Xbox loses $1.9 billion, failures at fault

by Richard Mitchell { Jul 20th 2007 at 2:45PM }

Microsoft has unveiled its financial numbers for its fiscal year 2007 (which ended June 30), and the Xbox division has posted a loss of $1.9 billion dollars. Just to give a bigger sense of impact, that's 1,900,000,000. $1.2 billion of Microsoft's loss occurred in the fourth quarter and is mainly attributable to the recent warranty extension (which includes retroactive repair refunds). Microsoft claims that the loss was offset to a certain extent by declining manufacturing costs. Keeping this cost declination in mind -- and that the warranty costs to Microsoft seem to be covered now -- GameDaily reports that fiscal 2008 could be the year that Xbox finally sees a profit, as Robbie Bach predicted earlier this year. A killer lineup of games this holiday -- lead by Halo 3 -- combined with a possible price drop, could very well push Xbox into the black for the first time.

As for the rest of the numbers, Microsoft shipped 6.6 million Xbox 360s in fiscal 2007, ramping their installed base up to 11.6 million (just short of the goal of 12 million set by MS). PC and Xbox game sales increased by %19 percent, up to $650 million.

Tags: business, fiscal2007, warranty

Reader Comments (Page 1 of 1)

DjDATZ @ Jul 20th 2007 3:03PM

Oh well...microsoft still had a huge fiscal profit though.

DjDATZ @ Jul 20th 2007 3:04PM

*quarter profit

Who Flang Poo @ Jul 20th 2007 3:15PM

Hey, if anyone can answer this question i would really appreciate it. Yesterday i got the ring of death, and i still need to get it sent in, but before i do that i was wondering if i am able to keep my hard drive and send it in evn tho i bought the pro consle with the hard drive?

Emily @ Jul 20th 2007 3:18PM

Well no wonder they lost money on the warrenty, I've gone through 3 of the goddamn systems (I still love you X-Box), and my roommate went through 2. I love the warrenty though, because I remember when the first one came out I didn't get the warrenty. I still went through two of the systems and had to pay for both of them!

DjDATZ @ Jul 20th 2007 3:20PM

Who Flang Poo...they ONLY want your console. NO attachments. your HDD, cables, controllers, wireless adapter, and everything else that has to do with your 360 stays with you. they only want the busted console.

Who Flang Poo @ Jul 20th 2007 3:23PM

Ok thank ya very much. =)

malos13 @ Jul 20th 2007 3:31PM

1.9 billion.
$400 to replace the xbox (there are still selling at a lost)
$30 roundtrip shipping cost.
4.4 million boxes divided by
11 mil sold equals
40% failure rate.

I'm on #3 and still having a good time. :)

James @ Jul 20th 2007 3:55PM

Well, at least they seem to be indicating (without ever coming out and saying it, for some reason only the PR-initiated could explain) that they figured out what caused all the failures and have a fix in place now.

Anyway, they could make up that loss in (gross) Halo 3 sales alone. Let's see, 1.9 bil / 70 bucks (weighted average of regular and various collectors' editions) = 27.1 million copies. Maybe not...

Larry @ Jul 20th 2007 3:57PM

They did not "loose" the billion for warranty repairs. It is an accounting thing that will cover them for what they think will be the life of the console plus three years. So they could be charging off the expense for the next years.

ryan @ Jul 20th 2007 4:28PM

this could've been avoided had they built the damn thing right in the first place!

Falcon .65 nm chip FTW, baby!

John Smith @ Jul 20th 2007 5:03PM

Wow, that is an interesting number, because that is the EXACT same that Sony lost in 2006 with the PS3.

brentkailbourn @ Jul 20th 2007 6:19PM

anybody still wondering why Peter Moore left Microsoft to go to EA?

kevin hardy @ Jul 20th 2007 7:03PM

i have the 2 rings.. i think its from over heating? i beleive the fan is dead,well they are going to charge me $100.00 to fix it,i paid 400.00 for the system and now have to sink another $100.00??? wtf?

GregA @ Jul 21st 2007 3:21AM

#7

I was watching on AOTS... They seem to think this effects EVERY xbox and EVERY box that gets used is gonna suffer this fate eventually. YMMV.

I am on #2, but the first one I got from Best Buy of all places was DOA.

warren @ Jul 21st 2007 5:26AM

I bought the exteneded warranty. I have had my xbox 360 for 7 months. No RROD. (knock on wood)

Andy @ Jul 21st 2007 1:34PM

Sony and M$ are the only ones losing money while Nintendo quietly makes millions.

Imagine how good of a console Sony and Microsoft could create if they worked together.
-take the online goodness of live
-take the forward thinking of Sony
-take their best devolopers and you got a great console with great games/

Branden @ Jul 21st 2007 4:14PM

#4 comment is funny

Hes and his roommate are like two guys who keep going back to the girlfriend that keeps cheating on them. Not only that they give her $400 dollars everytime she does.

and you XBOTS complain about the PS3 price tag when your buying 2 and 3 XBOXs

Stephen @ Jul 21st 2007 5:29PM

They charge $180 for a 120gb hard drive. How can anybody who rips you off that badly be losing money?

Who Flang Poo @ Jul 21st 2007 7:27PM

Yea us XBOTS complain about the PS3s pricing when were buying "2 or 3 360s" because buyin multiple 360s is worth buying because you actually get to play good games on the 360.

philmoon80 @ Jul 21st 2007 11:09PM

And what "must have" games are on the 360, Who Flang Poo, that would justify re-buying the system multiple times?

Now, keep in mind, I have a 360 Elite, so it's not like I'm unaware of what's out there. So far, I can count the number of must haves for 360 on one hand, which is: Gears of War (going to PC now), and Dead Rising. What is coming out that makes it a must have system? Halo 3? Mass Effect? That's really about it. Blue Dragon is a joke, and we still don't know if Lost Odyssey is going to be any good.

When I go into the store these days, I don't see anything on the shelf for 360 that is worth re-buying the system for when it fails. The greatest games for the system are either already on the PC, or on being made for it. And the ones that are not are not worth re-buying the 360 for.

This isn't a PS3 vs 360 comment. My point is that while 360 does have a lot of games for it, there are very few that are actually worth their $60 price tag and even less are worth re-buying the system for.