

#notallSonies

 

[PlayerReady]

And this is why I continue to say, we don't know shit one way or the other for the last decade.

Thx for putting that work btw. Makes things simple.

Wasn't always difficult to know as Microsoft lumped the Xbox with other devices that weren't successful in the same division like e.g Zine?

 

[Liabe Brave]

You may update update your chart with some numbers for net income "Other Personal Computing" which includes the whole Gaming/Xbox business for

2014 with a value of $5.605b
2015 with a value of $5.095b

Thanks, though there are some small errors here. The segment is called "More Personal Computing"--it's a pun, you see, Microsoft makes computing "more personal"--and the figures are operating income, not net income. I've made the appropriate changes to my earlier post.

After reading the Annual reports from between 2015 & 2017 - the whole text and not just the numbers - I cannot share the conclusion Xbox was never profitable at all as I did not find any hint on that in the remarks made.

This seems remarkably naive. You expect that if Microsoft had never made a profit on Xbox, they'd make sure to mention that in their annual reports? If anything, their reportimg consistently suggests exactly the opposite. They never mention profit for Xbox at all, and have never even given a positive operating income result for Xbox without including some other giant source of income under the same umbrella: Office, patent licensing, Windows, etc.

That said, in reality they give no proof one way or the other. Inside sources, such as Thurrott presumably has, are more likely to give us the answer than any amount of familiarity with the public reports.

 

[Colbert]

(a) Thanks, though there are some small errors here. The segment is called "More Personal Computing"--it's a pun, you see, Microsoft makes computing "more personal"--and the figures are operating income, not net income. I've made the appropriate changes to my earlier post.


(b) This seems remarkably naive. You expect that if Microsoft had never made a profit on Xbox, they'd make sure to mention that in their annual reports? If anything, their reportimg consistently suggests exactly the opposite. They never mention profit for Xbox at all, and have never even given a positive operating income result for Xbox without including some other giant source of income under the same umbrella: Office, patent licensing, Windows, etc.

That said, in reality they give no proof one way or the other. Inside sources, such as Thurrott presumably has, are more likely to give us the answer than any amount of familiarity with the public reports.

(a) Sorry typo. I mixed it up. But still a number better than GP

(b) No just making a conclusion from official documents filed by MS instead of being naive putting the word of a tech journalist making assumptions without giving any evidence over what is filed to the overseeing authority + being the only one saying this!

 

[D.Lo]

Always a funny one

2006        -$ 1.262b     Operating Income    Xbox/Xbox 360, PC/online games, consumer software and hardware, TV platform
2007        -$ 1.898b     Operating Income    Xbox 360, PC/online games, Zune, consumer software and hardware, TV platform, mobile and embedded devices
2008         $   497m     Operating Income    Xbox 360, PC/online games, Zune, PixelSense, consumer software and hardware, TV platform, mobile and embedded devices, retail sales of Office and Windows

Wow! I wonder how they turned that division around

+ retail sales of Office and Windows

Oh...

 

[KtSlime]

Always a funny one

2006        -$ 1.262b     Operating Income    Xbox/Xbox 360, PC/online games, consumer software and hardware, TV platform
2007        -$ 1.898b     Operating Income    Xbox 360, PC/online games, Zune, consumer software and hardware, TV platform, mobile and embedded devices
2008         $   497m     Operating Income    Xbox 360, PC/online games, Zune, PixelSense, consumer software and hardware, TV platform, mobile and embedded devices, retail sales of Office and Windows

Wow! I wonder how they turned that division around

+ retail sales of Office and Windows

Oh...

It's like you can watch them try to obfuscate the numbers.

Xbox ain't doing well, let's hide it with our PC games.

The next year: Well that didn't work, let's add in our music and soon to be successful mobile platforms.

And the next year: Now it's even worse, screw it, let's put them all together with Office and Windows.

 

[TBiddy]

It's like you can watch them try to obfuscate the numbers.

Xbox ain't doing well, let's hide it with our PC games.

The next year: Well that didn't work, let's add in our music and soon to be successful mobile platforms.

And the next year: Now it's even worse, screw it, let's put them all together with Office and Windows.

Yes, clearly the only reason Microsoft reports their numbers like that are to obfuscate how the Xbox is really doing. Obviously.

 

[Synth]

Yes, clearly the only reason Microsoft reports their numbers like that are to obfuscate how the Xbox is really doing. Obviously.

It's funny, because the takeaway everyone always seems to arrive at, is that the combined values are specifically to hide Xbox not doing well... no mention of thing like Zune or Windows Phone would likely be put any potential Xbox profits red also. Nope, Xbox just gets the special treatment, despite apparently being of very little importance.

 

[KtSlime]

Yes, clearly the only reason Microsoft reports their numbers like that are to obfuscate how the Xbox is really doing. Obviously.

I'm kidding a bit, but yes, that is why companies group products together, to obfuscate the numbers. Is it a terrible practice, no not really, if their investors are happy they don't have to show them everything. They could be obfuscating them form their competition or from their investors, but obfuscation is the only reason I can think of to report numbers in that fashion.

Maybe they weren't trying to hide the Xbox numbers but the Kin and WebTV and some other failed projects.

I think them losing a bit of money to try and change the landscape is fine and hope it works out for them.

 

[TBiddy]

It's funny, because the takeaway everyone always seems to arrive at, is that the combined values are specifically to hide Xbox not doing well... no mention of thing like Zune or Windows Phone would likely be put any potential Xbox profits red also. Nope, Xbox just gets the special treatment, despite apparently being of very little importance.

I guess it boils down to being a gaming forum, and lots of people at Gaf seems to take a pleasure in anything that can be considered bad (or non-good) news for Microsoft.

I'm kidding a bit, but yes, that is why companies group products together, to obfuscate the numbers. Is it a terrible practice, no not really, if their investors are happy they don't have to show them everything. They could be obfuscating them form their competition or from their investors, but obfuscation is the only reason I can think of to report numbers in that fashion.

I'm 99% sure it boils down to taxes, in one way or another.

 

[Shiggy]

I'm 99% sure it boils down to taxes, in one way or another.

How would that work? You still have to pay the same amount of taxes if you present numbers for the Xbox business separately.

 

[D.Lo]

Whatever the reason, it's presented as the same division when the portfolio dramatically changed by including hugely profitable legacy products in 2008.

Those numbers were reported in 2008 by many sites as 'The Xbox finally turning a profit' (example)..Of course there is nothing to suggest that at all, given retail Office and Windows was rolled in.

And Microsoft is literally obfuscating the number of consoles they are selling now because the news is bad, but they were happy to report them when they were good. Sony and Nintendo may have done some channel stuffing (and Sony changed tracking methods once to obfuscate poor PS3 sales) but have never actually not reported shipments. The inference is based on Microsoft's behaviour.

 

[00ich]

This means, paradoxically, that Paul Thurrott is in a much better position to know the facts than GAF members or even investors. He might have sources who really know, unlike the average person. Of course, his sources could also be mistaken or inventing things, so his statements are second-hand and should be evaluated cautiously.

My best guess would that Thurrott got the watercooler "truth" from within Microsoft's mid-management. The phrasing "Xbox was never seen as a financial success" would probably more true.

 

[00ich]

And Microsoft is literally obfuscating the number of consoles they are selling now because the news is bad, but they were happy to report them when they were good. Sony and Nintendo may have done some channel stuffing (and Sony changed tracking methods once to obfuscate poor PS3 sales) but have never actually not reported shipments. The inference is based on Microsoft's behaviour.

nope. nvm

 

[D.Lo]

Didn't Sont report "Playstation family' numbers around the first year of the PS3 to obfuscate bad PS3 sales?

Their PR used the term, but not quarterly reports.

Apologies I was wrong. In 2012 Sony stopped releasing quarterly shipment figures for PS3 for some reason too.

 

[Maximilian Kolbe]

It's funny, because the takeaway everyone always seems to arrive at, is that the combined values are specifically to hide Xbox not doing well... no mention of thing like Zune or Windows Phone would likely be put any potential Xbox profits red also. Nope, Xbox just gets the special treatment, despite apparently being of very little importance.

Just like people in here keep saying how Hololens will be bad for gaming and treat it like a gaming device, but MS never said gaming is main target of Hololens lol.

 

[Pif]

I say Nadella gives the xbox brand one more shot before Windows phoning it if it keeps underperforming (if it really is underperforming).

I can't see the X1X bringing home the bread at 500 a pop.

 

[TheThreadsThatBindUs]

I agree with most written in your comment but can you provide a source for that quote you have in there? Thank you in advance!

Of course I'm paraphrasing, but I believe the response in the interview with Eurogamer is the one I'm referring to:

I was going to ask - what's your assessment of the first-party studio setup you have now? Is there enough there for you to be able to provide the kind of games I'm talking about?

Phil Spencer: I've been in this job three years and focused on hardware innovation and I think we've landed two great consoles in the last two years, with Xbox One S and Xbox One X. I've focused a lot on live innovation and getting our developer platform as much as the consumer side of the platform in shape. I'm spending a lot of time on our first-party right now. I do think we have an opportunity to get better in first-party and to grow. We've got great support from the company to go do that.

 

[chromatic9]

Original Xbox and first half of 360 was probably a loss. How much they've made back with the other half of the 360 and low key Xbox One is hard to say. I'd guess Xbox Live and other online sales bring it to a small profit, the digital age helps more and more. Must've been some losses in 2014 on the original Xbox One Kinect SKU to make way for the Kinectless one and those TV related deals.

Still it's probably worth having the iron in the fire, the brand is pretty strong to do well if others slip and lots of young people and those approaching middle age are keenly aware of Microsoft. I remember how before it was an obscure techie sounding logo to the average person surrounded by many other logos such as Asus, American Megatrends, Windows.

 

[TheThreadsThatBindUs]

(b) No just making a conclusion from official documents filed by MS instead of being naive putting the word of a tech journalist making assumptions without giving any evidence over what is filed to the overseeing authority + being the only one saying this!

Or rather don't...

If you don't want to believe Paul Thurrott because you don't trust his sources on this issue, despite his track record as and insider (I mean insiders can sometimes be wrong too), then that's fine... there's no reason for any of us to really.

On the other hand, naively trusting the extremely vague non-information in MS' financial reports and making hard conclusions about the profitability of the Xbox brand based on reports that offer no information to that effect at all, just sounds like far more of an irrational and poorly considered position.

Why not simply be open to the possibility that Paul could be correct, just as much as the possibility that he isn't, given that there are no facts in the public domain available to us indicating either way?

I mean, I would even argue that a healthy amount of cynicism is always better when considering the publicly disseminated information from big business entities like MS, however, I wouldn't strongly enforce that as a rule.

 

[FyreWulff]

Insiders wars. Whom to believe?

Paul Thurrott is one of the OG MS insiders.. so.... Paul Thurrott? I mean the dude's personal logo is a play on the Windows logo. You can practically set your watch to his rumors.

 

[boneyjangles]

I would bet surface isn't profitable either.

 

[e-gamer]

Nadella is lying.

 

[oti]

Always a funny one

2006        -$ 1.262b     Operating Income    Xbox/Xbox 360, PC/online games, consumer software and hardware, TV platform
2007        -$ 1.898b     Operating Income    Xbox 360, PC/online games, Zune, consumer software and hardware, TV platform, mobile and embedded devices
2008         $   497m     Operating Income    Xbox 360, PC/online games, Zune, PixelSense, consumer software and hardware, TV platform, mobile and embedded devices, retail sales of Office and Windows

Wow! I wonder how they turned that division around

+ retail sales of Office and Windows

Oh...

lol

 

[Ozzy Onya A2Z]

Paul Thurrott is one of the OG MS insiders.. so.... Paul Thurrott? I mean the dude's personal logo is a play on the Windows logo.

I'll take the word of the CEO whom has regulation and investors up his arse constantly over a MS blogger who changed his favourites tune with respect to MS a few years ago thanks. Check his blog, it's plain to see his marked attitude change.

 

[FyreWulff]

I'll take the word of the CEO whom has regulation and investors up his arse constantly over a MS blogger who changed his favourites tune with respect to MS a few years ago thanks. Check his blog, it's plain to see his marked attitude change.

The CEO that combines Xbox with one of their most profitable segments (Office) to play with numbers?

I mean this isn't unique to MS. Literally every publically traded company does this. They're still reporting accurate numbers, yes, they're just being clever about where they're being reported from.

 

[Ozzy Onya A2Z]

The CEO that combines Xbox with one of their most profitable segments (Office) to play with numbers?

I mean this isn't unique to MS. Literally every publically traded company does this. They're still reporting accurate numbers, yes, they're just being clever about where they're being reported from.

Just like I linked from the last page, for tax minimalisation not some sinister plan to hide 5% of their total revenue away from gamers eyes for Xbox specifically. They're not coming clean on the tax avoidance methods/details which makes all this speculation at best.

If you think near 50million active users and 9billion in annual revenue isn't make profit you're crazy IMO.

A Japanese company might think in terms of 25 to 100 years operations but western companies rarely operate beyond 10 years at best.

 

[FyreWulff]

Just like I linked from the last page, for tax minimalisation not some sinister plan to hide 5% of their total revenue away from gamers eyes for Xbox specifically. They're not coming clean on the tax avoidance methods/details which makes all this speculation at best.

If you think near 50million active users and 9billion in annual revenue isn't make profit you're crazy IMO.

I think this where the confusion comes from. Nobody is saying Microsoft isn't making money off the Xbox. They obviously are. They just still haven't paid off the total tab that they've spent on Xbox to get to this point. Hence revenue vs profit. They're making lots of revenue off the Xbox.

 

[oti]

Just like I linked from the last page, for tax minimalisation not some sinister plan to hide 5% of their total revenue away from gamers eyes for Xbox specifically. They're not coming clean on the tax avoidance methods/details which makes all this speculation at best.

If you think near 50million active users and 9billion in annual revenue isn't make profit you're crazy IMO.

A Japanese company might think in terms of 25 to 100 years operations but western companies rarely operate beyond 10 years at best.

That sure is a good statement based on facts and nothing but facts.

 

[Ozzy Onya A2Z]

I think this where the confusion comes from. Nobody isn't saying Microsoft isn't making money off the Xbox. They obviously are. They just still haven't paid off the total tab that they've spent on Xbox to get to this point.

I doubt that too. For argument sake take an average of 4 billion revenue per year for 5 years. How does that stack up against marketing, manufacturing, warranty, studio development, staff, acquisitions etc? 20billion and still in the red? Nah I don't see it that way at all. Just creative accounting to balance phones or surface and taxes etc.

 

[D.Lo]

I think this where the confusion comes from. Nobody is saying Microsoft isn't making money off the Xbox. They obviously are. They just still haven't paid off the total tab that they've spent on Xbox to get to this point. Hence revenue vs profit. They're making lots of revenue off the Xbox.

No. Many are saying they are not making money now. The insider comment on which this thread is based is directly implying that too.

And we do not have clear official figures to prove it either way.

It is generally accepted, seemingly even by yourself, that the original Xbox lost at least 4 billion, and thanks to launch and then RROD the first three years of the 360 lost another 3 billion too. The financial reports do seem to correlate to this, as only PC games and a few minor projects were rolled in with Xbox, and those were the reported Operating Income results.

It seems plausible that Kinect-era 360 made some (relatively small) profits, but by then the Xbox had been rolled in with retail Windows and Office in reporting, so we literally have no non-obfuscated data from that point onward.

So we have $7 billion of negative Operating Income, followed by a decade of obfuscation. That's it. People draw their own conclusions because they are forced to.

 

[JaggedSac]

Probably already posted, but...

https://twitter.com/JezCorden/status/897251933651685376

https://twitter.com/JezCorden/status/897273549022482432

 

[KtSlime]

Are those 50 million active members all Gold members?

It's really hard to infer anything out of their statements due to how they have their products grouped together, but I think it is probably safe to assume that Windows licenses make up a big part of the revenue.

Probably already posted, but...

https://twitter.com/JezCorden/status/897251933651685376

https://twitter.com/JezCorden/status/897273549022482432

I don't live in America, so I am not really sure, but I have been under the impression that the people who call news fake news are the ones who tend to be making fake news. Is this right?

 

[Ozzy Onya A2Z]

Are those 50 million active members all Gold members?

It's really hard to infer anything out of their statements due to how they have their products grouped together, but I think it is probably safe to assume that Windows licenses make up a big part of the revenue.



I don't live in America, so I am not really sure, but I have been under the impression that the people who call news fake news are the ones who tend to be making fake news. Is this right?

Who knows? Likely less for gold. That 9 billion does not include windows licensing at all. Just Xbox and Windows gaming.

 

[hydrophilic attack]

Just like I linked from the last page, for tax minimalisation not some sinister plan to hide 5% of their total revenue away from gamers eyes for Xbox specifically. They're not coming clean on the tax avoidance methods/details which makes all this speculation at best.

If you think near 50million active users and 9billion in annual revenue isn't make profit you're crazy IMO.

A Japanese company might think in terms of 25 to 100 years operations but western companies rarely operate beyond 10 years at best.

That sure is a good statement based on facts and nothing but facts.

Yeah those numbers don't have to mean profit at all. Sony's gaming revenue in 2017 was 14.7 billion dollars and they recently achieved 70 million MAU. Yet their profit margin is only 8.2%.

Being a gaming platform holder and hardware manufacturer seems to be very high risk business and even the market leader has thin margins. Xbox has fewer MAU and much lower revenue than playstation. Seems very reasonable that they would be losing money

 

[JaggedSac]

I don't live in America, so I am not really sure, but I have been under the impression that the people who call news fake news are the ones who tend to be making fake news. Is this right?

Jez doesn't live in America either.

 

[KtSlime]

Who knows? Likely less for gold. That 9 billion does not include windows licensing at all. Just Xbox and Windows gaming.

Which report are you looking at, because when I read this:

Revenue in More Personal Computing was $8.8 billion and decreased 7% (down 7% in constant currency) driven primarily by lower phone revenue, with the following business highlights:

· Windows OEM revenue increased 5% (up 5% in constant currency)
· Windows commercial products and cloud services revenue increased 6% (up 6% in constant currency)
· Surface revenue decreased 26% (down 25% in constant currency)
· Search advertising revenue excluding traffic acquisition costs increased 8% (up 9% in constant currency)
· Gaming revenue increased 4% (up 6% in constant currency)

I am left with the impression that Windows, Surface, Search advertising, and Gaming are all grouped together in that not quite 9 billion.

Jez doesn't live in America either.

I've only really seen Trump and his people use the word, so I am not sure quite how to understand it.

 

[Shiggy]

Are those 50 million active members all Gold members?

You can be an Xbox Live user without a Gold subscription. The numbers also include "free" users.

 

[Ozzy Onya A2Z]

Which report are you looking at, because when I read this:


I am left with the impression that Windows, Surface, Search advertising, and Gaming are all grouped together in that not quite 9 billion.




I've only really seen Trump and his people use the word, so I am not sure quite how to understand it.

Was going off memory from yearly report, thanks for doubling checking.

 

[JaggedSac]

This was in the earnings report, you can get the Gaming revenue from this and last quarter from that:

Gaming revenue increased $44 million or 3%

 

[hydrophilic attack]

Which report are you looking at, because when I read this:


I am left with the impression that Windows, Surface, Search advertising, and Gaming are all grouped together in that not quite 9 billion.

That was a quarterly report, so Windows, Surface, Search advertising, and Gaming together had $8.8 billion of revenue in that quarter.

The comments Thurrott made was on comments from Nadella that gaming (alone) was over 9 billion in revenue for MS, which is not in contradiction with Windows, Surface, Search advertising, and Gaming together having $8.8 billion in revenue during one single quarter

This was in the earnings report, you can get the Gaming revenue from this and last quarter from that:

That correspomds to 1.5 billion dollar in one quarter. With the seasonal fluctuations in the gaming market, this is consistent with 9 billion in yearly revenue for MS gaming business

 

[ethomaz]

Yeah those numbers don't have to mean profit at all. Sony's gaming revenue in 2017 was 14.7 billion dollars and they recently achieved 70 million MAU. Yet their profit margin is only 8.2%.

Being a gaming platform holder and hardware manufacturer seems to be very high risk business and even the market leader has thin margins. Xbox has fewer MAU and much lower revenue than playstation. Seems very reasonable that they would be losing money

Just to add these 8.2% for the division are operation income and not net income... that means it is not the profit number yet because it needs to be deduced more things.

9 billion revenue (or any other big number) didn't say nothing about profit... you can have 100 billion revenue and not profit any penny.

 

[Colbert]

Of course I'm paraphrasing, but I believe the response in the interview with Eurogamer is the one I'm referring to:

That the leader of an organization focusing on one area over another doesn't mean that the whole organization just drop the other topics. Especially in bigger organizations we talk about. Sure it can mean that budget allocation for projects were in favor of the hw projects but I doubt they stopped to invest in developing new IP. We all know those things take time.

But yeah P. Spencer's focus was to turn around on the hw side first to have a better base 1st party games or games in general have a chance to shine. Something Sony did with its OG PS4 and its performance advantage that leaded to most games were able to be 1080p.

Or rather don't...

If you don't want to believe Paul Thurrott because you don't trust his sources on this issue, despite his track record as and insider (I mean insiders can sometimes be wrong too), then that's fine... there's no reason for any of us to really.

On the other hand, naively trusting the extremely vague non-information in MS' financial reports and making hard conclusions about the profitability of the Xbox brand based on reports that offer no information to that effect at all, just sounds like far more of an irrational and poorly considered position.

Why not simply be open to the possibility that Paul could be correct, just as much as the possibility that he isn't, given that there are no facts in the public domain available to us indicating either way?

I mean, I would even argue that a healthy amount of cynicism is always better when considering the publicly disseminated information from big business entities like MS, however, I wouldn't strongly enforce that as a rule.

Ym point is that we talk about one single person claiming this is, in a vague statement with providing ZERO evidence.

On the other hand we have what is public by 10K filings which if false could lead to consequences for the people who signed off the reports and the company itself.

It is also interesting that 1) there was never a followup on the issue to provide more detail and b) nobody else (analysts or "insiders") took the opportunity too to report on this too. Or have you seen any follow up on this?

So yeah I rather base my own conclusion on official available material than on somebodies vague statement on a topic he is not known for to talk about with no further evidence than his words.

It is just a personal principle I follow.

Edit:
If there is evidence that Thurrot was right I have no issue to admit that btw. But I see none atm.

 

[Celine]

Whatever the reason, it's presented as the same division when the portfolio dramatically changed by including hugely profitable legacy products in 2008.

Those numbers were reported in 2008 by many sites as 'The Xbox finally turning a profit' (example)..Of course there is nothing to suggest that at all, given retail Office and Windows was rolled in.

And Microsoft is literally obfuscating the number of consoles they are selling now because the news is bad, but they were happy to report them when they were good. Sony and Nintendo may have done some channel stuffing (and Sony changed tracking methods once to obfuscate poor PS3 sales) but have never actually not reported shipments. The inference is based on Microsoft's behaviour.

Not true, Sony stopped giving PS Vita hardware and software shipment data 6 months after the console release.
We still don't know exactly what is PS Vita LTD, same situation as Xbox One.

 

[D.Lo]

Not true, Sony stopped giving PS Vita hardware and software shipment data 6 months after the console release.
We still don't know exactly what is PS Vita LTD, same situation as Xbox One.

Yeah I corrected myself above on PS3 (which from what I can gather ended in 2012), so it seems Sony does it too when their product does poorly.

 

[TheThreadsThatBindUs]

That the leader of an organization focusing on one area over another doesn't mean that the whole organization just drop the other topics. Especially in bigger organizations we talk about. Sure it can mean that budget allocation for projects were in favor of the hw projects but I doubt they stopped to invest in developing new IP. We all know those things take time.

But yeah P. Spencer's focus was to turn around on the hw side first to have a better base 1st party games or games in general have a chance to shine. Something Sony did with its OG PS4 and its performance advantage that leaded to most games were able to be 1080p.

If the leader of Xbox is asked about why there is a weakness in his first party development output and he responds in meandering prose about how they were first focused on hardware innovation, then they were focused on their online platform innovation, and now they're looking to do better in software, I'm not sure how else you can interpret that without recognizing that Spencer's mentioned focus here is directly the focus of Xbox (and thus the monetary investment focus, in business terms, given the context).

Nowhere, did I state that they dropped everything outside of that focus, so I'm not sure why you even decided to argue that point. It's painfully obvious. But the fact remains that in the context of the question he was asked, i.e. about first party development (which is implies a need to invest material resources), Spencer here is talking about the investment focus of Xbox as a division.

To put it another way: Spencer has a fixed budget. As head of Xbox, he has to chose where he spends his budget. He chose to spend significant amounts on cost reduction initially to get the XB1S out the door, in order to overcome the pricing problem XB1 had since launch. Then he invested in the power disparity problem, by designing the XB1X. Meanwhile, he invested in XBLive. Now he's saying that they are free to focus investment dollars on building their first party.

That is in essence what Spencer said in this interview.

Ym point is that we talk about one single person claiming this is, in a vague statement with providing ZERO evidence.

On the other hand we have what is public by 10K filings which if false could lead to consequences for the people who signed off the reports and the company itself.

It is also interesting that 1) there was never a followup on the issue to provide more detail and b) nobody else (analysts or "insiders") took the opportunity too to report on this too. Or have you seen any follow up on this?

So yeah I rather base my own conclusion on official available material than on somebodies vague statement on a topic he is not known for to talk about with no further evidence than his words.

It is just a personal principle I follow.

Edit:
If there is evidence that Thurrot was right I have no issue to admit that btw. But I see none atm.

I don't believe that you're so dense as to not understand why an insider cannot provide evidence for any claim they make... So I'm not sure what you're trying to do here.

Of course Mr Thurrott isn't going to provide evidence. But none of us should expect him to. Just as none of us should be expected to take any of his claims as gospel truth, the whole truth and nothing but the truth (there's very likely to be more to it than what he claims).

On the other hand, Paul's track record alone lends credibility to his claims. So I personally wouldn't begrudge anyone for taking his claims at face value and believing them to be true.

For you on the other hand, Colbert, what you're claiming about the actual information contained within the official 10k filings is frankly so obviously silly that I cannot understand why you're continuing down this line of argument.

There is NO information about the profitability of the Xbox business contained in MS' filings. Frankly, MS' publicly disseminated financials are far more vague with regards to the health of MS' Xbox business than Paul Thurrott's claims. So quite why you'd elevate such nondescript vagaries as infallible sources of truth to inform us on the subject matter at hand, I cannot even begin to fathom.

MS' financials provide us no more understanding of the health of MS' Xbox business than they do our understanding of the meaning of life...

Spoiler

(well... unless you're someone like mrxmedia, and then MS is the meaning of life for you)

 

[TsuWave]

Bullshit.

The 360 was turning a profit in its third uear.

You think that's enough to make up for all the money they threw down the toilet on the Xbox brand?

Sony should've never released the PS2, since you know the PS3 wiped its profits.

Ha good old Sony too.

Well Sony aren't in it for the money, but M$ are remember.

wow. i've seen my share of "sony too" but its always startling to see how random it is when it comes up, especially with the double down at the end. i wonder if there are studies in the psychology of this.

on topic, hard to imagine they would be feeding a hole for this long.

 

[hydrophilic attack]

Just to add these 8.2% for the division are operation income and not net income... that means it is not the profit number yet because it needs to be deduced more things.

Yes, this is indeed the case. So profit margin, based on net income rather than operating income, is likely even lower (or possibly a bit higher if they sold off some big assets in FY 2016)

9 billion revenue (or any other big number) didn't say nothing about profit... you can have 100 billion revenue and not profit any penny.

Technically true.

But the cost of being a platform holder is likely comparable between MS and Sony. Both will have to spend roughly the same amount of money to research new hardware, to pay lawyers, to market their hardware, to update their firmware. Sony probably spends more on developing and publishing games, and probably spend more on servers (as someone argued earlier) but it is still very much comparable.

We do know that Playstation has 50% higher revenue than Xbox, and we know the Playstation business have a very modest margin. Based on all this, it seems a very reasonable assumption that Microsoft is losing money on Xbox. And since they won't give us actual numbers, all we can do is to assume, unfortunately.

 

[Colbert]

I don't believe that you're so dense as to not understand why an insider cannot provide evidence for any claim they make... So I'm not sure what you're trying to do here.

Of course Mr Thurrott isn't going to provide evidence. But none of us should expect him to. Just as none of us should be expected to take any of his claims as gospel truth, the whole truth and nothing but the truth (there's very likely to be more to it than what he claims).

On the other hand, Paul's track record alone lends credibility to his claims. So I personally wouldn't begrudge anyone for taking his claims at face value and believing them to be true.

For you on the other hand, Colbert, what you're claiming about the actual information contained within the official 10k filings is frankly so obviously silly that I cannot understand why you're continuing down this line of argument.

There is NO information about the profitability of the Xbox business contained in MS' filings. Frankly, MS' publicly disseminated financials are far more vague with regards to the health of MS' Xbox business than Paul Thurrott's claims. So quite why you'd elevate such nondescript vagaries as infallible sources of truth to inform us on the subject matter at hand, I cannot even begin to fathom.

MS' financials provide us no more understanding of the health of MS' Xbox business than they do our understanding of the meaning of life...

Spoiler

(well... unless you're someone like mrxmedia, and then MS is the meaning of life for you)

for me it seems you have something to lose here. as i said if somebody gives me a more factual reason i have no issue to change my stance here. you haven given me none so far.

btw any insider can give further evidence without outing his sources. as we see every day looking into the news. btw in the filings is more information than you might see if you take the information in there and and add industry benchmarks to it.

on a personal note: i also like to be adressed without the attempt of insulting me. thanks in advance.

edit:
seeing the pattern here it brings you nearer to the person you mentioned than me tbh:
a) strong believer in one insider
b) getting personal if not able to provide some sort of evidence or reasoning

just saying.

edit2:
btw i can live with it to agree to disagree on this matter.