Spinning off the Xbox division can help Microsoft protect its bottom line.
#Microsoft video games division Ps4#
According to Vgchartz's latest numbers, Sony has sold 18.5 million PS4 units worldwide compared to just 11 million Xbox One consoles. To make matters worse, those discounts are barely helping Microsoft catch up to Sony. Microsoft recently slashed the price of the Xbox One (console only) from $399 to $349 across the U.S. However, subsequent price cuts on the Xbox One were so steep that the consoles are now likely still sold at a loss. When the Xbox One launched in November 2013, IHS revealed that the console, without the Kinect, cost $396 to manufacture. Gaming consoles should become more profitable as component costs decline over time. Last August, Microsoft reported that its Xbox division revenue had risen 34% year-over-year to $1.7 billion, but cost of sales soared 72% to $2.1 billion due to marketing costs.
#Microsoft video games division windows#
The official figure is unclear as Xbox, Skype, Windows Phone, and patent royalties were previously grouped together under the entertainment and devices division. In late 2013, Nomura analyst Rick Sherlund estimated that losses could be as high as $2 billion per year. A money-losing business The Xbox business has likely lost money for Microsoft ever since the launch of the original console in 2001. Let's take a look at the three top reasons.ġ. On the other hand, the Xbox One gives Microsoft a strong brand presence among younger consumers and could help the company gain a foothold in living rooms.ĭespite those opportunities, I believe an Xbox spinoff will be a great long-term move for Microsoft. On the one hand, the Xbox One is a low-margin product facing tough opposition from the Sony ( NYSE:SONY) PS4. Follow him on Twitter for more updates!įollow frequently debate whether or not Microsoft ( NASDAQ:MSFT) should spin off its Xbox business.
His wheelhouse includes cloud, IoT, analytics, telecom, and gaming related businesses. Leo is a tech and consumer goods specialist who has covered the crossroads of Wall Street and Silicon Valley since 2012.
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