Xbox losses fail to rock Microsoft

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 five of the seven divisions of the company are operating at a loss.

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.

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.

News source: BBC News

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