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Analyst: Microsoft Loses $2 Billion on Xbox Annually


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#1 Juddy

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Posted 10 November 2013 - 20:25

Nomura analyst Rick Sherlund says that Microsoft's losses on its Xbox business total $2 billion per year, but are masked or hidden by substantial cash generated from royalties on patents from Android-based devices.

"If we start with the overall traditional [Entertainment and Devices Division] business that actually loses money before corporate allocations and back out the nearly $2 billion 95 percent gross margin Android phone royalties, we conclude that Xbox platform plus Windows phone and Skype lose about $2.5 billion per year, and we estimate that the Xbox platform may account for roughly $2 billion of this," Sherlund said.

He goes on to say that this loss "is concealed by the hugely profitable Android royalties" that come out of licensing deals on Microsoft-held FRAND patents related to the Android OS.

Source: GII by way of The Escapist

 

http://gamepolitics....ly#.Un_rnfmnpqk

 




#2 +_Alexander

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Posted 10 November 2013 - 20:29

If this was the case, Xbox would not exist.



#3 Andrew G.

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Posted 10 November 2013 - 20:29

Read this last week. It's no wonder investors are calling for them to branch the Xbox division out into a separate business.



#4 Soldiers33

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Posted 10 November 2013 - 20:30

lol show us evidence. I can be an analyst and say this guy is chatting rubbish.



#5 Crisp

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Posted 10 November 2013 - 20:32

It's true, I know, as I play Xbox.



#6 Showan

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Posted 10 November 2013 - 20:33

Microsoft makes a killing off of Android.. So Android OEMs,are basically funding Skype, Xbox, and Windows Phone and Bing for the most part. And basically the Blu-Ray license fees Microsoft has to pay for as well...

To keep a whole division going off of others companies dime, is pure genius if you ask me....

#7 vetneufuse

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Posted 10 November 2013 - 20:36

next up Analyst says Microsoft loses 5 billion on Windows, makes up for it by hidden cash from the Xbox division, get rid of windows! analysts are just full of BS... they don't have the books, they can only go by what they guess... only MS knows 100% for sure what makes what, then they distill that down to what they tell the SEC and investors



#8 Dot Matrix

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Posted 10 November 2013 - 20:38

It's true, I know, as I play Xbox.

 playing Xbox gices you secret access to Microsoft's financials?



#9 stevan

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Posted 10 November 2013 - 20:39

Never knew there were so many analysts at Neowin.

#10 trooper11

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Posted 10 November 2013 - 20:51

Read this last week. It's no wonder investors are calling for them to branch the Xbox division out into a separate business.

 

 

To be honest, if its losing that annually, how in the world would it survive spun off?  If they wanted to sell it, who would want to buy it? 

 

No if its losing money like that, then the only choice would be to get rid of it completely if they wanted rid of it.  I wonder how this compares to Sony.



#11 Andrew G.

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Posted 10 November 2013 - 20:59

To be honest, if its losing that annually, how in the world would it survive spun off?  If they wanted to sell it, who would want to buy it? 

 

No if its losing money like that, then the only choice would be to get rid of it completely if they wanted rid of it.  I wonder how this compares to Sony.

 

Amazon, Google, Valve?

 

All of them have the means to turn it around. On the outside Xbox isn't a horrible business and it has a lot of room to grow, but it has been mismanaged & bled money from the start. They've managed to grow it into one of the biggest names in gaming in just 10 years and taking 2nd place from Nintendo. That's a lot of power for someone to take interest in and to merge with their own app economy or digital futures.



#12 +Audien

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Posted 10 November 2013 - 20:59

It doesn't really matter if it's making or losing money at this point.  A significant part of it is being able to have a strong household presence for the rest of the Microsoft ecosystem.  Skype, Bing, IE, Video, Skydrive, etc...



#13 Atomic Wanderer Chicken

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Posted 10 November 2013 - 21:00

These Xbox and PS threads that cause F.U.D. are getting repetitive



#14 Dot Matrix

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Posted 10 November 2013 - 21:01

It doesn't really matter if it's making or losing money at this point.  A significant part of it is being able to have a strong household presence for the rest of the Microsoft ecosystem.  Skype, Bing, IE, Video, Skydrive, etc...

It's also a huge brand name. People know Xbox, and to loose that would be destructive.



#15 LaP

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Posted 10 November 2013 - 21:03

I can be an analyst


You are not.



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